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Amendment of the law

It is a great pleasure to follow the hon. Member for Northampton, North (Ms Keeble). She made some very good comments about house building and I can relate them to my constituency. One of my constituents, a builder, cannot get on the tendering list, although I am sure that he would be as cheap and efficient as some of the other builders. Let us not be under any illusion: this Labour Government have destroyed our economy. It does not matter whether we are talking about new Labour or old Labour—there has been a tax and spend approach, which has increased unemployment. Every time a Labour Government have been thrown out, unemployment has been higher than when they came in—and it will be just the same with this one. We can talk about the global financial crisis and its far-reaching effects on world economies, but the United Kingdom is in a far worse position than most. In fact, our country has the worst public finances in the G20. Under the Prime Minister's stewardship, our country is now in the longest recession since the second world war. In my constituency, unemployment is more than two thirds higher than it was in 1997. That is not a mistake; it is 67.1 per cent. higher than it was in that year. That is the dire consequence created by the man who spent and spent and never planned for the future economic stability of this country. He is the man who has created the fastest rise in unemployment. Let me put the issue in the context of families in my constituency. At the end of March 1997, under the Conservative Government, unemployment in my constituency was 1,938—one thousand nine hundred and thirty-eight families were looking at a bleak future. At the end of March 2009, after 12 years of Labour rule, the figure had increased to 3,239, so three thousand two hundred and thirty-nine families—67 per cent. more—were facing such a future. The Prime Minister built his boom on excessive and increasing borrowing. For 12 years he presided over the lending of billions to individuals against inflated house prices and he has allowed the banks to lend at the most extraordinary level of leverage. His Government borrowed and borrowed with no thought of how his boom would ultimately lead to bust. In this Budget, the Government are to borrow an incredible £175 billion this year and another £173 billion next year—£348 billion in the next two years alone. That assumes that the forecasts are correct, but given that the Chancellor's forecasts have a record of being far too optimistic, no doubt the Government will borrow even more. The whole thing is rather like a huge balloon that constantly expanded through borrowing. The balloon grows and grows, and as long as borrowing increases the balloon continues to expand. However, eventually something pricks it and there is a huge explosion. The borrowing stops, the balloon bursts and economic growth pours out. When a balloon is pricked, the air does not come out slowly—it gushes out. That is why the recession has been so sudden, sharp and severe. It is hard to believe that John Major's Conservative Government were thrown out in 1997 because of any mismanagement of the finances. In fact, the economy was growing in 1997. This year, however, the Government are predicting negative growth of 3.75 per cent. of gross domestic product. How do those figures translate to the situation in Wellingborough? I have already said that unemployment there is two thirds higher and that we are in the longest recession since the war. Yet the Prime Minister is still here and the Government stagger blindly along, rather like a rabbit caught in the headlights of a car. So what is this incompetent Government's solution? It is to borrow even more. We are told in the Budget forecast that public sector borrowing will be 12.4 per cent. of GDP this year, and 11.9 per cent. of GDP next year. In 2013-14, on the Government's own hugely optimistic forecast, public sector net debt will rise to an incredible 79 per cent. of GDP—in other words, twice the golden rule's upper limit of 40 per cent. They decided not to fix the roof when the sun was shining, but, worse still, when they found there was a problem, they sent in a cowboy trader to fix it. They did not call in Trotters Independent Traders—although Del Boy might have done a better job—but Darling and Co., who, like all cowboy traders, said, "Well, guv, the problem's a lot bigger than we first thought—it's going to cost a lot more to fix", and left the problem in a worse state than it was originally. The Institute for Fiscal Studies stated in "The Green Budget 2009":""Labour entered the crisis with one of the largest structural deficits in the industrial world and a bigger debt than most OECD countries, having done less to reduce debt and—in particular—borrowing more than most since 1997."" The Prime Minister's beleaguered quest to throw money he has taken from hard-working taxpayers at trying to fix problems has left this country with an unprecedented amount of debt, which is predicted in the Budget to rise to an extraordinary £1.4 trillion. I believe that he will not be satisfied until he leaves this country bankrupt. The Prime Minister wanted a huge second financial stimulus at the G20 summit. In fact, he travelled round the world—I remember him missing Prime Minister's questions because of it—to encourage everyone to adopt that second stimulus, saying that it was absolutely vital; only the courageous decision of the Governor of the Bank of England stopped this. Effectively, he tore up the Prime Minister's cheque book and cut his credit card into pieces. It is unique for a Governor of the Bank of England to disagree so publicly with a Prime Minister, and he would not have taken such a step unless he thought that our economy was in the gravest peril. One auction of Government gilts has already failed; if the Prime Minister had had his way, that would have become a regular occurrence. The IFS says that there is a £39 billion black hole in the public finances. For families in Wellingborough, and across the country, that is equivalent to a tax rise of £1,250, or 8p on income tax. That is what the Prime Minister has left us with, and it is quite different from what he said in his speech to the CBI in 1997:""The British economy of the future must be built not on the shifting sands of boom and bust, but on the bedrock of prudent and wise economic management for the long term. It is only these firm foundations that we can raise Britain's underlying economic performance."" He has done just the opposite. In 2002, he said in his speech to the TGWU conference:""There will be no return to the short-term lurches in policy that would put long-term stability at risk. No relaxing our fiscal disciplines"." Again, he has done exactly the opposite. I would like to talk briefly about how the Prime Minister's actions have affected my constituents. The Bank of England's base rate is 0.5 per cent., yet the APR on credit cards is rising, not falling. Some banks are sending out special promotional offers—I am sure that Members have seen them—claiming to charge 0 per cent. for six months. In fact, the small print says that there is a 3 per cent. flat fee to start with, and that after the six-month period the normal variable rate will apply. One would think that with the base rate at 0.5 per cent., the variable rate for credit cards should be falling, but instead it is rising. Banks, including the nationalised banks, are raising their interest rates to between 20 and 25 per cent. At a time when the base rate is at its lowest, people in my constituency are being asked to pay bumper credit card interest rates. Apparently, I am a valued customer of the Royal Bank of Scotland, because it sent me a rather glossy promotional booklet saying:""An exceptional card. Impressive benefits. Too good to miss? Find out more.""With an RBS Black Card you can look forward to a level of personal attention and exclusive benefits that are second-to-none."" So I thought I had better look at the small print, and it certainly is an exceptional card. Its APR is 51.8 per cent. a year—and that is from a nationalised bank. I kindly turned down the offer. I am afraid that the situation for businesses is even worse. The Bank of England reduced the base rate to 0.5 per cent., the intention being that the cost to businesses would fall. Unfortunately the reverse is happening, and the nationalised banks have been particularly damaging. Instead of providing more facilities and cutting interest rates, they have actually increased interest rates, imposed extra fees and cut facilities. It is almost as though the banks saw a way of making excessive profits out of companies following their previous ghastly mistakes. I am talking about existing, established and respected businesses that are fighting the recession but are fundamentally sound.