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The Economy (Supporting Business)

That would indeed have been very helpful. The Government have been running away from any debate of substance on the economy for many months. It was only a full Opposition day debate on the subject in March that finally prompted the Government to call their own debate in the week before Easter. Apart from allowing the usual scheduled debates on the Budget and the Finance Bill, the Government have been running away from being scrutinised on the economy for the past six months. The Minister tried to talk about green shoots. It is true that the rate of decline in the UK economy appears to have abated in some areas. Manufacturing industry and the service sector are not as downbeat as they were a few months ago. Nevertheless, we have already experienced the longest recession in decades, and if there is joy at seeing light at the end of the tunnel, it is mainly because we have been underground for so long. We welcome any signs of improvement in the economy. After four quarters of no growth or negative growth, we desperately need some signs that improvement will come. We have always thought and said that growth would return in 2009, although we have questioned, and continue to question, the Government's growth forecasts for the years ahead. However, there are conflicting signs in the real economy. The Minister presented some of the highlights, which we welcome, but we should be realistic about the complete picture. Lending to companies and households fell in April for the first time since 1997. Earlier this week, the Financial Times commented:""The slowdown in lending serves as a warning that while some 'green shoots' are emerging in the economy, constrained access to credit and weak demand for loans in the private sector could yet kill them off.'" Unemployment continues to rise inexorably, and at its fastest rate since the second world war. The Minister's optimistic tone will not be echoed by the additional hundreds of thousands who are joining the dole queues each quarter. In March, the level of unemployment had already surpassed the forecasts for the whole of 2009 that had been made in the 2008 pre-Budget report. The Budget predicted that the claimant count would rise to 2.44 million by the end of 2010, a figure that had already exceeded by 1 million the one predicted only six months earlier in the pre-Budget report. The British Chambers of Commerce have predicted that it will reach 3.2 million by the end of 2010, and the CBI has made a similar prediction. It seems that the age-old adage—that all Labour Governments leave office with unemployment higher than when they took over—will prove to be true yet again. If I were the Minister, I would go easy on trumpeting claims for the success of Government schemes to help people and businesses through the recession. It emerged earlier this week that just two home owners had been helped by the Government's flagship initiative to help families avoid repossession. The mortgage rescue scheme has been running since January, during which time nearly 20,000 homes are thought to have been seized, but only two households have been helped. Let us consider two of the Government's schemes for business. I do not know whether the Government can provide more up-to-date figures, but the most recent publicly available figures suggest that the capital for enterprise fund announced in November 2008 has yet to invest a single pound in any business. Furthermore, according to the Minister for Employment Relations and Postal Affairs the £1.3 billion enterprise finance guarantee scheme has loaned just £92.6 million to industry, despite also being announced last November. That represents just 7 per cent. of the funds available. Meanwhile—and I hear this across the country—big Government rises in business rates continue to hurt. One easy way of helping small and medium-sized enterprises would be to make small business rate relief automatic. Why did the Government oppose the private Member's Bill presented recently by my hon. Friend the Member for Mid-Worcestershire (Peter Luff), which would have done precisely that? As I said earlier, however, the way in which the Government could really help business is by sorting out the public finances. Unfortunately for the Government and the country, the position is going from bad to worse. We are still deep in the tunnel, with no chinks of light to be seen. Government borrowing in April—in just one month—was an incredible £8.5 billion. That is a record, and it is five times as much as was borrowed in the same month last year. Even according to the Government's own highly questionable statistical basis, net debt has already risen from the mid-40s to 53.2 per cent. of GDP. It is at its highest level since the 53.8 per cent. that we saw when the country was shamefully bailed out by the IMF in 1976. The United Kingdom has been publicly downgraded by Standard and Poor's for the first time ever, or at least since its credit was rated for the first time in 1978. Our credit prospects are negative. That will add yet further to our borrowing costs, especially the costs of any non-domestic borrowings. It will also shrink the investor base for our debt products, as some investors are not able to hold anything less than AAA-rated assets. Thanks to the public finances, borrowing rates for businesses are far higher than they should be in this recession. As I said earlier, long-term interest rates are an incredible nine times higher than short-term interest rates. Credit spreads on variable-rate borrowings are still too wide. Whether we look at variable or fixed-rate funding, it is clear that the long-term funding needed by businesses is still far too expensive. Moreover, the Government are crowding out business borrowers from the capital markets with their huge gilt auctions It seems that no one believes the Government's forecasts of a trampoline recovery. We hope and expect there to be some growth in the economy before the end of the year, but it is difficult to share the Government's optimism that there will be a 3.5 per cent. rate of growth next year. Of course we would love that to be true, but we suspect some political massaging of the figures. Indeed, I read that the Prime Minister wanted the figures to be even more fixed than those that I have cited. On Tuesday, The Times reported that""the Prime Minister tried to upgrade the growth forecasts to make the economic outlook appear rosier than it was; the Chancellor refused."" We urgently need to hear from the Minister what really happened. Are the growth forecasts in the Red Book from No. 10, or are they from the Treasury? Did the Prime Minister try to intervene, as The Times claimed? Perhaps he intervened successfully, and those growth forecasts are the result of his intervention. It would also be helpful to hear the Minister's response to the harsh criticisms of the Government's quantitative easing programme made earlier this week by the German Chancellor, Angela Merkel. She said:""What other central banks have been doing must be reversed. I am very sceptical about the extent of the Fed's actions and the way the bank of England has carved its own little line in Europe"." That is another extraordinary attack from a foreign leader on the Government's economic policy. May I ask the Minister whether, at the G20 summit and at last month's ECOFIN meeting, Germany raised its opposition to the quantitative easing programme with the Prime Minister or the Chancellor? Although no Labour Members except the Minister are present for it, this may well end up being an historic debate. It may well be the last debate on the economy to take place while the Chancellor of the Exchequer, the right hon. Member for Edinburgh, South-West (Mr. Darling) is Chancellor. This could be how it all finished: a dead-end debate slot on European election day with virtually no one present to witness the end of it all. The Chancellor would be like a modern-day Eleanor Rigby. Instead of coming here to talk about the economy, the Chancellor is somewhere else fighting for his political survival. Britain deserves better than this, and that is why we are calling for a general election. I thank my hon. Friends in advance for participating in this debate, but the whole Conservative party wants to debate the economy, and for longer than an hour and a half; we want a full, four-week debate in a general election campaign. Moreover, a general election is what the country wants and so desperately needs.