Economic Performance and Business debate

Charles Walker condemns the Prime Minister’s mismanagement of the economy over the past 11 years which will result in people losing their homes and jobs and taxpayers having to foot the £500 billion cost of rescuing the banking system.

Mr. Charles Walker (Broxbourne) (Con): It is simply amazing to hear the contributions of Labour Members. You would not believe, if you had tuned in for the first time—

Madam Deputy Speaker
: Order. I might or might not believe whatever is being said, but perhaps the hon. Gentleman will consider his phraseology.

Mr. Walker
: I was referring to the general public in the rounder use of the word “you”.

The general public would not believe, if they had tuned into the parliamentary channel for the first time, that the Government had been in power for 11 years. We have had 11 years of Labour misrule. For the first 10 years, the Chancellor, now the Prime Minister, told us all that he had abolished boom and bust, and that the economic miracle being experienced by the UK was entirely down to his stewardship—that it was nothing to do with a strong global economy, and that it was down to his guidance and supervision. He is a bit like Macavity—as soon as things go wrong, as was bound to happen after his spending splurge and 10 years of debt-fuelled extravagance at the taxpayer’s expense, he says, “It’s not my fault, guv. It’s nothing to do with me. I’m totally misunderstood. It’s all to do with these horrible Americans and the sub-prime debt market.”

The hon. Member for Wirral, West (Stephen Hesford) said that the sub-prime collapse could not have been forecasted. But as my right hon. Friend the Member for Wokingham (Mr. Redwood) has said—

Stephen Hesford

Mr. Walker
: I will not give way to you. I really will not give way to the hon. Member for Wirral, West.

Madam Deputy Speaker
: Order. I ask the hon. Gentleman to remember that we should have courtesy in this Chamber.

Mr. Walker
: I am sorry. I am unable to give way to the hon. Member for Wirral, West. He forgets that Bradford & Bingley and Northern Rock were lending not in the United States of America, but in the United Kingdom. They were advancing people mortgages of five or six times their annual earnings. They were allowing self-certification, and lending money to people who had no hope of paying it back. They have caused human misery on an enormous scale.

Today, 80,000 homes are under order of repossession. What will the figure be in 2010, when it is estimated that house prices will have fallen by 35 per cent. from their peak. The Government should at least say sorry to the hundreds of thousands if not millions of people whom their policies will drive out of work. Their policies will cause significant unemployment over the next three or four years.

It is all very well to talk about history lessons, about 1997 and 1979, but those years are exactly that—history. This is the here and now. The problems have happened under this Government’s watch. The Prime Minister must face up to the fact that he has driven this country to the edge of financial crisis. A lot of very good businesses will pay the price of his mismanagement.

Let us remind ourselves of the figures. The banks are being underwritten by £500 billion of taxpayer’s money. That is an astronomical figure—half a trillion pounds. The Government only manage to spend £650 billion a year, so nearly 80 per cent. of that, which they raise from the taxpayer and the debt markets, now underpins our banking system. If that is not a financial disaster, I do not know what is.

I also point out to the hon. Member for Wirral, West and the hon. Member for Brent, North (Barry Gardiner)—before the last reshuffle he was the forestry ambassador, not that it was a ministerial position—that the £500 billion must be paid back at some time in the future. Guess who will be paying it back—the taxpayer, for generations to come. That will not be easily forgotten.

Mr. Pelling
: The hon. Gentleman talks of the very large size of the £500 billion bail-out. In the light of that, is it not appropriate to ask whether the money was well spent? Reference was made earlier to whether the use of debt and the removal of toxic assets from bank balance sheets constituted a better approach than recapitalisation through equity. After all, it is the innovative and very successful scheme recently established by the Swiss National Bank that allows the removal of those toxic assets, improving the quality of the bank and removing the Government from the embarrassment of constantly being asked—bearing in mind that they are a majority shareholder—what they will do about the minutiae of the management of those banks. Surely that would have been a better way to spend such substantial amounts.

Mr. Walker
: My hon. Friend makes a good point, but the Government are asking us to take everything on trust. How can we trust a Government who have taken the country to the edge of financial ruin? No trust is left.

The hon. Member for Luton, South (Margaret Moran), who is no longer in the Chamber, talked of corporate social responsibility. I do not think she understands that the most responsible thing that small businesses can do now is try to retain their work forces—try to retain people in jobs so that they can put food on their tables. This is the level of the crisis facing small businesses.

I see the Minister of State making a few sedentary interventions. He really is living in cloud cuckoo land if he thinks that banks will lend at 2007 rates. Small businesses are having their loans renegotiated by banks at rates of upwards of 15 per cent. They are seeing their interest rates trebled, and that is pushing very good and viable businesses to the wall at this moment.

Mark Durkan
: Will the hon. Gentleman give way?

Mr. Walker
: I am sorry; I do not have time to give way to the hon. Gentleman.

I really believe that, after 11 years, the Government probably—or definitely— should have done a better job on the economy. For the last 11 years the Chancellor, now the Prime Minister, has said “Trust me: I know what I am doing.” Well, clearly he has not had a clue. He has been making it up as he goes along.

The four Labour Members who spoke this evening will all lose their seats at the next general election. They will pay the price for the Prime Minister’s failure, and ultimately he will have to explain himself to them when they are looking for new jobs.

9.27 pm

| Hansard