Savings/Public Investment

Asked about taxation of savings, the Prime Minister’s Spokesman (PMS) said that savers benefited from the low inflation environment we were seeing at the moment, including the price of many goods coming down, which protected the real value of savings.  Since 1997 we had introduced significant support to help savers with the introduction of Individual Savings Accounts (ISAs), which 18 million now benefited from.

Asked what the Government’s plan for savers was and when it would come into effect, the PMS said that we would normally announce our plans on economic policy at the time of the Budget.

Asked about the £10 billion increase in public investment, the PMS said that the £10 billion increase in public investment was the figure set out in the Pre-Budget Report (PBR), which showed that public sector net investment rose from approximately £30 billion in 2007/08 to £40 billion in 2009/10.

Israel/Gaza

Asked if the Prime Minister believed that the continued action was proportionate and justified, the PMS said that, as the Prime Minister said yesterday to Andrew Marr, the key focus was on what we could do in order to help the situation in Gaza rather than getting into a blame game.  The Prime Minister was focusing on 3-fold practical measures that could help; firstly, we needed an immediate ceasefire and that included the stopping of rockets into Israel.  Secondly, we needed a resolution over the problem of arms trafficking into Gaza, and particularly the situation regarding tunnels.  Thirdly, we needed the borders open, which required some form of international cooperation and international solution.

Asked if a ceasefire was imminent, the PMS said that it was something we continued to press for.  The Prime Minister spoke to Prime Minster Olmert over the weekend and we stayed in close touch with our key allies in Europe, America and the region.

Asked if the Prime Minister had any plans to talk to Prime Minister Olmert or President Abbas today, the PMS said that the Prime Minister was in regular contact with both Prime Minister Olmert and President Abbas.

Asked if the Prime Minister felt frustrated that Israel was ignoring international calls for a ceasefire, the PMS said that the Prime Minister was no going to get into a situation where he commented on those sorts of questions.  The Prime Minister’s focus was on what we could do to make a difference, and as well as the immediate ceasefire and stoppage of rockets into Israel, we needed to work with our international partners in the region and elsewhere to deal with the other issues such as arms trafficking into Gaza and the issue of maintaining the borders into Gaza.

Asked if the Prime Minister had spoken to Tony Blair over the last few days, the PMS said that the Prime Minister had said during his Andrew Marr interview yesterday that he had spoken to Tony Blair yesterday morning.

Economy/Recession

Asked to explain the Prime Minister’s comments to Andrew Marr yesterday that only £1 billion of the Government’s £18 billion package had been spent, the PMS said that the VAT cost of £12.5 billion for 13 months, which was around £1 billion a month, had already come into effect in December.  The other elements of the PBR package had not yet come into effect; that included the £145 for basic rate taxpayers, which would come into effect in April.  There was also £3 billion of capital spending which was being brought forward into the 2009/10 financial year, which had not yet come into effect.  As of the end of December, the only measure that had come into effect was the VAT cut.  On 1 January this year we also brought forward the increase in child benefit and the special payment for pensioners.  We still had significant measures to come into effect, including the bringing forward of capital spending and the extra help for basic rate taxpayers.

Put that the Prime Minister had given the impression that he did not know when the recession would end but that the Treasury had said it would end in the middle of next year, the PMS said that there was no inconsistency between the two; the Treasury had to make forecasts and publish those forecasts by law twice a year, therefore the Treasury had to take a specific view.   However, as the Treasury and everyone else would acknowledge, these were very uncertain times and, as the Prime Minister said yesterday, a lot depended on international action. 

Misc

Asked if there was Ministerial backing for a third runway at Heathrow, the PMS said that there were a number of proposals relating both to the future of Heathrow and more generally to transport infrastructure.  This was something that the Department for Transport was considering and as and when we were in a position to make any firm announcements on this we would do so.

The PM has spoken of the importance of investing for the future and his optimism for the British economy in his final Downing Street monthly press conference of 2008.

Addressing journalists this morning, the PM said that Britain can rise to meet the current economic challenges and “emerge stronger for the global future that is ahead of us”. The economic slowdown was “no excuse” for holding back investment and reform, he said.

Mr Brown listed a number of measures already introduced, such as the cut in VAT, and plans for future action such as reform of welfare and support for training and job-seeking.

The PM said:

“These are uncertain and difficult times but Britain can and must be a beacon of hope and opportunity for the future. The scale of the challenges that we face is matched by the strength of my optimism that Britain can rise to meet these challenges.

“With our fighting spirit and our can-do attitude, I am confident that we can meet all the challenges ahead.”

Mr Brown said the Government would be pressing ahead with investment in “green” jobs, the digital economy, energy and transport as well as social mobility and reform of the banking system. There was no “credible plan” for dealing with the current economic conditions that did not involve “building a better long-term British economy”, he said.

Statements and Transcripts: December press conference

Jim McGovern’s Resignation

Asked for a reaction to Jim McGovern’s resignation, the Prime Minister’s Spokesman (PMS) told the assembled press that the question of the resignation was probably best directed to a political colleague. On the issue of Royal Mail, Lord Mandelson set out the Government’s position in his statement yesterday.

Put that Jim McGovern had said that it beggared belief that the Government thought that the best solution was to have a foreign company take a stake in Royal Mail, the PMS replied that as Lord Mandelson had pointed out yesterday, the status quo was untenable, the service was under threat and the choice that we faced was either downgrading that service or acting now to turn things around and secure Royal Mail’s future. The recommendations put forward in the Hooper Review included a partnership with an existing operator, which could help bring about the changes that Royal Mail needed.

Asked if the Prime Minister was confident he could get a vote through on this, the PMS said that the Prime Minister and Lord Mandelson were convinced that the recommendations in the Hooper Review were based on sound argument and they intended to make that argument in the weeks and months ahead.

Put that Jim McGovern had been a member of the Government who had objected to Government policy and why was this considered a party issue, the PMS said that Jim McGovern had set out his position and we had set out ours.

Afghanistan

Put that if Barack Obama asked the Government to send more troops to Afghanistan then presumably it would have to consider that request, the PMS said that the position on Afghanistan was as the Prime Minister set out in his statement on Monday.

Iraq

Asked when there would be an inquiry into the Iraq war, the PMS replied that the Government had already had a number of inquiries on issues around both the death of David Kelly and the reasons for the war in Iraq. Asked which inquiry had dealt with the reasons for the war, the PMS said that we had had the ISC Inquiry, the Hutton Inquiry and the Butler Inquiry.

Put that none of those had covered the reasons for going to war, the PMS said that the Butler Inquiry had looked at the use of intelligence, which formed part of the basis of an argument for the war in Iraq. This was the public argument that we deployed in the dossier.

Asked when the right time would be for an inquiry, the PMS said that as we had set out in the past, we did not believe that it would be right to have an inquiry while our troops were still engaged in operations in Iraq.

Economy

Asked if there was any reaction to the American reduction in interest rates, the PMS replied that as people knew, monetary policy was for the Bank of England. Put that Barack Obama had expressed the concern that if interest rates came close to zero, monetary policy became ineffective and did the Prime Minister share this view, the PMS said that as the Prime Minister had made clear in the past, we would do all we could to get the economy through this difficult time and to help businesses and families. That included a range of measure, one of which was a fiscal stimulus.

Put that the Governor of the Bank of England suggested that a greater stimulus or a further package might be needed, the PMS replied that the Chancellor had set out the Government’s response in full.

Put that Tony McNulty had said that we had not reached the bottom of the bad news in regards to employment and how much worse did the Government anticipate it was going to get, the PMS said that he would not be forecasting unemployment. The PMS added that the point Tony McNulty was making was that the statistics had a degree of lag to them as they referred to a previous period. More broadly, the Government’s economic forecast was set in the PBR.

Misc

Asked if people could expect a statement on the car industry today, the PMS advised people not to anticipate one. Asked whether legislation on the working week eventually had to go through the European Council, the PMS said he would have to check on the matter.

Harriet Harman MP took the Prime Minister’s place at PMQs today as the Prime Minister is in Iraq.

The economy, unemployment and the housing market were on the agenda at today’s PMQs.

Ms Harman also took questions on pensioners and the armed forces compensation scheme.

Follow the links below to read the PMQs transcript or watch the broadcast again.

Watch the broadcast again or read the transcript

· Listen to PMQs (coming soon)
· Read the transcript (new window)

Question-by-question guide

Harriet Harman MP answered questions on:

· Unemployment
· Economy
· Energy companies
· Housing market
· Pensioners
· Afghanistan
· Armed Forces compensation scheme
· Building schools for the future

Extra information

Prime Minister’s Questions is an opportunity for MPs from all parties to question the Prime Minister on any subject, although they usually focus on the key issues of the day.

The half-hour session, which takes place at 12:00 GMT/BST on Wednesdays while Parliament is in session, starts with a routine question from an MP about the Prime Minister’s engagements.

· Parliament website (opens in new window)
· More on the history of PMQs

Cabinet

The Prime Minister’s Spokesman (PMS) began by giving a read out of Cabinet. There was a presentation from Hilary Benn ahead of the publication tomorrow of the Pitt Report into flooding; the Prime Minister gave an update on Iraq and a read out of his trip to Afghanistan; there was a presentation from Ed Balls ahead of the publication of the Sutherland Report. The main discussion at Cabinet concerned the publication of the Hooper Report this afternoon.

Israel

Asked for details from the meeting the Prime Minister had had with the Israeli Prime Minister, the PMS said that they had met this morning at 0730. The meeting was an opportunity to discuss the prospects for peace in the Middle East and both men were strongly committed to making all possible progress. They also discussed the issue of Israeli settlements and the importance of the Palestinian economy and measures that could be taken to reduce the constraints on the Palestinian economy. Asked for more specifics on this, the PMS said that as we had set out before and as the Prime Minister had said yesterday, we believed that it was important to establish a stable economy for a potential Palestinian state.

A viable Palestinian state was reliant on having a flourishing private sector and we recognised that restrictions on trade and movement and capital flows had an impact on the development of that private sector. We were strongly committed to working with all sides to ease those constraints.

Penisons

Asked if the Liam Byrne statement was in regards to the overpayment of pensions, the PMS confirmed that it was. Asked if the principle remained that people would not have to pay back any money, the PMS said that that was the case.

Asked if it was not a matter of importance that taxpayers had been wrongly paid pensions for up to 30 years in some cases, the PMS said of course it was a matter of importance and that was why we were tabling a WMS setting out what had happened and what action the Government had taken.

Asked if the Prime Minister thought it was right to cut pensioners income at a time of economic uncertainty, the PMS said we recognised that through no fault of their own, some public sector pensioners had been overpaid and that we believed that it would be unfair to ask them to repay the money. It would also be unfair to taxpayers to compound the administrative error by letting the situation continue. So we would be adjusting pensions so that pensioners received the correct amount in future.

Post Offices

Asked for more detail on the discussion in Cabinet on post offices, the PMS replied that people would have to wait for the publication of the Hooper Report for the detail. There was a presentation from the Business Secretary and a positive discussion to which most Cabinet members participated.

Economy

Put that the Governor of the Bank of England had said in a letter to the Chancellor that additional measures would probably be needed to support lending, the PMS said that in his response, the Chancellor had said that the Government would keep this and other measures designed to support lending under review. We now had the Lending Panel which had agreed changes to the credit guarantee scheme and these had been announced yesterday.

Asked whether the Prime Minister was concerned that inflation was not falling as sharply as expected, the PMS said that the views of the Government were set out clearly in the Chancellor’s letter to Mervyn King.

The Prime Minister has made a statement to Parliament covering the agreements reached at the EU Council Summit in Brussels last week and his visit to Afghanistan, India and Pakistan.

Speaking about the EU Council, the PM said that the agreed measures, including support for public spending along with “judicious reductions in tax” such as Britain has already introduced, will support employment and economic growth in each country.

The PM said that agreement had also been reached on a new energy and climate change policy. Commitments and targets were set to strengthen the EU emissions trading scheme, increase carbon capture and storage funding by around €9 billion and cut greenhouse gases by 20 percent and meet 20 percent of energy demand through renewable sources by the year 2020.

The PM said:

“These historic commitments make Europe the first continent to make legally binding the detailed policies required to set itself on a path to a low carbon economy. And they provide a clear signal to the rest of the world that an international agreement on climate change can be achieved in Copenhagen next year.” (Check against delivery)

Mr Brown also paid tribute to the service and sacrifice of armed forces personnel, many of whom he visited on his visit to Afghanistan on Saturday, and announced an increased compensation package for injured troops.

The PM concluded his statement by outlining Britain’s support for India, Pakistan and Afghanistan in building counter terrorism capacity and tackling radicalism.

• Speeches and transcripts: Statement on EU Council (coming soon)
• EU agrees economic recovery plan
• PM announces new anti-terror pact
• UK will support Afghan democracy - PM
• PM pays tribute to British troops

Knife crime

Asked about the knife crime announcement and whether the Prime Minister would like to apologise as well, the Prime Minister’s Spokesman (PMS) told the assembled press that clearly this incident was a matter of regret as the Permanent Secretary of No10 made clear in the letter he wrote to Sir Michael Scholar on Friday.

Jeremy Heywood accepted in that letter that insufficient attention was paid to the views of the chief statistician at the Department of Health. He also said in that letter that the concerns of the National Statistician were only brought to Number 10’s attention on Thursday morning, after the data had already been released. None of this of course removed from the fact that in terms of the data that the UK Statistical Authority were content with, we had seen a 17% reduction in serious teenage knife injuries and we had also seen 10,000 more stop and searches every month.

We had seen over 2020 weapons seized, 179 more offenders in prison for weapons possession and an increase in average prison sentences for perpetrators of knife crime. The figure that the authority had objected to was dealt with in the letter sent by Jeremy Heywood to Sir Michael Scholar on Friday. Asked if that was an apology, the PMS replied that Jacqui Smith had spoken about this, this afternoon.

Treasury Announcement

Asked why anyone would buy a house at the moment with a 100% loan, the PMS said that there would be an announcement from DCLG this afternoon on the subject. It was clear that the long term demand for housing remained high and we remained committed to helping people on to the housing ladder. It was of course for individuals to decide according to their own particular circumstances what they wanted to do, but the Government remained committed to helping people get on the housing ladder. The situation in Britain was very different to the situation in countries such as America and Spain where there was a significant over supply of housing. This was not the case in Britain and the long-term demand for housing remained high.

Asked what the difference was between the bad 100% mortgages banks were offering and the good 100% mortgages that the Government was offering, the PMS said that what we were doing was providing help for people who wanted to get on to the housing ladder. We were doing it in a targeted way and any further questions should be addressed to the department.

Troops in Afghanistan

Put that 300 extra troops had already been sent to Afghanistan and was it true that no more would be sent before the NATO Summit in April, the PMS said that this was the position that we had set out and he would not be putting any additional interpretation on the Prime Minister’s words beyond what he actually said. Obviously, we did keep all of these things under review.

Put that General Petraeus and President-elect Obama wanted a lot more troops in Afghanistan, the PMS said that we wanted to see an increase in troops from those countries which were not providing that many. That was why the Prime Minister had been talking about the need for extra burden sharing and we would be consulting and working very closely with our American allies in the period ahead.

We had made our announcement today and that involved a temporary increase of around 300 troops to take us to around 8300 through to August. Asked if the Prime Minister had discussed the issue with other EU leaders such as President Sarkozy or Chancellor Merkel, the PMS said he would not get into discussions about individual countries, but other NATO allies were well aware of what our position was.

Asked to confirm that the 300 troops were already out in Afghanistan, the PMS replied that the MoD would provide the detail of exactly who the troops were in a WMS tomorrow. Some had already gone out and some were due to go out in the next few weeks or so. Asked whether President Karzai had accepted an anti-corruption task force, the PMS said he would have to check on the status of that.

Economy

Asked whether the Prime Minister was concerned about the price of the pound, the PMS said that exchange rates were volatile and they moved up and down. The key thing, as far as the Prime Minister and the Chancellor were concerned, was taking action now to support the economy and to help families and businesses in Britain to get through this difficult period.

Asked for an update on a possible rescue package for the car industry, the PMS advised people to check with BERR on the specifics. As people knew, there was a meeting that Lord Mandelson had had with representatives of the car industry a few weeks ago. They made a number of requests and the Government was considering those. Asked if there would be any announcement this week, the PMS advised people to wait and see.

Asked whether the Prime Minister thought that anyone involved in the financial situation should be brought to account, the PMS said that the Prime Minister’s view was that if anyone had committed any crimes or if there was evidence of any inappropriate or criminal behaviour then that was for the relevant authorities to look at. This was why we had introduced the FSA and why we had strengthened their powers to address any abuses.

Economy

Asked what the Prime Minister hoped the first meeting of the lending panel would achieve, the Prime Minister’s Spokesman (PMS) told the assembled press that the Treasury would brief in full on the lending panel meeting. The panel was established by the Government to monitor lending to businesses and homeowners and to make sure that all responsible steps to improve the flow of credit were being taken.

The meeting followed Tuesday’s meeting of the Home Finance Forum, which was chaired by Lord Myners, where the Mortgage Support Scheme was also discussed. Lord Myners would report back to the lending panel on that discussion, as would Lord Mandelson and BERR ministers on the work of the subgroups on small business finance.

Asked if there was any expectation on the Prime Minister’s part that anything would come of this meeting, the PMS replied that it was part of an ongoing process of work that we were undertaking with the banks. Asked if any announcements were expected, the PMS advised people to ask the Treasury for more details.

Asked if the Prime Minister was concerned about the level of the pound, the PMS said that we did not comment on sterling.

German Finance Minister

Asked for an update on the Prime Minister’s attitude towards the German Finance Minister, the PMS said that there had been widespread reporting of the Prime Minister’s comments this morning on LBC Radio. The PMS added that in contrast to the comments made by the German Finance Minister in his Newsweek interview, the German Economy Minister had made further comments today about the benefits of a fiscal stimulus package.

Asked whether the Prime Minister would be meeting Chancellor Merkel separately tonight in Brussels, the PMS said not as far as he was aware. Leaders would be going straight into a dinner after their discussion on the environment, where they would be discussing the global economy.

Irish Referendum

Asked if the Prime Minister would welcome a second referendum in Ireland and would it have any impact on a possible referendum in the UK, the PMS replied that as people knew, we had already ratified the Lisbon Treaty and had had an extensive parliamentary debate on the passage of the Lisbon Treaty Bill. Any decision that the Irish took on their own ratification process, was a matter for the Irish Government.