16 May 2008
Gordon Brown answered questions on the economy, the Government’s income tax compensation package and efforts being made to get aid into Burma.
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Prime Minister:
Thanks very much for coming this morning. You have heard enough from me with Statements in the House of Commons yesterday, so questions.
Question:
Prime Minister, we have heard you say quite a few times that the reason for this £2.7 billion package was to do with putting a stimulus to the economy. Will you at least admit clearly and unequivocally today that it had a lot to do with the fact that you might have lost your Finance Bill and it was largely a political decision to get you out of a political hole?
Prime Minister:
As the Chancellor said on Tuesday in the House of Commons, the reason that we brought forward the package was to deal with the problems arising from the 10 pence rate and that is the reason that we wanted to help those people who had been hurt as a result of it. But when we were considering the package and which package we should bring forward, we also looked at the overall effect on the economy and we recognised that there are millions of people in the country facing higher food bills as a result of the rise in food prices, something that is happening worldwide, we also realised that people are facing rising
petrol costs and rising utility bills, as a result of the oil price, which again is a factor that is in every country, so that when we chose the package we chose, we chose one that would benefit more people and
that is why 22 million people in total benefit £120 for those people who are basic rate taxpayers and I believe that is the right thing for the economy.
If you look at what is happening in different countries of the world, all governments are having to look at how they deal with the rising oil prices and rising food prices. We have seen in America in the last few
months a $150 billion stimulus package. We have seen in Spain a few weeks ago a 10 billion Euros package, so it was right when we were considering how to respond to the 10 pence rate to take the action that was necessary that we promised we would do, but at the same time the package was shaped so we could help more people in difficult times.
Question:
Prime Minister, millions of people in Britain doing their jobs have appraisals, part of which is to assess their strengths and their weaknesses. What areas of your own performance in such an appraisal would you say you need to work on?
Prime Minister:
Well I have already said that we have had to deal with the 10 pence rate and that is both to admit a mistake and to get on with the job of sorting it out. But you know we face a very difficult economic
situation as a result of what has been happening around the world. Go to any country at the moment and the central issue is oil prices, food prices, standards of living and how people are affected. Now I certainly have some experience in dealing with the economy over the last 11 years. I don’t think anybody doubts that over these last 11 years, we have had a strong economy, an economy that has been growing,
capable of generating in fact about 3 million jobs, and over that period of time people’s standards of living have risen. As we deal with the difficult world situation I think that what I can do and how I can work with other countries to deal with oil price rises and other issues, therefore I feel I am in the right position to be able to sort out the problems that we have now, and these are problems that are essentially generated by the credit crunch coming out of America and inflationary pressures coming out of the rest of the world. Now these are issues that all countries will have to deal with. I think that because of because my experience I am in a good position to deal with these issues.
Question:
Prime Minister, you said yesterday you expect to be judged on an economic recovery in this country. You must be feeling fairly confident that that is what is going to happen over the next 2 years. Why are you so confident? And secondly, if I could say, in relation to last night’s violence in Manchester, you recently said that you would be in favour of home internationals being brought back. Can you still say that that is a good idea, despite the violence?
Prime Minister:
I condemn absolutely the violence that was caused by a small minority last night in Manchester. I want to praise the police for the action that they took. This was originally a carnival atmosphere with large
numbers of supporters in the centre looking at the match on screens, but when a small minority disrupt that and cause problems, mainly because of alcohol, it is something that we have both got to investigate and see whether there is further action that has got to be taken. I don’t think that at this stage you want to take a decision about the home internationals but I think you want to look at the powers that police have to be able to control the use of alcohol in public places on occasions like this. And I think we also have to look
at how the messages sent to football supporters are far stronger in future, that if you want to come to a city where you do not have a ticket for a match you should think twice about that.
On the question of the economy, I believe we can take Britain through what are difficult times faced by every country in every part of the world. If someone had said to anybody here that the oil price per
barrel would be $125 - or around that - today, when over the last 10 years the oil price has been as low as $11, the average was about $25 and now it is $125, then most people would have predicted that this
would have caused enormous problems for any economy. But we have got the combination of high oil prices and high commodity prices in every part of the world, with high food prices because of food shortages, and that goes hand in hand with the credit crunch which is the lack of finance available to businesses and available, for example, to mortgage holders trying to get their homes. Now these are difficult issues. Some of them have got to be dealt with internationally, and I am talking to my colleagues in the G8 about what we can actually do. There is an issue about oil prices and why the oil price is too high.
There is a big issue about food prices and why there is a shortage of food, and of course the whole commodities market, there are issues that have got to be looked at internationally. At home I think we can help the housing market and we started to take some measures yesterday, and we will continue to look at what we can do for the housing market and I think we have got to continue to look at how we can help people as we have with the utility bills in very difficult situations.
So we will continue to work hard to steer the economy through difficult times. I think the experience I have built up over 11 years enables me to do the right things by the British economy. We will not hesitate to take whatever action is necessary to bring the British economy through these difficult times. But I think that people should remember that though unemployment is rising in America at a very fast rate and while we have very high unemployment in France and Germany, although we had a small rise in the unemployment figures yesterday, we have seen half a million more people into jobs over the last year, and British employment is still at record levels and never been higher in the history of our country. So we have many advantages: low debt, having kept inflation lower by public-sector pay deals over 3 years, and of course the action that we have already taken, we have many advantages as we face what is a difficult world situation.
Question:
Prime Minister, do you think that it is fair that the changes in Vehicle Excise Duty that were announced are going to be retrospective? Do you not think in the current economic climate they should be
postponed?
Prime Minister:
The changes in the Vehicle Excise Duties are not retrospective. They would only come in in 2009 and 2010, so they are not retrospective. In fact the changes are to move us towards a more environmentally friendly
way of assessing vehicle excise duties, and as I understand it, the majority of motorists benefit from the changes or are no worse off, that 24 of the top 30 car models, actually the most popular car models,
have lower or the same Vehicle Excise Duties as a result of these changes, but the changes are not being brought in until 2009 and 2010.
Question:
Accepting that you are getting on with the job, which you have said many times in interviews today, and putting that to one side what is your message to those Labour MPs who are plotting to bring you down?
Prime Minister:
My message to everybody is that we are going through a difficult economic situation. I think if you talk to anybody in the country, their first concern is about the cost of household goods, what is in their shopping basket, what they have to pay at the petrol station. These are events that are due to world circumstances and you need a government that is able to deal with these problems and take them and address them, and that is precisely what I am doing. I am going to continue to do the job that is right for the country and I am going to continue with the preparations for the future of this country as The Queen’s Speech draft programme put forward yesterday. This year we have made long-term decisions about nuclear energy, climate change, transport infrastructure, planning and housing. (Party political content) these are long-term decisions about the future of the country, where we get our energy, how we can plan the new infrastructure for the future, how we can develop our transport system, how we can build 3 million houses in the next 15 years. These are all long-term decisions.
Now we are about to make further long-term decisions, not necessarily immediately popular but the right long-term decisions for the country. A major Welfare Reform Bill, and that will tighten up the conditions
for incapacity benefit, it will put a skills test on individuals who are unemployed that they have got to acquire a skill or undergo a skills test, we are making big changes in the education system, I want
every school to be a good school and you will see in the next few weeks a new constitution for the National Health Service. As we celebrate 60 years of the National Health Service we move forward to the next
60 years with a new constitution, new rights for patients, a new emphasis on preventative care and as you saw yesterday a new identification of what is the outcome and the satisfaction of the patient when we are setting the tariff for the hospital. Now these are big reforms in our public services to give patients and parents and citizens more power, as well as to improve opportunities around the country so we are going to continue with the long-term programme for change.
Question:
… my supplementary question, your answer that there were plotters, can you see them off?
Prime Minister:
I didn’t say that at all. I said I am getting on with the job, and I am getting on with the job of building for the long term and taking sometimes unpopular decisions that are necessary so that we can show
the country that we are preparing this country which has a huge and magnificent future ahead of us if we make the right long term decisions and I am determined not to be diverted from making these right long
term decisions.
Question:
Prime Minister on the economy, isn’t the basic truth that there is actually not much you can do here, that the price of fuel, the price of international commodities, they are not going to be affected by 3-year
pay deals here, they are not going to be affected by what you do to the housing market, you know £200 million to buy a few houses, it is not going to be affected by a few discussions at the G8, and so ultimately
isn’t the truth that you have placed your political future entirely on a strategy of crossing your fingers and saying let us just hope that the economy gets better over the next 2 years?
Prime Minister:
But of course you are right that the forces that are bringing about high oil prices are international, some of them speculative, some of them about supply and demand. The forces that are bringing about food
price rises are shortages of food in different parts of the world and rising demand for better quality of food in Asia. But to accept your basic proposition is completely defeatist. Now I actually believe that
there is a great deal that we can do, that good economic decisions can help people through difficult times, that we have got to make these decisions internationally and that is why when the supply of oil is not
sufficient to meet the demand, not just this year but in future years, we can do something about it. When there is a shortage of food for factors that are not simply due to the demand for food in China and
Asia, we can do something about it. And when of course we have a housing market that is in need of stimulus, we can do something about it, and that is exactly what we will continue to do. If people took the
premise of your question seriously they would just give up, and that is not what we are going to do. We are going to help people through these difficult economic times.
Question:
Prime Minister, when John Major was facing difficulties outside his government and divisions inside, he told his critics it was time to put up or shut up and he resubmitted himself to a leadership contest. Was
he wrong to do that?
Prime Minister:
I think I was elected unopposed and I think that people understand that we are getting on with the job and I am not going to be distracted by this gossip. I am going to get on with the job of steering the economy through difficult times, building for the future, reforming our public services. This is a (party political content) message, not just about how we can help people in difficulty, but how we can build greater ambition
and aspiration in this country for the years ahead.
Now, if you were to listen to all the questions that we have just heard, you would be quite pessimistic about the future of Britain. Actually round the world people see Britain as having one of the faster growth rates this year, some of the highest rates of employment and one of the lowest levels of inflation compared with America and the Euro area, and so we are building on the strengths that we have built up over these last 10 years as we face this economic down-turn and we should simply get on with the job of taking Britain through these difficult circumstances.
Question:
Earlier today in one of your radio interviews you said while you wanted to lead the country through these difficult times, there were plenty of people in the Labour Party who could take over. When Tony Blair was Prime Minister he always acknowledged your abilities and the fact that you would make a good Prime Minister. Who in your Cabinet do you think could take over from you?
Prime Minister:
Well of course there are many people able to do the job, but I am doing the job, I am getting on with the job and the job is about steering this economy through difficult times, building better public services for the future, extending opportunity in this country, for example with our apprentices proposal that everyone who is qualified has the right to an apprenticeship and we are going to make sure that that happens, every adult has the right to have a second chance in education. These are radical proposals for the future, and to be
honest I am not going to be put off by the sort of gossip that you are indulging in today.
Question:
Next Monday and Tuesday, the MPs have got the highly controversial Embryology Bill before the House of Commons. One of the big issues is the reduction in the upper time limit for abortion. I wondered whether
you would actually be taking part in any of those votes. And also Iain Duncan-Smith and some senior Conservatives have tabled an Amendment saying that when clinics provide IVF treatment to women they should have regard to the father. That would stop lesbians and single women from having IVF. Do you agree with that?
Prime Minister:
No I don’t agree with the second proposal. On the first about abortion, this is a very difficult issue, it is a difficult issue for any woman that faces the choice as to whether to ask for an abortion or not and I think we have got to be very sensitive to the needs of those people who are in that position, while making sure that we do everything to protect life in this country. The BMA published a report only a few weeks ago saying that there was no improvement in the survival rate before 24 weeks. That seems to be the medical evidence that is available to us, the scientific evidence that is being given to us. Of course most abortions happen within the first 10 weeks and of course nearly 90% happen within 13 weeks. Only 0.7% of abortions are over 22 weeks, but if the medical evidence is telling me that there has been no improvement in the survival rate before 24 weeks then I think that the original position of the House of Commons on 24 weeks is on a free vote that I will engage in, the one that I want to uphold.
Question:
My question is as an overseas journalist I have noticed over the past month that whatever you do you always get a negative reaction in the local press. They always find something that you have done wrong, you know.
Prime Minister:
I didn’t invite him in, honestly! It is very kind of you, being here.
Question:
And I heard Ming Campbell saying recently on Question Time “Why do you want to concentrate all the time on getting headlines. Why don’t you take policies?” You started with the project of withdrawing troops
from Iraq and this is a very important issue for the British people. Are you going to go ahead with that? And, if you are going to go ahead with that, are you going to stand up against some voices from the Neo-
Conservatives in America who want these forces to stay there. We do not know why. Are you going to have your own policies and not follow what the newspapers want to hear you know?
Prime Minister:
We are committed to the future of Iraq and I believe that British Forces are making an important difference and we are committed to moving from what you call combat in Iraq to an overwatch role and that
means that our main role is, and will be, training the Iraqi forces for the future, helping the economic development of the Basra area, and making sure that people in the area can have local elections soon, are
in a position to take over the airport and bring it into civilian use, that the port is brought back into work and that people have a stake in the future of Iraq. So in all the areas where we have been involved in
Iraq, we are determined to work on behalf of the local Iraqi people to make sure that they feel that their country can move forward economically and socially as well as politically, and that is what our
role will be over these next few months.
Now, I have said any decisions about numbers will be made on the advice of the military commanders on the ground and in the light of the situation on the ground. And as you know, over the last 2 months the
situation changed with the attacks, organised, rightly so, by Mr Maliki on the militias, so we have stalled the run-down of numbers meantime, but I will be making a statement on that and on the future in due
course, but our role is essentially one of overwatch in future.
Question:
Since you have become Prime Minister you have had to repeatedly re-write your tax policy. This week you had an emergency budget, you announced an unfunded tax cut and you did it with money conjured up
from thin air. How on earth can you claim economic credibility after that?
Prime Minister:
Because over the last ten years, which has made it possible to do what we have done this week, we have reduced debt in the economy from the 44% of national income we inherited, to 38%. Now that is the
equivalent of a £100 billion reduction in debt, and at times when the economy needs to be moved forward it is right to borrow so that fiscal policy can support monetary policy, it is what is happening in America,
it is what is happening in other countries as a result of the need to deal with the world economic situation. So these are the right decisions both for the future of the economy and the right decisions that we have made this week to put extra money into the economy. And if other countries are having to respond, as we are responding, then I think you can see that round the world people are dealing with a situation where people are facing these problems of food bills and fuel bills and we are doing the right thing by them.
As far as our fiscal rules are concerned, we have two rules, just to make it absolutely clear: one is called the golden rule and that is that revenues over the economic cycle should pay for expenditure, that is current revenues paying for current expenditure; the second is what is called the sustainable investment rule and that merely sets the level, the proportion of debt in the economy that we regard as acceptable. Now everybody said in the last economic cycle we would never meet our rules, no government previously had met these rules for 30 - 40 years. The Conservatives I think were £150 billion out on their rules in the last economic cycle, but we met our rules and of course that is what we intend to do in the future.
Question:
Each and every year? Because there was an issue about this morning you said that you would meet the rule over the economic cycle, but the Treasury said, and the Chancellor said that those rules should be met
each and every year, so will you meet that rule this year?
Prime Minister:
Just so you are absolutely clear, what I was being asked about was actually two things: one is borrowing for investment, which refers to the golden rule, that current revenues must pay for current expenditure over the economic cycle, so that is a rule that is not met in an individual year, it is met over the economic cycle; the second one, just to be absolutely accurate, is the sustainable investment rule and you want to meet that every year and over the economic cycle.
Question:
Still on the economy, you said several times this morning that you are the man to steer the British economy out of the doldrums. Can you confirm that you won’t do that by changing the … at the Bank of England
which is to target inflation, that you won’t change that target of 2% over two year cycles?
Prime Minister:
Well we have set in the legislation for the Bank of England the rules that are followed. Every year the Chancellor will make a statement to the House of Commons about the inflation target, but the primary
purpose, as set in the legislation, is to control inflation and that is not going to change.
Question:
Prime Minister you seem to put emphasis on the oil prices, which is quite rightly so, and what area of foreign policy do you think Britain can influence oil production to bring down prices, given the historic
friendship between Britain and many oil producers?
Prime Minister:
OPEC is responsible for about 40% of the production. It is clear that OPEC should be raising production targets. If demand for oil is exceeding supply of oil, and if demand for oil in future years looks as if it is going to exceed supply of oil, then the oil price is affected by that and unless you can increase production then you have got enormous pressures on the price. So I would want OPEC to consider increasing production, I believe there is capacity to do so, I believe there are many oil producers around the world that could look at what they can do. But of course we have got to also have a forward looking plan because the oil price now is being affected by what people see as the likely outcome a few years ahead and if supply is going to be lower than demand for future years then we need to act now to convince people that more oil can be made available. So that is what the discussions between consumers and producers of oil have got to be about. There is a meeting of the International Energy Foundation to look at that, I will be talking to my other colleagues in the G8, as I have done with some of them, about what we can do about this. And of course this is difficult because this is an oil price that is affected by many things including geo-political instability, including the reserves that are available for oil, including also speculation, and we have got to look at what we can do to make sure that the oil is priced at a realistic level in the future. Now that is one of the things that the international community has got to look at very seriously over the next few months.
Question:
Prime Minister a lot of people express cynicism about politics and politicians. What would you say to people like myself who find that we are increasingly cynical about the way that things are done here in Westminster?
Prime Minister:
You know the only reason that I am in politics is because I want people to have the opportunities that I had in schooling, in healthcare, opportunities to develop their talents to the full. And I saw when I was at school large numbers of young people had real talent and real ability who never got the chance to make the most of their potential. And I believe that the purpose for most people in politics is not just to serve the community but to make sure that their children can have better chances than they have had as a result of being able to take action to improve our society. So for me politics is not about the ins and outs or about the gossip or about the rumours, for me it is about achieving what I believe are noble purposes on behalf of the community.
Question:
Prime Minister as you know the FA Cup Final takes place on Saturday, you can probably guess my question, but Cardiff City are there for the first time since 1927 when it became the only club to take the trophy
out of England. As a Raith Rovers fan you have some experience of cheering for the under-dog and I just wonder if you would like to take this opportunity to send a message of support to Dave Jones and the
Bluebirds to let him know that you will be there on his side at the weekend cheering for a Cardiff City win in the FA Cup.
Prime Minister:
I can tell you that two days ago I met Dave Jones, who is the Manager of Cardiff City, and some of the officials and wished him well as he approached the Cup Final. I also met Sol Campbell at the same
reception and having satisfied myself that he was going to be fit for the Cup Final I also wished him well in the match ahead. I think this is going to be a great match, I think it is essentially a clash in the great Raith Rovers versus Celtic match context between a Premier League club and the challenger and I wish both sides well in the tournament. Dave Jones has done a great job as a manager, but obviously Portsmouth has had a great season as well so it is going to be a great clash and I look forward to watching it.
Question:
Prime Minister the situation in Lebanon is extremely dangerous and some Middle East commentators say that you and the west offer words of support, but what action could you be taking to put pressure on the
foreign forces that have allowed the situation to deteriorate as such.
Prime Minister:
Well the actions of Hezbollah are completely unacceptable. I met Prime Minister Sinora recently. I have given him the support that we can give, I know the whole international community wants to support him
and I know there is an Arab League initiative and we must do what we can so that peace and stability can rein in what is a troubled area of Lebanon.
Question:
Prime Minister given what you said about oil and commodity prices and the global economic situation do you think in retrospect it was wise to sell off so much of Britain’s gold reserves?
Prime Minister:
It was right to sell off gold, it should have been done a lot earlier. You have got to have a balanced portfolio. I think this argument about whether we should have more gold as opposed to a balanced portfolio has been won many times over. If we simply had our reserves in one commodity - gold - it would leave ourselves very vulnerable. You have got to have a diverse portfolio. And all those people who criticised the sale of gold forget that as a result of the sale and the purchase for example of euros, which many of the people who oppose the sale of gold hate, the value of the euro went up and therefore our reserves went up in terms of euros as a result of that. So you have got to have a diversified portfolio and I don’t think the
argument about clinging to one commodity only holds water, and to be frank it should have happened years before we did it.
Question:
Prime Minister relating to Lebanon, it appears that Hezbollah was attempting to create a state within a state. What can Britain and the international community do practically to ensure that Hezbollah, acting on behalf of Iran with Syrian assistance, does not get to the position where it can threaten Israel’s northern border. And related to that, Israel yesterday suffered an attack on one of its major cities from Gaza, with weaponry which has been smuggled across the Egyptian border, what practically can Israel do and what can the international community do to ensure that this stops?
Prime Minister:
Well any incursion into Israel and any threat to Israel’s borders and security is to be condemned. I just want to say that I have been present at a number of the events commemorating the 60th anniversary of
the creation of the state of Israel and Israel has a right to live within secure borders, free from terrorism. As far as Hezbollah is concerned I think the whole world will want to condemn any actions that put at risk the stability and the peace of Lebanon, and we will certainly be working with those Arab League countries who want to make sure that Lebanon is stable, and there have been a number of initiatives taken by the Arab countries to make sure that that happens. I know President Bush is in Israel for the commemoration, and I know also that Tony Blair’s initiative gives hope to the Palestinians that they can have industrial and economic growth and that jobs can be created if we could sort out the security problems between Israel and the Palestinian Authorities. I think that the initiative that he took this week is also to be welcomed, it is very important for the future relationships between Israel and the Palestinian Authorities.
Question:
Prime Minister I think there is one major political issue that was touched on by one of your biggest supporters, former biggest supporter, Neil Lawson in the Independent this week, and then Anatole Kaletsky is back at it today, and it basically is this feeling that while you were an excellent Chancellor you are not cut out to be Prime Minister. What is your reply to that?
Prime Minister:
That we are making policy right across the board. If you look at the draft legislative programme yesterday it is not simply about the economy, it is about big changes we are making in health, in education, in housing and right across the board. And if you look at what we are talking about even this morning, and I had to talk about yesterday, Burma, about what is happening in Darfur, what is happening in Kosovo, what is happening in Zimbabwe, I think we are making the right decisions as a government about how we can take action on behalf of people in different parts of the world. So yes the economy has moved to the top of the agenda, but I think looking at the draft legislative programme, and also looking at the actions that we are taking internationally, I think people will understand that we are making the right decisions across a whole range of areas and I am happy over time to be judged on what I do and how we perform dealing with not just the economic issues, but all the issues that come on to my desk.
Question:
Could I take you to another great clash north of the border? Who should the people of Scotland agree with, you who believes there shouldn’t be an early referendum on Scottish independence, or Wendy Alexander who thinks there should be an early referendum?
Prime Minister:
Well I have given my view, but let’s be pretty clear about this, there is no legislation coming forward for a referendum either now or in the immediate future, there is no legislation going to come forward in
Westminster and there is no legislation that is likely to come forward in the Scottish parliament. I think the events of the last week have shown that while this is an intense debate in Scotland and while there are many people saying that because of the uncertainty, action should be taken, that there is not a plan at the moment for there to be legislation for a referendum and therefore a plan for there to be a referendum now or in the immediate future in Scotland or coming out of Westminster. I really think our attention should be drawn to the wider issue here - the defence of the Union. I think it is very important to recognise that the case for the Union must now be put. I tried to do it at the weekend to show the economic, and the social, and the political case for a union that has lasted for 300 years to be seen as something that is important to the people of England, Wales as well as Scotland and something that is to be valued and cherished and fought for. And I think the debate over the next few months will be that we know that the Scottish National Party at some point wants to break up the United Kingdom, and we know that there is also an English lobby
for a separate English parliament. The case for the United Kingdom and the integration of it has got to be put and that is what I intend to do over the next few months.
Question:
Prime Minister as a football fan could we have your thoughts on the untimely passing of Tommy Burns, the Celtic legend?
Prime Minister:
I met Tommy Burns on a number of occasions and of course he distinguished himself not just as the manager of Celtic, where he had a great record, but also working with the Scotland football team and at
one stage as a manager of Kilmarnock. And I think everybody knows that he was not just a great man as a footballer, but he was a great family man, he was a wonderful person helping charities in Scotland and
everybody will be very sad that his long battle against skin cancer has ended in his early death and I think the condolences of all of us will want to go to his family.
Question:
The ugly face of football returned to the UK last night in Manchester. Police and city officials have been blamed for not doing enough in preparing for the influx of fans. What is your view on that and have you had a full briefing? And on the broader issue of crime and violence in the UK there has been an increase in stabbings and gun crime, particularly amongst young people. That has been blamed on a lack of social cohesion and the poverty of aspirations. One of the arguments is that this social breakdown has happened under Labour’s watch, your watch and that the government should shoulder some of the blame.
Prime Minister:
Well first of all on what happened last night, it was a disgrace to see people misbehaving, it was a minority but it is completely unacceptable and for that to happen in a public place where the Manchester authorities had made available the facilities for people to enjoy the match means that they have good reason, both the
police and the authorities, to be very angry about what happened. We do have laws that enable us to control drinking in public places where there is a risk of disorder and we will have to look at these laws for
the future. And so whatever the carnival atmosphere was at the beginning, the fact that it degenerated as a result of the minority being engaged in violence will lead us to have to look at this. The Home Secretary will be speaking to the Chief Constable about what happened. I want to do everything to avoid us being put in a position where we might be at risk of an application for example for the 2018 World Cup not being acceptable because of this, and I think we have got to make sure that we deal with these problems of football violence and deal with them whenever they happen. So we will be looking at this as a matter of urgency.
As far as crime generally is concerned, and particularly antisocial behaviour, I think it is often forgotten that crime has fallen in this country by 30% since 1997, that certainly there are more people in prison but that is as a result of us being far tougher in the sentences that we apply to people who have either knives, or guns, or people who are in gangs, or people who commit violent offences. But where there are people who are engaged in antisocial behaviour, our policy is to punish and to prevent, punish with tougher sentences and you will see from the Criminal Justice Bills that we have had and the future ones that we have, that we will not shirk from taking the tough action to impose tough penalties, and to prevent - taking action that persuades young people and prevents them getting into trouble in the first place. And you will see that there is a programme of activity to deal with potential young offenders and those that might get into trouble, to prevent these incidents that are terrible happening. It was a tragedy this week Jimmy Mizen dying and I believe that people will want to send condolences to the family. I think it is important to recognise that where knives are involved, and where glass is involved as in his case, where there is violence involved, we are taking action in areas which are hotspots to deal with these particular problems.
Question:
Prime Minister I just want to ask you, your government has been closely engaging with the top leadership of Pakistan and only during the last 10 days David Miliband met the top leaders of the political parties. Now that the coalition is falling apart, are you concerned about it?
Prime Minister:
Well obviously we want a stable government in Pakistan and David Miliband has visited Pakistan and will also be meeting leaders in Pakistan who have been discussing some of the issues affecting the government here in London this week. So we will do what we can to help the creation of a stable government. Clearly the elections were not conclusive in the sense that there was a majority for one particular party, but it is possible for a coalition to work and I hope that that will happen.
Question:
You called for an emergency summit for Burma yesterday, what it is that you think you can achieve through it? And also why is it that a powerful country such as your country and the United States who are powerless in the face of 150 million people facing starvation and disease, in your own words?
Prime Minister:
I called for an emergency summit. I phoned the UN Secretary General to say that we needed to bring people together to decide on the course of action we have got to take to persuade the regime to accept supplies and workers into this country. I think two things have happened in the last few hours: first of all I understand that this emergency summit will be convened by the UN Secretary General with the ASEAN group of countries and in the region and I think that is great progress and I hope that it yields the results that I want to see; and secondly, that the ASEAN countries are being invited by the Burmese government to
provide aid and aid workers through these countries into Burma. Now we will not stop from doing what we also want to do, and that is get our supplies of aid into the country. We had four flights from Britain, I
believe there was about 30 tons or so went into Rangoon yesterday, we need about 20 flights a day if we are going to be able to continue to get the aid into the country that is necessary as a minimum and I hope
that these flights can happen. And we will stop at nothing in trying to pressure the regime into doing what any regime should have done long ago, and that is in the interests of the people of the country and their safety and security, allowing the aid to reach them. And there should be nothing - nothing - that stops that aid getting to the people of the country now. Save the Children is helping about 80,000 people as a result of the work that they are doing, other aid agencies are in the country but so much more needs to be done and that is why the emergency summit is now so important.
Question:
Just going back to your fiscal rules, you said this morning: “the sustainable investment rule is over the economic cycle.” Now I think you just made it clear that you think …
Prime Minister:
Both over the economic cycle and in an individual year.
Question:
Sorry, can I just finish the question. So given that it has to be reached in each year, are you committed to meeting the 40% debt limit in the coming years or do you think there is a case for relaxing that rule to allow the kind of fiscal stimulus you were talking about earlier?
Prime Minister:
Our rule is as it is - 40%. And when it comes to borrowing for investment, let’s just be clear, the question that I was asked this morning was about borrowing for investment and that is covered not by the sustainable investment rule but by the golden rule, and the golden rule has to be met over the economic cycle. That was the point I was trying to make.
Question:
Another economic cycle question if I may. Where are we in the economic cycle and when is it going to end?
Prime Minister:
We have just come through a long economic cycle that most people think lasted from 1997 to about 2007, and during that economic cycle we met both our fiscal rules, the golden rule that expenditure be covered by
revenue and the sustainable investment rule that debt as a proportion of national income be below 40%. And we are now in a new economic cycle, most economists agree that that is the case. The problem is that while we had higher growth than most countries last year, over 3%, and while most people think that we will have higher growth than America and many parts of Europe this year, the problem is every country is now being hit by these two forces that are happening in different parts of the world, the stagnation which is coming out of America which is affecting Europe and affecting the rest of the world, and the inflation which has essentially been generated from rising demand for oil and for food in Asia which is affecting commodity prices and inflation rates round the world. So we are being hit by both a credit crunch coming out of America and inflationary price rises coming out of Asia. And as I say, I don’t think anybody could have predicted that the oil price would be at $125 or that food prices would have risen by such a high level of inflation over the last year or two and those of course are trends that we have got to look at to see how we
can deal with them in future years. So yes we are in a new economic cycle, the question however is what are the pressures that are coming from the rest of the world and how as a country can we deal with them?
Now we have got a history of being able to withstand problems, there was an American recession, we didn’t have a recession, there was a Russian crisis that didn’t affect us, there was an Asian crisis, we managed to get through it, there has been a trebling of oil prices, indeed more than a trebling of oil prices and in the past we have come through it. Now the challenge is to come through the difficult problems that we face as a result of worldwide events now.
Question:
So you don’t know?
Prime Minister:
I said we are in a new economic cycle.
Question:
And when will it end?
Prime Minister:
But I am not going to forecast when it is going to end.
Question:
(inaudible)
Prime Minister:
I have just got to say to you that the job of government is to make sure that we arrange our economy, our finances, in such a way that we can deal with these eventualities. But you will see that the Treasury has got its own sort of forecast about how long this economic cycle will last. I mean historically, in historical terms economic cycles are now lasting far longer. But as I say what has happened in the world economy is the problem that we are having to deal with. And I think anybody looking round the world, if you went to America they are talking about exactly the same problem of oil prices and food prices, in France I know that standards of living are the big issue. Round the world this is the big issue and it is a big issue for two reasons: we have got the credit crunch and we have got the pressures on inflation from oil and food and that is what affects the judgments that people have got to make about the future. The Treasury will publish its forecast in the next Pre-Budget Report and that is what it does, it doesn’t change its forecast between budget and pre-budget report, so if you want to refer to where we are at the moment, go back to the last
budget.
Question:
Prime Minister do you think the measures that you have announced can actually stop the fall in house prices this year and do you agree with Caroline Flint that prices are likely to fall by 5 - 10% at best?
Prime Minister:
I am being very careful about what papers I bring here today, so I will put this in my pocket now! Caroline Flint’s paper was referring to forecasts that have been done by external agencies. The Treasury doesn’t make a forecast for house prices and never really has, these are forecasts done by outside agencies. The issue here is what is going to happen both to the housing market and the supply of funds to the housing market from the banks and the building societies, and of course what is going to happen to interest rates in the future. The good thing is that interest rates are relatively low. The difficulty is of course the inability to get money to people who are either first time buyers or people who are changing their mortgages as a result of buying again and that is what is causing some of the problems at the moment. But the £50 billion injection of liquidity by the Bank of England into the economy should be one of the forces that helps increase the supply of funds from building societies to home owners. What we can do as a government is when the fixed rate mortgages that were to the great advantage of people because they were low fixed rate mortgages with 100% mortgages as well, while these have been less available than in the past, new measures like shared equity can make it possible for people to buy their homes for the first time. That is why we are expanding shared equity at the moment and that is why we will continue to look at whether we can get a higher supply of funds into the housing market so that houses will be sold obviously and so that there is not an unlet or an unsold stock in the market going forward.
Question:
How are you helping fixed rate mortgage (inaudible)
Prime Minister:
In the past if you were buying a house for the first time your best deal was usually a fixed rate mortgage for 2 or 3 years that was negotiated at a lower rate of interest than the ordinary rate in the market place and you were able as a result of the flow of funds being generous to be able to get 100% mortgages. These are more difficult to get at the moment because banks and building societies are finding it not to their advantage to give fixed rate mortgages at the lower rate. So what can replace that? What can replace that is a shared equity mortgage, so instead of buying 100% of the house you buy maybe 60, 70 or 80% of the house, you rent the rest, you buy up your mortgage, you buy up the 100% over a period of time. So while fixed rate mortgages were more attractive a year or two ago, shared equity mortgages are going to become more attractive in the times to come because it provides an alternative avenue at a lower price than perhaps the ordinary market price for people to be able to buy their first home. So that is what we are making available in the market place, something that might be more attractive now given the difficult
situation in the market place.
Question:
(Party political content)
Prime Minister:
(Party political content) But as I say the conclusion of this debate is that there is no Bill at the moment going before Westminster or going before the Scottish parliament legislating a referendum or making
it possible to have a referendum now or in the immediate future. But the debate about the future of the Union is going to go on. (Party political content). I am going to defend the Union, I believe it is good for Britain, I believe it is good for the people of Britain.
Question:
Just following on from some of these questions about international crises and Britain’s ability to deflect them, some people say that the country’s diplomatic clout and stature has been declining and that will
affect our ability to play a role in the kind of crises that you have been discussing this morning, in particular some other European leaders have overshadowed yourself. I wonder what your response would be to
that?
Prime Minister:
I think what really matters is whether we get the right action as both Europe and as an international community. And I think working together to deal with the problems of Darfur, and I have proposed an
international conference to bring the different sides together, working together to deal with the problems of Zimbabwe where we are working with others to make sure that if there is a further election there are proper international observers there from other parts of the world, and working together on Burma so that different countries can contribute to get aid into the country. These are the big issues and of course
some of the big issues also are how we reform some of the international institutions to make them relevant to the future challenges that we face. And I think it is true to say that most people would acknowledge
that Britain is leading the way with our proposals on that.
Question:
Prime Minister it has been written that the previous Prime Minister, Tony Blair, has been advising you recently. Given the state of the party in the polls do you think we could have a judgment on whether the
advice has been good advice or suspect advice?
Prime Minister:
Well I talk regularly to Tony Blair who is a good friend of mine and I continue to talk to him, but our conversations remain private. He is doing a very good job, as you know, in the Middle East looking at how
we can improve the economic and social conditions of the Palestinian areas and I have had a number of conversations with him about that, but obviously we talk about lots of things.
Question:
As you well know China is suffering from one of the worst earthquakes in recent history and your government has generously promised a £1 million donation. We ask what will that comprise? And also your
Ambassador to Beijing has confirmed that dozens of British tourists were now safe and sound. How would you comment on the rescue work so far?
Prime Minister:
Well I think the rescue work has been speedy and where lives can be saved they have been saved. I know there has been an enormous amount of casualties and I want to send my condolences both to the
government of China and to the Chinese people. I know that in the last day or two the 19 British citizens who people feared for have been found, and though there may still be some other Britons where there
hasn’t been contact made yet with them. I hope that they will also be found safe. So we will work very closely with the Chinese authorities in making sure that British citizens are safe but also in doing anything we can to help the Chinese. I have written to Premier Wen giving him the condolences of the British people at this very difficult time.
Question:
To Burma again, some commentators have written that now is the moment where military intervention was necessary to provide the help to the people that the Burmese government is not providing. Do you agree?
Prime Minister:
Well we rule out nothing but the important thing to recognise is that the best way to get aid to the people of Burma is to make sure that we can work with the government of Burma to get it through. And while there has been talk about invoking or supporting or debating the Responsibility to Protect and there have been issues about airlifts without the support of the Burmese government. I think everybody agrees, including the aid agencies, that the best way to get aid to the people of Burma is to pressure the Burmese government into disseminating the aid that is now coming into Rangoon and other parts of the country to the rest of the country. We have HMS Westminster there, we have plane loads going in, we have a humanitarian team in Rangoon, we are working with British aid agencies who are also already there. I think everybody knows that the best way of getting the equipment to people who are in danger is to get that aid through the cooperation of the Burmese government, and that is where we stand.
Question:
So you are not ruling out military intervention.
Prime Minister:
I am not proposing that at all.
Question:
Prime Minister I have two questions regarding the 2.7 billion package, let me clarify how you are going to finance it, is it mainly by more borrowing, or more tax, or less spending? Another question is about the G8 summit will be held in Japan in the coming July, what kind of subjects should be at the centre of the discussion at G8?
Prime Minister:
Well first of all the Chancellor made it clear on Tuesday that we will pay for the package by borrowing and the reason that we could do so is that our debt is substantially lower than it was ten years ago, in
fact the equivalent of £100 billion lower. That enables us to do exactly what America is doing at the moment, and that is to expand help available to people who are hit by food bills and fuel bills to borrow
during this period.
As far as the G8 Summit is concerned it seems to me absolutely crucial that these big issues about oil and food are on the agenda, directly on the agenda. World leaders will want to discuss how we can come
together to make a difference in these areas and of course it is difficult but I think this is the right time for preparations to be made at the G8 to discuss these very issues.
Question:
I am particularly talking about your special message to Prime Minister Fukuda, the Japanese Prime Minister, who will chair the G8 Summit this summer and you sent a special message last month, could you tell me the background of it?
Prime Minister:
We are working very closely with the Japanese government and the Prime Minister to make sure, as he wants it to be, that the G8 Summit is a success. There are climate change issues that we will be discussing and the Japanese have led the way in putting that on to the agenda. There are development issues, including health, that will be directly on the agenda, and I hope education as well. But obviously in the last two or three months it is imperative as a result of events round the world that we discuss these other issues; what is happening to food; what is happening to oil; what is happening to commodity prices, because all of us are affected by everything that is happening in that area and these will definitely be a matter for big discussions when we come to the Japanese Summit.
Question:
Were you really as persistently disobedient and impertinent to your predecessor on public sector reform as is suggested by John Prescott and Cherie Blair? And what do you really make of that woman - Mrs Blair?
Prime Minister:
The public sector reforms, many of them were proposed by the Treasury, many of them were pushed forward by the Treasury and many of them are there as a result of the initiatives such as all the Gershon changes that have reduced the number of civil servants by I think nearly 70,000 to make way for other uses for resources. I think that the issue that has been raised in the book is foundation hospitals, the only issue on foundation hospitals - so that none of you start re-writing history - was whether hospitals could run up huge borrowings at a local level. The Treasury obviously was worried about the implications for debt
if individual institutions were able to borrow substantial sums of money and someone - because a hospital could not easily close if it had an accident and emergency facility or something like that - had to pick up the bill. And that was the only issue in relation to foundation hospitals. It was a perfectly sensible issue;
how do you deal with a situation where an institution that is not actually the Government itself can run up huge borrowings. And of course we reached an understanding on that and I think the result is that we do not have these huge borrowings, that was the only issue.
Question:
And Mrs Blair?
Prime Minister:
I have enjoyed working with both Tony Blair and Cherie Blair over the years and I have got nothing but praise for the work they did for our country, and continue to do.
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