Brown v Cameron: tax and business
Updated on 19 November 2008
Gordon Brown and David Cameron battle at prime minister's questions over helping small businesses and tax rises.
David Cameron opened his questions at prime minister's questions by thanking the prime minister for agreeing to a "full independent enquiry" into the death of Baby P. In a reference back to last week's clash, Cameron said "this was never about politics, it was about getting to the truth".
He then turned his attention to the economy, saying "Does the prime minister agree that bank reconstruction hasn't yet had the desired effect in terms of ensuring lower interest rates are passed on to businesses and that credit is genuinely freed up?"
Gordon Brown responded by saying that he thought there was "unity and common ground" in the House of Commons, and that action had to be taken quickly when the report is released on Haringey.
Brown then reiterated that he thought the recapitalisation of the banks was the right decision, and "this has now been followed in every country of the world".
He said that the government is in discussion with the banks about how to "resume funding" to small businesses and homeowners.
He particularly referred to how HBOS, Lloyds TSB and RBS "can achieve their promise that they will have activity for lending and marketing of lending at the level of 2007" and how all the banks "can resume funding", committing to bring forward proposals "very, very soon indeed".
Cameron cited two examples of small business examples. He acknowledged that his party supported what has been done so far, but said "what has been done so far has not yet worked properly and we need to do more on the credit side."
"What has been done so far has not yet worked properly and we need to do more on the credit side."David Cameron, Conservative leader
Brown responded by saying that the banks have to "accept their responsibilities to act in a manner that is responsible and fair" as the government has "done what we can".
He went on to cite expanding the small firms loan guarantee system to small businesses, drawn on a European facility, set up a monitor of the banks and "despite the predictions on the other side of the house" the Bank of England cut interest rates.
Cameron said his question was whether "we then need to go ahead and consider doing more". He asked if the prime minister would look at new methods, such as establishing new institutions to underwrite lending.
Cameron also asked if the government was considering putting more taxpayers money into the banks.
Brown responded by saying "the issue now is real help for small business and families".
"Real help will mean that there will have to be some fiscal expansion to make that possible. If the leader of the opposition is now telling me he will support that fiscal expansion to make that possible, then that is a change from yesterday, but a welcome change indeed."
Cameron retaliated by saying "I was asking about the constructive measures that need to be taken in terms of bank lending, and I don't think we go much of an answer."
"I was asking about the constructive measures that need to be taken in terms of bank lending, and I don't think we go much of an answer."David Cameron, Conservative leader
He then turned to the pre-budget report saying: "I know the prime minister is desperate to go on this borrowing binge. Everyone wants to know how he is going to pay for it."
Brown started his response saying "first of all on small businesses", but had to stop when the speaker of the house calmed the heckling, saying: "He may not answer the way that the honourable members want him to answer, but he is answering."
Brown went on to say "the best way of dealing with tax issues is to secure growth in the economy and to secure tax revenues." He added "they are the 'do nothing' party when it come to now, and they will let the country down by their actions."
Cameron then accused the former chancellor of forgetting the difference between monetary policy and fiscal policy. "He loves to lecture on the economics, but for him it is all about the politics," he said.
He went on to say: "He's got to tell us how he is going to pay for it. On this side of the house we've made our choice, it's called spending restraints. Isn't it clear that the prime minister favours tax rises?"
Gordon Brown responded by quoting Cameron from 30 September, before saying "let me tell him the difference between monetary and fiscal policy. He proposes we only use monetary policy... As for the present circumstances, everybody in every continent round the world is saying very clearly monetary policy is not enough.
"If he is setting his face against that, then his is setting his face against helping families and business through the difficult downturn."
Cameron responded by quoting Brown during his chancellor days: "Unfunded tax promises simply do not add up. They mean tax cuts before an election leading to tax rises after the election.
"Does he agree with himself?"
Brown's response: "Only a few days ago, the leader of the opposition himself was saying that borrowing had to be allowed to happen. Then he changed his mind and he is depriving people of real help for business and for families.
Gordon Brown closed the exchange, saying: "We are going to be the party that helps people through this difficult downturn.
"We will act, they would refuse to act."
