Previous SectionIndexHome Page

Mr. Peter Brooke (Cities of London and Westminster): Before we set another unnecessary hare running, did the Chancellor of the Exchequer intend to agree with the hon. Member for Middlesbrough (Mr. Bell), as he seemed to, that financial services are not a real service industry, even if they require regulation?

Mr. Brown: No, I did not say that, and I do not think that it was the intention of my hon. Friend the Member for Middlesbrough.

Mr. Dennis Skinner (Bolsover): My right hon. Friend should not pay a great deal of attention to the nervous laughter from the Conservative Benches when he was making his statement, because that party was responsible for seeing Johnson Matthey go down the pan to the tune

2 Nov 1998 : Column 570

of several hundred million pounds; they sat on their hands while the Bank of Credit and Commerce International lost £14 billion; and they did nothing when Barings lost£800 million. They are the Nicky Leesons of the political world. Will my right hon. Friend bear in mind that, although words like "codes of conduct" and "intervention" are well-meaning, if we are to tame the casino economy there must be some binding measures as well?

Mr. Brown: I am grateful to my hon. Friend for pointing out the Conservatives' record. If they do not believe in international financial regulation, it is doubtful whether they believe in national financial regulation. All G7 countries have agreed to follow the codes of conduct and the intervention that we propose, and there is now a timetable for action. At the beginning of next year, agreements on a number of those issues will be put into practice, and any further work will be completed by the next G7 summit. That is a record not only of moving the issue forward as a result of the financial crisis, but of trying to resolve quickly issues which, on reflection, Conservative Members should have resolved long ago, when they were in government.

Miss Anne McIntosh (Vale of York): The Chancellor mentioned the need to reduce unemployment across Europe. Does he agree that those measures should be business led, and that it is not the role of Governments within the European Union to attempt to create jobs? That should be left to the business community.

Mr. Brown: I agree that businesses create jobs and prosperity, and that is exactly what I would say in every discussion I have. However, the hon. Lady must recognise that welfare to work would not have happened without government. The private sector often needs the Government's lead in helping with training and job opportunities for people who have been left out. We now have 140,000 young people in the welfare-to-work programmes under the new deal. I hope that the hon. Lady's remarks mean that she, at least, will welcome that on behalf of the Conservative party.

Mr. Jim Cousins (Newcastle upon Tyne, Central): I welcome my right hon. Friend's statement, because it offers a firm platform for collective action by the new Governments of the left in Europe to promote growth and employment. However, can he assure the House that, in future, IMF packages will secure jobs and employment in the target countries, not simply bail out banks for risks that they should never have taken? Will he also assure us that Britain's offshore tax havens will have a firm regime of disclosure and transparency, of the kind that he wishes to see in the rest of the world?

Mr. Brown: I can say that we are looking at exactly that, in relation to the offshore independent territories.

As for the IMF, it is true that last year's initial programmes relating to countries such as Indonesia have been found not to be appropriate. That is why there must be more openness and more external audit in regard to what the IMF does, and I believe that some of the decisions that we have made will facilitate the process.

Mr. Michael Jack (Fylde): In the early part of his statement, the Chancellor mentioned a number of actions

2 Nov 1998 : Column 571

that countries and groups of countries were expected to take in order to comply with the international agreement. Will there be a country-by-country timetable for such action? What sanctions will be imposed on countries that do not comply with that international requirement? Without a timetable and without sanctions, it will be a worthless and toothless agreement.

Mr. Brown: Countries will report what they have done by the time of the next G7 summit. As for sanctions, we propose that, when the IMF produces its national reports on individual countries, it should report on what has happened to, for example, reforms of the financial system. So there will be a timetable for reports, and sanctions in the form of publicity about what has gone wrong.

Mr. Gerald Bermingham (St. Helens, South): Will the Chancellor keep a wary eye on our national clearing banks and other financial institutions, so that what has happened with hedge funds in the past does not happen again? When the financial institutions caught a cold in connection with third-world debts, the property boom and one or two other speculative enterprises in the 1970s and 1980s, they promptly recouped the money from customers in the United Kingdom, both industrial and private. Perhaps the Chancellor will keep an eye on them, because we would not like a repeat of something that caused so much damage to the personal and industrial economic health of the country.

Mr. Brown: I agree that it is important for our banks to service the needs of businesses in the best way possible, and the Government will keep that under continuous review. As for hedge funds, we intend to implement the initiatives that I have suggested this afternoon. I will report to the House later.

Mr. Michael Fabricant (Lichfield): Does the Chancellor realise that the CBI and the Engineering Employers Federation will not be amused by his refusal to answer questions about the way in which his actions are exacerbating the effects of the decline in the world economy? Will he now answer the question posed by my right hon. Friend the Member for Horsham (Mr. Maude)? Will he tell us exactly why the Australian economy, which is more dependent on the Asian economy than ours, is growing at a rate of 2.2 per cent., while the United Kingdom economy--which, by his own admission, is less dependent on the Asian economy--is growing at a rate of only 0.8 per cent.?

Mr. Brown: As the hon. Gentleman knows, the British economy has been growing at an average of more than 2 per cent. over the past year. I shall give the figures tomorrow.

The hon. Gentleman should look at the figuresrelating to employment, which show that more people are employed in Britain than ever before. As for unemployment, which is another measure of bad performance, we have 400,000 fewer people unemployed.

2 Nov 1998 : Column 572

I can tell the hon. Gentleman that the Australian Government are as interested as the British Government in reforming the international financial system. It seems that the only organisation that is uninterested in reform is the Conservative party.

Mr. Chris Pond (Gravesham): I welcome my right hon. Friend's statement, especially the statement of the principles of social policy that have been agreed through the G7.

Will my right hon. Friend confirm--especially in the light of his last few words--that the country's employment record has been rather better lately than the record of the last Government, from whom we inherited the largest proportion of workless households in the European Union? Will he also confirm that it is understood by all members of the G7, on both right and left, that decent social standards are a precondition for economic progress, and that social justice is not an alternative to economic prosperity?

Mr. Brown: We have held discussions about the code of social policy, not simply with the G7 and the IMF but with the Commonwealth countries. They, too, are interested in how we can establish internationally agreed principles of social policy that can guide their peoples' behaviour. I like to think that we can make some progress on that, in terms not just of international debt, but of laying down social standards that all countries are prepared to adopt.

In view of what is happening in Indonesia--which I visited only a few months ago--and in Korea, Malaysia and many other Asian countries, the sooner we can secure agreement on what can be done to help in these difficult social times, the better. I assure my hon. Friend that, although I can, of course, make my party political points about the Conservatives' record on unemployment, it is more important to us to make progress throughout the world in dealing with some of the major social problems.

Mr. Andrew Tyrie (Chichester): The Chancellor said that the IMF quota increase was agreed in July by the House. In fact, it was put upstairs in a Standing Committee, where there was an almost farcical exchange, with very little understanding by the Government of what had been agreed. Billions of pounds of British taxpayers' money is at risk here. Will the Chancellor acknowledge that, in future, all IMF quota increases should be taken on the Floor of the House?

Mr. Brown: I am happy to debate the issues of international financial institutions sensibly, and I hope that the whole Conservative party will join that debate when we have it. On the IMF quota increase, it is correct that, in Committee before the summer recess, we approved the UK share of the quota increase. It is also true that we approved in Committee last year the steps that the UK needs to take to participate in what are the new arrangements for borrowing.

I agree that these are important issues, but I think the hon. Gentleman would want Britain to continue to be the fourth biggest shareholder in the IMF, and to play our full part in the international institutions, and would want Britain's influence to count throughout the world. That depends on our playing a full part in the international

2 Nov 1998 : Column 573

financial institutions, and not on some cheap party political point saying that we should not pay our share of the quota.

Next Section

IndexHome Page