Examination of Witnesses (Questions 274
THURSDAY 8 DECEMBER 2005
MP, MR JON
Q274 Chairman: Chancellor, good morning
to you and your colleagues. Can you introduce your colleagues
for the shorthand writers please?
Mr Brown: Yes. I have with me
Jon Cunliffe, who is head of Macroeconomic Policy and International
Finance, Dave Ramsden, Tony Orhnial, Mridul Brivati and Michael
Q275 Chairman: Thank you. Firstly,
Mr Orhnial, thank you for your paper which arrived this morning.
I know we put a lot of pressure on your staff and we are very
grateful. Chancellor, I want to ask you about the World Trade
talks in Hong Kong, because you said that you have always said
that with movement on trade we would make significant progress
but that would be undermined if there is not any agreement, and
your old soul mate, Mr Peter Mandelson, for whom I suppose absence
makes the heart grow fonder, said that you were missing the point
in pressing for cuts to the Common Agricultural Policy and that
you had gone over the top in that demand. Are you going over the
top in pressing for these cuts as part of a deal on the trade
talks, or would developing countries gain from a liberalised agricultural
market in the EU?
Mr Brown: I am grateful, Chairman,
for the chance to talk about the trade talks. Pascal Lamy, who
is the head of the World Trade Organisation, has said that agricultural
protectionism is at the root of both the problem and the solution
that he faces in trying to get a negotiated settlement on trade.
What we saw at the weekend was an interesting development in that
Brazil offered to make concessions on a number of areas, including
services, and those manufactured goods where they were under pressure.
It was said they would move to what they said was a simple Swiss
formula, which in a sense means that those with the highest tariffs
will make the greatest concessions. India then made a statement
at the weekend that they are under pressure on services in particular,
that they would be prepared to move if the others moved. Then
of course the onus is on Europe and America. America has made
an offer of 73% reductions, the Europe offer at the moment is
lower than that. The question really now is whether the four different
groups which are the essential element of the negotiated settlement
can come together and by each making proper concessions we can
get a settlement at the trade talks. I believe that all people
who want to see the world economy grow fasterbecause the
trade talks and a settlement might be worth about 300 billion
dollars of growthall those who, as you rightly point out,
want to have the developing countries benefiting from a reduction
in agriculture protectionism, will actually want to see this happen.
I hope even at this time the trade talks can move forward.
Q276 Chairman: You would not agree
with, say, Professor Joe Stiglitz who said maybe no deal was better
than a bad deal?
Mr Brown: I think we have to hope
that the negotiators can come together. I think Professor Stiglitz's
pointwho interestingly enough is going to become the professor
at Manchester University and set up a new department, and he is
after all a Nobel prize-winning economist and used to be head
of economics at the World Bankis that he does not want
to lock the world into a position over the next ten or 15 years
because there will be no trade round for another ten or 15 years,
which is less advantageous than the one which could be achieved
if people kept talking. But equally, the sooner this agreement
is reached, the better, because the world economy has suffered
a great deal of volatility and instability over the course of
this year, and I think it is very important that we send a signal
that we are all determined to get the trade talks moving.
Q277 Chairman: Can I take you on
to the G8 deal on debt relief and aid? The G8 research centre
at the University of Toronto has indicated that the documents
issued at the Gleneagles contained 212 separate commitments. Who
is responsible for monitoring these commitments to ensure they
Mr Brown: To some extent, the
G8 has got to continue to monitor what it has decided, because
if it does not secure the implementation of its agreement then
the credibility of the G8 is in issue. Equally the G8 is passing
on a number of decisions to other world organisations, for example,
it is the IMF and the World Bank that has to implement the debt
relief deal and soon the shareholders of the World Bank and the
IMF will be asked to vote directly on these issues. There is a
mandate now out to the shareholders of the IMF to do so and I
was urging all my European colleagues to vote on this settlement
when we met on Tuesday. So to some extent the IMF and the World
Bank have to implement the decisions of the G8 and that requires
us to get other countries on board.
Q278 Chairman: Your announcement
on unclaimed banking assets is a welcome announcement, but how
much progress has been made in that scheme and when are we likely
to see the first of these assets being used for the community
and will we require legislation for that?
Mr Brown: This is essentially
an agreement that has been reached between the banks and the Government
and the details of this, including the final amount of money,
have to be sorted out in the next set of discussions. The agreement
in principle was that the money went to finance education and
to youth and community services. I believe that the agreement
is one, reached on a voluntary basis between the two sets of negotiators,
which will survive and endure.
Q279 Chairman: As you know, in the
Republic of Ireland they have a similar scheme and I note that
UBS and Lehman Brothers, the investment banks, pledged to turn
over their unclaimed assets to the Balance Charitable Foundation,
as they call it in the Republic of Ireland. Have you any plans
to extend this scheme in the country, mirroring what happens in
the Republic of Ireland?
Mr Brown: Our agreement is with
the banks and building societies and there are other financial
institutions which have unclaimed assets, and there have to be
further discussions in these areas. There was a debate about where
the money should be spent, and it would be a considerable number
of millions each year, and it was agreed that youth and community
services, which after all have not had the investment they deserve
over recent years, should get this. I look forward to a new youth
and community services policy in this country. We are introducing
the national youth community service over the next few months.
This is the result of the Russell Commission. This has been long
planned over some years. It will give people the chance to do
part-time or full-time community service as young people in their
own communities. It will validate what they do and there is now
a considerable amount of private sector money and now public sector
money behind it and, aligned to the National Sports Foundation,
the youth budgets we are creating, and the youth pass which has
been created, I believe the release of these unclaimed assets
can guarantee funding for the kind of youth and community services
we want to see in the future years and do so in a way which is
sustainable for decades.