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Mr. Richard Benyon (Newbury) (Con):
Those of us who have been involved in this issue for many years might wish in our hearts to see a Ceausescu moment, when the world sees fear in the eyes of a despot. However, like all of us in the House, I recognise that such emotions are self-indulgent. Does the Foreign Secretary agree that, looking forward, one of the most important things that we have to do is stop the Zimbabwe central bank printing money like confetti? To do that, we need to implement the International Monetary Fund plan on which Mugabe reneged some time ago. Does the Foreign Secretary agree that that
will require huge will from the international community? It is something that we really can do to bring about a rapid turnaround—I hope—in the Zimbabwean economy.
David Miliband: The situation has got significantly worse since that plan was rejected; I would want to be sure that the plan was appropriate to the circumstances. However, I know that my right hon. Friend the International Development Secretary, and the Chancellor when he goes to the IMF spring meetings, will ensure that the issue will be on the agenda so that there is a proper plan when the time comes.
Illegally Logged Timber (Prohibition of Sale and Distribution)
1.19 pm
Barry Gardiner (Brent, North) (Lab): I beg to move,
That leave be given to bring in a Bill to make it an offence for any importer or distributor to sell or distribute in the United Kingdom any wood harvested, manufactured or otherwise dealt with illegally in the country from which the wood originated or through which it passed or was transhipped; and for connected purposes.
In this House, we are charged with the responsibility of making law. Our constituents, who bestow that privilege upon MPs, expect us to use it wisely—that is, to solve genuine problems without imposing yet greater ones upon them. Good law should carry the consent of the public who are governed by it. To do so, it must be possible to explain clearly the need that the legislation seeks to address and how it meets that need efficiently and simply, with the minimum of bureaucracy. The Bill that I bring before the House meets those tests. I believe that the significant cross-party support and the public backing of more than 30 non-governmental organisations and industry bodies as diverse as the Environmental Investigation Agency, James Latham Ltd, the Royal Society for the Protection of Birds, Global Witness and the Born Free Foundation demonstrate that this Bill is urgently needed and widely welcomed.
Last year, the Stern report commissioned by my right hon. Friend the Prime Minister pointed out that between 18 and 24 per cent. of all the greenhouse gas emissions that are contributing to climate change come from deforestation. If we put all the power stations in the world together—coal-fired, nuclear and all the other technologies for producing electricity—only then would we have a sector that contributed more to global warming than the loss of trees.
Last December, in Bali, the United Nations forum on combating climate change led to an historic agreement among the nations of our world that deforestation was a major problem and that the means for avoiding it must form part of the post-Kyoto settlement. To do so requires that we create ways of rewarding sustainable forest management by the time of the Copenhagen conference of the parties in 2009.
On the issue of forests, the world has declared that it shall run before it has even begun to walk. We cannot jump to sustainable forestry until we have established legal forestry. The World Bank estimates that trade in illegal timber amounts to US$15 billion every year. The UK is the fourth largest consumer market of imported tropical timber, yet only a fraction of it can be said with any degree of certainty to have been legally sourced and harvested in its country of origin. Illegal logging is a criminal activity. It corrupts and undermines governance in many countries across the globe. In doing so, it not only destroys forest ecosystems and contributes to carbon emissions but directly harms some of the poorest people on our planet—the indigenous forest-dwelling communities whose very livelihoods depend upon the forest. The $15 billion of this illegal trade is $15 billion that should be going into health care and education for them and their children.
We declare our support for the millennium development goals, yet it is not an offence in the UK to trade for commercial gain timber that we know to have been harvested illegally in its country of origin. If we were dealing with private property such as stolen antiques or works of art, there would be no question but that those importing or selling those artefacts were regarded as criminals and dealt with according to the full force of the law. Yet in the UK, companies habitually trading in stolen timber have committed no crime and broken no law. My Bill would change that. Any distributor or importer who sold any wood that had been harvested, sold, taken or possessed illegally in the country from which the wood was originally harvested would be subject to various penalties, ranging from five years’ imprisonment and a £100,000 fine down to a simple £5,000 fine, depending upon the degree of knowledge and degree of recklessness or good faith involved.
I am grateful to the timber industry for its constructive engagement with my Bill, particularly given the severity of some of the penalties that it would impose. While recognising the pioneering work of companies such as Timbmet and others, I also want to acknowledge the help of the Timber Trade Federation, which has ensured that the Bill is much improved from its original draft. It now reflects the need to distinguish between three different cases: those who know full well that they are trading in illegal timber; those who should know but turn a blind eye and do not ask too many questions of their supplier if the price is right; and those who have acted at all times in good faith but are caught out by an honest mistake. Equally important, the best companies, which have diligently borne the expense of getting things right and have gone down the route of certification to ensure that they supply only legal and sustainable timber, would no longer see their products undercut by less scrupulous competitors.
My Bill would achieve that not by imposing a ban on illegal timber at the border—that would demand an army of Customs agents well versed in the changing legislation of each producer country and able to check the various certificates and licences that might be deemed proof of legality—but by shifting the balance of risk by providing a clear incentive for companies to drive the burden of due diligence back down their own supply chain. Seals and ribbons that are the trappings of legality can be bought for $5 in the ports of far too many producer countries around the globe—far better, then, that importers and distributors are put on notice that at any point they can be opened up to challenge and if found guilty will face substantial penalties. Not only Government agencies but NGOs and even the industry itself could bring forward evidence on which a prosecution could be based. The elegance of the Bill is that it does not seek to make a virtue out of catching those who do wrong but to alter the wrongdoers’ behaviour by shifting the balance of risk against them. Ultimately, it is a Bill about protecting the environment, not catching thieves. To that end, it would apply Occam’s razor by simplifying and cutting bureaucracy.
The Bill should be seen in an international context—not solely as it relates to trade between countries but in the context of other legislative measures. I particularly wish to recognise the international negotiations between the European Union and countries such as Ghana, Malaysia and Indonesia in negotiating forest law enforcement, governance and trade voluntary partnership agreements—FLEGT VPAs. That would introduce a voluntary licensing scheme that would allow only legal timber from VPA countries to enter European markets. My Bill would complement FLEGT by catching unlicensed timber from VPA countries that was laundered through third-party countries. It is no accident that the European Commission is considering measures similar to my Bill under the additional options paper. However, they would not be passed by the European Parliament until 2010, and we should not wait that long.
I must also point to the leadership given in the United States by Congressman Earl Blumenauer and Senator Ron Wyden, who have introduced similar legislation to that which I propose as an amendment to the Lacey Act. Their initiatives and foresight have inspired the content of my Bill. I acknowledge with gratitude the helpful discussions that I have had with them and their officials. If there is a race between us as to who can get such measures on to the statute book first, it is the only race I know where each runner is urging his competitor to go even faster than he himself is able. The signal that would be given to world markets by both our countries enacting such legislation is incalculable.
Perhaps the single most important legislative initiative in relation to illegal logging is that of Japan. This year, Japan hosts the G8 summit as its president. For the past three years, Japan has developed various initiatives against illegal timber, including its highly regarded Gojo wood policy. I have been privileged to chair, with my good friend Mr. Yoshino, the illegal logging dialogue. The purpose of that dialogue has been to make recommendations to the G8 summit in Hokkaido that will combat illegal logging. My Bill would be one that the legislators in the United States already—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I fear that the rest will have to be taken as read.
Bill ordered to be brought in by Barry Gardiner, Margaret Beckett, Mr. Elliot Morley, Eric Joyce, Mr. Andrew Dismore, Chris Huhne, Alun Michael, Joan Walley, Mr. Graham Stuart, Mr. James Paice, Mr. Ian Cawsey and John Mann.
Illegally Logged Timber (Prohibition of Sale and Distribution)
Barry Gardiner accordingly presented a Bill to make it an offence for any importer or distributor to sell or distribute in the United Kingdom any wood harvested, manufactured or otherwise dealt with illegally in the country from which the wood originated or through which it passed or was transhipped; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 94].
Opposition Day
Repossessions and the Housing Market
1.30 pm
Dr. Vincent Cable (Twickenham) (LD): I beg to move,
That this House notes with concern the risk of recession in the United Kingdom economy; recognises that although the collapse of the United States mortgage market and the global ‘credit crunch’ are a catalyst to the current downturn in the United Kingdom economy, record levels of personal debt and the extreme bubble in the housing market were already major destabilising factors; further notes that because of inflation and weak public finances there is little scope for stimulating demand; applauds the efforts of central banks to reintroduce stability into the world money markets, but warns against the use of taxpayers’ money in bailouts which cause serious concerns about moral hazard; further notes with dismay rising levels of personal debt, exacerbated by high mortgage interest rates; further notes the rising evidence of a major slowdown in the United Kingdom housing market; registers with concern the increasing number of people requesting help regarding mortgage payments; further notes with concern that repossession orders are now at the same level as in 1990; regrets the Government’s failure both to admit the current problems in the housing market and to act to prevent mass home repossessions; calls upon the Government to consider options being used in the United States, particularly to encourage banks to explore options other than repossession; and further calls upon the Bank of England to include house prices in the measure of inflation.
I am grateful for the opportunity to introduce this debate on a motion in my name and those of my colleagues. Perhaps I will be able to pursue answers to questions that I was not able to ask earlier in our proceedings. The Government’s reputation rests very heavily on their economic credibility and performance, and they have won two elections on that basis. Two propositions are at the heart of their credibility: the first is that they have enjoyed the longest period of economic growth since records began in 1701—I think that that is how the case is put—and the second is the mantra that there is now an end to boom and bust. The first of those two propositions is still true, but looking rather precarious, and the second is beginning to look rather ridiculous.
This is an Opposition day debate, and I know that the convention is to deal with such matters in a rather Punch and Judy way, but I shall try to avoid doing so for several reasons. First, we are at the beginning rather than the end of a difficult period for the economy, and it may be that with good policies and good luck, we shall avoid the worst, such as something similar to what happened under the Tories 15 years ago. Secondly, some of the problems are home-grown and result from failures of Government policy, but some are imported—particularly the credit crunch—and the Government are not responsible for those. We need to acknowledge that there is a mixture of the two.
The other point, which is technical but rather important, is that some of the problems we are now confronting are difficult and perhaps unprecedented. How does one deal with a big debt deflation problem, as it is called? How do we deal with the collapse of a bubble in an asset market such as housing? How do we deal with a drying up of credit in the banking system?
Those are relatively new problems to which there are no obvious easy answers. I want to set some ideas for discussion as to how we might approach those questions.
However, I do not want to be too generous. There are clearly criticisms that one can make of Government performance, and the central one is complacency. Many of the problems that we face were anticipated in the past. I recall raising the issue of the housing market and debt with the current Prime Minister in 2003. At that time, I put this to him:
“On the housing market, is not the brutal truth that...the growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level?”—[ Official Report, 13 November 2003; Vol. 413, c. 398.]
The then Chancellor’s reply was that I was scaremongering, but the scariest thing about my scaremongering is that my predictions turned out to be largely correct. There are major concerns in that area.
Let me just review the problems. First, we have an acknowledged slowdown in the economy. We are not in a recession, but the slowdown is acknowledged. The Government’s forecasts are significantly more optimistic than the consensus among independent forecasters, who, a few weeks ago, were predicting 1.7 per cent. growth for the next year. Those estimates have been marked down week by week. We have other estimates from companies such as JP Morgan, the bank advised by former Prime Minister Tony Blair, that there is a one third risk of recession. Lehman Brothers have now joined it in making such an assessment.
In addition, we have severe, outstanding problems, many of which relate to problems of personal debt in a range of households—not all of them, but a substantial number. The total amount of personal debt in relation to people’s income is now roughly 160 per cent.—twice what it was when the Government came to office. It is the highest figure in our recorded history, and the highest in the developed world. Now, that is just a figure, and it does not necessarily relate to people’s everyday lives. What does relate to their lives, however, is the amount of income that they have to spend in service of debt. That now stands at about 20 per cent. and comprises mortgage payments, interests on mortgages, unsecured loans and credit card payments. We are now at roughly the level of debt service required as during the great Tory recession of the early 1990s.
Philip Davies (Shipley) (Con): I am sure that most people will share the hon. Gentleman’s analysis of the problems. However, the Liberal Democrats are usually very good at telling everybody what the problems are, but very weak on the solutions. Does he agree that at a time when people are struggling to pay their mortgages, energy bills and petrol prices, and when their pay is going up slowly, if at all, one of the best things that the Government could do is reduce the burden of taxation on those hard-working families? It is quite the wrong time for the Government to scrap the 10p basic rate of tax.
Dr. Cable:
We do agree with that, and we argued that case at the time. The hon. Gentleman was probably rehearsing his intervention while I was speaking,
because I did say that half of what I wanted to say concerned constructive solutions. However, I agree with his specific point, which we have made many times.
In addition to the problems of debt and the problems of debt service, there is a problem at the heart of the economic difficulties, which is inflation in the housing market, its consequences and the turnaround that may come from it. Since this Government came to office, the relationship between price and earnings has roughly doubled for housing. That has meant that a lot of people are a great deal wealthier and they have been happy to spend that wealth, which raises the question of what happens as the market goes into reverse.
At the core of the Government’s case, which is summarised in their amendment, is a statement made by the Chancellor a few weeks ago:
“Housing market conditions today are very different to those we saw in the early 1990s. Interest rates remain at comparatively low levels—as do mortgage rates. And unemployment is currently at 30-year lows.”
That is true, as far as it goes, but it is deeply misleading and extremely complacent, for several reasons. First, if we look back at what I call the great Tory recession—[Hon. Members: “Which one?”] There were several, but I am talking about the last one, at the beginning of the 1990s—
Philip Davies: Was that the one when we were in the ERM?
Dr. Cable: We were dealing with extreme conditions at the end of the Lawson boom— [ Interruption. ]
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I do not like to interrupt the hon. Gentleman—I am sure that he is capable of taking care of himself—but we really do not want sedentary exchanges across the Chamber. They spoil the debate.
Dr. Cable: Thank you, Mr. Deputy Speaker.
At the end of the Lawson boom, interest rates stood at 15 per cent. and inflation at 10 per cent. Those are extreme figures, but the practical reality was that the cost of borrowing was 15 minus 10—the real cost of borrowing was 5 per cent. real interest. Of course, we have different conditions today, as the Chancellor said. Someone borrowing at current rates will probably be paying 7.5 per cent. interest, but official inflation is about 2.5 per cent. The cost of borrowing in real terms is the same.
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