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Britains fast action has been widely applauded, and many other countries have followed our lead and taken similar action. The G7 action plan, which took a lead from the UK plan, has provided a framework for effective co-ordinated international action, which has resulted in more than £300 billion being approved from public funds to recapitalise banks worldwide. We remain committed to taking all action necessary to restore confidence and stability in the financial system. International co-ordination is a central part of the Governments response and we will continue to work with international partners going forward. My hon. Friend is right to say that international financial institutions, too, have a role to playI am not just referring to stabilisation, but I do not wish to talk too much about that in the time that I have left.
I want to move on to the points that my hon. Friend made about how we can reform the system so that it is more fit for purpose. After initial stabilisation, the next step is to achieve a global financial system that is fit to meet the challenges of the future. As many hon. Members have said, the financial crisis has revealed problems at the heart of the international financial and regulatory system that we must rectify. That means addressing not only reforms to the supervision and regulation of financial markets but global governance arrangements. The Prime Minister has stated that the reforms must be guided by five principles: transparency, integrity, responsibility, sound banking practice and global governance with co-ordination across borders.
Strengthening of the supervision and regulation of the banking sector is essential. Significant steps have been taken that build on the recommendations of the FSF and that are in line with the road map agreed with European Union partners. For example, the FSF recommended strengthening Basel II capital requirements for banks using off-balance sheet vehicles. We should move forward with that proposal as it represents an important step towards restoring faith in the banking system. Beyond those immediate challenges, more progress is needed to establish globally applied standards of financial regulation and supervision for the future.
We have made a number of proposals to international partners, including improving incentives in financial institutions to manage risk; improving transparency in financial markets; ensuring appropriate regulation of all financial institutions and markets; and ensuring that the financial system supports economic stability. Better supervision and regulation need to be coupled with better global governance. Events have shown that global financial markets present challenges that no one nation can solve in isolation. We have to strengthen global co-operation and build a new global financial architecture for the years ahead. The new global governance should deliver a global early warning system so that future risk to global economic and financial stability is identified and mitigating action is taken early. There should be effective cross-border supervision of global firms, including through international colleges of supervisors, globally accepted standards of supervision and regulation applied consistently across countries, and mechanisms for co-operation and concerted action in a crisis through international cross-border stability.
Mr. Andrew Smith:
I know that the debate is drawing to a close, but does the Minister agree that action must be taken to deal with the proceeds of corruption and
exploitation and the collusion of the international banking system? If she does not have time to address the matter now, will she write to me and tell me what the Government will do to put it on the international agenda?
Angela Eagle: I agree that it is a vital issue and my right hon. Friend has done us all a service by raising it. I am happy to write to him, but we have strongly supported international efforts, both against money laundering and terrorist finance and to enhance the transparency of the banking system.
A number of positive steps have already been taken in recognition of the global change that we need. For example, the IMF recently established a new macro-financial surveillance unit, and reviewed its global financial stability report. We believe that more needs to be done to strengthen its role. The IMFs statement of surveillance priorities agreed by Ministers at the annual meeting sets out a clear strategic focus for IMF surveillance. We believe that the IMF must work more closely with the FSF to provide a clear warning of risks to global macro-economic and financial stability.
Mr. Plaskitt: While the Minister is on the subject of the IMF, do the Government think that it is time to consider the governance structure of the IMF and the issue of US dominance, especially as the Prime Minister is now leading efforts to bring in funding from states that are not appropriately represented on the structure of the board?
Angela Eagle: The UK has been at the forefront of the debate to try to get some kind of reform of the voting structures and architecture of international institutions, including the IMF and the World Bank. However, achieving such reform is almost as challenging as getting things agreed at the European Union when vetoes are used. It is clearly an important matter and we will continue to take forward our ambitions in that area.
We have entered a new era for the global economy. We need a new international system that is fit for purpose, both to deal with the many different and evolving challenges of the system of global banking, finance and economics and to stabilise the current situation. The Government are determined to make important progress in both areas and have been leading those efforts both at home and abroad.
Mr. Mark Harper (Forest of Dean) (Con): It is a pleasure to serve under your chairmanship, Mr. Benton. I welcome the Minister to his position. This is certainly the first time that I have spoken in a debate with him in his current post; I do not know whether it is his first outing in the role. I am also pleased at the good turnout from Gloucestershire, including my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) and the hon. Member for Stroud (Mr. Drew). I am particularly delighted to see the hon. Member for Gloucester (Mr. Dhanda) who was of course responsible for the issues in question before recent changes. I commiserate somewhat with the present Minister for the rather poor inheritance that he has to deal with.
Local fire and rescue authorities throughout England face the prospect of having to make cuts to their fire services, or raise the amount of council tax that they must charge, if the fire control regionalisation process continues. There is no guarantee that any of the measures that are proposed will improve fire services.
Mr. Dhanda: I am surprised that the hon. Gentleman, my neighbour, has not discussed the matter with our chief fire office, who would tell him that with respect to FiReControl, all new burdens are being met from central Government, not by local taxpayers. I am not sure where he gets his information.
Mr. Harper: It is helpful of the hon. Gentleman to raise that subject. He will know that the Government have made a commitment to meet the incremental costs only for the first three years of the project. After that, local taxpayers will bear the burden. It is a typical case of the Government putting burdens on them and covering the cost for the first few years, after which costs must be met by those local taxpayers. They have seen through it, and so have councillorsI think that hon. Members have seen through it, too. I want to make a little progress now, and then I shall be happy to take further interventions.
The Governments proposal is to close the existing 48 control centres, and replace them with nine large regional control centres. That move was announced at the end of 2003. One of the stated objectives is to improve efficiency. A further aim, which is the one by which I am unconvinced, is increasing public safety and enhancing national resilience. The Governments chief fire and rescue adviser, Sir Ken Knight, who will, I suspect, be oft-quoted by the Minister, as he was by the Ministers predecessor, highlighted the excellent response of the fire services to last years floods, despite very difficult conditions. That is something about which we know well in Gloucestershire, as we were at the epicentre. Sir Ken has said:
My review shows that there was a magnificent response by the Fire and Rescue Services firefighters, control room and support staff. Firefighters responded with their renowned professionalism
and complete dedication to the challenges faced in very difficult conditions. The national coordination of the high volume pumps across the country worked well, helping to protect infrastructure and homes.
Mr. James Gray (North Wiltshire) (Con): My hon. Friend knows that I want to pay tribute to Chippenham fire service, which provided the boats for Gloucestershire during the crisis last summer, demonstrating that cross-border co-operation works extremely well at the moment without the creation of the new fire control centres that the Government propose.
To be fair, Sir Ken went on to say that there were problems; but my contention is that those problems have different solutions, and that it would be better to consider an alternativeco-locating fire and rescue services with other emergency services. That approach has worked extremely well in Gloucestershire.
Unlike many aspects of local government, fire and rescue services are generally efficient, well run and popular with residents. They have adapted to significant change since the publication of the Bain report in 2002. The 2007 Audit Commission report on the majority of fire services would be the envy of many council chief executives. Indeed, I have already highlighted what Sir Ken Knight said about how well authorities coped with the floods last year.
Mr. Dhanda: I agree with the hon. Gentleman about how the service coped in Gloucestershire. Its members did incredibly well with the system available to them, but the hon. Gentleman is being very partial in his quotations from the chief fire and rescue advisers report. He made it very clearand the chief fire officer of Gloucestershire made it clear to the Departmentthat thousands of calls came in that could not be answered by the system, because the system that exists is not resilient enough. That must be changed, and Sir Ken Knight made it clear in his report.
Mr. Harper: I did, as well as quoting Sir Kens positive remarks, say that he acknowledged that there had been problems. My contention is that the way to deal with those is not to remove the very good locally-based systems, throw them away and set up something new and untested, but to build on what we have. In Gloucestershire, for example, we benefit from a tri-service centre at Quedgeley, in the constituency of the hon. Member for Gloucester, with the police, fire and ambulance services co-located next door to the police headquarters, which, together, operated as gold command during the emergency last year. The tri-service centre was set up in 2003 at a cost of £3 million and it enabled the emergency services and county council, and other bodies, to provide a co-ordinated response. Following last years events, Gloucestershires deputy chief fire officer Chris Griffin said in response to Sir Ken Knights comments:
The arrangements between the three emergency services worked well during the summers flooding crisis and the working relationship was strengthened and enhanced by their close proximity.
Its always been my view that emergency services work better when they train together and are co-located together.
To lose the close inter-agency working which the centre affords the county can only have a detrimental impact upon our collective ability to effectively deal with crises affecting residents and visitors to the county.
It could only be the present Government who would choose to put the south-west fire control centresomething that is supposed to improve resilienceon a site on a flood plain that is at high risk of flooding. That was pointed out and there has been a bit of jerry-rigging on the site, putting defences around the fire control centre to protect it from flooding; but it is only the present Government who would put such a fire control centre on a flood plain when only last year we had to protect ourselves from a major flood. If we had another major flood the new fire control centre would be one of the first places to flood, and even if protections were built around it, instead of pictures of Tewkesbury abbey as an island in the middle of a flood, we would have pictures of the south-west fire control centre in exactly the same position.
Mr. Dhanda: I do not want to turn the debate into a dialogue, and I shall try not to intervene on the hon. Gentleman againI shall make my own points later; but that myth has been kicking about for more than a year. The site is not in an area of flood risk. The hon. Gentleman mentioned the word jerry; well, there is a Jerry who is a key figure in the debatea Conservative councillor called Jerry Willmott, in Wiltshire where there is also a tri-service centre. He made it clear that we need FiReControl to save peoples lives. It is all very well co-locating a command centre, which is something that can continue to happenit would happen again in the city of Gloucester if a major event were to occurbut at the same time Jerry Willmott makes it clear that we must put other measures in place to save lives.
Mr. Harper: Thank you, Mr. Benton. To respondI shall not dwell on it for too longthe Environment Agencys flood risk website shows the location of the proposed south-west fire control centre to be in an area of flood risk, on a flood plain. That does not appear to be a wise place to put a fire control centre, one of whose key purposes is to provide resilience. It is not where I would have chosen to put it.
I am most grateful to my hon. Friend for giving way. I will not keep interrupting. Jerry Willmott, who is indeed a Conservative councillor from Wiltshire, is wholly opposed to the notion of a single fire control centre in Taunton. I have no idea where the former Minister got that information from. Jerry Willmott has gone to great lengths recently to say that we are operating
under huge demand with limited resource, and to attack the Government of which the hon. Member for Gloucester is a Member.
There is also discontent within the fire service itself about the Governments plans. A leaked letter from the head of the new south-west regional fire control to the former Minister, the hon. Member for Gloucester, revealed widespread discontent about the Governments plans. The head of FIReControl warned that local fire and rescue services would not voluntarily submit to the Governments regionalisation and criticised delays in the project that led to immense frustration and profound disappointment. Ministers were told that
confidence amongst the company directors, our hard working officers and, we suspect, fire authorities is now rock bottom.
there is no evidence to suggest any overall saving...we are unconvinced that the Government can offer the assurance of maintained or improved service quality resulting from the FiReControl project.
Another worrying sign, apart from the lack of evidence that service to the public will improve, is the escalating cost of the project. The Government belatedly published a new regional business case in July, and an updated national business case has yet to be published. Last years business case admitted that the costs of the project were £400 million over its original £1 billion budget. By any measure, such an escalation in cost is significant, and it indicates that the project has been poorly managed, at least financially.
The Fire Brigades Union commissioned an independent report from the Institute of Public Finance on the business case for the FiReControl project. The report forecast that between October 2006 and June 2007, the total invested in the project by the Department for Communities and Local Government would have risen £180 million from £160 million to £340 million, a rise of 112 per cent. Annual efficiency savings were forecast to fall 80 per cent., from £115 million to £23 million. The costs are rising considerably, and the forecast financial savings are falling at almost the same rate. That is incredibly worrying for taxpayers in general and for local taxpayers in Gloucestershire and the south-west specifically.
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): Has my hon. Friend contrasted what is proposed for our fire and rescue service with what was proposed and implemented for our ambulance service? We were told when the Gloucestershire, Wiltshire and Avon ambulance services merged that we would get lots of savings and a better service. Does he not think that the Government are making exactly the same statements now, and that we will end up with a worse service in Gloucestershire that puts peoples lives at risk, which is exactly what has happened with the ambulance service?
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