Select Committee on Liaison Minutes of Evidence

Examination of Witness (Questions 240-259)


3 JULY 2008

  Q240  John McFall: Exactly. What is happening, Prime Minister, is that UK passengers will save significant amounts of tax by using non-UK hubs, such as breaking long-haul flights from the UK in Amsterdam. For example, if I were flying from Glasgow to Mumbai through London, I would have to pay three times and it would cost me £60, but, if I chose to go via Amsterdam, I would pay once and it would cost £10. Now, that does not make sense at all in terms of a green taxation. Further, commercial delivery companies, like FedEx and DHL, they will be paying the new tax on freight-only flights in contrast to the exemption from the existing APD. What that will mean, Chancellor[sic], sorry, Prime Minister—

  Mr Brown: I think this is a question for the Chancellor!

  Q241  John McFall:—is that they will have the opportunity to go to Amsterdam, pay nothing and take their goods then by road further cluttering up the roads, so something really needs to be done about this policy.

  Mr Brown: Well, I think part of the measures maybe are for consultation and no doubt the Chancellor will listen to your representations on that matter. I do not think anybody would deny, however, that the decision of a previous government and our Government, that air passenger duty has to be paid and it has got to be paid fairly, is the right decision if we are going to assess the cost to climate change of air travel, and I know there are many representations about that, but I think the duty that is levied generally is the right duty.

  Q242  John McFall: But there is a big international issue here because I am informed that the US Embassy has formally notified the UK Government of its significant policy and legal concerns that the UK Government could possibly be breaching the 1944 Chicago Convention.

  Mr Brown: Well, these are matters that will have to be looked at. I have not seen this particular item

  John McFall: Thank you, Prime Minister.

  Q243  Mr Sheerman: This summer, there are a lot of vulnerable and fearful people out there in our country who can blame the situation they are in on what even The Financial Times can suggest is an incompetent, reckless and downright greedy banking system in our country. What they see is that the position they are in is down to these people that have served them badly. What do you think about that sort of view?

  Mr Brown: I think the off-balance-sheet activities of some banks that have caused many of the problems that we have got and the write-offs that are now taking place is something that should never have happened. We need a regulatory system that can pick up more information when firms are using off-balance-sheet methods for financing some of their activities, and the unfortunate thing is that we are talking about probably £400-800 billion of monies, mainly in America, that have been off balance sheet and are now being brought on balance sheet and causing a huge amount of difficulty, so there are reforms to the financial system that are necessary. One is that the transparency of balance sheets so that these off-balance-sheet activities cannot be recorded in the way that they were before and they have got to be on balance sheet. The credit rating agencies have got to do a better job, and that is one of the issues that is before us. I would say also that, where there are to be write-offs, they should happen now because what we cannot have is a situation where, months from now, people have not disclosed write-offs that they know have got to take place now, and I think these measures have got to be taken by the financial system. I think what is also revealed is that you have national regulators that do not have all the information about international companies that are operating in many continents and you are going to have to have a better system of global financial supervision. In many cases, we are dealing with a situation where national supervisors have been outgrown by global financial flows, so we need a better system of supervision at a global level.

  Q244  Mr Sheerman: But, Prime Minister, these people are in a mess now and the banks that got them in the mess in the first place are making it even worse because they are not lending to anyone. They are not lending to small businesses, they are not lending to people who want to get a home and they are not lending to each other, so it is a crisis for them now and they want something and they see you and your Government, our Government, as the people that should do something about it. Many of the experts say that, if you do not act soon, if our Government does not act soon, the banking and financial crisis will deepen this summer and we need urgent action. What urgent action are we going to give them?

  Mr Brown: Our aim is to keep the economy moving forward. That is why the Bank of England injected £50 billion into the markets only a few weeks ago, so action has already been taken to improve the flow of money. That is why we are taking action in the housing market itself and we have announced that we will buy many unsold properties in the market to enable the housing market to move forward, and we are looking at other measures by which we can help mortgage finance so that, in a situation in Britain where there is demand for housing, we can actually find a way that the market and the financial markets can satisfy that demand. We are aware also that consumers are under pressure and that is why 22 million will get a tax cut, that is why we have raised the Winter Allowance, that is why we have got the low-income support for fuel bills and that is why we are trying to move forward with other measures as well, so we are doing things.

  Q245  Mr Sheerman: I accept that. I accept that there is some action going on, some really important action going on, but many of my constituents will say, "Is it enough?" Can I just press you on one thing which you brought up earlier about the Leitch Report and how we do not need any longer very many unskilled people in our economy. Is it not time that we had a total moratorium on immigration into this country that is unskilled? It is stoking up real problems. Whether they come from the Indian Sub-Continent or whether they come from Albania or Romania or anywhere else, unskilled people coming here without the English language are going to be a real problem for the future of our country, so is it not time we acted even more firmly than we have?

  Mr Brown: Well, as you know, we have introduced the new points system and the points system means that unskilled workers coming from countries outside the European Union who are not needed by our economy will not be welcomed into this country, so the points system deals with exactly the problem that you have raised. Where there are skilled workers that can contribute to the economy, we will, under the points system, allow them in. Where they have no skills to offer, they will not be allowed in. As far as Europe is concerned, we took special measures for Romania and Bulgaria and we will continue to monitor that situation.

  Chairman: We now move to the final theme, international flashpoints. Mike Gapes?

  Q246  Mike Gapes: Prime Minister, there has been a great deal of debate recently about what the international community or individual countries can do where there are problems, humanitarian problems or political problems, in different parts of the world and in the words of the United Nations General Assembly Resolution in 2005 "where national authorities manifestly fail to protect their populations". We have some specific questions about particular countries, but can I just begin by asking you what you understand by the responsibility to protect?

  Mr Brown: Well, the responsibility to protect, as you know, is a principle adopted by the United Nations in circumstances where there are humanitarian issues, ethnic cleansing and where there is genocide and it is incumbent on the international community to act. It has also got to take into account that it is a just cause, that we operate on the right intention, that it is a last resort, that any action is proportional and that it must have reasonable prospects of achieving that goal. I think the biggest problem we face actually is that we do not have the means by which we can take the action that you would want to see, so whether it was Rwanda or whether it was Darfur, we do not have, beyond the number of peace-keepers and the humanitarian aid that we can provide, the means at the moment by which the international community can offer the help for stability and reconstruction that you are talking about. I think we need the UN to be reformed in such a way that, in addition to humanitarian help and the 100,000 peace-keepers there are, there is a civil society presence, that you have police, you have judges, you have people that can offer their skills to help reconstruct failed states in a way that would mean that your humanitarian aid could lead to the satisfactory restoration of civil order and a civil society in these countries.

  Q247  Mike Gapes: But in the meantime before we get that reform of the international institutions and the strengthening of the United Nations—and many people have been trying for many years to achieve that—we have to deal with the United Nations system as it is today. What do you do if you are not able to get Security Council resolution and the international community collectively to act? What can we do in this country, what can the Europeans do in cases for example like Burma where you were quoted in an interview to the BBC World Service in May where you said: " ... we have to get the agreement of the international community. And it has been difficult to get all countries to agree to a common approach ... " What do we do when we do not get that common approach?

  Mr Brown: There are some cases, as you know, where that has happened in Eastern Europe or in Africa where unilaterally we will provide the support that we can. There are some cases where we will act as the European Union to take the action that is necessary. There are some cases where we will act with other allies to make sure that we can do the right thing. However, that is less preferable than getting agreement at the United Nations. I suppose when you were talking about responsibility to protect, we should reform the peace-keeping system so that there are regional peace-keepers (for example the African Union can do more) and we do need this post-conflict response facility that is not good enough at the moment even when the will is there.

  Q248  Mike Gapes: But there are people internationally who are saying that we are never going to get the Chinese or the Russians to agree in the Security Council so we are not going to get the international legitimacy and therefore there is an idea going around—and Senator John McCain has taken it up—of a so-called "League of Democracies". Does our Government have an attitude to that? What do you think about that suggestion? Would it be helpful or would it actually undermine the United Nations?

  Mr Brown: I think the United Nations should be reformed and I think we should try and get an agreement about reform. I do believe that there is more will to make these reforms than might be suggested by your question. The Security Council itself in the end will have to be reformed to be more representative. At the same time if we could agree on the purpose of action by the United Nations before we talk about who is going to do what under certain circumstances and which countries have got the votes, I think we could get quite far. We did reform humanitarian aid and we have done quite a lot about peace-keeping. There are now 100,000 peace-keepers, as I say, which is a very substantial number bigger than at any time I think in the history of the world. However, you have got to go further on these reforms and I think talking to Commonwealth countries, to China, to India, to the Americans and the Europeans, there is the potential to reach agreement on many of these reforms, and I think we should be pushing this quite hard over the next year.

  Q249  Mike Gapes: So you are not inclined to go along with this idea of a League of Democracies?

  Mr Brown: There are various meetings. I think there is a Concert of Democracies at the moment. There is an another group that meets together to look at what democracies can do. Obviously the strongest form of government in the world for the future is where there are democracies, but I think we should try to reform the United Nations itself.

  Q250  Mike Gapes: Rather than setting up ad hoc alliances with the United States, the Australians, the Canadians and the Europeans?

  Mr Brown: I think there will always be ad hoc alliances. Where you cannot reach agreement internationally in the United Nations you will work with those countries where you can do so, but it is far preferable to have a decision of the international community and to give the United Nations both the strength to act and the representative decision-making process it should have.

  Mike Gapes: Thank you. We will move now to the situation in Iraq. James Arbuthnot?

  Q251  Mr Arbuthnot: Prime Minister, I will ask you some questions about Iraq and Afghanistan. Afghanistan is much the harder issue to resolve but if I may start with Iraq, may I ask when were you last in Basra?

  Mr Brown: I was there a few months ago and I really do not want to give details of my future plans.

  Q252  Mr Arbuthnot: I would not ask that.

  Mr Brown: But I have seen and heard from visits that ministers have made about the most recent situation in Basra, and I think it is true to say that after the action by Prime Minister Maliki in taking his own troops into the Basra area, there has been substantial progress in dealing with the militias which have been operating in Basra. I think the Defence Secretary described how it was possible for him to walk in the streets of Basra in a way that did not happen before. Really we have got these four tasks that we have got to do. Do you want me to describe them or would you prefer to ask your other question first?

  Q253  Mr Arbuthnot: My impression from being there last week was that Basra City has been utterly transformed by the action that Prime Minister Maliki took in March. When we were there last year the rocket and mortar attacks seemed to be coming in every couple of hours or so and we were there for five days last week without a single such rocket or mortar attack and our convoy was stuck in a traffic jam because of the prosperity of the country, and yet nobody seems to know about it. Why do you think that is?

  Mr Brown: Nobody seems to know about the ---?

  Q254  Mr Arbuthnot: Nobody seems to know about the transformation of Basra.

  Mr Brown: I have been talking about it myself and I think others have been talking about it. There are, as I say, four tasks that are important that we have got to still undertake. One is we have got to train the Iraqi forces and one of the problems that Prime Minister Maliki ran into was that some of his forces were insufficiently trained, and of course there had to be support given from the Americans and from us at the time of his exercise, so we have started new ways of helping the training of the Iraqi forces and the Iraqi police. The second thing is we have got to build on this success in Basra by having local government elections so we persuade people to come out of the informal and sometimes violent ways that people have chosen to conduct their activity in Basra into representative government, so I hope there will be local government elections soon. We have got to complete the transfer of the airport to civilian use, and that is where many of our troops are at the moment, and we have got to do what I think you are hinting at which is to build some prosperity in Basra, giving people an economic and social stake in the future of the area. We talk about "over-watch" but these are the four tasks that moving from our combat role to an over-watch role that we have got to undertake and complete.

  Q255  Mr Arbuthnot: Can I ask about that first task. The one thing we were told by the British troops when we were there was that they were doing an absolutely essential job in training the Iraqi troops and that the Iraqi troops in turn were doing an essential job in mentoring the Iraqi police, and that it would be quite wrong for our troops to be pulled out prematurely from that job in order to fit into some political numbers game dictated in this country. Would you agree with that?

  Mr Brown: There is neither an artificial timetable nor is there any political numbers game being played. I have said all along that we will do what is necessary, taking into account the views of military commanders on the ground, and that we will complete the work of training the Iraqi forces. We have changed the way that we train the Iraqi forces over recent months, as you have probably discovered in your visit to Basra, but the task still remains to be done. I think we have trained up 30,000 but there is a lot more to do.

  Q256  Mr Arbuthnot: The only minor political sting I would put into this is that I hope we can have no more predictions of 2,500 or stuff like that because it is the capabilities that we need to put there rather than the numbers that are important.

  Mr Brown: I think it is right to suggest the direction in which we want to go. We had 44,000 troops in Iraq at one stage; by the beginning of last year it was 5,500; it is now 4,100. The direction of travel is clear but I have always made it clear that the final decisions about the actual movement and reconfiguration of troops will be based on the situation we find and on the advice of military commanders on the ground.

  Q257  Mr Arbuthnot: Turning now to Afghanistan, where tragically the deaths of our servicemen and women have been very high recently, one of the key issues with Afghanistan is their relations with Pakistan, which are not good, frankly. Pakistan says it can only stop terrorists crossing the border into Afghanistan if it is allowed to secure the border, which neither country will agree. President Karzai has threatened to take troops into Pakistan if need be. What can we do to reduce the tensions there?

  Mr Brown: We are working with the American and the Pakistani Government as well as the Afghan Government on these issues. It clear that this is a very difficult area. You, like me, have studied this and will know that it is one of the most difficult terrains in the world. I think we have got to have the co-operation that is necessary with the Pakistan Government. It would be better if there were better relations between the Afghan Government and the Pakistani Government. We have also got to move our troops in the right way to ensure that we can protect them from the insurgents that are coming in from Pakistan.

  Q258  Mr Arbuthnot: But all the while the commitment of NATO seems a bit half-hearted. You have called for greater burden-sharing and I think you are right on that. The number of troops does seem to be creeping up but there is a sense in Afghanistan that people there do not think we are there for the long haul. How can we change that?

  Mr Brown: I think people do know that this is a long-term commitment. I was at the NATO summit in Bucharest. We have got around 40 countries that are contributing to this exercise. You are absolutely right to say that burden-sharing is of the essence for the future. If, for example, the Dutch or the Canadians, who have suffered quite large losses, as we have suffered losses in recent months, did not feel that other countries were contributing properly, then they themselves, as has been said by the Canadians and the Dutch, would have to review their position, so it is very important that there is burden-sharing. The French, as you know, are bringing extra forces in. That will allow American marines to move into the south. There is an attempt to bring together many of the countries of Eastern Europe but also the whole of Europe to contribute to both increased training for police and the provision of equipment like helicopters. We set up this Helicopter Trust Fund and it has had a number of countries contributing to it. We now have offers from some of the Eastern European countries to provide what is vitally needed equipment for Afghanistan, so there is evidence of greater burden-sharing, but I would be the first to say that more has got to be done. As far as the Afghan people are concerned, our aim must be that the Afghan army is strengthened in its ability to run its own affairs and that the Afghan police are sufficiently strong that they can, free of corruption, tackle many of the problems in the country. I do think it is going to be important also to build up local government as well as greater efficiency in national government and the economic and social development programme there if Afghans themselves are going to have a stake in the future. Never forget this: the restoration of the Taliban to power would affect us in Britain in our communities as much as it would affect the Afghan people.

  Q259  Mr Arbuthnot: I entirely agree with that but what do you think about the prospects for reducing the corruption that you have just referred to in Afghanistan? What prospect is there of President Karzai achieving a major change in that before the elections of next year and the year after?

  Mr Brown: As you probably know, we have been talking to President Karzai about giving him additional support so that we have a civil service that allows decisions that are made to be properly implemented, and he has asked for and we are giving him advice on how to do this. The training of a corrupt-free police force is being supervised by the Germans who have brought additional trainers into Afghanistan for that. I agree with you that these are problems that arise particularly because we have got a heroin trade operating from Afghanistan, and it is important that we increase the number of poppy-free provinces, as has happened over the last few years, but obviously not everything has yet been achieved; there is a huge amount still to do. The battle against corruption is a better civil service, better policing, better local government, action against heroin, and these are the things that we are trying to undertake and complete.

  Mike Gapes: Thank you, we will now move to the Middle East. Phyllis Starkey?

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