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My hon. Friend raises an important point. Many of the most significant regeneration schemes across the country are a combination of retail, commercial
and educational facilities. That is why we are seeking to ensure as far as possible that those projects proceed. I am aware of a number of applications that have been made to the Learning and Skills Council, and it is important to ensure that its processes and procedures result in swift decisions. I shall liaise with my right hon. Friend the Secretary of State for Innovation, Universities and Skills to ensure that that is the case.
T8.  Simon Hughes (North Southwark and Bermondsey) (LD): Given that cutting fuel bills and the use of energy is the best way of meeting the environmental challenge, when will Ministers be able to meet the target put forward by many groups last September of an energy efficiency rating of 81 out of 100 for our homes? How many UK homes already meet that target?
Margaret Beckett: I am afraid that I am not carrying that number in my head, but I shall certainly write to the hon. Gentleman about it. I shall also provide an answer to his query. I am not sure whether anyone has set a date by which they think that standard can be met, but it is an important point and I shall write to him about it.
Margaret Moran (Luton, South) (Lab): Will my right hon. Friend join me in congratulating Luton borough council, which this week has successfully tendered all its infill housing sites to one housing association, providing much-needed housing and community facilities in areas such as Hart Hill, in my constituency? Will she use her considerable influence to ask housing associations to invest in extending existing registered social landlord properties where there is severe overcrowding, as in the case of families in my constituency who have no prospect of ever getting a transfer?
Margaret Beckett: I am happy to join my hon. Friend, who I know takes a great and expert interest in these matters, in congratulating her local community and welcoming the housing provision to which she refers. I certainly take her point, and I am mindful of the fact that, not just in her constituency but across the country, one difficulty is that even where housing has been provided, it is not always the larger housing that families need. I take her point entirely and I am grateful to her for making it.
T9.  Andrew Stunell (Hazel Grove) (LD): When does the Secretary of State plan to publish her biennial report on the Sustainable and Secure Buildings Act 2004, which was due to be presented to the House last October?
Dr. Brian Iddon (Bolton, South-East) (Lab): For the third successive year, I am afraid that I must complain about the huge increases in the salaries of chief executive officers of housing associations. The highest-paid this year, including his bonuses, has crashed through the £300,000 per annum level for the first time. Who makes these decisions, and is my right hon. Friend ever consulted on them?
Margaret Beckett: I am certainly not aware of ever having been consulted about them. The boards of housing associations would make those decisions. My hon. Friend makes a valid point and I know that there is concern across the Housecertainly among those on the Labour Benchesabout the levels of some of the salaries and about whether or how they can be justified. We will certainly continue to discuss the matter.
T10.  Ann Winterton (Congleton) (Con):
Does the Minister agree that it makes no sense in this very difficult housing market for councils to charge full domestic rates on properties that are empty because of
a bereavement? It also does not help a sale if the furniture has to be removed. What action can the Government take to persuade local government to be more pragmatic and to react sensibly to what is, after all, reality?
Mr. Iain Wright: I take on board what the hon. Lady says. We have put in place a package of measures so that councils have more powers to be more mindful of specific circumstances. She will be aware, for example, of the empty dwellings management orders that can be used. However, the whole point, as she suggests, is to act sensitively and co-operatively with the family concerned. That is what we will encourage local authorities to do.
Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): On a point of order, Mr. Speaker. I am told that I must raise this question with you, because the Modernisation Committee has no powers to deal with it. There is no rule of the House that I can discover that dictates that our Clerks should sit in this Chamber wearing wigs. You yourself, Mr. Speaker, no longer wear a wig. On this day of modernisation in another political system not very far from here, in the United States, would it not show that we were modernising if our Clerks, who work so hard for us, no longer had to wear wigs?
That this House takes note of European Union Documents No. 14938/08, Commission Communication: From financial crisis to recovery: A European framework for action and No. 16097/08, Commission Communication: A European economic recovery plan, and endorses the Governments approach to discussions with European partners on these issues.
I welcome the opportunity to debate the Governments approach to the European economic recovery plan, alongside the related European Union documents. The world economy is in a serious downturn arising from financial system dislocation. The size and speed of that downturn warrant substantial and immediate action from Governments. Developments in the United States sub-prime mortgage market were the original trigger for the distress in the financial markets that escalated throughout last year, leading on to a severe downturn in economic activity across the world.
What began as disruption to the functioning of specific credit and money markets has spread and intensified to the extent that all financial markets have been affected. Financial institutions and financial systems in both developed and emerging market economies have been placed under severe pressure and, as credit conditions between banks have become tighter, their ability to lend to businesses and consumers has been restricted. That scarcity of credit for businesses and consumers has further contributed to the downturn and produced a real effect on the lives of individual citizens at home and in other countries, too. That is why it is right and necessary for Governments across the world to take bold action now to support the economy. My right hon. Friend the Chancellor of the Exchequer yesterday set out the further measures that the UK Government are putting in place.
In October, we took the lead with steps to stabilise the banking system. The euro-area summit of 12 October agreed a co-ordinated approach based on the UK model. In the pre-Budget report, my right hon. Friend the Chancellor announced measures worth around £20 billion between now and April 2010. That fiscal stimulus includes timely, temporary and targeted measures to support demand and to provide real help to people and businesses through these difficult times.
Mr. John Redwood (Wokingham) (Con): The document also says that any measures should be within the growth and stability pact and should be close to or within the 3 per cent. budget deficit ceiling. Will the Financial Secretary confirm that our budget deficit will be more than 10 per cent. of gross domestic product this year? Is that not well outside the terms of the document?
Mr. Timms: I do not recognise the figure that the right hon. Gentleman gives, but I can tell him that the Commission has recognised that, in these exceptional circumstances, countriesincluding those in the euro areamay well exceed the 3 per cent. limit.
As I said, at the euro-area summit of 12 October, we took the lead with steps to stabilise the banking system. In the pre-Budget report, my right hon. Friend the Chancellor announced measures worth around £20 billion.
Yesterday, he announced further measures to support the banking sector and to safeguard millions of jobs at risk from continuing difficulties in the financial system. The aim of the measures is to begin to replace the lending capacity lost by the withdrawal of foreign banks and other institutions, and to address the barriers that prevent UK banks from expanding their own lending. They are also designed to support stability in the economy, and ECOFIN has been looking at them today.
The crisis, however, is global and requires a global solution, so we are also working with partners outside Europe. The G20 summit in Washington in November set a vital precedent for international co-operation. Governments from developed and developing economies debated solutions to the crisis and they agreed on closer macro-economic co-operation and to take whatever actions are necessary to stabilise the financial system and support growth.
The G20 Finance Ministers will meet under the UK presidency in March, and the G20 leaders will meet at the London summit in April. International co-operation is of the greatest importance, and the European Union, its institutions and member states, are among our most important partners.
Mr. Timms: No; in fact, if anything it is the other way round. The measures that we introduced in the UK inspired large parts of the European plan, and of course we were closely involved in the discussions that led up to the plan that is before the House this afternoon.
Mr. David Heathcoat-Amory (Wells) (Con): The Minister has claimed that Britain led the way in monetary policy, but we would not have been able to do so if we had taken the Governments earlier adviceit is the current advice from the Liberal Democratsand joined the euro, because that would have meant giving up our power of self-government over monetary policy. Will he now repent of that folly and agree that joining the euro would have been a catastrophic mistake? Will he also agree with us that countering the recession will require both fiscal expenditure control and monetary interest rate control, which we can have only if we retain our own currency?
Mr. Timms: I think that the right hon. Gentleman is familiar with the five tests that the Government have set as preconditions for considering entry to the single currency. I shall take his contribution as a statement in support of those arrangements.
This crisis has impacted on all members of the European Union. The euro area is already in recession, after a fall in GDP for the second consecutive quarter. The latest European Commission forecast expects GDP in the largest member states to fall by between 1.75 and 2.25 per cent. The European Central Bank has taken action in line with the Bank of England and dramatically reduced interest rates, in some cases in co-ordination with cuts made by the G7 central banks.
The European Union now has the opportunity to use its structures and institutions for decisive, co-ordinated action to respond to the crisis and facilitate recovery. At the end of October, the Commission published a
communication outlining initial proposals on how the EU can take united, unified and co-ordinated action to address the crisis. The initial response was later developed into a full framework.
On 26 November, the Commission published its European economic recovery plan to inspire a co-ordinated response to the downturn. A plan based on that was subsequently agreed by the European Council, and it has two key pillars. First, the Commission calls for a fiscal stimulus from member states equivalent to around 1.5 per cent. of European Union GDP, to be made up of contributions from member states and the EU itself. This pillar is consistent with measures that we announced in the PBR, including supporting general VAT reductions and front-loading investment projects in infrastructure, transport and climate change, as well as further measures for small businesses. France, Germany, Italy, Spain and the Netherlands have all since announced stimulus packages along those lines.
The plan further stressed that, in these exceptional times, it was necessary for Governments to have flexibility to increase borrowing in line with measures to support the economy, and, as I said a few moments ago, that member states may breach the 3 per cent. of GDP deficit limit outlined in the stability and growth pact. The conclusions from the December European Council reiterated that the revised stability and growth pact provides flexibility for member states to implement measures in the recovery plan without compromising public finances in the medium term. In line with that thinking, we have set out plans for a sustained fiscal consolidation from 2010-11, when the economy is expected to be recovering and able to support a reduction in borrowing.
The second pillar comprises priority actions grounded in the Lisbon strategy for growth and jobs and designed to adapt our economies to long-term challenges to take advantage, when growth returns, of the new opportunities that there will then be. They include employment support initiatives, enhancing access to business financing, reducing administrative burdens, and promoting the rapid take-up of green products and technologies. We are taking action in those and other areas to help individuals and businesses through this crisis, and other members of the European Union will take similar steps in the spirit of this plan. These measures will help to provide us and our European partners with the means to take full advantage when the economy begins to recover.
The plan highlights the role of the European Investment Bank in mitigating the effects of the crisis. The EIB has put together a package of €30 billion in loans to help small to medium-sized enterprises, and that is up 50 per cent. on its usual lending to the sector. UK small businesses stand to benefit to the tune of £4 billion by 2011. The plan also proposes to revise the EU budgets financial framework to fund energy interconnections and broadband infrastructure. We are looking forward to examining those proposals in more detail, as the detail becomes available, and discussing them with our EU partners. We very much welcome publication of the plan and the agreement at the December European Council on priority actions at national and EU level.
Mr. Philip Hammond (Runnymede and Weybridge) (Con):
The Financial Secretary mentioned the proposals for the acceleration of energy and broadband projects.
It is clear from the Governments response that they were not certain at the time whether that would have budgetary implications for the UK. Is he any clearer now whether the proposals would have budgetary implications for the UK Exchequer?
Mr. Timms: Clearly, if the European Union spends more than otherwise would have been the case, there will be implications, but we are waiting for the detail of those proposals, which I anticipate will be provided quite soon.
The plan supports our fiscal stimulus, and provides further support for actions to front-load public expenditure, which we have just touched on, and assist small and medium-sized business. The plan and the menu of possible complementary actions that it provides can be enacted in member states as suits the needs of their domestic economies, while producing positive spill-over effects in the wider single market.
Bold action in a common market requires a common framework for action, not least to protect against competition distortion, so the plan also includes a temporary state aid framework for support to the real economy over the next two years. In the state aid arrangements, we need to take account of the extraordinary circumstances across the European Union, so we welcome the Commissions flexible, pragmatic approach in assessing measures to support both the banking system and the real economy.
The Commission provided rapid approval of UK actions to stabilise the banking system in October. Since October, 15 member state schemes have been approved, each similar to the UK model of recapitalisation or loan guarantees. The temporary framework also endorses the approach to supporting small businesses via state guarantee schemes. However, the role of the EU in monitoring state aid remains important. There should be no suspension of state aid rules, as they are key to ensuring a level playing field across the single marketand, most importantly, to avoiding moves towards protectionism, which might otherwise be a danger, and towards a counter-productive subsidy arms race. In the near term, it will be particularly important for the Commission to enforce the rules when interventions are not appropriate or well targeted.
Mr. Cash: The right hon. Gentleman referred to a level playing field. Does he not think that in the context of over-regulation, the stability and growth pact, the provisions of the Lisbon agenda and the issue of state aid, the playing field looks more like a battlefield of the Somme? I am thinking of the carnage that has been created in respect of all the rules that we have been told for decades are essential for the European economy. Does all this not demonstrate that all those plans are simply worthless and that the United Kingdom would be much better off with our own economic plans, rather than our being entirely driven by all this European nonsense?
I completely disagree with the hon. Gentlemans characterisation. The single market in Europe is of immense value to the UK as well as to the other member states. The ability to produce a plan along
these lines to achieve a unified response to the crisis demonstrates once again the value to the UK of our membership of the European Union.
Kelvin Hopkins (Luton, North) (Lab): My right hon. Friend has talked about the great value of the single market. However, have we not been a dumping ground for continental European produce and had a gigantic trade deficit as a result? We have been able to deal with that only because we have been able to depreciate our currency. Has the single market not been a disadvantage to us, rather than an advantage?
Mr. Timms: I do not agree at all, and I do not believe that the great majority of UK businesses would either. The European Union accounts for a very large proportion of our trade, and the fact that the single market is in place has been greatly to our assistance. It is one of the reasons why in the past few years we have attracted such an enormous amount of foreign direct investmentmore than any country in the world other than the United States. The single market has been an important element in that success.
The Government claim that we led the way on state support. Is the Minister seriously telling the House that if we had had to go to Europe to get the support approved and the European Union had said no, we would have stopped it?
It may also be necessary to help countries that have been hit particularly hard by the financial crisis and to support their domestic economies and to prevent cross-border contagion. The G20 summit in Washington affirmed international commitment to supporting emerging market economies through this crisis, and it has been necessary for the Community to provide financial assistance to two of its members in conjunction with the International Monetary Fund. As has been the case in respect of many financial institutions in the current crisis, the member states are fundamentally sound, but the pressure of market conditions and exposure to the advanced economies of the euro area, and elsewhere in the EU, have been severe.
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