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The hon. Gentleman referred to sustainability and the exit strategy. As I said to the House on Tuesday, whatever we do and wherever we do it, we must support our economy now, but we must also be sure that in the medium term, as we come out of this, we live within our means. All countries have to do that. The exit strategy specifically refers to the banks, in which regard the Governments policy remains, as I have stated beforeI think that the hon. Gentleman and I are in complete agreement one of returning these banks to the private sector, commercially operated albeit properly regulated and supervised, when we can do that.
The hon. Gentleman asked about tax havens, on which action is necessary, and he asked why we did not take action before. That is another example of the fact that, for years, many countriesmany of which were represented at the G20 todaydid not want to know about taking action on tax havens, as he well knows. That mood has changed. One of the planks of President Obamas election campaign was that America should do something about the issue. We now have an environment in which it is far easier to take action, and it is interesting to note that in the past few weeks, when countries have known that they might be named and shamed, there has been a flurry of activity as countries have said, Weve decided were going to sign up to international obligations. That shows that action works.
The hon. Gentleman made a general point about the European Union, and I believe that where it is possible to reach agreement, we should. Having spoken to people over the past 48 hours or so, I found that the differences between various countries in the EU, the United States, ourselves and anyone else were far less significant than it may have appeared in reporting to the public. What was announced and achieved today will be seen as a significant step forward, provided that we make sure that we implement it, and make sure that the benefits are passed on to the people who elect us.
Madam Deputy Speaker (Sylvia Heal): Many Members are hoping to catch my eye. I will, therefore, insist on a brief single question so that we can have a concise reply. More may then be successful in making a contribution.
John McFall (West Dunbartonshire) (Lab/Co-op): The sterile debate about whether to have a fiscal stimulus or not has been put into context today by these welcome measures to reflate the world economy and kick-start trade. But the Chancellor knows that this crisis has a human face, with millions of people becoming jobless over the coming months. According to the World Bank, 54 million people in the low-income countries will be put into absolute poverty. Does he agree that there is a moral imperative to continue policies that alleviate such distress to individuals, and will that be taken up in the G20 meeting in the autumn?
Mr. Darling: I certainly agree with my right hon. Friend. It is estimated that 90 million people throughout the world were at risk of falling into poverty if we did not take action. That is one of the reasons todays outcome is to be welcomed. We now have to make sure that we see the process through. One of the purposes of the second meeting later this year will be to ensure that pressure is kept on countries to deliver what they have signed up to.
Mr. Michael Fallon (Sevenoaks) (Con): Would the Chancellor explain more fully why the Prime Minister said at his press conference that there had been an agreement on a common approach to the toxic assets, when that is not in the communiqué? Some countries are isolating their assets, others are trying to sell them off, and here at home the right hon. Gentleman is trying to insure them. Where is the common approach?
Mr. Darling: The common approach is that all of us agree that we need to isolate and then remove the effect of toxic assets on the ability of banks to lend. That can be accomplished through insurance, which is what we are doing here, or through the so-called good bank-bad bank split, which we have taken here on two occasions. It can involve a combination of the public and private sectorsomething that we are doing partially, and which the Americans are doing. It is importantand the Chairman of the Select Committee is looking at thisthat we use the right approach. It will vary from country to country, and it will vary from bank to bank, but the right approach must be to get lending going. That is a common approach.
Mr. Geoffrey Robinson (Coventry, North-West) (Lab): Is my right hon. Friend aware that we on the Government Benches very much congratulate the Prime Minister and him on the stunning success of getting this G20 conference held, and on the results they have obtained, particularly the $5 trillion increase in the funds put into the world economy? That is key to generating the confidence that we badly need to sustain us coming out of the recession.
Mr. Darling: I am grateful to my hon. Friend. It is a major step forward, but, as I said before, it is important that as people leave London tomorrow, they start to make sure that everything we have agreed is delivered.
Sir Patrick Cormack (South Staffordshire) (Con): As one who genuinely hopes that todays understandable euphoria will be followed by lasting satisfaction, may I ask the Chancellor a specific question about his statement? He says that the immediate cause of the crisis is a failure in the global financial sector and in global financial regulation. Is he completely confident that the regulations that will be imposed in countries around the world are mutually compatible?
Mr. Darling: First, I am grateful for the hon. Gentlemans comments. I have been accused of being euphoric on very few occasions, but I am none the less grateful to him. He asks a perfectly pertinent question. It is important that we now accept that there need to be common rules because we have a global financial system. I think that there is much agreement about that. In Europe, our attitudes must changethere need to be common rules and a common approach, but that is not inconsistent with having national supervisors and regulators, because we need a regulator near the ground and the people they regulate. Everything that we have experienced demonstrates in huge amounts the need for closer co-operation. I hope that we can achieve that on a global basis and in the European Union.
Mr. Ian McCartney (Makerfield) (Lab):
I thank my right hon. Friend the Chancellor and my right hon. Friend the Prime Minister for holding their nerve in the
past few months, when the Opposition have poured buckets of abuse over them on a daily basis. Without holding their nerve, the G20 would never have happened and we would not have the stimulus we have got.
In the statement, my right hon. Friend talked about assisting the poor. In his busy schedule in the next few weeks, will he meet me and some colleagues to discuss additional measures to help poor borrowers in the United Kingdom, who are suffering extremely difficult times, especially in the home loan and high street sectors?
Mr. Darling: I am extremely grateful to my right hon. Friend. He is right that we need to do everything we can to help people, especially those on low incomes, in this country. Throughout his time as a Minister and in the many jobs that he held in Government, he spent considerable time trying to ensure that we did more to help low paid people, not only those who had lost money, but those who were in fear of exploitation. It is equally important to have exactly the same approach to people on low incomes throughout the world. I am glad that the need to tackle that was specifically addressed in the communiqué.
Mr. Iain Duncan Smith (Chingford and Woodford Green) (Con): In answer to the questions of my hon. Friend the Member for Tatton (Mr. Osborne) and to the hon. Member for Twickenham (Dr. Cable) about the fiscal stimulus, the Chancellor set out what others had already done. He knows that, in the run-up to the G20, the Prime Minister went round the world talking about a further stimulus, not what had been done. Is not the reality that the G20 was originally set up around the further stimulus and the Prime Ministers desire for the world to follow that? He has not succeededGermany and France have clearly got their way. Does the Chancellor, who is recorded as possibly being in favour of being against that further stimulus, think that it is a good or a bad thing that France and Germany won?
Mr. Darling: I am not sure whether it is possible to be in favour of being against something, but I shall ponder that. The right hon. Gentleman is plain wrong. It is clear from the discussions this morning and from the declaration that:
We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.
Alun Michael (Cardiff, South and Penarth) (Lab/Co-op): My right hon. Friend referred in cautiously optimistic terms to getting a kick-start to the world trade talks. The Prime Minister has been consistent in his support for development and for fair as well as free trade. How confident and optimistic is my right hon. Friend that those talks, when they restart, will help encourage the principles of fair trade and the sustainability of developing economies?
We have to be optimistic because it is important to get a satisfactory conclusion. President Obama has made it clear that he takes that extremely seriouslyhe understands his countrys obligation on that. I appreciate the obvious problems of an incoming Administration; they want to take stock of several matters. However, the Presidents commitment to what my right hon. Friend raises, and his support for what we
agreed today, is important. America has a key role to play in the world and I am glad that President Obama has made it clear that he intends to play his full part.
Mr. Darling: The hon. Gentleman has asked some ridiculous questions in his time in the House. Given the scale of what we are facing and the scale of the problems faced by people in this country and across the world, particularly people in emerging economies, people who are living in poverty and people who run the risk of falling back into poverty, I would have thought that anyone looking at the situation would say that now is the time for Governments to act and support them, not to turn their backs on them and walk away.
Derek Twigg (Halton) (Lab): I congratulate my right hon. Friend and the Prime Minister on the excellent work that they have put in to ensure the success of the G20. Is the issue now not about ensuring that the benefits that come from what has been agreed today get to people as quickly as possible, including those in Halton who are losing their jobs and houses, and to businesses, so that they have hope for the future, and about ensuring that the institutions that are responsible for getting that help to them are brought together quickly and that action is taken?
Mr. Darling: I agree with my hon. Friend that that is important. That is why we should continue to do everything we can here to help people who lose their jobs. It is important, too, that we remember the effect of public investment in transport, for example, of which he will be well aware. And who knows? One day, I hope not in the too distant future, we might get to visit the bridge that he has advocated for so many years. I certainly look forward to seeing it one day, as I think that I approved it.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): In answer to my hon. Friend the Member for Twickenham (Dr. Cable), the Chancellor did not clarify whether the European Central Bank had the power to introduce quantitative easing if it so wished or whether the Royal Bank of Scotland would be doubling pay rates to get around the fact that it would not be paying bonuses.
Mr. Darling: In relation to RBS, I need to get back to the hon. Gentleman. In relation to the ECB, which is a slightly different matter, the bank would need to consider what options it had. It would also have to discuss the matter with members of the euro group. However, I am sure that they recognise that they may have to look at other optionsthe interest rates were cut again today in Europealthough that is a matter for them. We are not in the euro; we are responsible for our own Bank, and we shall have to see what the ECB decides to do.
Dr. Gavin Strang (Edinburgh, East) (Lab):
My right hon. Friend is right to be cautious, but surely it is already clear that the London G20 summit has been a success. Although it is true that there are still toxic
assets in the banking system, which is a problem, and that unemployment will continue to rise for a good many months yetand not just here, but elsewhereare we not beginning to see grounds for some optimism? He is right to refer to the position six months ago. Are we not seeing a situation in which it looks as though the 1930s will not be repeated in this global downturn?
Mr. Darling: My right hon. Friend is right: there are certainly lessons to be learnt from the 1930s, when there was an attempt, which failed, to get countries to come together. It was not until the end of the second world war that countries sat down and started to plan for the peace and look at the international institutions and the action that they might need in future. What has happened shows that we can take action and that we can take it quickly.
There is some way to go yetI am naturally cautious about these thingsbut the measures and the agreement reached today will be a significant help, provided that we see them through to conclusion. I think that they will be a significant help and I think that Governments can make a difference. If I did not, I, like many others, would not be here anyway. Governments can make a difference; perhaps the difference between us in this House is that I think that Governments need to make a difference and that they need to act.
Sir Peter Viggers (Gosport) (Con): Although the steps announced by the Chancellor are broadly to be welcomed, does he agree that they all have a tendency to be inflationary and that the situation could change quite quickly, especially as the amounts of money borrowed by this and other Governments are so large that Governments may tolerate inflation, because that will help them to reduce their debt burden? Will he promise never to take his eye off the ball and ignore the risk that explosive inflation could cause?
Mr. Darling: I am grateful to the hon. Gentleman. He is right that we always have to be vigilant about inflation. When he has an opportunity to look at the communiquéI appreciate that he will not have seen it for perfectly understandable reasonshe will see that it acknowledges that risk.
Nia Griffith (Llanelli) (Lab): My right hon. Friend may be aware that last year I introduced a ten-minute Bill that would have prevented the awarding of PFI contracts to companies that avoid UK tax through the use of tax havens. Can he tell me how the G20s excellent start on tackling tax havens will be progressed, so that Bills such as mine will become unnecessary and billions of additional pounds will flow into Government coffers worldwide?
Mr. Darling: The agreement that we reached today made it clear that we wanted to have a crackdown on tax havens. The OECD has published a list of the countries that it regards as compliant, those that have indicated that they are ready to comply, and those that have not. Over the next few weeks and months, it will be important as we move to the next stage that we bring pressure to bear on those countries, using whatever sanctions are thought appropriate, to ensure that we end these tax havens. They are grossly unfair and grossly inefficient, and we need to stop them.
Sir Nicholas Winterton (Macclesfield) (Con): Following up on the question from my hon. Friend the Member for Gosport (Sir Peter Viggers), may I ask the Chancellor where all this money is coming from? How will it impact on inflation in the short and medium term? Will there be any benefit whatever
Mr. Darling: The hon. Gentleman will know that the Bank of England has a responsibility to target the Governments inflation rate and that it is for the Bank to decide what action is appropriate to ensure that we support that target.
Mr. David Kidney (Stafford) (Lab): The Governmentand especially the Prime Ministerdeserve congratulations on achieving a broad range of agreements from such a diverse range of countries. Given sterlings competitiveness internationally at the moment, what, if anything, in todays agreement will help those sectors of our economysuch as agriculture and manufacturingthat would in normal circumstances expect to benefit from a growth in exports?
Mr. Darling: I am grateful to my hon. Friend; he is right to say that we have an opportunity to capitalise on our exports. We produce very good quality exports and it is therefore important that we have markets in which to sell them. For example, one of the reasons we support Germany putting money into its economy is that we sell goods into Germany. We also sell goods into developing countries. When people ask why we are concerned about what is going on in these other economies, the answer is quite simple. It is because our exports, and therefore our jobs, depend on them.
Mr. Michael Jack (Fylde) (Con): The effectiveness of a complex package such as this lies in the detail of its implementation, so who among the G20 has taken responsibility for ensuring that all parties that have made commitments in the agreement today actually deliver what they have committed to?
Mr. Darling: The right hon. Gentleman raises a perfectly pertinent point. The test will be in the implementation of this agreement. The answer to his question depends on the particular measure, but the IMF, for example, has now been given a commitment of more funds by certain countries. There have been commitments in respect of China, Japan and the European Union, though it must be ensured that it gets the rest of the money. It is the IMFs job to ensure that it can negotiate quickly with countries seeking help, and to ensure that the money gets there. Equally, there has been agreement to get money to the development banks. We contribute quite substantially to them through the Department for International Development. The right hon. Gentleman is absolutely right: we have to ensure that all the organisations involvedmany of them internationalactually implement what they have signed up to.
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