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Then there are the laws that are simply unnecessary, because the Government could act without them. For example, the financial services Bill is supposedly being introduced to crack down on bonuses, but everyone knows that the Financial Services Authority already
has most of the powers that the Government are promising in the Bill. Real, radical action would be to take the advice of the Governor of the Bank of England and finally split up the banks to separate retail and investment banking and so protect consumers. Until that is done, the Government should impose an extra levy on the profits of the banks, so that they pay for the taxpayer guarantee by which they have been propped up and we get a return on our investment. The Bill announced today does none of that, being just more displacement activity to make it look as though the Government are sorting out the banks.
Rob Marris: By far the most robust banking system in the western world is the Canadian one, where retail and investment banking are not split, so why are the right hon. Gentleman and his hon. Friend the Member for Twickenham (Dr. Cable) so fixated on splitting banks into retail and investment, when that is clearly not the problem-as demonstrated by the robustness of the Canadian system?
Mr. Clegg: With respect, I will heed the views of the Governor of the Bank of England on the issue slightly more than I do those of the hon. Gentleman. The Governor makes a simple, compelling case, starting from first principles. Retail banking-keeping people's deposits safe and lending prudently to businesses and households-should not be mixed up with the high-risk, over-leveraged business model of casino banking. Full stop. It is as simple as that.
We have an improving schools Bill, which is highly unlikely to improve schools. If the Government wanted to improve schools, they would take bureaucracy away from teachers, not impose more. It will be the 12th education Bill in as many years, so why do the Government imagine this one will work when none of the others does.
The policing, crime and private security Bill will yet again tweak the over-tweaked ASBO regime. Is it not time for the Government to accept that passing laws does not cut crime, but that more police officers out on the beat do?
Worst of all, some Bills in the Queen's Speech cynically raise expectations, yet the Government know that they will deliver far less than they promise. The Bill to outlaw cluster bombs sounds great, but in fact we know that it will outlaw only some cluster bombs. There will be a Bill that-supposedly-delivers free personal care. After the Prime Minister's media interviews this morning, tens of thousands of elderly people up and down Britain will have been led to believe that they will be properly looked after from now on, yet it will not happen. He has raised the hopes of some of the most vulnerable people in this country, when he knows perfectly well that the Bill will offer free personal care only to a fraction of the people who are struggling to pay for the help that they need.
Keith Vaz (Leicester, East) (Lab): The right hon. Gentleman did not mention the digital economy Bill. Surely, he will support the measures in that Bill to implement for the first time the recommendations of the Byron report on violent video games. He must accept that there is a need for legislation to deal with such issues-we cannot just talk about expenses all the time.
Mr. Clegg: Absolutely not. Of course, I accept that we shall scrutinise the Bills in the Queen's Speech and support or oppose them, as is the duty of a responsible Opposition party.
I return to the basic question of what the Queen's Speech should be doing in the very little time available to this Parliament.
Mr. Redwood: I am grateful to the leader of the Liberal Democrats for giving way. How big a reduction in the deficit would he recommend and what should be the balance between expenditure cuts and tax rises?
Mr. Clegg: We accept that the most important thing is to be credible in any plan to fill the structural deficit. Simply passing a law saying that the Government will halve the deficit over the next four years is irrelevant if they do not spell out the difficult choices. That is why the Liberal Democrats have advocated big, difficult, bold decisions-not renewing like for like the Trident nuclear missile system, ending tax credits for above average income families and ending the child trust fund of £250 for every 18-year-old in the country. That is not because the choices are popular; they are difficult, and we need to spell them out if we are to be credible about the deficit reduction programme that is absolutely necessary.
What should Parliament be doing in these final weeks? The Queen's Speech should have been replaced by an emergency programme of political reform. After the expenses scandal, this Parliament has destroyed its legitimacy. In the few weeks remaining to it, the one gift that this failed Parliament can give its successor is a fresh start. When we move out of a house, we clean it for the people moving in. That must be the final task of this rump Parliament.
Let me set out in a few words what real reform would look like-what the focus of the last 70 days of this Parliament should have been. We should introduce a power of recall, so that people can sack any MP found guilty of serious misconduct. All candidates at the next election should declare their financial interests, as Sir Christopher Kelly demanded. We should have real action to reform the House of Lords, not yet more delaying tactics from the draft legislation proposed in today's Queen's Speech. We need changes to House of Commons procedure to reduce Executive power.
We should agree a total change in party funding, so that big money and the whiff of corruption that it brings are removed from politics for good. We should introduce fixed-term Parliaments, so that voters can never again be toyed with by a Prime Minister planning an election timetable to save his or her skin. Finally, we should have real action on electoral reform, so that every citizen knows that their vote counts.
Of course those changes are a tall order, but with political will, they could transform our threadbare democratic institutions. Instead of being just a sorry footnote to a shameful year at Westminster, these months could have been a moment of important and permanent change in British political history. After today's Queen's Speech, however, we know that that opportunity to do the right thing has been squandered, yet again, by this Government.
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Mr. Charles Clarke (Norwich, South) (Lab): First, I join the congratulations that have come from all parts of the House to the proposer and seconder of the Loyal Address. Both were entertaining, witty and powerful. I know both well and I think that they did themselves and everybody else credit.
Unfortunately, I cannot say the same for the speech made by the Leader of the Opposition. He has led the most extraordinary attack on the Queen's Speech, writing in The Times yesterday that we
"will see a Prime Minister playing politics with the biggest constitutional event of the year."
The right hon. Gentleman's discovery that the Government's legislative programme is political is truly bizarre. His stance can surely be explained only by his fear of exposing to debate his own party's lack of clear policies, programme or philosophy. The fact is that almost all legislation is political-indeed, it should be, as it expresses the values and beliefs that underlie our society. The question is not whether the Queen's Speech is political, but whether its politics are right.
This legislative programme comes at the end of a Parliament elected in 2005, during which enormous and in many ways unpredictable changes have occurred in our national life. Some, such as the deep challenge from climate change and the reality of an ageing population, are now understood more widely and more deeply than they were at the start of this Parliament. In this year's Queen's Speech, the energy Bill and the personal care at home Bill are important and welcome steps towards implementing the excellent low-carbon transition plan and the first-class "Shaping the Future of Care Together" White Paper, both published in July.
It is, however, the world financial crisis and the rocking of the foundations of confidence in the integrity of our politics that represent the most significant changes since this Parliament was elected in 2005. In the economic field, this Government, and the Prime Minister in particular, have already played a leading role in putting into place the measures necessary to address the crisis, but one of the lessons of the past few years is that banking needs more and better focused regulation, not less. That is why, although I welcome the further measures proposed in the Queen's Speech to regulate banking, I hope that, in addition, the Government will consider including proposals that divide so-called retail and casino banking in the ways recommended by the Governor of the Bank of England and the Treasury Committee and respond more positively to the proposed European Union regulatory regime. I also hope that the Government will strengthen and encourage mutual financial institutions, including by remutualising Northern Rock.
Chris Huhne (Eastleigh) (LD): To reinforce the right hon. Gentleman's excellent point about Glass-Steagall, does he agree with me that the Canadian example offers no obvious illustration of how such a measure would fail, given that the Canadian banks have never been known for their investment banking activity and are, in effect, universal retail banks?
Mr. Clarke:
I regret not being as well informed about the intricacies of the Canadian system as I ought to be. My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) is extremely well informed about
that subject and I take his judgment very seriously, but I remain of the view that the Governor of the Bank of England and the Treasury Committee are right in urging the separation of the retail and casino elements of banking over a period of time, and I hope that that will be considered in the legislation.
John McFall (West Dunbartonshire) (Lab/Co-op): I have visited Canada and spoken to representatives of its central bank. The hon. Member for Eastleigh (Chris Huhne) is right about the type and structure of banking there, but rather than allow ourselves to be diverted into considering whether it is narrow or not, the big question that we should be asking is: is it too big to fail? The answer to that question is still outstanding-it still has to be tackled.
Mr. Clarke: I very much agree with my right hon. Friend. Banking is about more than responding to the injunctions of the European Commission, particularly the European Commissioner to whom we had to respond recently on the question of breaking up banks that are too big. We have to demonstrate our own clear approach, and show that Parliament has taken steps to correct the mistakes of earlier years that have had such a serious impact. That is a duty on Parliament, and we need to get away from the "too big" bank model, which my right hon. Friend has mentioned. I think that the break-up into retail and casino banking is a better way of doing so, and the examples that I have in mind are the landesbank in Germany and Crédit Agricole in France, which are based on a particular industrial function or geographical reality. We would do better to move our banking system in that general direction.
Mr. Redwood: Would that mean that a retail bank could not offer a business customer a forward currency contract?
Mr. Clarke: It might well mean that. If we look at the inadequate finance regimes for many industries in this country, including agriculture, engineering and so on, we can see that we need much more dedicated provision. I can give the right hon. Gentleman the example of Barclays bank, which used to have strong relationship in Norfolk with the agricultural industry from which it emerged. That was gradually eroded by the development of new types of banking, so there is a less intimate relationship than there should be. That is the kind of thing at which we should be looking.
The second major change since 2005 is the impact of the party political funding dramas and the parliamentary expenses crisis on popular confidence in our political system. We all know that it is exceptionally serious and that it is the duty of Parliament to address it before our successors are elected. I am therefore certain that the best and most political use of the limited parliamentary time available between now and April is to do our utmost to rectify those problems. The people of this country need to know that we have put right the flaws underlying the problems that have been exposed over the past couple of years.
For those reasons, the Queen's Speech should have included proper legislation to regulate the funding of political parties, along the lines of Hayden Phillips's report, on which agreement was almost reached between
the parties some years ago. That should finally resolve the ways in which the pay and allowances of Members of Parliament are set, rather than permitting both the instability and uncertainty that has followed unsatisfactory reports by Sir Thomas Legg and Sir Christopher Kelly, as well as an uncertain role for the new Independent Parliamentary Standards Authority. Even if there were no further change in the composition of the upper House during this Parliament, we must reform the highly unsatisfactory arrangements for peers' remuneration and allowances by the end of this Parliament. That is being considered at the moment, but Parliament has not dealt with those matters properly, and an effective approach of the kind that I have described would go a long way towards rebuilding the trust in politics that has been lost since 2005.
Simon Hughes: Does the right hon. Gentleman agree that the Labour party has failed abysmally to reform the second Chamber, which is the largest entirely unelected second Chamber in Europe, if not the world? Rather than a draft Bill to tinker with it, if the Government really wanted to be seen as reformers, they ought to get rid of the hereditary principle and have an elected Chamber on the statute book before the election.
Mr. Clarke: I do not agree with the hon. Gentleman. I am in favour of an elected second Chamber, but I believe that the Labour party has made major advances in addressing that issue. The difficulty is that there is no consensus on what the change should be. There are some people who, perhaps like the hon. Gentleman and me, favour an elected second Chamber; there are some who favour a unicameral system; and there are others who favour an entirely appointed system. We have not made a change because there is no consensus, and it is not right to criticise the Labour party in that way.
We have not dealt properly with arrangements for peers' remuneration and allowances, but we should do so. In addition, the public would appreciate knowing that the timing of a general election will not be subject to the considerations and manipulations of crude party politics. That means legislating for fixed-term parliaments, which almost all other comparable countries have. That could still be done in the final Session of this Parliament and, I suggest, could be considered on a free vote. Certainly, we on the Labour Benches have good reason to know, following the experiences of both 1978 and 2007, that for a Labour Prime Minister the ability to choose the date of the general election is not always an unalloyed blessing.
Though I believe that the measures to clean up politics should be pursued on an all-party basis, without partisanship, and that they could be, I believe that they would have a major benefit to Labour since it is Labour, as the governing party, which in my opinion has suffered most from the public's declining confidence in the conduct of our politics, and it is our job to try and put that right in a non-partisan way.
Finally, it may be claimed that, in the short parliamentary Session ahead of us, there is no space to deal with the additional measures that I have proposed. If that case were to be made, I would suggest dropping some of the other measures proposed-in particular, those that appear to enshrine in legislation and so subject to interminable and expensive legal contention goals and targets that
ought to be the normal business of government. Those seem to come from the "new Bill of Rights" or "NHS constitution" school of thought, which would benefit only lawyers' bank balances and render government more ineffective.
It should, for example, be possible for the Chancellor of the Exchequer to subject the Secretary of State for Education to the normal fiscal disciplines, without having recourse to a fiscal responsibility Act of Parliament. Our correct and important ambitions in relation to child poverty and international development will not be strengthened by statutory requirements, nor will precise performance targets for health or education be helped by statutory underpinning. Those approaches owe less to good government than to a premature expectation of defeat in advance of the general election.
Lembit Öpik (Montgomeryshire) (LD): I agree that targets should not be enshrined in legislation. Does the right hon. Gentleman agree that a classic case in point is the mandate from the Government to the banks to lend more? Despite all that enormous pressure, the banks still are not lending enough to small businesses. Changing the law will not change that attitude.
Mr. Clarke: Changing the law can and does change things, but we need to improve the conduct of our politics and government to operate that way round, and that is the way to do it. The public justification of this approach by reference to the need to use the Queen's Speech to highlight so-called dividing lines as we approach the general election is neither the best way to govern the country, nor the best way for Labour to win in 2010.
Martin Horwood (Cheltenham) (LD): Will the right hon. Gentleman give way?
Mr. Clarke: No, not for a moment.
The true political purpose of the Queen's Speech is to address the legislative challenges of the coming year from the point of view of the country, the Government, Parliament and the Labour party. Despite its many positive elements-I believe that the Queen's Speech does contain many positive elements-it does not do that, and so it is difficult to support. We should have faced this challenge by proposing with confidence and clarity our own programme, without reference to dividing lines or any such thing, reflecting our own sense of purpose and values.
The kind of measures that I would like to have seen included to reflect that would be measures attacking poor housing conditions by licensing houses in multi-occupation, creating better sentencing alternatives to prison for some offenders, permitting more congestion charging in difficult and controversial areas, extending electoral reform or opening more community access to schools. Instead of legislating in a way that sets out a constructive ambition for the future, I fear that this Queen's Speech shows that we are dominated by political fear of our opponents. That is not the right way for Labour to win and makes it more difficult for us to do so.
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