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5. Mr. Alistair Carmichael (Orkney and Shetland) (LD): If he will take steps to limit the levels of penalty charges imposed by banks on their customers; and if he will make a statement. 
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): The Government announced in the pre-Budget report on 9 December that they would work with consumer groups, the Office of Fair Trading and the banks to agree a new framework that will make bank charges fairer, simpler and more transparent. The Government will take action to deliver change if a voluntary approach does not result in a fair outcome for consumers.
Mr. Carmichael: I thank the Minister for that very helpful reply. She was given a fairly broad hint by the judgment of Lord Walker in the case of Abbey National and others, when he said that his decision was
"not the end of the matter,"
"Ministers and Parliament may wish to consider the matter further."
What can she do to review the operation of section 140 of the Consumer Credit Act 1974, which requires fairness in the contractual relationship between banks and customers?
Sarah McCarthy-Fry: The Office of Fair Trading is still considering that judgment in detail, and on 22 December it intends to make an announcement about what further action will be taken. Our position is very clear: we want to see a fairer and more transparent system of charges, and we are working very closely with the OFT to achieve that.
Mr. Andrew Love (Edmonton) (Lab/Co-op): I welcome the Government's decision to stop unrequested credit card cheques being sent to consumers, but I urge the Minister also to consider unrequested credit card limits. That is of great concern to consumer organisations and very detrimental to the most vulnerable consumers.
Sarah McCarthy-Fry: I thank my hon. Friend for his question. He has a long record of standing up for the consumer in such matters. We were very pleased to be able to introduce measures to stop the practice of unrequested credit card cheques, and we continuously keep under review how we can best protect our most vulnerable people.
7. Christopher Fraser (South-West Norfolk) (Con): What recent discussions he has had with his EU counterparts on EU regulation of financial services. 
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): The Chancellor of the Exchequer has regular discussions with European Finance Ministers on EU regulation of financial services, most recently at the ECOFIN meeting on 2 December.
Christopher Fraser: Government complacency has seen the role of Commissioner for Internal Market and Services go to France, and France and Germany have outmanoeuvred the Government on the alternative investment fund managers directive. Have the Government learned a lesson and put in place a new procedure to ensure early engagement over the proposals for regulation of the financial services industry?
Sarah McCarthy-Fry: I disagree. It is not the case that we have not been engaged early in all the processes. The Chancellor and our other Ministers have actively and successfully engaged in the EU agenda, both directly in the EU and within the G20, and I can assure the hon. Gentleman that that will continue. With the allies that we have in the EU and the European Parliament, we can do that; I am afraid I cannot say the same for the official Opposition party.
David Taylor (North-West Leicestershire) (Lab/Co-op): Earlier this year, the Chancellor was thinking aloud about the potential of an independent macro-prudential early warning system linking the Bank of England to European central banks, and a single micro-prudential rule-making body. Can the Minister say what the state of play is in terms of those developments?
Sarah McCarthy-Fry: Our position is very clear: we do think that we need an EU-wide system to protect financial stability. We are also very clear that that EU-wide system should not have any impact on our fiscal responsibilities. As a result of the discussions at the ECOFIN meeting, we have now secured the fiscal safeguard that we were seeking.
Mr. Mark Hoban (Fareham) (Con): In June the Chancellor said that he was determined to block the moves to force the UK taxpayer to foot the bill for decisions made by the new European supervisory authorities. However, is not the reality that the Chancellor lost that battle in December's ECOFIN meeting? None of the safeguards that he or the Exchequer Secretary talked about amount to a veto to protect national sovereignty and national taxpayers.
Sarah McCarthy-Fry: I absolutely disagree. In the negotiations, we secured the fiscal safeguard that our Chancellor went out there for, and which I brought to the House when we had the debate the day before.
8. Justine Greening (Putney) (Con): When he expects to announce arrangements for the next comprehensive spending review. 
The Chief Secretary to the Treasury (Mr. Liam Byrne): Departmental budgets are set until April 2011. As the Chancellor made clear in his statement, now would not be the time for a spending review, given the uncertainties that remain in the world economy.
Justine Greening: But as the Minister will recognise, last week the Chancellor predicted the economic growth for next year, so will he pledge to publish the comprehensive spending review results before next year's general election?
Mr. Byrne: I think that the Chancellor's judgment on that will depend entirely on the uncertainty that we see at the time in the international economy.
Mr. Gregory Campbell (East Londonderry) (DUP): Does the Minister not agree that there is a need right across the United Kingdom for certainty as we look forward into 2010 and beyond, not just for the next 12 months but for a period comparable to that covered by a CSR?
Mr. Byrne: If the Chancellor had set out a spending review earlier this year, for example, it would have been pretty likely that those figures and settlements would have had to be revised, as unemployment turned out to be far lower than we initially expected. Indeed, today the Secretary of State for Work and Pensions is setting out the argument for the kind of savings that could be achieved on the welfare bill if, as we hope, unemployment is much lower than it might have been over the next few years. Until that certainty is acquired, it would be wrong to set out to the last pound and the last penny what each individual Department should get. We are very clear that halving the deficit over four years is in the right time frame. Halving it any faster-over three years, for example-would involve taking £26 billion out of public spending. That would mean, for example, putting about 5p on VAT, or halving the education budget.
Mr. David Gauke (South-West Hertfordshire) (Con):
Since last week's pre-Budget report we have learned that the Treasury itself does not believe that the Government's spending plans provide a credible route to restoring our public finances, and that the Schools Secretary was still wringing concessions out of the Treasury after the Chancellor went to bed on Tuesday night. Is it not now
clear that even if the Treasury Ministers recognise the scale of the fiscal crisis, they are too weak to do anything about it?
Mr. Byrne: I am sure there must have been a question lurking in there somewhere. I advise the hon. Gentleman not to believe everything he reads in the newspapers. What the Chancellor did last week was set out a clear plan for how we can halve the deficit over four years. It is pretty much the fastest consolidation plan in the G7, and it is also the clearest. We stand by the judgment that four years is the right period over which to halve the deficit. Of course there are people who have advised us to take a different direction and halve the deficit over three years, which would involve some pretty difficult judgments. That is the policy advocated by the Opposition, but they have not yet said whether they would put up VAT by 5p or halve the education budget. Is that because they do not know, or because they will not say?
9. Andrew Selous (South-West Bedfordshire) (Con): What recent assessment he has made of the relative effect of the UK budget deficit on the economy in comparison with other G20 economies. 
The Financial Secretary to the Treasury (Mr. Stephen Timms): In common with that of other G20 countries, UK fiscal policy will continue to support businesses and families until the recovery is secure.
Andrew Selous: Does not the fact that Britain's deficit is larger than that of Greece, which has had its credit rating downgraded, mean that we urgently need to get our finances in order and keep interest rates low so that we can get Britain growing again?
Mr. Timms: We have seen an unprecedented global downturn, and the debt is going up in all the G7 countries as well as other countries. Of course UK debt was low at the beginning, giving us extra fiscal space, as the International Monetary Fund has pointed out. The additional support that we have provided has meant fewer jobs lost, fewer business failures, fewer homes repossessed and less damage to the economy. As my right hon. Friend the Chancellor has explained, we will now halve the deficit over the next four years and so secure the public finances.
Joan Walley (Stoke-on-Trent, North) (Lab): Is not the most important thing the fact that we have a deficit reduction plan, so that we can keep money in the economy, get through the recession and keep up front-line spending, particularly on health services? In Stoke-on-Trent we need the Haywood hospital and we need our schools, and we do not need the deficit.
Mr. Timms: My hon. Friend is absolutely right. It is vital that we have a plan-as we do-and that we can show how we will continue to live within our means while also providing the investment that her constituency and the public services need. We must also continue to support the economy, given the uncertainty that is still around. The Opposition made the wrong call on the banking crisis and the wrong call on the recession, and now they are making the wrong call on the recovery as well.
10. Daniel Kawczynski (Shrewsbury and Atcham) (Con): What recent discussions he has had with credit ratings agencies in respect of the UK's AAA rating. 
The Financial Secretary to the Treasury (Mr. Stephen Timms): We follow the assessments of the credit rating agencies closely. Moody's restated last week that the UK is a resilient triple A sovereign. Standard and Poor's reaffirmed the UK's triple A rating in May, and Fitch did so in July.
Daniel Kawczynski: The Minister must recognise what terrible financial damage, and loss of prestige to our country, would result if our rating were lowered. How confident is he that our triple A rating will not be lowered over the next six months?
Mr. Timms: It is important that all three major agencies assign us a triple A rating. As I said, Moody's reaffirmed its rating just last week. It clearly helps that we went- [Interruption.]
Mr. Speaker: Order. I apologise for interrupting the Minister, but there are a lot of private conversations taking place in the Chamber, and it is very unfair both to the Member- [Interruption.] Order. Mr. Fabricant, you know a lot better than that. I know where to look, and I do not require your help. Private conversation is very unfair on the Member asking the question and on the Minister answering it, and I think it would probably be regarded by members of the public as rather rude.
Mr. Timms: Thank you, Mr. Speaker. It does help that we went into the recession with low debt, as was underlined in the Moody's note of 26 October. It is also important that we have the plan that we have set out for halving the deficit over the next four years. That is the responsible approach.
11. Ann Winterton (Congleton) (Con): What his most recent assessment is of the effectiveness of his programme of bank recapitalisation; and if he will make a statement. 
The Economic Secretary to the Treasury (Ian Pearson): Since the events of last October, the Government have acted decisively and comprehensively to support the stabilisation of the banking system and protect depositors. The recent entry of the Royal Bank of Scotland into the asset protection scheme on terms that improve incentives and deliver better risk sharing with the private sector, as well as Lloyds Banking Group's private capital raising, means that banks are better capitalised and better positioned today to support the economy in its recovery.
Ann Winterton: Is the Minister aware of the National Audit Office report that says that neither Lloyds nor the Royal Bank of Scotland are meeting targets for lending to business? Bearing in mind that small and medium-sized enterprises in particular need the oxygen of available credit, what action is he taking to ensure that those two banks meet one of the objectives of re-capitalisation following the huge input of taxpayers' money?
Ian Pearson: I am certainly aware of the NAO's report-a couple of questions on the Order Paper cover the same matter. As the hon. Lady will be aware, the situation is that RBS and Lloyds banking group have made significant strides in improving lending to SMEs. However, a lot of small and big businesses have been paying down debt during this recession, which is why the net lending figures do not look so promising. The banks have signed lending commitments, which are binding, and we expect them to keep to them. We continue to monitor the issue very closely.
13. Mr. David Amess (Southend, West) (Con): What response his Department plans to make to the National Audit Office report on the Government's support for banks; and if he will make a statement. 
The Economic Secretary to the Treasury (Ian Pearson): The Government welcome the National Audit Office's recent report, and particularly its conclusion that the support that we have provided to the banks was justified. We will consider the report and respond in the normal way.
Mr. Amess: I am sure that that response will make very interesting reading, but perhaps the Minister will explain why the Treasury gave a clean bill of health to the Royal Bank of Scotland just weeks before the bail-out.
Ian Pearson: It is my understanding that the Treasury did no such thing. We will obviously respond to the report in detail in due course, but I should like to quote paragraph 19 to the hon. Gentleman:
"If the support measures had not been put in place, the scale of the economic and social costs if one or more major UK banks had collapsed is difficult to envision. The support provided to the banks was therefore"
15. Mr. Mark Harper (Forest of Dean) (Con): What estimate he has made of the current and future level of growth in the UK economy compared to other G20 countries; and if he will make a statement. 
The Financial Secretary to the Treasury (Mr. Stephen Timms): The pre-Budget report forecast that UK gross domestic product will have fallen by 4.75 per cent. in 2009 and will recover to 1 to 1.5 per cent. growth in 2010. The report did not forecast what will happen in other G20 economies, but world GDP is expected to contract by 1 per cent. this year, then to grow by 3.25 per cent. in 2010.
Mr. Harper: I am grateful to the Minister for those numbers. Given that we are the only G20 country still in recession, he will have to forgive us for not taking his forecast for granted. However, given that over the next couple of years, between pre-crash and post-crash levels, the level of debt in this country will have doubled-in fact, the rise in the debt will be third only to Iceland and Ireland-is the Minister not concerned that our growth levels will be much lower as a result? That will be a dangerous situation for everyone who lives in this country.
Mr. Timms: Let me first of all reassure the hon. Gentleman about our forecast. We said at the time of the Budget that we forecast 1 to 1.5 per cent. growth in 2010. At that time, most people, including the Opposition, said that that was much too optimistic. Today, however, the consensus has caught up with the forecast that we set out. I hope that the hon. Gentleman will be reassured by that vindication of my right hon. Friend the Chancellor's forecast.
Right across the world, countries are borrowing more, which is the right thing to do. The stimulus that we provided has reduced uncertainty and helped to prevent a spiral of falling confidence and demand. That is why the impact of this unprecedented global shock has been so much less in the UK than many expected. If we had taken the advice of the Conservatives and let the recession take its toll, the damage and the long-term cost to the economy would have been far greater.
Mr. Andy Reed (Loughborough) (Lab/Co-op): I am sure my right hon. Friend is aware that in certain sectors, there is potential for growth, and those are the ones that the Government need to invest in. I am thinking particularly of so-called green jobs. Intelligent Energy in my constituency is growing as a consequence of not only Government investment but investment from the private sector. That will deliver on jobs, but also from an environmental point of view in, for example, hydrogen fuel cells. Will he ensure that all Government aid is targeted at those future job growth areas, where we will make a significant impact on UK plc?
Mr. Timms: My hon. Friend is right, and I very much enjoyed my visit to Intelligent Energy as his guest a few years ago. Our "New industry, new jobs" strategy is targeting those parts of the economy with the biggest growth potential-for example, green jobs and the digital sector-and ensuring that we have the wherewithal to do well in the future in those sectors.
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