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I accept what the noble Baroness said: perhaps I did not answer the Convenor of the Cross Benches sufficiently well when she asked about periods of illness, particularly for Members of the House who are severely disabled. I have never opposed any attempt to find a regime for a very few special cases. We are one of the few legislative assemblies to have allowed severely disabled people to play their part. I am sure that if the noble Baroness were to invite the House Committee to re-examine these issues, she would receive a positive response.

Lord McIntosh of Haringey: My Lords, my question is about the word "attendance", which sounds very simple. I spent the past week at the parliamentary assembly of the Council of Europe in Strasbourg, where they have changed the rules. You get your hotel paid, and a smaller amount than used to be the case for subsistence. I was in Macedonia earlier this month, where the subsistence amount was the munificent sum of €28-in addition to the hotel, which they chose. Those who serve the House away from the House, such as members of the Council of Europe and the Western European Union-are they not attending the House for the purpose of this exercise?

Lord Strathclyde: My Lords, it is not envisaged that the attendance rules will be changed for Peers who are working outside the House. The current rules are clear about what can be claimed when Members are outside the House, and it is not intended that that should change.

The Earl of Onslow: My Lords-

Noble Lords: Time.

G8 and G20 Summits

Statement

3.58 pm

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, it may be a convenient moment to turn to the second Statement, which was made a few minutes ago by the Prime Minister in another place.

"With permission, Mr Speaker, I should like to make a statement on the G8 and G20 summits which took place in Canada. First, I am sure the whole House will join me in paying tribute to the seven British servicemen who have lost their lives in the past week. From 40 Commando Royal Marines: Sergeant Steven Darbyshire. From 1st Battalion the Mercian Regiment: Colour Sergeant Martyn Horton, Private

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Douglas Halliday, Private Alex Isaac. From the Yorkshire Regiment: Lance Corporal David Ramsden. From the 4th Regiment Royal Artillery: Bombardier Stephen Gilbert, who died from injuries received in an explosion earlier this month; and the soldier from 101 Regiment Royal Engineers who died yesterday. As the country marked Armed Forces Day this weekend, people did so with tremendous pride but also great sadness. We will never forget what these men and so many of their colleagues have given for us.

As I have said, I am determined that our forces will not stay in Afghanistan a day longer than necessary. I led a discussion at the G8, where we made it clear that we 'fully support the transition strategy adopted' by international partners. We are not after a perfect Afghanistan-just a stable Afghanistan, able to maintain its own security and prevent al-Qaeda from returning. So the G8 sent a collective signal that we want the Afghan Security Forces to 'assume increasing responsibility for security within five years'. The presence of large-scale international forces cannot be an indefinite commitment. We need to get the job done and bring our troops home.

Let me report to the House on the main conclusions of the G8 and G20. I have placed copies of the communiqués in the Library so that people can see the details of what was agreed. The G8 is a good forum for the leading democratic economies to give proper strategic consideration to the big foreign policy and security issues. It also plays a vital role in helping the richer nations to improve the future of the poorest. In my view, these two vital functions of this forum should continue. Let me take each in turn.

On the big security issues, we discussed the Middle East peace process and agreed the importance of putting pressure on both sides to engage in the proximity talks with the aim of creating the conditions for direct talks. President Obama specifically said that he would make this his priority in the coming months.

While the changes that Israel had proposed are welcome, they do not go far enough, and the communiqué says that the current arrangements in Gaza,

On Iran, UN Security Council Resolution 1929 was welcomed. The communiqué states that all countries should "implement it fully". Since the G8 includes Russia, Britain believes this was significant.

The UK also made the case for all members of the G8 to have positive engagement with Turkey, which could have a key role to play in resolving both the Iran issue and encouraging progress on Middle East peace. We also discussed North Korea, deploring and condemning the sinking of the "Cheonan", nuclear disarmament and non-proliferation.

On development, while the G8 has played an important role in increasing aid spending by the richest countries in the world, some of those countries have not met the commitments they set out. I stressed the importance of transparency and accountability, and the accountability report sets out what countries have done in meeting their commitments. While not perfect, it is really good progress in making sure that countries cannot make promises without being held to account for them.



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Even at a time when our countries face difficult budget decisions, it is important we maintain our commitment to helping the poorest in the world. The UK is maintaining its commitment to increase spending on aid to 0.7 per cent of gross national income. This gives us the opportunity to exercise leadership. At the same time, in order to take the public with us, we also need to make sure that every penny will reach those who need it most-that means transparency and accountability. It also means that the projects we support must be deliverable, practical and measurable, addressing the causes of poverty and not just its symptoms.

The Muskoka Initiative is a case in point. Today in the UK, the chances of dying in pregnancy and childbirth are one in 8,200. In parts of Africa, it is as low as one in seven. This is something we can change-and we must change. The resources agreed, including a big contribution from the UK, could lead to an additional 1.3 million lives being saved. As the White Ribbon Alliance points out, if you save the mother, you save the family; and if you save the family, you build a stronger society and a better economy.

Turning to the G20, this is now the right forum for all the leading economies of the world to discuss the vital economic issues. The key goal of the G20 is to continue the recovery of the world economy and secure sustainable growth. The argument, proposed by some, that deficit reduction and growth are mutually exclusive is completely wrong. The whole approach underlined by the IMF for this G20 and the subsequent meeting in Seoul is all about how the world should maximise growth through the right combination of three things: deficit reduction, tackling imbalances, particularly through actions by emerging economies, and structural reform in the advanced economies. There was broad agreement on all three and this is reflected clearly in the communiqué.

On deficit reduction, the G20 agreed:

"Those countries with serious fiscal challenges need to accelerate the pace of consolidation",

and that there was,

The advanced G20 economies committed to at least halve current deficits by 2013 and stabilise government debt to GDP ratios by 2016. While we agreed that the speed and timing of deficit reduction will vary with national circumstances, the verdict of the G20 was unequivocal.

For countries with large deficits, the time to act is now. Britain has one of the largest deficits in the G20, and the summit specifically welcomed the plans set out in our Budget last week. In terms of addressing the fundamental imbalances, China's recent decision to move towards greater exchange rate flexibility is welcome. As, in the end, growth comes only from rising productivity, we also agreed on the need to pursue structural reform across the whole G20 to increase and sustain our growth prospects.

On financial reform, the G20 agreed 'a set of principles' on bank levies to ensure that the financial sector makes a,



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That is very much in line with the plans for a bank levy, which we announced in the Budget. On making sure that the banks in all countries can withstand future crises, we also agreed that,

We agreed that new standards on the quality, quantity and transparency of capital and liquidity should be finalised by the Seoul summit in November.

Basle took 10 years and this looks like it will be completed in one. Although the drawing up of clear, robust new rules is absolutely essential, it is important that they are not implemented too quickly. We do not want a further monetary squeeze or a reduction in bank lending at this stage of the recovery. The biggest stimulus we could give to the world economy today is the expansion of trade. Although the G20 agreement to extend its pledge that no additional trade barriers should be put in place is welcome, continued failure to make progress on Doha is deeply disappointing. This has now been eight years in negotiation and there can be little confidence that, as things stand, the round will be completed rapidly.

A completed trade round could add $170 billion to the world economy. The UK led the working session on this issue at the G20. One potential way of making progress is to try to add to the benefits of the round so that all parties can see reasons for going that final mile. That was supported by President Obama. The director-general of the World Trade Organisation, Pascal Lamy, suggested that all trade negotiators should return to the table and consider both what it is they really need from the round and what it is they are prepared to offer to get it moving again. That will lead to a report at the Seoul meeting in November.

Too many people still see this as a zero sum game, where one country's success in exports is another country's failure. That is nonsense. Everyone can benefit from an increase in trade flows. We will play our part in breaking the logjam. I want this country to lead the charge in making the case for growing trade flows around the world.

On climate change, while the G8 communiqué was strongly positive on limiting the rise in global temperatures to less than two degrees and on seeking an ambitious and binding post-2012 agreement, at the G20, the communiqué was more limited. This is partly because some countries do not see the G20 as the forum for discussing this issue. In discussions, it was also clear that there was widespread disappointment at the way that Copenhagen failed to deliver a legally binding global deal. We must not give up on this. We will be playing our full part in pushing for a successful outcome at Cancun.

This long weekend of summitry was a good opportunity to build Britain's bilateral relationships. Among others, I had useful meetings with President Obama, President Hu of China, Prime Minister Singh of India and Prime Minister Erdogan of Turkey. In building a very strong friendship with our leading European partners, I also suffered the exquisite agony of watching England lose 4-1 to Germany in the company of my good friend Chancellor Merkel and

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the German summit team. Although I cannot recommend the experience of watching football in the margins of a G20 summit, I commend this Statement to the House".

4.08 pm

Lord Eatwell: My Lords, in the absence of my noble friend Lady Royall, I thank the noble Lord for repeating the Prime Minister's Statement made in another place. I also echo the tribute he has made to servicemen who have lost their lives. We all have deep sympathy for the loss suffered by their families and friends.

Much of the G8 summit was taken up, according to the communiqué, with problems of international conflict and tensions around the world. As noble Lords will be aware, most of the economic agenda was shifted to the G20 summit, to which I shall turn shortly.

On international issues, in a widely publicised article published just before the G8 summit opened, the Prime Minister made the commitment to withdraw UK troops from Afghanistan within five years. Will the noble Lord tell us whether our allies were consulted prior to the Prime Minister's announcement?

While the whole House will applaud the concern that the G8 summit displayed for development issues, will the Minister confirm that the G8 has reneged on the Gleneagles promise to double aid to Africa? On the important issues of maternal health, which quite properly dominated the development section of the G8 communiqué, will the Minister tell us whether the UK's contribution of funds for this purpose will be new money, or will it be met from the existing aid budget?

I turn to the G20 summit. As the House will be aware, it dealt predominantly with economic and financial matters, building on the earlier summits in Washington, London and Pittsburgh. Those earlier summits were characterised by a remarkable degree of unity on facing up to the global financial crisis. The unity of analysis and purpose was led at those earlier summits by the British Government, with significant support in Pittsburgh from the Obama Administration. Sadly, the Toronto communiqué exhibits a quite different tone. On the balance between stimulation and fiscal consolidation, the communiqué stresses the differences between national approaches. On the banking levy, the previous universal approach has been abandoned. On regulatory reform, it is not at all clear whether other Governments will follow the US lead in banning proprietary trading by banks, or whether they will adopt US strictures on derivatives trading. Does the Minister share the widespread concern that the present communiqué does not exhibit the earlier unity of purpose?

On specific matters, the communiqué states that,

Will the Minister confirm that the Office for Budget Responsibility has calculated that the Budget measures introduced in March by my right honourable friend Alistair Darling were indeed sufficient to achieve exactly that goal? In the Statement, the Prime Minister says that,

Is the noble Lord aware that that welcome does not appear in the communiqué?



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The Prime Minister's Statement also refers to the need for "clear, robust new rules" on financial regulations-not principles but rules. Will the noble Lord confirm that the coalition expects international rules to be imposed on the financial sector of the UK? Which elements of financial regulation does the Prime Minister expect that imposition to cover?

I turn to some of the specific measures in the financial section of the G20 communiqué. Will the Minister confirm that it is the intention of Her Majesty's Government to impose a leverage collar on UK banks, as suggested by the communiqué? Will he also clarify the coalition's position on the requirements that previously over-the-counter derivatives should now be traded through central counterparties by the end of 2012, as the communiqué also states? Are the Government concerned about the consequent concentrating of risk in central counterparties, and what do they intend to do about it?

Given the considerable concern expressed by the banks about the premature implementation of higher capital requirements, will the noble Lord explain why the idea of pro-cyclical provisioning, which was prominent in the communiqués of the previous three summits, is notable by its absence here? Has the idea been abandoned? If so, what are the implications for the size of capital buffers to be held by the banks?

At several points, the communiqué refers to the need for mutual assessment by G20 countries of the implementation of agreed measures. Can the noble Lord tell us by what process that mutual assessment is to take place? Who will do it? What precisely are the criteria to be applied? Will it be done before the next summit?

Finally, although we all welcome the fact that the Prime Minister was treated to a helicopter ride by President Obama, did he also have the chance to undertake bilateral discussions with Mrs Merkel while watching the football? As is well known, the German Chancellor is having considerable difficulty holding her coalition together. Did the Prime Minister advise her on the benefits of having weak and submissive coalition partners?

4.15 pm

Lord Strathclyde: My Lords, I was going to say how grateful I was that the noble Lord, Lord Eatwell, was standing in for the leader of the Opposition. Having heard his speech, I am not sure that that is the case. He asked a series of extremely pertinent questions that, if this were a full debate of several hours, would take me tens of minutes to reply to. I hope that he will forgive me if on some of his specific questions I answer him by way of a letter. As I know that others in the House will take what the noble Lord said seriously and with great interest, I will make sure that a copy of the letter is put in the Library.

The noble Lord, Lord Eatwell, started off with an important question about the statement by my right honourable friend the Prime Minister on Afghanistan, the so-called five-year limit and whether any discussions took place with our allies. We are in a state of continual consultation with our allies in Afghanistan. None of

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that statement was a surprise to them. They understood exactly the point that we were making. There is no desire in any country for its forces to remain in Afghanistan for any longer than they absolutely have to. Over the past few weeks, we have laid out a set of priorities that we believe will enable British forces to have largely removed from Afghanistan, as part of getting civil society in Afghanistan working again.

We have set ourselves new priorities on the aim of development aid. It is right that we and the G8 should do so. It is important continually to review our processes and priorities for our development goals, and the new priorities on the health of mothers, children and families speak for themselves. However, a unity of purpose does not mean a unity of means. Although it is true that Britain has maintained its commitment on funding overseas aid, other countries have found it more difficult. However, in the medium term, there is no reason why we should not get back to the original position. We do not anticipate new money coming in to deal with those priorities. It will be a change of priorities within the existing budget but, as we have explained, over time we hope to meet our target of 0.7 per cent of GDP.

On bank levies and the financial situation, as the noble Lord knows only too well, the IMF forecasts that the UK will in 2010-11 have the largest budget deficit in the G7. When he talked about the record of the former Chancellor of the Exchequer, I was not quite sure whether he took pride in the legacy that the Labour Party left this country. We must never lose sight of the lesson of the past three years: taxpayers pick up the bill not only when one of our banks fails but when Governments spend too much money. The bank levy, the concentration of risks and higher capital requirements will all be debated and discussed as quickly as possible over the next few months. There is no question of the new bank rules being imposed. They will need to be agreed by all, and we believe that there is every possibility of those new rules being agreed by everybody.

The noble Lord poked fun at my coalition colleagues, which was entirely unnecessary. I can confirm to him that we are getting along extremely well. Sometimes people say that we have a lot to learn from our European colleagues. I hope that when it comes to working with coalition colleagues, they will find that they have a lot to learn from us.

4.19 pm

Lord Laming: My Lords, I am sure that the whole House will support the warm tributes that the Leader of the House and others have paid to our brave military personnel. Does he accept that many of us welcome the Prime Minister's decision to get our troops out of Afghanistan at the earliest practicable time? Does he also accept that, if that requires involving the Taliban in negotiations, that is a nettle that will need to be grasped?

Lord Strathclyde: I thank the noble Lord, Lord Laming, for what he has just said. He reiterates the position extremely well and with a clear understanding of what the issues are. There is increasingly an appreciation and understanding that a violent and military-directed

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war in Afghanistan is not a winnable proposition for anybody, least of all for the people of Afghanistan themselves. All peace processes around the world have dealt with it by, slowly but surely, bringing all sides together. That will need to be the case in Afghanistan and is increasingly the thrust of our policy.

Lord Dholakia: My Lords, may we from this side join the noble Lord in the tributes that he paid to the seven soldiers who lost their lives last week?

One matter of concern is the non-action on development aid, particularly the lack of action on the targets for alleviating poverty. How do the Government plan to ensure that the decisions taken by the G8 and the G20 will be actively implemented? Furthermore, why was climate change discussed only in the G8? If there is to be a global agreement on the way forward on climate change, surely the non-G8 members of the G20 will have to play a crucial role. Finally, do the Government agree that the G8 has now become an anachronism and that it would be better if its role was assumed completely by the G20?

Lord Strathclyde: My noble friend is right to draw attention to development aid, a matter which very much dominated the discussions of the G8. That delivered for the first time a comprehensive accountability report which assessed transparently the G8 progress against its development-related commitments. In the communiqué the G8 leaders reaffirmed their commitments on overseas development aid, on aid effectiveness and on HIV/AIDS. Furthermore, however cynical one is-and I am not suggesting for a moment that my noble friend is cynical when it comes to these matters-about a very serious attempt to give a new priority to these initiatives, the House will recognise that there was an agreement in the Muskoka initiative which means that funding for maternal, newborn and child health will be the new priority.


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