Economic Crisis
Opposition Day — [20th Allotted Day]
4:00 pm

Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)

I think that the right hon. and learned Gentleman is being rather partisan in his caricature of the circumstances. When I say that we have an important job to do in re-engineering the global economic system, that does not mean that we do not have equally important reforms to put in place nationally, or that we do not have equally important reforms to put in place at European Union and G7 level. Those jobs must be done together.

Another lesson of the new era in which we find ourselves, following the credit crunch and the way in which it is manifesting itself, must be that, given the extent of the present interconnection, our problems cannot be solved simply by examining national circumstances or national regulators. That does not mean that the Financial Services Authority has not recognised that it needs to change and reform. Indeed, a programme of work is already under way to respond to some of the shortcomings that the FSA's chief executive identified. The reforms in the Banking Bill constitute another—but only one—aspect of that. There is much work to be done across the piece, at national and at global level, and all the parts of that work must fit together.

As trying to run an economic system without credit is rather like trying to run a car engine without oil, restoring some normality to credit markets has been an obvious priority for the Government. A sound banking system is an essential precondition for the long-term health of the economy, so by definition our initial focus has had to be on the banks.

That is why on 8 October, in consultation with the tripartite authorities, the Government announced comprehensive measures to ensure stability in the financial system. By recapitalising banks, guaranteeing inter-bank lending and extending the special liquidity scheme, the Government are demonstrating their commitment to do whatever is necessary to maintain stability. The fact that this comprehensive plan was followed by similar action around the world shows both the global nature of the challenge confronting us and the leadership given by the UK in responding to it.

The Prime Minister and the Chancellor are working with other global leaders and our European partners to ensure that the banks are stabilised and begin to lend again, but they are also focusing on reform of the international system to ensure that it can cope with the realities of an interconnected and increasingly interdependent global economic system.

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