G7 Finance Ministers

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 1st March 2007.

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Photo of Ann McKechin Ann McKechin Labour, Glasgow North 10:30 am, 1st March 2007

If he will make a statement on the priorities identified by his Department for the forthcoming G7 meeting of Finance Ministers.

Photo of Meg Hillier Meg Hillier PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Communities and Local Government

If he will make a statement on the discussions he had with G7 Finance Ministers on his education for all initiative for Africa.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Our international development priorities for the G7 are to support universal education for all children, including holding an international summit on the subject on 2 May, and to extend our new vaccination facility to malaria to prevent 1 million unnecessary deaths each year. Our domestic priorities as G7 members are to ensure low inflation and I can tell the House that we have today accepted the public sector pay review body reports to be implemented in two stages, and the armed forces in full, from 1 April. The overall awards come within the inflation target, at 1.9 per cent., demonstrating our total determination to maintain discipline and stability and to continue with an 11th year of sustained economic growth.

Photo of Ann McKechin Ann McKechin Labour, Glasgow North

I know that my right hon. Friend will try to ensure that G7 Finance Ministers live up to the promises they made in 2005 at Gleneagles on the issue of funding international development. Does he agree that the G8 leaders should be looking at a variety of new social protection programmes that are being used in the least-developed countries to provide child benefit and pensions, which in many cases are the key to the world's poorest people obtaining proper food and getting access to education and to proper health care?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am grateful to my hon. Friend, who has taken a major lead in international development in Scotland and elsewhere. There has never been a year when international development payments by member Governments committed to overseas development have been higher but we must maintain that over the next few years. I agree that we have to deal with issues of child labour and child protection and that we have to build capacity in health care systems. Over the next two months, our two priorities at the G8 will be, first, to move forward with our plan for school education so that 80 million children who do not go to school get the chance to do so and, secondly, to build on what we have achieved by creating vaccination facilities to prevent, first, pneumoconiosis, and then tuberculosis, diphtheria and, in future, malaria. We are prepared to make substantial investments as a Government—with, I believe, the support of the whole House—to ensure that we can eradicate some of the worst diseases in the world.

Photo of Meg Hillier Meg Hillier PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Communities and Local Government

My right hon. Friend mentioned the 80 million children who are currently not receiving primary education. I am sure that he is aware that around half of those are in war-torn states. If we do not get those children into education, we have no hope of reaching the millennium development goal. Will he support the work of Save the Children on this and will he try to make sure that this is on the agenda at the education for all donor conference on 2 May?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I assure my hon. Friend that that will be the case. There are about 40 million children in conflict zones or zones where failed states are unable to deliver the capacity to create education, far less train teachers, build schools and provide educational facilities for the future. We are discussing the idea that, behind frontiers, an international organisation similar to the Red Cross and Médecins sans Frontières could offer education, with the protection of international law, to children in conflict zones. That new idea must be properly developed, but I believe that there will be international support for it, and I hope that there will be all-party support in this country. If we were able to ensure that children in failed states and in areas of conflict received education, we could meet the international development target that every child has primary education by 2015.

Photo of Peter Tapsell Peter Tapsell Conservative, Louth and Horncastle

At the Chancellor's meeting with the G7 Finance Ministers, will he advise that the International Monetary Fund, which is said to be close to insolvency, should, as recommended in the Andrew Crockett report dealing with the subject, sell part of its gold—its ultimate core of value—so that it can continue to pay its staff wages? If not, what will he recommend?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am grateful for that question because it allows me to say that the International Monetary Fund is not going bankrupt, and that its role is changing from conflict resolution to the prevention of crises. I believe that, given that new role to perform, the IMF will need less money to do its job. Its emphasis will be on publicising, transparency, surveillance and making sure that the world knows the state of individual economies and of individual continents. In future, it will be engaged in fewer of the large lending operations in which it used to be involved. However, as chairman of the IMF committee, I can assure the hon. Gentleman that, far from being bankrupt, the IMF is extending its role into new areas.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

Do not worry, Mr. Speaker, I will not be suggesting that we go back on to the gold standard any time soon. [Interruption.] It is only a matter of time, of course.

No one would deny that the Chancellor has a strong commitment to African matters. However, will he ensure that, at their meeting, the G7 Finance Ministers hold that commitment close to their hearts so that we can try to ensure that we have free and open trade at the earliest possible opportunity, particularly in relation to agricultural produce, which offers a way out of poverty for many African nations?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

There is absolutely no doubt about what we could achieve this year with an international trade deal. It would make it possible for large numbers of people in Africa to trade with the rest of the world, and it would enable them to escape from poverty. That is why we are working with other countries, and why we put so much emphasis on achieving an international trade deal over the next few months. As the hon. Gentleman might know, trade talks have started again on a formal basis, after the informal discussions that took place at Davos, and I believe that if Europe and America can make some of the concessions that are necessary, Brazil, India and other countries, which also have concessions to make, will come on board. The hon. Gentleman must also recognise that to make it possible for countries in Africa to trade, they need support to build up capacity to trade; they need support in infrastructure, transport and telecommunications. That is why, as part of a trade deal, we are prepared to lead the way with other countries with an aid-for-trade package that would enable African countries in particular to build up their resources for the future.

I am pleased, by the way, that the hon. Gentleman has announced that the Conservative party will not go back to the gold standard. That is about the only specific policy announcement that we have had from it.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

Can the Chancellor confirm that of all the G7 countries Britain comes out top on jobs, stable growth and Government debt? If we were a football team, we would have done the treble nine years in a row.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

And it will be 10 years in a row.

I should tell the House that, as my hon. Friend said, when we came to power in 1997, Britain was seventh out of the seven G7 countries in terms of per capita income. Japan, Germany, the United States, France, Italy and Canada were ahead of us, and we were No. 7. Last year, the gross domestic product per capita income figures were as follows: the United States, £22,000; the UK, £19,000; France, £17,000; Germany, £17,000; Japan, £17,000; and Italy, £15,000. Far from being at the bottom of the G7 league, we are now near the top, and that is due to the policies of stability and employment pursued by this Government. It is unfortunate to note that a party that has proposals to increase spending, while cutting taxes and borrowing, and a fiscal rule to cut spending by £18 billion, would lead us back into the old problems of unemployment, recession and public spending cuts.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

Given that the Germans have asked the G7 Finance Ministers to look at the issue of highly leveraged private companies, what are the Chancellor's views on private equity? Does he share the enthusiasm of his Conservative shadow and the Prime Minister, or the serious reservations of the CBI, the TUC, his two declared leadership opponents and, I think, the Economic Secretary, who believe that there is a serious problem of lack of transparency, as well as a drain on Treasury funds in terms of tax relief?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am sorry if the Liberal party is going down the road of doubting whether a whole category of business finance is capable of serving the nation. As is usual in many areas, there are companies that are short-termist and those that are long-termist. We want a British economy in which there is long-term investment in the future of our industry that will create jobs and opportunities for people. Where companies are too short-termist, we will speak out. Where private equity companies and others are operating in a long-termist way, we will congratulate them on what they do. The evidence is that private equity has created more jobs at a faster rate than some other institutional investments in the economy. It is about time that the Liberal party was prepared to have a balanced debate on this, as on other issues.

Photo of Barry Sheerman Barry Sheerman Chair, Education & Skills Committee, Chair, Education & Skills Committee

Does my right hon. Friend agree that giving education to 80 million young people is not the only priority for the G7? I agree that the Government have done much work in this area, but can he push the G7 to ensure that the money and resources get to the children, and do not bypass them and get into the hands of corrupt Governments and officials—that they reach bodies such as non-governmental organisations that deliver on the ground?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am grateful to my hon. Friend, who has taken a long-term interest in education issues throughout the world, for that question. Britain's proposal—that individual countries sign education plans that will build capacity, particularly teacher training—will be monitored by the World Bank's fast-track education initiative and is the right way forward. I hosted a conference in Nigeria at which 20 African countries agreed to submit education plans. This is a major breakthrough, in that they are now proposing how they will spend their resources, as well as the international resources that are provided. We have support from a number of G7 Governments for the pledging conference that we will hold on 2 May. In advance of the G8 meeting in Germany, we can make very considerable progress, with a number of countries signing up to our initiative. However, our initiative alone—£1 billion a year for education—means that in the next few years, we alone will be educating 15 million additional children in some of the world's poorest countries. That is thanks to the international support that has been given to this education initiative.

Photo of George Osborne George Osborne Shadow Chancellor of the Exchequer

One of the most important issues that the G7 Finance Ministers will be dealing with is of course climate change. Carbon emissions in Britain have risen in the past 10 years and continue to rise. We have discovered that this week, the Chancellor's Smith Institute trustee, Deborah Mattinson, told a private Labour meeting that there is public

"dissatisfaction with the government's performance" on the environment. Why does he think that is?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

We introduced the climate change levy, which the Opposition opposed. We extended the aggregates levy, which the Opposition opposed. We extended the landfill tax, which the Opposition opposed. Every time that we tried to deal with the problems of the car industry, the Opposition opposed us. If anybody was taking an objective view of who had done more for the environment, I do not think that they would come down in favour of the Conservative party.

Of course, one reason why we can do better on the environment is co-operation within the European Union. [Interruption.] Oh yes. That is why we are signing agreements with other European countries to reduce carbon emissions. The hon. Gentleman spoke at the Centre for European Reform yesterday. At the beginning of his speech, he said "I'm a pro-European", but within 12 minutes he said:

"I would call myself a Eurosceptic."

Photo of George Osborne George Osborne Shadow Chancellor of the Exchequer

Of course the European Union can do things to tackle climate change: it does not mean that we have to give up all our sovereignty to let it do them —[ Interruption. ] Now listen, I am asking the Chancellor about the views of Deborah Mattinson. I am surprised that he cannot agree, because she is his personal pollster and the event at which she was speaking was called "Brown's first 100 days" —[ Interruption. ]

Photo of George Osborne George Osborne Shadow Chancellor of the Exchequer

And only newly promoted as well.

Now look, that is not the only such event this week. What does the Chancellor say to the former Home Secretary, who served with him in the Cabinet, who said yesterday that thanks to the Chancellor, the Labour Government were sleepwalking to disaster? Does Mrs. Rochester agree?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I repeat what the shadow Chancellor says to every meeting that he addresses in the City:

"The Labour party has become in the public's minds the party of economic competence. Establishing economic credibility allowed them to persuade the public that they then could deliver on their promises of social justice."

He also talks about

"Labour's success on macroeconomic policy".

That is very different from the interview that I heard him give this morning. The Leader of the Opposition said that he had an absolute commitment to introducing a married couple's allowance, but the shadow Chancellor said on the radio this morning that he could say only that they were thinking about it. So in the Conservative party, Front Benchers make public spending commitments, Front Benchers say that they will cut taxes and Front Benchers say that they will cut borrowing and achieve stability. None of it ever adds up, as it never did in any previous election. As a result of the hon. Gentleman's policies, we would be back to where we were in 1992, when the Leader of the Opposition had to stand with the then Chancellor and pronounce about 15 per cent. interest rates, 3 million unemployed, public spending cuts and the worst economic record of any Government since the war.