The Economy

Part of Council Tax Rebate – in the House of Commons at 4:17 pm on 31st March 2009.

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Photo of George Osborne George Osborne Shadow Chancellor of the Exchequer 4:17 pm, 31st March 2009

The Chancellor shakes his head, but the last time we exchanged remarks about IMF reform across the Dispatch Box, he said that it should not be attempted at the moment because it would be too difficult. As I say, that is disappointing.

We want the members of the G20 to live up to the commitments on aid signed at Gleneagles by the G8, because all of us in the House appreciate that the poorest countries are the silent victims of the credit crunch. On financial regulation, the test will be whether the G20 engages with or ducks the difficult issues. We can, of course, expect a strongly worded statement on bankers' bonuses and offshore tax havens; the Government would have more credibility on those issues if the Prime Minister dealt with Lord Myners. The vote of confidence that Lord Myners got from his boss, the Chancellor of the Exchequer, was hardly a ringing one. We await events this afternoon.

It would also be good to have reform of the structure of banking. I noticed that although Paul Volcker, Nigel Lawson and the head of the Bank of America are all saying that we should look at dividing narrow banking from investment banking, the only person in the world who wants to shut down that debate is the Prime Minister, who has already made up his mind and does not want to listen to any other argument. It would be useful to have that debate in the G20.

Those are all tests for the Prime Minister as he chairs the summit. [Interruption.] I am glad to hear that Mr. Campbell is confident that the Prime Minister will pass all those tests. Of course, the real test will be whether he is focused on the right objectives in the build-up to the summit or whether we will end up with what Lord Malloch-Brown candidly called

"meaningless, empty commitments which don't survive the flight home".

The fear is that the Prime Minister is not focused on those objectives but has instead wasted his energies on trying to use the international stage to fight his domestic political battles. After all, as the Chancellor knows perhaps better than anyone, the Prime Minister will look for the domestic political advantage in everything. He cannot help himself.

The Prime Minister's plan has been pretty clear since the beginning of the year. He wanted to get all the G20 leaders together in London and make them sign up to a second round of fiscal stimulus. He then wanted to unveil the British version of that second fiscal stimulus three weeks later—in the Budget, which he delayed for the purpose—and to leave the Opposition on the wrong side of one of his pathetic dividing lines. Well, if that was the plan, it has spectacularly backfired. The result is hardly the springboard for yet another political relaunch by this Prime Minister but actually proof that the Prime Minister is the one who is isolated, while European Governments are lining up with us to warn about the dangers of borrowing more.

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