Queen's Speech — Debate (3rd Day)

Part of the debate – in the House of Lords at 4:30 pm on 8th December 2008.

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Photo of The Bishop of Durham The Bishop of Durham Bishop 4:30 pm, 8th December 2008

My Lords, I was pleased to see in the gracious Speech the promise that the Government,

"will work for a co-ordinated international response to the global downturn".

I am slightly surprised that I am the first to pick up this theme of the economic statements in the gracious Speech.

We urgently need to rethink the structures of our global economy. The unintended consequences of the 1944 Bretton Woods agreement include the tilting of the global economy to benefit rich nations, and several of the poorest countries in particular still face massive spiralling debt. Since a country cannot declare itself bankrupt and start over, it is compelled to prioritise debt-serving ahead of healthcare, clean water, education and so on.

At the recent Lambeth Conference, I was privileged to meet bishops from Tanzania who spoke of the dramatic effect of the debt remission that was granted to that country a few years ago. Other countries have also benefited enormously, but a huge task remains. More than $400 billion of debt still needs to be cancelled, most of which will be taken up by 100 per cent relief for the very poorest countries. Debt in Bangladesh stands at $19 billion, and repayments are higher than the annual health budget. Yet Bangladesh is one of the countries most at risk from climate change, and about 40 per cent of the population lives on less than $1 a day.

Or take the Philippines. Most of its $28 billion of debt was incurred under the Marcos dictatorship. The country has already paid five times that amount. Even so, the compound interest has ballooned the debt to more than £60 billion. The result is that one child in 10 suffers from malnutrition and one person in five has no access to clean water. Those two figures stand for many more around the world. All this is miles away from the noble vision articulated by Gordon Brown, speaking in St Paul's Cathedral in March 1999. He said:

"Poor country debt is the great moral issue of our day, the greatest single cause of poverty and injustice across the earth ... We must drop the debt and drop it now".

That agenda was then endorsed by the then Leader of the Opposition, the right honourable William Hague.

Whenever I and others have spoken about these things in the past 10 years or so, we have faced a chorus of excuses and been told that we do not understand how the world works, that people who borrow money must learn that they have to pay it back, or that the borrowers were wicked, irresponsible or incompetent, and that any debt relief will only be siphoned off to fund yet more extravagance on the part of the few. Recent events have blown that excuse right out of the water. Governments, including our own, are, as we know, bailing out banks. At least one bank is being refloated in such a way as to continue unchecked, with large bonuses and shareholder payouts. The American Government are bailing out car manufacturers with loans taken from funds that have been allocated for ecologically significant design improvements. The very rich are doing for the very rich what they have refused to do for the very poor. If the promises in the gracious Speech are to be fulfilled, these global issues must be addressed as a matter of first priority.

We should not be aiming to return to business as usual, as some phrases in the Front-Bench speeches might have implied. It is business as usual that has got us into this mess. We need a paradigm shift. We cannot simply return to the old mixed economy, balancing the rampant follies of the so-called free market with appropriate government ownership and intervention; we have to address the underlying issues. Behind the sudden new squeals for help from the very rich, we must listen to the long-term cries from the very poor. My colleagues and I intend to continue our work with bankers and economists to shape and develop a future global economic order in which all may genuinely benefit. When I say "all", I think of the people I work with day-by-day in the north-east of England. In the strong opening paragraphs of the gracious Speech, the Government promised to address local issues facing families and businesses.

Ten days ago, I hosted a meeting of business leaders from across the north-east. The message came through loud and clear from speaker after speaker that the banking model we have worked with recently is flawed and needs to change. Bailing out the banks will not do any good unless the system is radically reformed. The massive over-regulation, which tries to diminish risk-taking in some areas and which is a standing joke among struggling small businesses, now appears as a displacement activity for the massive deregulation which has encouraged astonishing irresponsibility and inappropriate risk-taking in the financial sector.

That said, I am hearing two different messages around the north-east right now. On the one hand, the recent steady economic improvement has been good and diverse. Some, previously redundant, have found new work. We have a traditional low-spending population, so when money is tight, we do not see a drastic change in spending patterns. The manufacturing members of the North East Chamber of Commerce, particularly in the Tees Valley, are markedly more positive than other parts of the business community. However, unemployment has gone up to 8 per cent, the highest in the country. There have been significant job losses, even in thriving companies like GlaxoSmithKline in Barnard Castle. Our many small and medium-sized enterprises are particularly vulnerable to sudden, economic swings. I take the point of the noble Lord, Lord Mandelson, about the raising of the threshold for rates on empty properties, but the North East Chamber of Commerce is insisting that this does not actually address what it really needs to in that area. In larger businesses, we are seeing a slowdown in production; for example, the forthcoming extended Christmas closure period at the Nissan plant in Sunderland. Parish clergy across the diocese tell me that many people are living on a knife edge, barely able to make ends meet. Not for the first time, many in the north-east ask themselves whether they have fallen off the map, especially following the Northern Rock debacle which hit hard at many north-eastern charities previously supported by the Rock.

Meanwhile, we in the churches remain committed to working on the aims highlighted in the gracious Speech through local partnerships at every level. Churches are distributing food and running small credit unions. Churches can often give a lead in helping to identify to social services those most at risk. In addition, though voluntary agencies are themselves at risk when money is tight, we can still help provide voluntary work for the unemployed, particularly young people, so that they can develop skills and retain a sense of self-worth. We are actively involved in helping local communities to think creatively about our medium and long-term aims and how to prepare for them. The churches can take a small but significant lead in helping maintain and restore morale and thus assist in the objectives outlined in the gracious Speech. I hope in years to come that we look back to this moment, not as a disaster followed by a muddle, but as a time of fresh vision and bold action which made a real, lasting difference both globally and locally.