My Lords, I apologise; I heard nothing from the opposition Front Bench of concern for the plight of such people. Indeed, we heard the noble Lord, Lord De Mauley, refer to the "extraordinary fiscal loosening". It is indeed an extraordinary fiscal loosening, which is designed to address the very problems that we face as a consequence of the difficulties in the global economy.
Quite frankly, the Conservative Front Bench finds itself between the Scylla and Charybdis of knowing what is necessary—knowing what needs to be done—and not wishing to acknowledge that that is the case, recognising in truth, I suspect, that they would plan to do little to help with this problem. Indeed, we see that from the observations of the vice-chairman of the Conservative Party, Mr Maples, who sits in another place, or those of Mr Redwood and Mr Lansley. Mr Maples has said that we must let the recession run its course and others have similarly said that we must accept a reduction in the standard of living. This is not what we as a Government plan to do. Perhaps the Conservative Benches were somewhat shaken by the announcement made over the weekend by President-elect Obama, which reinforced the view that what is needed is a global fiscal stimulus. Once again, we were to the fore in recommending that to major international institutions and other Governments.
The noble Baroness, Lady Noakes, said that our banking actions have done nothing for business. Let me say what they have done for business. A sound banking system, which provides retail depositors with absolute confidence, is a critical precondition for an effectively operating economy. We have provided an important stimulus through the tax concessions that we have introduced. We are advancing capital expenditure; we are taking actions to facilitate cash-flow management for small companies; we are doing things that help an economy in a real way to address the global challenges.
I was asked by the noble Baroness whether we have a plan B. We have a number of options which we regularly keep under review. We have seen evidence of that in our announcement of a programme of support to help mortgage holders who are experiencing difficulties in servicing their obligations. But we are confident that the actions that we have taken are the right ones to address the needs and requirements of today. I was also asked by the noble Baroness whether I thought that we had been damaged by not being in the euro. Defending something that we did not do is theoretically counterfactual. However, for the avoidance of doubt let me say that our choosing not to be in the euro was in my judgment the right thing to have done. If the noble Baroness was seeking to endorse that the Government have done the correct thing, I can confirm that I gratefully welcome her endorsement.
The noble Baroness told me that we should consider a national loans guarantee scheme. She advanced that idea on the basis that it would be novel, imaginative and appropriate for the times. I completely agree with her. That is precisely what we have done with our small business loan guarantee scheme, which is precisely the policy that Mr Cameron and Mr Osborne have alighted on at a rather late hour in the day.
The noble Lord, Lord Razzall, made a wise, sensitive and important series of observations. I want to pick up only one or two points. He quoted Angela Knight of the British Bankers' Association as saying that the new capital that we had provided was not available for new lending. I am pleased to tell noble Lords that I met Angela Knight and a number of her members today and made it absolutely clear to her that that capital is available for new lending. It is there to support the banks in withstanding the inevitable write-offs which we know they will experience, while having sufficient capital to meet the needs of their business and private customers. This is not a new minimum requirement for sustained capital; rather, as I have said previously to noble Lords, it is an all-weather capital structure, designed to withstand the pressures that we know bank balance sheets will have to cope with over the next 12 months so that banks are adequately capitalised to perform their economic function. I made that very clear to Angela Knight today.
The noble Lord, Lord Razzall, also suggested that we should keep open more unorthodox measures. That was raised by one or two other Peers, including the noble Lord, Lord Higgins. I think that here we have in mind issues such as qualitative easing, which was also referred to by my noble friend Lord Layard. We listen to the advice that we receive from the Bank of England in these matters and, as I said, we rule nothing out and nothing in so far as concerns appropriate measures for the economy.
The noble Lord, Lord Razzall, asked whether we had a timetable for joining the euro. We do not but we have a process for establishing the conditions for joining. The timetable will follow as and when those conditions are deemed to be satisfied. He also asked whether we had a timetable for Dr Cable to become Chancellor of the Exchequer. I simply advise him that he will have to work far harder in electioneering before that becomes a real possibility.
I turn to some of the other points that were made in what, as I said, was a very informed debate. I should like to start, in particular, with issues surrounding innovation and skills. I was heartened by the fact that a number of noble Lords—my noble friends Lord Rooker, Lord Haskel, Lord Bhattacharyya and Lady Kingsmill, the noble Lord, Lord Broers, the noble Baroness, Lady Sharp, and the noble Lord, Lord Clement-Jones, from a digital perspective, spoke about the importance of education and innovation. Going through this very tricky period, those are absolutely critical to the success of our economy. This Government support continued investment in R&D by both the private sector and government. Indeed, we recently published our first innovation report, and my noble friend Lord Drayson will be chairing a new Cabinet committee which will take specific interest in matters relating to innovation. Our excellence in science, engineering, knowledge and technology will be critical in driving forward economic growth. I am pleased to confirm—a point on which my noble friend Lord Haskel sought assurance—that we continue to support science and innovation.
There were many interesting contributions on the economy. The noble Lord, Lord Skidelsky, took us back to the days of Ramsay MacDonald and a fiscal policy move which, in his judgment and the judgment of history, was too modest. He also stressed the need for fiscal and monetary policy to act hand in hand. We are taking the appropriate steps to ensure that we have a co-ordinated fiscal and monetary policy.
Although several others followed, the noble Lord, Lord Skidelsky, was the first Member of the House to question whether the terms of the banking recapitalisation were penal. I believe that the noble Viscount, Lord Trenchard, spoke to this, as did the noble Lord, Lord Tugendhat. I do not think they were penal. The terms that we made available to those banks that took equity investment from the Government were judged by most people to have been rather better than those available in the marketplace. But it was not our wish to penalise. We wanted to ensure that in providing support to banks through capital, liquidity and funding, we did so on an arm's-length basis which reflected good value for taxpayers.
There was much talk about regulation and banking. My noble friend Lord Thomas of Macclesfield spoke with passion and conviction about mutuality and behavioural shortcomings in our banking institutions. We recognise that cultures were in place at a number of the world's leading banks that were simply inappropriate for organisations that should be inherently prudent and cautious in their management of risk and their assets. The noble Lords, Lord Low of Dalston and Lord Marlesford, made observations on these points as well.
The noble Lord, Lord Low of Dalston, asked whether I would confirm whether there would be an inquiry into the banking crisis. I am happy to make it clear that I did not say that there should be such an inquiry. I said in response to my noble friend Lord Lea that if the FSA judged it appropriate there should be an inquiry into any leak that might have taken place around the bank capitalisation. A careful study of Hansard will show that to be the case.
The noble Lord, Lord Oakeshott, referred to issues around Ireland and the Irish banks. There is an important difference between the Irish and Icelandic banks, which he compared. The Irish banks already have all their deposits guaranteed by the Government of Ireland. As a full member of the EU Ireland has access to the ECB. We note his observations and take a deep and significant interest in the quality of banks from throughout the world which operate in the United Kingdom.
The noble Lord, Lord Tugendhat, made a particularly fine contribution and I welcome his observation that we should not underestimate the scale of the actions that have already been taken. The comprehensive programme that we have introduced was one in which he clearly saw good value. The noble Lord, Lord Barnett, observed that when it came to cutting expenditure, you should always ask for more than you are offered. I am sure that that is a good piece of guidance, but I remind him that we have made significant efficiency gains under the programme established by Sir Peter Gershon. Ministers believe that there is still more improvement in terms of efficiency of payment and procurement of services by the Government.
I was much taken by the interest shown by noble Lords about the plight of small businesses. The noble Lord, Lord Bilimoria, started us focusing on that and there were welcome contributions from the noble Lords, Lord MacGregor and Lord Wakeham, and the noble Earl, Lord Courtown. Noble Lords can rest assured that we share the noble Earl's view that small businesses are the engine of the economy. That is one of the reasons why we have put an extra £1 billion of funding behind guarantees for bank support for businesses, plus an extra £1 billion that will come from the EIB, and tax deferment and VAT delays to ensure that small companies are in a good position to cope with challenging times.
We are doing further work on banking regulation and look forward to the report that we have commissioned from the noble Lord, Lord Turner, the chairman of the FSA, with his views on how banking regulation can be improved. We have no current plans to introduce anything equivalent to a Glass-Steagall Act, but we are mindful of the fact that large and complex institutions bring particular regulatory challenges. The FSA has strengthened the resource that it has committed to supporting and regulating large institutions.
There were many contributions on pensions. I do not think I can do fair duty to the important points that were made, except to say that we heard again the old canard that the Government had raided pensions. That is simply not true. The noble Lord, Lord De Mauley, encourages us to read to the bottom of the page. I encourage noble Lords on the Conservative Benches to read to bottom of the page that the abolition of the ACT claw-back, which was not supported by any logical reason, was accompanied by a reduction in corporation tax, which has been to the benefit of British industry ever since. It is worth noting that the stock market rose on the day after and for the next three years, which is a strong endorsement of the fact that it was a pro-business move. To portray this Government as raiding pension funds is simply at odds with the facts.
My noble friend Lady Hollis made a wonderful contribution, challenging in style and content, on an issue about which she knows so much. It falls outside my departmental brief, so I rather inadequately say that I will make every effort to draw her words to the attention of the Secretary of State for the Department for Work and Pensions and my noble friend Lord McKenzie, and ensure that they are fully exposed to the logic that she advances, which I found well articulated, for allowing access to lump sums. I believe that others will have an interest in understanding it as well.
The noble Lord, Lord Patten, made an important contribution about annuity purchases at 75. That also falls outside my departmental brief, although I am advised that there is some flexibility and some exemptions around the 75 limit. If I cannot give him a satisfactory response, I have given him a clear answer to his question about our policies on the taxation of pensions.
I am conscious that I could and should refer to the contributions made by many other noble Lords, but with the indulgence of your Lordships' House, I propose to handle them in writing. This has been an extremely good debate. I am impressed and delighted to have been part of it. This is the first time that I have closed for the Government, and noble Lords set me an extraordinarily difficult job, as the quality of the debate and the range of contributions were so extraordinary. I commend this part of the gracious Speech to your Lordships' House.
Debate adjourned until tomorrow.