Cable, Smith and Teather quiz Darling on the G20 Summit

• [Apr 02]: 'I THANK the Chancellor for his help in getting the information this afternoon. This was a crucial meeting, part of a process of restoring confidence in a great crisis . .

'The Prime Minister and the Chancellor deserve some credit for some of the positive outcomes; they would get rather more credit if they had not exaggerated expectations in advance of the meeting. None the less, there were some good results in respect of the funding of the IMF and the World Bank, in terms of trade credit and the commitment to fighting protectionism.

I want to ask a series of specific questions, one of which relates to what was evidently a failure-the inability to realise an accord on the stimulus needed to growth and employment. If the French and Germans are not able to agree to a fiscal stimulus, have they specifically agreed to a monetary stimulus in Europe? Can the European Central Bank engage in quantitative easing, as described in paragraph 7? If so, how much is it proposing to do?

In relation to the so-called "credible exit strategies" mentioned in paragraph 11, can the Chancellor explain why the British are proposing an exit strategy in 2010-11 given that the Government are committed to reverting to a deflationary fiscal policy while all the other major countries are committed to expanding it beyond that date?

Paragraph 27 refers to a "green" stimulus as part of the fiscal package. Why is the British environmental stimulus as part of that package half the international average?

In relation to tax havens, I welcome the agreement as far as it goes. Can the Chancellor say how many of the countries listed today by the OECD as non-compliant are British dependent territories? Why, over the past 10 years, have the Government tolerated tax evasion and criminal money laundering in British territories, and will that now stop? Can the Government give an assurance on tax policy that no company, bank or otherwise, will come for help from the British taxpayer, be it in cash or guarantees, unless it gives an absolute assurance that it will stop tax avoidance and the use of tax havens, which companies have used in the past?

Paragraph 15 of the communiqué has an ambitious commitment to what it describes as "tough new principles on pay and compensation".

What does that mean for the British banks, particularly the nationalised banks? I was told today that the Royal Bank of Scotland is proposing to double the pay of its senior management from an average of £150,000 to £300,000 to compensate for the loss of bonuses. Is that true, and, if so, will the Government stop it?

One of the clear conclusions to emerge from this meeting is that we now have a fundamentally different international order in which there are two superpowers-the United States and China-and other countries, such as Russia, Brazil and India, which are very firmly part of the major powers as regards economic and other matters. Was not, however, the European Union badly divided, with grandstanding and squabbling on a major scale? Does the Chancellor agree that if the European Union, including Britain, is to be listened to in this fundamentally changed order, there must in future be a unified approach, which was manifestly lacking on this occasion?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour): I thank the hon. Gentleman for his appreciation, albeit qualified, of the efforts that we put in. We need to be realistic about what we have achieved today, but there are also grounds for optimism. Even six months ago, I would have found it difficult to imagine that we would be able to get together 20 countries representing 80 per cent. of the world's largest economies and come to a substantial agreement that will, over time, make a significant difference to the prospects of the world economy. That is a very important step.

The hon. Gentleman asked about fiscal stimulus, particularly in relation to Germany and France. He will know-I think that he made this point the other night-that Germany has put in not just one fiscal stimulus but two, and has put in slightly more than us, even taking into account the automatic stabiliser effect of increased benefits and reduced tax take that both our countries show. France has also put in a fiscal stimulus. It is not a case of their saying, "Do nothing", as some argue-they have done something. As I have said on many occasions, it must be up to each country to decide how much it does and when it does it.

The hon. Gentleman asked about credit easing-quantitative easing. Of course, within the eurozone that would be a matter not for Germany and France but for the European Central Bank, which is yet to make any proposals in that regard.

The hon. Gentleman referred to sustainability and the exit strategy. As I said to the House on Tuesday, whatever we do and wherever we do it, we must support our economy now, but we must also be sure that in the medium term, as we come out of this, we live within our means. All countries have to do that. The exit strategy specifically refers to the banks, in which regard the Government's policy remains, as I have stated before-I think that the hon. Gentleman and I are in complete agreement- one of returning these banks to the private sector, commercially operated albeit properly regulated and supervised, when we can do that.

The hon. Gentleman asked about tax havens, on which action is necessary, and he asked why we did not take action before. That is another example of the fact that, for years, many countries-many of which were represented at the G20 today-did not want to know about taking action on tax havens, as he well knows. That mood has changed. One of the planks of President Obama's election campaign was that America should do something about the issue. We now have an environment in which it is far easier to take action, and it is interesting to note that in the past few weeks, when countries have known that they might be named and shamed, there has been a flurry of activity as countries have said, "We've decided we're going to sign up to international obligations." That shows that action works.

The hon. Gentleman made a general point about the European Union, and I believe that where it is possible to reach agreement, we should. Having spoken to people over the past 48 hours or so, I found that the differences between various countries in the EU, the United States, ourselves and anyone else were far less significant than it may have appeared in reporting to the public. What was announced and achieved today will be seen as a significant step forward, provided that we make sure that we implement it, and make sure that the benefits are passed on to the people who elect us.

. . • Robert Smith (Aberdeenshire West & Kincardine, Liberal Democrat): In answer to my hon. Friend Dr. Cable, the Chancellor did not clarify whether the European Central Bank had the power to introduce quantitative easing if it so wished or whether the Royal Bank of Scotland would be doubling pay rates to get around the fact that it would not be paying bonuses.

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour): In relation to RBS, I need to get back to the hon. Gentleman. In relation to the ECB, which is a slightly different matter, the bank would need to consider what options it had. It would also have to discuss the matter with members of the euro group. However, I am sure that they recognise that they may have to look at other options-the interest rates were cut again today in Europe-although that is a matter for them. We are not in the euro; we are responsible for our own Bank, and we shall have to see what the ECB decides to do.

. . • Sarah Teather (Brent East, Liberal Democrat): Does the Chancellor recognise that our ability to meet the millennium development goals to which he referred in his statement may be very adversely affected by the impact of climate change on the world's poorest countries? What hope does he have for a serious global deal at Copenhagen, given that the statements about the environment that emerged from the G20 today appear to be disappointingly vague?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour): Today's meeting reaffirmed the commitment to the millennium development goals. It is also important for countries not just to sign up to such goals, but to do what is necessary. I very much hope that Copenhagen is a success, but as the hon. Lady will know, while most Governments accept that climate change is a reality and that we need to do something about it, that view is not universally held. Moreover, some countries which acknowledge that climate change is a problem are not willing to do as much about it as they should. Today's meeting, however, showed that if there is a will, there is a way of getting through this, and the same spirit must be shown in Copenhagen later this year.

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