Eurozone Crisis

Baroness Stuart of Edgbaston Excerpts

Thursday 27th October 2011 Commons Chamber

[Mr Osborne]

That would have been catastrophic. We would have been the only IMF shareholder not to have ratified the deal initiated at the London G20 summit, which would have completely isolated Britain. We might have had to leave the IMF, and we would certainly have lost our permanent seat on the board. We heard all the talk from the shadow Chief Secretary about ensuring that Britain is at the table—but she wants us to get up and leave the IMF table.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

In his statement, the Chancellor said, quite rightly, that the euro would not work unless the periphery countries regained their competitiveness. How is that possible if those countries do not have the full IMF package, including currency devaluation? In that context, does he think that the IMF will get its money back?

[Mr Osborne]

It is perfectly possible for areas within a monetary union to increase their competitiveness relative to other areas in the union—parts of the United Kingdom and the United States have done so in the past 20 or 30 years. It is possible, but it is very hard work—I agree with the sentiment that the hon. Lady is expressing—and requires people to tackle tough issues, such as labour market reform, pension ages, tax rates and so on, which, of course, are controversial. However, people in countries such as Italy, Spain and Greece have been confronted with the reality of the need to make change—although we will see whether they do indeed undertake that change. The IMF is the guardian of its own programmes and makes constant assessments of its programmes in Ireland, Greece and Portugal. I do not want to be premature, but I think that we are seeing substantial improvement in the Irish economic performance after the difficult decisions that they have taken in that country.

Eurozone

Baroness Stuart of Edgbaston Excerpts

Monday 10th October 2011 Commons Chamber

[Mr Osborne]

I am not against a financial transaction tax in principle; after all, Britain already has one—the stamp duty on shares. What I am against is a European financial transaction tax that operates only on the European continent and is imposed in Europe. If we can get global agreement, with the United States, China and others, on a world financial transaction tax, all well and good, although I do not think that is terribly likely. If we do not have that, all this business currently conducted in the UK would immediately depart to the United States. We saw the same thing happen when Sweden imposed a financial transaction tax—all the business departed to London. I am therefore against a European financial transaction tax, although, as I say, if we can get global agreement, all well and good.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

It is deeply uncomfortable to hear Ministers say from the Dispatch Box that they give advice in private but they do not share it with the House. I wish to give the Chancellor another chance by asking him whether he agrees that as Greece is unable to regain its competitiveness—because it cannot devalue—he is therefore in favour of permanent bail-outs. Another term for those is “permanent gifts”, because that country cannot regain competitiveness.

[Mr Osborne]

As the hon. Lady knows, these are very market-sensitive issues and I have to be careful, as the UK’s Finance Minister, in what I say about the Greek situation. However, I was pretty clear in my statement in saying that the debt sustainability of Greece had to add up. That is the issue that has to be confronted with Greece in the coming weeks.

Eurozone (Contingency Plans)

Baroness Stuart of Edgbaston Excerpts

Monday 20th June 2011 Commons Chamber

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

(Urgent Question): To ask the Minister what are Her Majesty’s Treasury’s contingency plans in case of a Greek default.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

Hon. Members will be aware of the recent developments in Greece. There has been considerable media speculation about what this means for the Greek adjustment programme and potential market reactions. I am not going to engage in speculation on what might or might not happen but give the House an account of the facts as they currently stand.

Let me begin with some background on Greece and the financial assistance package. The international financial assistance package for Greece was agreed in May 2010. The package is composed of two elements: a loan of €30 billion from the International Monetary Fund and €80 billion of bilateral loans from euro area member states to the Greek Government. Although they were created at a similar time, neither the European financial stabilisation mechanism, which is backed by the EU budget, nor the euro area-only European financial stability facility contributed to the package for Greece.

The adjustment package requires Greece to undertake significant actions. There are some very difficult questions that Greece has to address now, because the package assumed that it would be able to access market funding again in 2012, but this now looks unlikely in current market conditions. The House will also be aware of political developments in Greece; a new cabinet has been appointed and the Government will soon be subject to a vote of confidence in the Greek Parliament. Later this month, the Greek Parliament will also be voting on a medium-term fiscal strategy, which is a key element of the conditions attached to the current adjustment programme.

Against this backdrop, the euro area member states have been discussing the next steps. The Eurogroup, which comprises euro area member states, today released a statement calling on

“all political parties in Greece to support the programme’s main objectives and key policy measures to ensure a rigorous and expeditious implementation”.

The statement also said that Ministers will

“define by early July the main parameters of a clear new financing strategy”.

This is a statement from the euro area member states only. Let me be clear: the UK has not been involved in these discussions. We did not participate directly in the May 2010 package of support for Greece, and there has been no formal suggestion of UK bilateral loans or use of the EFSM, which is backed by the EU budget. The UK participated in the May 2010 package for Greece only through its membership of the IMF. So the burden of providing finance to Greece is shared between the IMF and euro area member states, and we fully expect this to continue. Our position on that is well understood across the euro area.

The UK believes that the international community needs a strong IMF as an anchor of global economic stability and prosperity. Over the past few years, we have seen how important that role can be in times of crisis, as the IMF has taken swift and decisive action to support the global economy.

There is, of course, no room for complacency. The Treasury, the Bank of England and the Financial Services Authority are monitoring the financial system, including in the euro area, on an ongoing basis. Many scenarios are considered as part of the normal policy development process. Hon. Members will agree that it would not be appropriate for me to discuss the detail of those scenarios. I also remind hon. Members that UK banks have little direct exposure to Greece.

The continuing uncertainty in the euro area is a reminder of the benefits of taking early action to stabilise and recapitalise the banks, as the UK has done. The UK banking system has developed a strong capital position, which has made it more resilient and will insure it against future risks. UK banks have made good progress in sourcing funding, despite the difficult market conditions.

The difficulties faced by eurozone countries such as Greece and Portugal reinforce why it is right to pursue the course that we set last year to tackle the deficit. The House should reflect that our deficit is larger than that of Portugal, but that our market rates are similar to those of Germany. The action we have taken to strengthen the country’s finances stands us in good stead during this period of instability in the eurozone. No one on either side of this House should lose sight of the importance of these decisions in protecting the UK economy.

[Ms Stuart]

It is absolutely true that there is no room for complacency, but there is also no room for selective blindness and deafness, which there clearly is on the Front Benches. We have yet another question on a bail-out to which Ministers say, “Of course, we cannot be specific and we will not indulge in speculation on events that may or may not happen.”

The United Kingdom will not be isolated if Greece defaults. Economists across the world are increasingly saying that it is a question not of if, but of when and are arguing that, for all intents and purposes, it has already happened. Another bail-out package will not solve Greece’s problems because it is not regaining competitiveness and cannot do so while it is in the eurozone. Therefore, is it not time that Her Majesty’s Government woke up and prepared for the possibility and almost inevitability of Greece defaulting? The situation will lead either to a Greek default or to the break-up of the eurozone. Whichever way it goes, we will not be isolated.

I will therefore ask the Minister some questions that go to the heart of the resilience that needs to be built up. The first is about institutional resilience. If he is really telling the House that people at the Treasury and the Bank of England have not started to get together to make practical provisions about who will meet, hold discussions and take action in the case of a default that would be comparable to Lehman Brothers, he is guilty of not stepping up to the responsibilities of his office.

Secondly, the Minister’s economic plans are completely predicated on the rest of Europe and the world being economically successful. If Greece defaults, other economies will not grow and ours will be affected. Therefore, should he not reconsider his VAT increase, because that would give us greater resilience?

[Mr Hoban]

indicated dissent.

[Ms Stuart]

The Minister shakes his head; I ask him to take me seriously.

Thirdly, I ask the Minister to consider article 66 of the treaty on the functioning of the European Union, which states:

“Where, in exceptional circumstances, movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic and monetary union, the Council”,

after consultation, can impose

“for a period not exceeding six months”

measures to restrict capital flows between the EU and the rest of the world. The UK would be affected by such restrictions of capital flows. Has he discussed that with the Commission? Has he made provision for how the UK economy would deal with that if it was imposed?

[Mr Hoban]

The hon. Lady poses a series of very good questions, to which I will respond.

The hon. Lady asked whether the authorities are working together. I said in response to her initial question that the Treasury, the Bank of England and the FSA are working closely on this matter and monitoring the situation. We are keen to ensure that the UK banking system is resilient. The additional capital that the banks hold now, compared with at the start of the crisis, will help with that. As I said, UK banks have not had difficulty in sourcing funding in the market. There is a concern about liquidity risk, but UK banks are continuing to source funding.

I mentioned in my statement the exposure of UK banks to the Greek Government. It is $4 billion, which is less than our exposure to, for example, the Irish banks. The hon. Lady should bear it in mind that French banks’ exposure is about four times that amount and that German banks’ exposure is about five times that amount. We are taking the matter seriously and considering it carefully, and the Chancellor is currently at the ECOFIN meeting in Luxembourg, where I am sure it will be discussed.

The hon. Lady talked about reversing the VAT increase. The shadow Chancellor proposed last week a cut in VAT that would cost £51 billion, which would put at risk our credibility in international markets. We have taken the difficult decisions to ensure that UK market rates are in line with those of Germany. The proposal that she put forward, and which her right hon. Friend put forward last week, would mean interest rates rising for families and businesses across this country, putting the recovery at risk. I do not think that is a gamble that we can afford to take.

Oral Answers to Questions

Baroness Stuart of Edgbaston Excerpts

Tuesday 10th May 2011 Commons Chamber

[Mr Osborne]

The shadow Chancellor is not just out of his depth; he is drowning. The truth is that he has had absolutely no impact in the several months that he has been doing the job. He had one policy, a VAT cut on fuel that the European Union ruled illegal. He had one idea, which was to follow America, but now the Obama Administration have announced a deficit reduction plan as fast and as deep as the UK’s. He had one prediction, which was that there would be a double-dip recession, and that has not happened. We know that he is a man with a past, but we are beginning to discover that he has absolutely no ideas for the future. If we want any proof of that, this is what the CBI said this week when asked what the outcome would be if Britain followed Labour plans:

“The economy would be weaker because of the impact of a loss of confidence”.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

4. What assessment he has made of the effects of the increase in the standard rate of VAT on levels of economic growth in the first quarter of 2011.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

At this stage, it is not possible to make a full assessment of the effect of the increase in the standard rate of VAT on levels of economic growth in the first quarter of 2011. The Office for Budget Responsibility forecast released on 23 March projected growth of 1.7% over the course of 2011. That forecast takes full account of the Government’s fiscal policy measures.

[Ms Stuart]

The Bank of England expects inflation rates to accelerate over the next few months. The markets, however, seem to have taken the view that interest rates will not increase as speedily as was anticipated just a few weeks ago. How does the Exchequer Secretary reconcile the Chancellor’s notion that the economy has grown with the judgment of the markets?

[Mr Gauke]

The economy is growing: that is clear from the Office for National Statistics numbers and from the projections of every respected economic forecaster. Despite the predictions coming from the Opposition last year, there has been no double dip.

European Summit

Baroness Stuart of Edgbaston Excerpts

Thursday 24th March 2011 Commons Chamber

[Mr Hoban]

My hon. Friend wishes me to respond to a hypothetical question, but I do not intend to do so today.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

For clarity—and in the hope of getting at least one sensible answer out of this debate—will the Minister confirm that because we do not have a veto over the bail-out mechanism, if Portugal applied for a bail-out, we could be exposed to liabilities of up to €4 billion? We have no veto, which means that we would be forced to do it, irrespective of which Government negotiated the position. I would like a yes or no.

[Mr Hoban]

The hon. Lady, who is very knowledgeable and well-versed in these matters, knows exactly the terms on which the EFSM was established. However, I do not believe that it is helpful to speculate on hypothetical situations.

Financial Assistance (Ireland)

Baroness Stuart of Edgbaston Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr Osborne]

I am a believer in national sovereignty, so I do not propose to tell other countries what they should do with their currencies. I would just make this observation, since this has been a debate I have heard in recent years: Ireland has all its sovereign debt denominated in euros.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

Ultimately, the bail-out will work only if Ireland can retain its competitiveness. Traditional International Monetary Fund packages always include reducing public spending, increasing tax rates and devaluing the currency. The third element, which is essential for Ireland’s recovery, is missing. What makes the Chancellor believe the bail-out will work under those conditions?

[Mr Osborne]

If it is not possible to devalue the currency, there is a more difficult route, which is to try to enforce competitiveness through, for example, wage cuts, and that, of course, is part of the Irish package. It does make things more difficult, but, as I say, those of us who argued against Britain joining the euro made all these arguments at the time. That makes for a very good discussion, but at a very theoretical level given the very practical immediate challenges we face in Ireland.

Finance Ministers’ Meeting (Ireland)

Baroness Stuart of Edgbaston Excerpts

Wednesday 17th November 2010 Commons Chamber

[Mr Hoban]

My hon. Friend is absolutely right. We have strong economic ties with Ireland, which is one of our biggest trading partners. Our economies are closely interlinked, and it is therefore in our national interest to ensure that the Irish economy and banking system are stable.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

What is Her Majesty’s Government’s strategic view of the crisis? Should we bail out the Government or their banks?

[Mr Hoban]

I reiterate that no request for assistance has been received from the Irish Government.

Economic Governance (EU)

Baroness Stuart of Edgbaston Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr Hoban]

My hon. Friend makes an important point. I know that he thinks about these issues very deeply, and I would encourage him to read the final report of the taskforce. It sets out our exemptions explicitly, and he will recognise that they will protect the UK’s position and help to develop a strong and stable eurozone, which is also in our long-term economic interests. The document makes it clear that we are outside the sanctions regime that applies to members of the eurozone and others.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

I spent yesterday in Berlin talking to German politicians, and I think that the British Government will discover treaty changes pretty quickly. Those politicians feel that the stability and growth plan is dead, and that it is not the mechanism to take us forward. May I urge the Minister to answer a specific question? Given that 25 of the 27 member states either are members of the eurozone or will have to become members under treaty obligation, and that only two have an opt-out, does he agree that anything that would strengthen the financial and economic co-ordination of the 25, plus the two with opt-outs, would represent a diminution of our sovereign ability to exert our influence and would therefore be subject to a referendum here?

[Mr Hoban]

As I reiterated earlier—and as my right hon. Friend the Prime Minister has made clear—we will not endorse a treaty that transfers sovereignty from Westminster to the EU. The hon. Lady takes a close interest in these matters, and I know that she will recognise that views among member states about the desirability of treaty changes vary, and that the UK is not the only one that is concerned about this.

Draft EU Budget 2011

Baroness Stuart of Edgbaston Excerpts

Wednesday 13th October 2010 Commons Chamber

[The Economic Secretary to the Treasury (Justine Greening)]

I beg to move,

That this House takes note of European Union Document No. SEC(2010) 473, Statement of Estimates of the European Commission for the financial year 2011; and supports the Government’s efforts to maintain the 2011 EU budget at the cash levels equivalent to the 2010 budget, while ensuring better value for money in EU expenditure.

I very much welcome the fact that this debate is taking place in this Chamber for the first time in several years. The debate demonstrates the importance that the House attaches to scrutiny of the EU budget, to the UK’s contribution to it, and to the value for money of EU expenditure.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

I am grateful to the Minister for giving way. She says that this debate demonstrates the importance that the Government attach to giving the House a say. Can she tell us whether a vote on the matter, either way, would make the slightest bit of difference?

[Justine Greening]

The hon. Lady is assuming that those Members who have tabled amendments will press them to a vote. Perhaps she is prejudging the outcome of the debate. We welcome the debate because, tomorrow, I shall be in Brussels pressing our case in respect of the European Union budget, and it is vital that we are able to say that we have scrutinised the document thoroughly in our European Parliament.

In regard to the European Union, matters such as the single market, enlargement and environmental standards have seen real progress, but the EU budget does not have pride of place among the EU’s achievements. I will not hide from the House the Government’s frustration that some of our partners—and those in EU institutions—do not seem to understand how bizarre it is, when national budgets are under such extraordinary pressure, that the EU should be immune from that. So here in the UK, the week before a very tough spending review, it is only right that we should subject the EU’s budget for 2011 to the same level of scrutiny as our own national accounts.

As I said to the hon. Member for Birmingham, Edgbaston (Ms Stuart), I will be in Brussels tomorrow, holding discussions with Commissioner Semeta, the Belgian presidency and MEPs on this very subject, pressing them to take the close, objective, pragmatic and responsible look at the EU budget that is long overdue, just as we are doing in the House today. I will, of course, come later to the previous Government’s giveaway of the rebate, which is one of the main reasons why we will see our contributions rising over coming years, but let me begin by summarising this Government’s approach to the Commission’s EU budget proposals.

At the beginning of the debate, let me also clarify our response to the amendments: I absolutely agree with the sentiments of both. Amendment (a) was tabled by my hon. Friend the Member for Stone (Mr Cash) and I would like to take this opportunity to pay tribute to the time, effort and work he has put into scrutinising not just the EU budget but a whole range of areas in which the EU has become involved. His persistence has certainly paid dividends in ensuring that this matter has maintained the prominence in the UK Parliament that it absolutely deserves.

--- Later in debate ---

[Justine Greening]

I assure my hon. Friend that we are looking across the piece to challenge rises in all areas of the EU budget, including the EEAS. As he points out, only months ago we were given an assurance that there would be fiscal neutrality and that has already been broken. We are challenging that and I believe we are doing so successfully. I assure him that we are making our case very strongly within the EU to challenge those sorts of spends when they are bad value for money and when the money is spent in an unplanned way that has not been agreed and was not passed in the original proposal that was signed up to. As he points out, that proposal was signed up to by the Labour party when it was in government.

So, let me wrap up. Although the annual budget negotiations are not the usual forum to achieve major budget reform, we have still set out our stance. We will be looking for a cash freeze in 2011 and, in this time of austerity, Europe needs to be looking to make the same efficiency savings that we are making in the UK.

I know that the House is interested in this topic, so I shall touch on it briefly. The European Parliament’s Budgets Committee has voted on this budget and the European Parliament in plenary will be voting next week on the European Parliament’s position on the 2011 budget. We have done our best to ensure that our Government’s position on the 2011 budget has well and truly got through to MEPs. We sent a lobbying note to the UK MEPs in September clearly setting out our position.

[Ms Gisela Stuart]

Would the Minister care to comment on press reports that the European Parliament said that it would make concessions on its budgetary demands only in exchange for concessions by member states on direct resources financing?

[Justine Greening]

I cannot confirm those reports, but I can tell the hon. Lady that the European Parliament is now considering in detail its response to the European Union 2011 budget. It might well decide to take a position that has a broader perspective than purely the size of the European budget and the split of that budget across the headings. As she will be aware, if there is no agreement, the conciliation process will take place, and of course I cannot prejudge how the European Parliament will approach that and whether it will seek a broader negotiation process than just that on the budget. She is right to flag up the fact that the Parliament might choose to do that, which is why it is all the more important that Ministers and the Chancellor are out making our case with the European Parliament and MEPs as to why we believe that saying no to the totally unacceptable 6% rise is absolutely vital for all MEPs. I hope that the Opposition will play their role with their MEPs in ensuring that the European Parliament takes the right position on the European Union budget. I have spoken with James Elles, an MEP who is on the Budgets Committee. As I have said, I will be in Brussels tomorrow to reiterate our position.

We anticipate that the long-overdue budget review paper from the Commission will be published in the next 10 days. We then expect the Commission to present proposals for the next seven-year framework for the EU budget in the first half of next year. I can assure hon. Members that the Government will strongly defend the UK’s national interests in the forthcoming EU budget negotiations. We are clear about what matters to the UK. We will defend the UK’s abatement, which is fully justified owing to distortions in EU spending, and we want the EU budget to be smaller, so that our domestic efforts to cut the deficit are not undermined by growth in EU commitments.

--- Later in debate ---

[Kerry McCarthy]

That is obviously partly related to the fact that the UK has probably the largest financial centre globally—it is certainly far and away the largest financial services sector in the EU. There is a more significant impact on the UK economy, London being as it is, as opposed to other countries.

To return to my speech, I shall not take any more interventions for a while. Labour Members believe, as we have always done, that the EU should always scrutinise its expenditure carefully and closely in cutting waste. We want to ensure that the budget is spent wisely and well, and that there is demonstrable added value for the member states and regions as a result of such expenditure.

We welcome the fact that the EU Parliament has chosen, for the first time, not to go above the ceiling set out in the budget at a time when member states face economic hardship. That demonstrates that the Parliament has at least gone some way to appreciating the challenges, but the issue today is whether we should go further. The Government, despite all their talk and bluster, seem to be singularly failing in their aim of putting a lid on what the EU Parliament wants to spend.

Labour Members fully support the principle that the EU budget needs to play its part in an era of fiscal consolidation, and we do not think it right that there should be significant real increases next year, but we should avoid throwing the baby out with the bathwater. The EU has key roles to play, and it was noticeable in the Minister’s speech that she made only passing reference to the good things that come out of working with our European partners. In particular, it is important that the EU continues to foster growth and recovery, which is the priority for us here in Britain. As Europe is our largest export partner, growth in Europe is an essential precondition for our recovery.

We welcome the stated key objectives for the draft 2011 budget, which are to support the EU economy and recovery from the economic and financial crisis, and to help EU citizens by reinforcing economic growth and employment opportunities. It is somewhat ironic that as the European Parliament debates and votes on the draft budget on Wednesday 20 October, when it will focus on the admirable and important objectives of supporting recovery and growth, we in the UK Parliament will hear a statement on the comprehensive spending review from the Chancellor, who clearly rejects an active role for the Government in securing such objectives and believes that cuts, cuts and cuts alone are the way forward.

[Ms Gisela Stuart]

Will my hon. Friend take on board two observations? On an earlier intervention about the Commission’s budget not having been signed off for the past 10 years, is she aware that neither has that of the Department for Work and Pensions? On a much more practical point, if the great ambition is to make us economically successful, will my hon. Friend reflect on the Lisbon agenda, which was supposed to make us the most competitive and technologically advanced economy in 2010 and has singularly failed to do so? Why does she have so much faith in the 2011 aspirations?

[Kerry McCarthy]

There was also the 2010 strategy. In the flagship initiatives set out in the documents before us today, there are some good programmes that we should support, to the extent that they have demonstrable outcomes and that they make a difference, rather than being fine words that do not achieve what they set out to do.

Let me go briefly through the headings in the budget. The Minister was unspecific. She spoke generally in favour of a cash freeze, but did not specify in which areas. [Interruption.] Perhaps the hon. Member for Devizes (Claire Perry) will refrain from heckling me quite so much. She is a near neighbour of mine, and we get to talk rather a lot on the television cameras outside the Chamber. It is extremely distracting, and she will get a chance to contribute later if she wishes. That is fair.

Under sub-heading 1a in the budget, on competitiveness for growth and employment, we support funding that encourages the effective operation of the single market, including addressing transport challenges, such as the greening of transport systems, and promoting sustainable, low-carbon economic recovery and growth. It is important to continue to support innovation and research and development on, for example, the environment, clean energy, energy efficiency and promoting a knowledge-based economy. Europe has a key role to play in that.

On structural and cohesion funding, which is included under sub-heading 1b, much of that spending is key to EU enlargement. Sensible steps to ensure that that money is well spent, which we agree should be taken, should not be allowed to slip into undermining the important principle that enlargement is in the UK’s long-term interest.

Equitable Life (Payments) Bill

Baroness Stuart of Edgbaston Excerpts

Tuesday 14th September 2010 Commons Chamber

[Mr Mike Weir (Angus) (SNP)]

rose—

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

rose—

[Albert Owen (Ynys Môn) (Lab)]

rose—

--- Later in debate ---

[Mr Hoban]

It goes back to what the previous Government were prepared to accept. Sir John’s report is based on the terms of reference that the right hon. Gentleman’s colleagues gave him, which dealt with the accepted findings. Of course, the previous Government did not accept all the ombudsman’s findings, but that decision was overturned in the courts. It is important to recognise that the first stage—the calculation of external relative loss—is not dependent on the accepted findings because it covers the findings of Equitable Life as a whole across the period. The issue of the accepted findings becomes especially important when Sir John assesses what would have happened if Equitable Life had been regulated properly. The reconstruction of Equitable Life’s financial accounts was based on the accepted findings of the previous Government. The problem is that as we get further and further away from the calculation of external relative loss, what the previous Government accepted and did not accept becomes much more relevant to the calculation of compensation. That is one of the factors that we need to take into account when we assess the final level of loss.

[Ms Gisela Stuart]

The Financial Secretary has just mentioned 1992, so it is clear that this issue goes back not just to the Labour Government but to the previous Tory Government. All Equitable pensioners want a resolution as quickly as possible and they will be disappointed by this slanging match. I have a simple question: what did the parliamentary ombudsman say to him yesterday when they met? Was she satisfied with his proposals, and what did he say to her?

[Mr Hoban]

The ombudsman’s letter is clear. She said that she welcomed much of the Government’s approach, including the appointment of an independent commission, the publication of a clear timetable for the beginning of payments to those affected and our commitment to consider representations on the best way forward. I do not feel that I can give the House the outcome of a private meeting, but the ombudsman reiterated her findings, which were set out in the report that she published in July 2008 and which the previous Government sat on for six months before responding. She will also have the opportunity to make her views known when the Public Administration Committee works on this. I just want to do all that I can to ensure that the recommendations published by the ombudsman in July 2008 are honoured, and that is the task that we have to achieve.