G8 and G20 Summits

Lord Blunkett Excerpts

Monday 28th June 2010 Commons Chamber

[The Prime Minister]

The message is clear: countries that face big fiscal challenges have to address those challenges. Let me put it the other way around: for countries like us, with an 11% budget deficit, further fiscal action—or, indeed, no action—could lead to a serious problem with our economy. Where I agree with my hon. Friend is that when we tighten fiscal policy, as we should, that should be accompanied by a loose monetary policy. That is why I made the remarks that I did about the importance of not bringing in the banking rules too quickly, and why the Bank of England’s positive response to the Budget that my right hon. Friend the Chancellor introduced is so encouraging. However, for Britain, the right measure, as the G20, the EU and the OECD say, is to deal with our deficit. If we do not, we could be in real danger.

[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

I was going to congratulate the Prime Minister on his first foray into the G8 and G20, but he has already congratulated himself.

In his discussions with the Canadian Prime Minister, did they talk about the consequences for ordinary men and women of too rapid a deficit reduction and, in particular, the reduction in Canada in the late 1990s, when the environmental services budget in Ontario was cut by $200 million and the town of Walkerton experienced the most enormous impact, with disease and, regrettably, death from E. coli? Does the Prime Minister agree that it is not grandiose announcements but the consequences for people in their lives with which we need to be concerned?

[The Prime Minister]

I thank the right hon. Gentleman for his question and his probably justified rebuke, which was well put. However, at the risk of quoting another Prime Minister, Stephen Harper did say that the UK Budget

“highlighted the very fiscal consolidation that we’re trying to steer the G20 towards,”

so there was strong support from the Canadians for what we are doing here. As we do the difficult job of dealing with the record deficit that we inherited, we of course have to do everything that we can to protect the poorest and ensure that we stimulate regional growth, a subject that we will be talking about tomorrow. However, I keep returning to this point: not acting would be more serious for the UK economy and would lead to greater hardship for people.