G8 and G20 Summits

Lord Strathclyde Excerpts

Monday 28th June 2010 Lords Chamber

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, it may be a convenient moment to turn to the second Statement, which was made a few minutes ago by the Prime Minister in another place.

“With permission, Mr Speaker, I should like to make a statement on the G8 and G20 summits which took place in Canada. First, I am sure the whole House will join me in paying tribute to the seven British servicemen who have lost their lives in the past week. From 40 Commando Royal Marines: Sergeant Steven Darbyshire. From 1st Battalion the Mercian Regiment: Colour Sergeant Martyn Horton, Private Douglas Halliday, Private Alex Isaac. From the Yorkshire Regiment: Lance Corporal David Ramsden. From the 4th Regiment Royal Artillery: Bombardier Stephen Gilbert, who died from injuries received in an explosion earlier this month; and the soldier from 101 Regiment Royal Engineers who died yesterday. As the country marked Armed Forces Day this weekend, people did so with tremendous pride but also great sadness. We will never forget what these men and so many of their colleagues have given for us.

As I have said, I am determined that our forces will not stay in Afghanistan a day longer than necessary. I led a discussion at the G8, where we made it clear that we ‘fully support the transition strategy adopted’ by international partners. We are not after a perfect Afghanistan—just a stable Afghanistan, able to maintain its own security and prevent al-Qaeda from returning. So the G8 sent a collective signal that we want the Afghan Security Forces to ‘assume increasing responsibility for security within five years’. The presence of large-scale international forces cannot be an indefinite commitment. We need to get the job done and bring our troops home.

Let me report to the House on the main conclusions of the G8 and G20. I have placed copies of the communiqués in the Library so that people can see the details of what was agreed. The G8 is a good forum for the leading democratic economies to give proper strategic consideration to the big foreign policy and security issues. It also plays a vital role in helping the richer nations to improve the future of the poorest. In my view, these two vital functions of this forum should continue. Let me take each in turn.

On the big security issues, we discussed the Middle East peace process and agreed the importance of putting pressure on both sides to engage in the proximity talks with the aim of creating the conditions for direct talks. President Obama specifically said that he would make this his priority in the coming months.

While the changes that Israel had proposed are welcome, they do not go far enough, and the communiqué says that the current arrangements in Gaza,

‘are not sustainable and must be changed’.

On Iran, UN Security Council Resolution 1929 was welcomed. The communiqué states that all countries should “implement it fully”. Since the G8 includes Russia, Britain believes this was significant.

The UK also made the case for all members of the G8 to have positive engagement with Turkey, which could have a key role to play in resolving both the Iran issue and encouraging progress on Middle East peace. We also discussed North Korea, deploring and condemning the sinking of the “Cheonan”, nuclear disarmament and non-proliferation.

On development, while the G8 has played an important role in increasing aid spending by the richest countries in the world, some of those countries have not met the commitments they set out. I stressed the importance of transparency and accountability, and the accountability report sets out what countries have done in meeting their commitments. While not perfect, it is really good progress in making sure that countries cannot make promises without being held to account for them.

Even at a time when our countries face difficult budget decisions, it is important we maintain our commitment to helping the poorest in the world. The UK is maintaining its commitment to increase spending on aid to 0.7 per cent of gross national income. This gives us the opportunity to exercise leadership. At the same time, in order to take the public with us, we also need to make sure that every penny will reach those who need it most—that means transparency and accountability. It also means that the projects we support must be deliverable, practical and measurable, addressing the causes of poverty and not just its symptoms.

The Muskoka Initiative is a case in point. Today in the UK, the chances of dying in pregnancy and childbirth are one in 8,200. In parts of Africa, it is as low as one in seven. This is something we can change—and we must change. The resources agreed, including a big contribution from the UK, could lead to an additional 1.3 million lives being saved. As the White Ribbon Alliance points out, if you save the mother, you save the family; and if you save the family, you build a stronger society and a better economy.

Turning to the G20, this is now the right forum for all the leading economies of the world to discuss the vital economic issues. The key goal of the G20 is to continue the recovery of the world economy and secure sustainable growth. The argument, proposed by some, that deficit reduction and growth are mutually exclusive is completely wrong. The whole approach underlined by the IMF for this G20 and the subsequent meeting in Seoul is all about how the world should maximise growth through the right combination of three things: deficit reduction, tackling imbalances, particularly through actions by emerging economies, and structural reform in the advanced economies. There was broad agreement on all three and this is reflected clearly in the communiqué.

On deficit reduction, the G20 agreed:

“Those countries with serious fiscal challenges need to accelerate the pace of consolidation”,

and that there was,

“a risk that failure to implement consolidation … would undermine confidence and hamper growth”.

The advanced G20 economies committed to at least halve current deficits by 2013 and stabilise government debt to GDP ratios by 2016. While we agreed that the speed and timing of deficit reduction will vary with national circumstances, the verdict of the G20 was unequivocal.

For countries with large deficits, the time to act is now. Britain has one of the largest deficits in the G20, and the summit specifically welcomed the plans set out in our Budget last week. In terms of addressing the fundamental imbalances, China’s recent decision to move towards greater exchange rate flexibility is welcome. As, in the end, growth comes only from rising productivity, we also agreed on the need to pursue structural reform across the whole G20 to increase and sustain our growth prospects.

On financial reform, the G20 agreed ‘a set of principles’ on bank levies to ensure that the financial sector makes a,

‘fair and substantial contribution towards paying for any burdens associated with government interventions to repair the financial system’.

That is very much in line with the plans for a bank levy, which we announced in the Budget. On making sure that the banks in all countries can withstand future crises, we also agreed that,

‘the amount of capital will be significantly higher and the quality of capital significantly improved’.

We agreed that new standards on the quality, quantity and transparency of capital and liquidity should be finalised by the Seoul summit in November.

Basle took 10 years and this looks like it will be completed in one. Although the drawing up of clear, robust new rules is absolutely essential, it is important that they are not implemented too quickly. We do not want a further monetary squeeze or a reduction in bank lending at this stage of the recovery. The biggest stimulus we could give to the world economy today is the expansion of trade. Although the G20 agreement to extend its pledge that no additional trade barriers should be put in place is welcome, continued failure to make progress on Doha is deeply disappointing. This has now been eight years in negotiation and there can be little confidence that, as things stand, the round will be completed rapidly.

A completed trade round could add $170 billion to the world economy. The UK led the working session on this issue at the G20. One potential way of making progress is to try to add to the benefits of the round so that all parties can see reasons for going that final mile. That was supported by President Obama. The director-general of the World Trade Organisation, Pascal Lamy, suggested that all trade negotiators should return to the table and consider both what it is they really need from the round and what it is they are prepared to offer to get it moving again. That will lead to a report at the Seoul meeting in November.

Too many people still see this as a zero sum game, where one country's success in exports is another country's failure. That is nonsense. Everyone can benefit from an increase in trade flows. We will play our part in breaking the logjam. I want this country to lead the charge in making the case for growing trade flows around the world.

On climate change, while the G8 communiqué was strongly positive on limiting the rise in global temperatures to less than two degrees and on seeking an ambitious and binding post-2012 agreement, at the G20, the communiqué was more limited. This is partly because some countries do not see the G20 as the forum for discussing this issue. In discussions, it was also clear that there was widespread disappointment at the way that Copenhagen failed to deliver a legally binding global deal. We must not give up on this. We will be playing our full part in pushing for a successful outcome at Cancun.

This long weekend of summitry was a good opportunity to build Britain's bilateral relationships. Among others, I had useful meetings with President Obama, President Hu of China, Prime Minister Singh of India and Prime Minister Erdogan of Turkey. In building a very strong friendship with our leading European partners, I also suffered the exquisite agony of watching England lose 4-1 to Germany in the company of my good friend Chancellor Merkel and the German summit team. Although I cannot recommend the experience of watching football in the margins of a G20 summit, I commend this Statement to the House”.

--- Later in debate ---

[Lord Strathclyde]

My Lords, I was going to say how grateful I was that the noble Lord, Lord Eatwell, was standing in for the leader of the Opposition. Having heard his speech, I am not sure that that is the case. He asked a series of extremely pertinent questions that, if this were a full debate of several hours, would take me tens of minutes to reply to. I hope that he will forgive me if on some of his specific questions I answer him by way of a letter. As I know that others in the House will take what the noble Lord said seriously and with great interest, I will make sure that a copy of the letter is put in the Library.

The noble Lord, Lord Eatwell, started off with an important question about the statement by my right honourable friend the Prime Minister on Afghanistan, the so-called five-year limit and whether any discussions took place with our allies. We are in a state of continual consultation with our allies in Afghanistan. None of that statement was a surprise to them. They understood exactly the point that we were making. There is no desire in any country for its forces to remain in Afghanistan for any longer than they absolutely have to. Over the past few weeks, we have laid out a set of priorities that we believe will enable British forces to have largely removed from Afghanistan, as part of getting civil society in Afghanistan working again.

We have set ourselves new priorities on the aim of development aid. It is right that we and the G8 should do so. It is important continually to review our processes and priorities for our development goals, and the new priorities on the health of mothers, children and families speak for themselves. However, a unity of purpose does not mean a unity of means. Although it is true that Britain has maintained its commitment on funding overseas aid, other countries have found it more difficult. However, in the medium term, there is no reason why we should not get back to the original position. We do not anticipate new money coming in to deal with those priorities. It will be a change of priorities within the existing budget but, as we have explained, over time we hope to meet our target of 0.7 per cent of GDP.

On bank levies and the financial situation, as the noble Lord knows only too well, the IMF forecasts that the UK will in 2010-11 have the largest budget deficit in the G7. When he talked about the record of the former Chancellor of the Exchequer, I was not quite sure whether he took pride in the legacy that the Labour Party left this country. We must never lose sight of the lesson of the past three years: taxpayers pick up the bill not only when one of our banks fails but when Governments spend too much money. The bank levy, the concentration of risks and higher capital requirements will all be debated and discussed as quickly as possible over the next few months. There is no question of the new bank rules being imposed. They will need to be agreed by all, and we believe that there is every possibility of those new rules being agreed by everybody.

The noble Lord poked fun at my coalition colleagues, which was entirely unnecessary. I can confirm to him that we are getting along extremely well. Sometimes people say that we have a lot to learn from our European colleagues. I hope that when it comes to working with coalition colleagues, they will find that they have a lot to learn from us.

[Lord Laming]

My Lords, I am sure that the whole House will support the warm tributes that the Leader of the House and others have paid to our brave military personnel. Does he accept that many of us welcome the Prime Minister’s decision to get our troops out of Afghanistan at the earliest practicable time? Does he also accept that, if that requires involving the Taliban in negotiations, that is a nettle that will need to be grasped?

[Lord Strathclyde]

I thank the noble Lord, Lord Laming, for what he has just said. He reiterates the position extremely well and with a clear understanding of what the issues are. There is increasingly an appreciation and understanding that a violent and military-directed war in Afghanistan is not a winnable proposition for anybody, least of all for the people of Afghanistan themselves. All peace processes around the world have dealt with it by, slowly but surely, bringing all sides together. That will need to be the case in Afghanistan and is increasingly the thrust of our policy.

[Lord Dholakia]

My Lords, may we from this side join the noble Lord in the tributes that he paid to the seven soldiers who lost their lives last week?

One matter of concern is the non-action on development aid, particularly the lack of action on the targets for alleviating poverty. How do the Government plan to ensure that the decisions taken by the G8 and the G20 will be actively implemented? Furthermore, why was climate change discussed only in the G8? If there is to be a global agreement on the way forward on climate change, surely the non-G8 members of the G20 will have to play a crucial role. Finally, do the Government agree that the G8 has now become an anachronism and that it would be better if its role was assumed completely by the G20?

[Lord Strathclyde]

My noble friend is right to draw attention to development aid, a matter which very much dominated the discussions of the G8. That delivered for the first time a comprehensive accountability report which assessed transparently the G8 progress against its development-related commitments. In the communiqué the G8 leaders reaffirmed their commitments on overseas development aid, on aid effectiveness and on HIV/AIDS. Furthermore, however cynical one is—and I am not suggesting for a moment that my noble friend is cynical when it comes to these matters—about a very serious attempt to give a new priority to these initiatives, the House will recognise that there was an agreement in the Muskoka initiative which means that funding for maternal, newborn and child health will be the new priority.

On the question of climate change, I can understand why my noble friend should feel aggrieved that this could be debated and discussed with one group but less successfully with another. However, there are those at the G20 who felt that it was not appropriate for it to be discussed at that level and that it should remain with the G8. However, there is the climate change conference in Cancun later this year. An enormous amount of work is taking place between now and then to give effect to a global agreement.

[Lord Howarth of Newport]

My Lords, on global imbalances, the Statement referred only to the modest, although welcome, adjustment that the Chinese authorities have allowed to the exchange rate of the renminbi, but surely the Government do not think that that will be enough to solve adequately the problem that is being generated by the continuing propensity of certain major economies, notably China and Germany, to invest and export very powerfully, and the propensity of other major economies, notably that of the United States of America and our own, to borrow and consume excessively. Is it not inevitable that if we continue with these imbalances, the trade surpluses of the exporting countries will be recycled to create excessive liquidity in the economies of countries such as our own that tend to consume too much, leading to another manic and unsustainable boom followed by a miserable bust? What were the Prime Minister’s suggestions at the G20 for averting this outcome, and what response did he receive?

[Lord Strathclyde]

I could not possibly comment on the noble Lord’s direct question at the end, but the whole issue of global imbalances concentrated the minds of the G8, and indeed of the G20. The new flexibility in the Chinese arrangements is an important step in the right direction. It is the kind of flexibility that we have been looking for for some time, it will make an appreciable difference—so we all hope—and it is recognition by the Chinese authorities of China’s importance to the world economy as a trading nation and as an increasingly important currency. The noble Lord might say that this is a very small step, but it is at least a small step in the right direction.

[Lord Hannay of Chiswick]

My Lords, does the Minister accept that the case for maintaining the G8 while the G20 is functioning is rather less strong than the Statement that he read out suggests? Here, I join the noble Lord, Lord Dholakia. Only by stretching the word “democratic” a very long way indeed can it be applied to the G8, which has Russia among its members. It is also surely worth remembering that there are rather better qualified democracies in the G20, such as India, Brazil and South Africa, the membership of at least some of which we support as permanent members of the Security Council. I therefore hope that the Government will reflect a little on the need for these two forums to continue to run side by side and confusing the issues that they discuss quite a lot—a confusion that I suspect will increase when they meet in different places, as presumably they will have to when the G20 goes to Mexico in 2012, as is said in the communiqué. I therefore hope that the Government will reflect on the possibility of a sunset clause for the G8.

Will the Minister also be so kind as to comment on what the Government are doing to ensure that these endlessly repeated commitments to complete the Doha round are brought to a decision in the not too distant future? The wording of the communiqué is extremely weak. I thought that the wording of the Statement was first class, if I may say so. It reflects the view of those on all sides in this House and in this country that this is a really major objective. However, there is no sign whatever that the United States Administration are putting their back into completing Doha. What strategy do the Government have for moving that ahead at Seoul and thereafter?

[Lord Strathclyde]

My Lords, my right honourable friend found the meetings at the G8 and the G20 useful. They were particularly useful because they were different, and because, as a new Prime Minister, he was able to meet different political leaders at different stages. It is impossible for me to say whether these structures will be maintained in the long term. As the noble Lord recognised, they will not be meeting together in the future.

On the Doha round, the noble Lord, Lord Hannay, said that he finds the Statement convincing but the communiqué rather less so. Frankly, we were rather disappointed by the wording in the communiqué. It is a key strategic plank of this Government to move issues forward on the whole question of the Doha trade round and we will be developing a strategy so that we turn that leadership into action by convincing different countries that it is in their material interest to see an increase in global trade. I am sure the whole House agrees with that but it will need our combined collective will, good judgment and the kind of experience that the noble Lord, Lord Hannay, possesses in order to convince other countries of that necessity.

[Baroness Symons of Vernham Dean]

My Lords, first, can the noble Lord shed a little more light on the Prime Minister’s thinking on withdrawing our troops from Afghanistan by 2015? It was always the view in the past, as I understood it, that giving a date for withdrawal would be like signalling to the Taliban and al-Qaeda how long they would have to hold out before they would not have any opposition on the ground. My concern is that many people will think that this gives the Taliban and al-Qaeda an opportunity to scale down what they are doing, gather their resources and armaments, bring in fresh recruits and simply re-emerge when the foreign troops have departed. I wonder if the noble Lord can help me on that.

Secondly, the Statement says that the biggest stimulus that we can give the world economy today is the expansion of trade. Can the noble Lord tell us when the Government are planning to appoint a Minister dedicated to trade promotion? I know that, among his many other duties, Mr Mark Prisk has been appointed pro tem to look at trade—but the fact is that he has many other duties. Previously, the noble Lord, Lord Digby Jones, my noble friend Lord Mervyn Davies, and indeed I myself were dedicated to trade promotion and expansion. When will the Government be able to match what they are encouraging the world to do by doing a little better at home?

[Lord Strathclyde]

My Lords, on the point about Afghanistan, I agree that the view was taken in the past that making too rigid a timetable and setting the end date too soon simply gives a target for everyone to aim at. That is not true in this case because we are in a very different situation. We have been in Afghanistan for about nine years now and we can see that this current year is extremely important in creating the right grounds for long-term peace and rebuilding civil society. In this case, I do not think that we will run into the danger of giving the Taliban a target, and after all, five years is a long time to have to hang around waiting for British troops to leave. Moreover, that would not achieve the right conditions on the ground for rebuilding civil society in Afghanistan, which is important. So while I accept the point made by the noble Baroness, it is my wish, as I know it is hers, that those conditions will not apply.

On the question of the Minister for Trade, I could not agree more with the noble Baroness that such a Minister is important and that—by her own example and that of others in this House who have held the role—it is a key role for the Government and for focusing our overseas export effort. I am delighted to say that in the past 24 hours Mr Mark Prisk has been made the Minister of Trade. I know that, aided and helped in every way by my noble friend Lord Howell of Guildford, they will make a valuable team. Moreover, my noble friend will be answering for him in this House.

[Lord Lawson of Blaby]

My Lords, is not the answer to the question posed by the noble Lord, Lord Dholakia—who, having asked his question, appears no longer to be in his place—that the G20 was unwilling to tackle the question of climate change because the major developing nations such as China, India and, to a certain extent, South Africa and Brazil quite rightly attach much greater importance to economic development and the relief of poverty, to which moves on climate change would be entirely antipathetic? Nevertheless, does my noble friend agree that there is reason to welcome the response by that distinguished economist, the noble Lord, Lord Eatwell, speaking on behalf of the Official Opposition? Although he devoted his comments largely to the minutiae of banking reform—which are important but not urgent matters; indeed, it is more important to get this right than to do it quickly—he accepted, tacitly at any rate, the urgent need for the fiscal consolidation which this Government have shown they have the courage to enter into despite some of the rumblings from the neo-Keynesian dinosaurs who appear to be around.

[Lord Strathclyde]

My Lords, I am sure that the noble Lord, Lord Eatwell, enjoyed that in the spirit in which it was intended. I agree with my noble friend that fiscal consolidation is important. Not only have we struck the right balance but, increasingly around the world, it is seen that we have struck the right balance. On the question of the G20 and the G8, my noble friend is again correct. Different countries have taken different views of these issues, particularly the developing countries. That is not news today but has been true for some time. That is why the climate change conference in Cancun will be extremely important.

[Lord Patel]

My Lords, I commend the Government on their commitment to increasing overseas aid to 0.7 per cent of GDP, as I do their renewed commitment to reducing the terrible tragedy of maternal mortality. Does the Leader of the House agree that in any new strategy which the Government might develop for reducing maternal mortality, our professional organisations will be well placed to assist in the health service reforms required? Secondly, while a reduction in maternal mortality is important, we must also not forget that we need to reduce the terrible burden of other reproductive health issues, such as the greater number of deaths—even more than through maternal mortality—that occur through cervical cancer in low-resource countries, which is a totally preventable disease; the problem of fistulas; and the number of children dying in childbirth or immediately after, which is now some 3 million.

[Lord Strathclyde]

My Lords, the noble Lord, Lord Patel, rightly draws us back to the issue of overseas aid. The reasons for changing the priorities of the G8 were not taken lightly. Obviously, in putting this new strategy into effect, there will be wide consultation with involved parties—most importantly with the health authorities of the countries most directly involved—so that the resources spent can be used as effectively and efficiently as possible. The noble Lord is also correct to refer to the range of preventable diseases that exist and which at the moment are not dealt with sufficiently well. This issue is part of an overall programme. I do not suppose we will see all the answers come out quickly, but the direction of travel is important.

[Lord Bates]

My Lords, I welcome my noble friend repeating the Statement, particularly the strong section relating to development aid. Can he confirm reports that there was a shortfall of some $10 billion in the commitment of $50 billion made at the Gleneagles G8 summit five years ago? Can he further confirm that the two countries primarily responsible for that are Japan and Italy? What conversations did my right honourable friend the Prime Minister have with them on that issue? Given that they have cited their fiscal position as the reason for not fulfilling their commitment, will my noble friend encourage the Prime Minister to give them a lesson on how to rigorously tackle the fiscal deficit while still being fair and caring about the world’s poorest?

[Lord Strathclyde]

My Lords, there are many people who will be disappointed that some of the Gleneagles aims have not been met. My noble friend referred to two of those countries. In the communiqué that was delivered this weekend, there was genuine recognition that there needs to be more transparency and accountability on the part of those countries that have promised to help but have not yet delivered.

I know that the Prime Minister draws the attention of many people, not only from overseas, to the problems that we face in this country and how we are tackling them. They may well be a beacon of light to help other countries meet the commitments that they have already made and come up with the money.