G8 and G20 Summits

Baroness Harman Excerpts

Monday 28th June 2010 Commons Chamber

[The Prime Minister (Mr David Cameron)]

With permission, Mr Speaker, I would 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 last week: from 40 Commando Royal Marines, Sergeant Steven Darbyshire; from 1st Battalion the Mercian Regiment, Colour Sergeant Martyn Horton, Private Douglas Halliday, and Private Alex Isaac; from the Yorkshire Regiment, Lance Corporal David Ramsden; and from the 4th Regiment Royal Artillery, Bombardier Stephen Gilbert, who died from injuries he received in an explosion earlier this month; and we also remember the soldier from 101 Engineer Regiment who died yesterday. As the country marked Armed Forces day this weekend, people did so with tremendous pride but also with great sadness. We must never forget what these men, and so many of their colleagues, have given for us, and our thoughts should be with their friends and their families.

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 back 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 has also played a vital role in helping the richer nations to improve the future of the poorest people in our world.

In my view, those two vital functions of this forum should continue. I want to 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 later this year. President Obama specifically said that he would make this his priority in the coming months. While the changes Israel have 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, I believe that 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 both in resolving the Iran issue and in encouraging progress on middle east peace. We also discussed North Korea, deploring and condemning the sinking of the Cheonan, and the vital topics of 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 commitments that they set out. I stressed the importance of transparency and accountability, and the accountability report that has been published sets out what countries have done in meeting their commitments. While not perfect, it represents good progress in ensuring that countries cannot make promises without being held accountable for them and for failing to meet them.

Even at a time when our countries face difficult budget decisions, it is important that 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% of gross national income. That gives us the opportunity to exercise leadership on behalf of the poorest. At the same time, in order to take the public with us, we also need to ensure that every penny will reach those who need it most. That means transparency and accountability along the lines that we are introducing. It also means that the projects we support must be deliverable, practical and measurable, addressing the causes of poverty and not just alleviating the symptoms.

The Muskoka initiative on maternal and child health agreed at the G8 is a case in point. Today in the United Kingdom, the chances of dying in pregnancy and childbirth are 1 in 8,200. In parts of Africa they are as high as 1 in 7. That is something we can change and must change, and 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 for Safe Motherhood points out, if we save the mother we save the family, and if we save the family, we build a stronger society and a stronger economy.

I turn to the G20, which is now clearly 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, in my view, completely wrong. The whole approach underlined by the International Monetary Fund for this G20 and the subsequent meeting in Seoul is 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, which is reflected clearly in the communiqué.

On deficit reduction, the G20 agreed that

“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.

On addressing the fundamental imbalances, China’s recent decision to move towards greater exchange rate flexibility is clearly very welcome. 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 that my right hon. Friend the Chancellor announced in his Budget. On ensuring 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”.

The new standards should be finalised by the Seoul summit in November. The Basel accord took 10 years; this looks like it could be completed in a little over one.

Although the drawing up of clear, robust new rules is 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 the world economy today is the expansion of trade. While the G20’s 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. It has now been eight years in negotiation, and frankly, there can be little confidence that as things stand the round will be completed rapidly. That is a tragedy, because 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, including more things in it, so that all parties can see reasons for going that final mile. This was supported by President Obama, and the director-general of the World Trade Organisation, Pascal Lamy, suggested that all trade negotiators should return to the table and consider, vitally, both what it is they really need from the round and what it is they are prepared to offer to get it moving again. This should lead to a report at the Seoul meeting in November. In my view, too many people still see this as a zero-sum game, where one country’s success in exports is somehow another country’s failure. This is nonsense: everyone can benefit from an increase in trade flows. We will play our part in breaking the logjam, and 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 2°, the G20 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, and 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. While I cannot recommend the experience of watching England lose football to Germany in the margins of a G20 summit, I do commend this statement to the House.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

I join the Prime Minister in paying tribute to the service personnel who have died in Afghanistan since we last addressed the House: from 40 Commando Royal Marines, Sergeant Steven Darbyshire; from 1st Battalion the Mercian Regiment, Colour Sergeant Martyn Horton, Private Douglas Halliday and Private Alex Isaac; from the Yorkshire Regiment, Lance Corporal David Ramsden; from the 4th Regiment Royal Artillery, Bombardier Stephen Gilbert; and the soldier from 101 Engineer Regiment who died yesterday. Our thoughts are with their families as we remember them and acknowledge the deep debt of gratitude we owe them.

May I thank the Prime Minister for his statement? The G8 and G20 summits covered many issues of importance to the United Kingdom, not least the need to work internationally to sustain the UK economic recovery that began last year. The G20 declaration rightly identifies the G20’s

“achievements in addressing the global economic crisis”,

saying that the G20’s

“efforts to date have borne good results. Unprecedented and globally coordinated fiscal and monetary stimulus is playing a major role in helping to restore private demand and lending.”

Now that the Prime Minister has joined other G20 leaders in endorsing those pro-growth policies that have put the global economy back on the road to recovery, will he acknowledge the role of the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), in shaping that approach and winning support for it at the G20, thereby laying the foundations for that recovery internationally and here at home?

Is it not inconsistent for the Prime Minister to sign up to this approach abroad while continuing to denigrate that approach here at home? We welcome the G20’s commitment to

“‘growth friendly’ fiscal consolidation plans”

and the target of halving deficits by 2013. Will he confirm that this target is entirely consistent with deficit reductions that the Office for Budget Responsibility showed would have been achieved by 2013 under our plans? Will he confirm that nothing in the G20 statement provides any justification whatever for his choice to cut the deficit further and faster? Indeed, is it not the case that only last week President Obama called on world leaders to

“learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships”?

The G20 calls for growth-friendly fiscal consolidation, but how is it growth friendly to cut investment allowances for manufacturing firms, to scrap the regional development agencies and to cut back on investment in high-tech, export-oriented British firms such as Sheffield Forgemasters? How is it growth friendly for his Government to take an approach that the OBR says will cost 100,000 jobs?

With President Obama and major emerging economies, including India and Brazil, warning against the risk of Budget cuts too early and too deep, is it not clear that on the question of timing and content, the summit’s conclusions on deficit reduction amount to no more than an agreement to disagree? Given the risk of deflationary policies in the eurozone and the fact that growth forecasts in the United States have been revised downwards, is not weak demand the major threat to growth? Is it not the case that Government policy should still play a part in sustaining demand? Is it not clear, given that demand in our export markets again looks fragile, that the assumption of a 40% increase in UK exports, on which last week’s Budget plans were based, looks very optimistic? To which markets does the Prime Minister expect that 40% increase in exports to go?

The Opposition welcome the G8’s commitment to support the international security assistance force’s efforts in Afghanistan. As the Prime Minister recognised in his statement, this will be a crucial year for Afghanistan, with the Kabul conference and elections in September. Because military effort must pave the way for, and go alongside, a political settlement in Afghanistan, will he update the House on preparations for the Kabul summit and Afghan elections?

Surely there is agreement on both sides of the House that we do not want our troops to stay in Afghanistan one day longer than necessary. We look forward to when the Afghan Government can guarantee their people’s stability and security, and thereby make us safer, as the Prime Minister has said previously. Will he therefore clarify his remarks on Afghanistan? He said:

“We can’t be there for another five years”.

Does the Prime Minister believe that that assists our troops in their task in Afghanistan? What effect does the Defence Secretary believe the Prime Minister’s comments will have on the morale of our troops fighting day by day on the ground in Afghanistan? Is it not the case that, as the Defence Secretary has said, setting artificial time scales is a very dangerous game to play?

May I now turn to the G8 approach to tackling global poverty? Is the Prime Minister aware of the deep frustration within the development community at what it sees as a major retreat by the G8 on its commitment to help the poorest? In particular, how can he, as one of the G8 leaders, justify the decision to drop the commitment of the 2005 Gleneagles summit to increase aid by $50 billion by 2010? That G8 commitment was hard won by the previous Labour Government. Is he aware that Save the Children called that “shameful”, and that Oxfam described the G8 statement as being

“lower than our lowest expectations”

on maternal mortality?

Writing on the eve of the summit, the Prime Minister said:

“Too often these international meetings fail to live up to the hype and promises made”,

but instead of strengthening the resolve of G8 leaders to deliver the promised action, he has allowed them to renege on their promises. Does that not reflect badly on his international leadership, for which the very poorest will pay a heavy price? Can the Prime Minister tell us how hard he tried to get the other world leaders to stick to, and deliver, the Gleneagles promises? He apparently told journalists that as

“the new kid on the block”,

he was focusing on a different aid target, namely the UN’s 2015 millennium development goals. Will the Prime Minister attend the key UN summit on the millennium development goals this September in New York? If he is not planning to do so, could he reconsider his decision in order to put the G8’s and the world’s efforts towards achieving the millennium development goals back on track?

[The Prime Minister]

I thank the right hon. and learned Lady for her response.

We are preparing for the Kabul summit by having repeated conversations and meetings with President Karzai and others. I have met him twice since becoming Prime Minister, once here in the UK and once in Afghanistan, and my right hon. Friend the Foreign Secretary will attend that important meeting.

The right hon. and learned Lady asked me to clarify the perfectly obvious statement that British troops should not be in Afghanistan in five years’ time. Let me put it to her the other way around. It was a Labour Government who took us into Helmand province in 2005. Is she really saying that 10 years later we should still be there? We want to get the job done, train up the Afghan army and police and bring our troops back home. She would be better advised to seek cross-party agreement on that than to take the position that she has chosen.

The right hon. and learned Lady then made some remarks about global poverty. Of course I deplore the fact that some G8 members have not stuck to the promises that they made at Gleneagles in 2005, but the slippage that she was trying to blame on the new Government took place between 2005 and 2010. The person to whom she wanted me to pay tribute—I would be delighted if he could be bothered to turn up to the House—was either Chancellor of the Exchequer or Prime Minister during that time.

The right hon. and learned Lady asked me to attend the UN summit on the millennium development goals in September in New York. I was intending to do so, but for reasons of paternal health—we have been talking about maternal health—I hope that I will be otherwise engaged in the UK, as we are having a baby. My right hon. Friend the Deputy Prime Minister will be at the summit and doing a very good job.

The right hon. and learned Lady’s whole premise on which she based her argument about the G20, the need to tackle deficits and get growth is completely wrong. The whole point about the G20 is that if you combine fiscal consolidation in the countries that need it with expansion and dealing with the imbalances from emerging economies, you can maximise world growth. That is what it is about. She says that there is no case for going faster in those countries with excessive deficits—on the IMF figures we have the biggest deficit of all—but the Labour party is now completely isolated on this issue. The G20’s view is that

“it is clear that consolidation will need to begin in advanced economies in 2011, and earlier for countries experiencing significant fiscal challenges at present”—

and that is the UK. So the Labour party is isolated from the G20.

Let us see how Labour is getting on with the US. Tim Geithner, the US Treasury Secretary, said about the UK Budget:

“I think they’ve got the right balance, the right objectives and I think they’re demonstrating that again you have to act so that people can see you’re committed to follow through”.

So Labour is now isolated from the Americans. What about the Europeans? José Manuel Barroso, the President of the Commission, said in Toronto that there is no more room for deficit spending. So Labour is now isolated from the Europeans.

Let me end with the IMF, because that is where we would have ended up if that lot had stayed in power. The IMF was clear:

“In this regard, credible and coherent fiscal plans should be clearly communicated as soon as possible. There is a pressing need…for fiscal consolidation in G-20 advanced economies”.

If that is not done, it could, says the IMF,

“weigh on the recovery and raise market pressure in an environment of elevated uncertainty about sovereign debt risks.”

There we have it. Whether it is the US, the EU or the IMF—and I could add in the OECD—the Labour party is now completely and utterly isolated.

As for quoting President Obama, here is one I prepared earlier. He said that

“we have been very impressed with the leadership that David Cameron has shown thus far. He has, I think, taken a series of steps on some very tough issues and…is prepared to make…decisions on behalf of…his country.”

The right hon. and learned Lady’s attempt to claim that somehow we are not completely in tune with the US, the EU, the G20 and the IMF is an attack that simply is not going to take off.