G8 and G20 Summits

Lord Howarth of Newport Excerpts

Monday 28th June 2010 Lords Chamber

[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.