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World Leaders Summit

My Lords, we have a serious global economic and financial problem. It is all the more serious that the noble Lord, Lord Strathclyde, could not find a single positive alternative. A fiscal stimulus is essential. That means an increase in borrowing. I do not know what serious alternative is being suggested. It certainly did not come from the noble Lord, Lord Strathclyde. My concern is that it would be wrong if the fiscal stimulus were to result in an increasing capital expenditure. I hope my noble friend would agree with this. It requires urgent and immediate capital investment, and I hope she can confirm that that is what the Government have in mind. On regulation, one of the major reasons we have the banking problem today is a factor that did not apply in Keynes’s day or any other day I can think of; namely, the derivatives used by bankers, who used to be intelligent people. They have been spending money as if it did not matter at all. Not only that, they did not know what they were spending it on. Who is going to put in place the new regulation that all sides want? Are we going to use ex-bankers? Perhaps my noble friend could tell us or give us some idea what kind of regulation the Government have in mind. This will be important if we are to get over this serious banking as well as economic and financial problems. On monetary policy, the Prime Minister made it clear that he wants to see lower interest rates. In the past, the Governor of the Bank of England, who has the responsibility here, has been a little cautious, to put it mildly, in coming forward with interest-rate cuts when he should have done. Is my noble friend really saying that, if the governor were to revert to his previous cautious position and not cut interest rates further, the Government would not use the powers available to them—the reserve powers in the Bill—that set up the responsibility of the Bank of England? It would be a terrible situation if we left the Bank of England to act without any government responsibility.