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The Economy

We have had an interesting debate and I wish to mention a few of the contributions that I have enjoyed listening to this afternoon. First, I should mention the one made by my hon. Friend the Member for Coventry, North-West (Mr. Robinson). He pointed out the untenable Conservative position of calling the Government response to the current conditions inadequate, while being against the Government’s spending, which is needed to pay for any action at all. The speech made by my hon. Friend the Member for Crawley (Laura Moffatt) recognised the really difficult times for people and businesses that the current conditions we are battling are causing us to have to deal with. My right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) and my hon. Friend the Member for Elmet (Colin Burgon) gave us a critique of neo-liberalism and, in some cases, a timely analysis of the problems of inequality. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) cited Galbraith’s statement about where the wise got their wisdom, but pointed out that the Tories are not ideologically comfortable with the direction that is needed to get us through the current problems. My hon. Friend the Member for Northampton, North (Ms Keeble) made an extremely good speech, talking passionately about the unfavourable consequences of the Conservative do nothing approach to the recession of the 1980s and 1990s, contrasting that with the Government’s action so far. The main themes of the speeches by Opposition Members can be summed up in two words. Many Opposition Members, including the right hon. Member for Haltemprice and Howden (David Davis) and the hon. Members for Eddisbury (Mr. O’Brien) and for Wellingborough (Mr. Bone), talked about the need to restore confidence. If they wish to restore confidence, why do they go around scaremongering about levels of debt? Why do they talk down the British economy and emphasise the negatives, rather than help us battle the serious problems that we face? Other Opposition Members talked about how the problems here were caused by the Bank of England and the creation of the tripartite arrangements, but that has not had anything to do with the global recession that we now face. In fact, the problems of the global credit crunch have been manifested in every country, despite very different styles of financial regulation. Clearly, there are lessons to be learned, and Lord Turner has talked about some of those in the publication of his report today, which the Chancellor requested last October. The problems are deeper, as Lord Turner pointed out, and include the complex financial engineering that was going on, and the global imbalances between saving and spending, which manifested themselves in low-priced credit. All those issues have to be solved if we are to create a sustainable future. This debate has demonstrated the real differences that we have with the Conservatives over how to tackle the unprecedented economic challenge that we now face. The Conservatives like to insist that somehow the downturn we are now experiencing is all the fault of our domestic policy. In fact, the credit crunch began in the American sub-prime mortgage market. As it has reverberated around the world, we have seen a noticeable deterioration in global economic prospects. In the last quarter of 2008, the world economy shrank for the first time since 1945. The IMF now expects global growth to be negative in 2009. That will be the first global contraction for more than 60 years. The battle to end this global financial crisis and return the world to sustainable growth demands new ways of thinking and new ways of acting, both domestically and internationally. There are three priorities. First, the global economy is interconnected, so we can succeed only if we work together. Secondly, we need to stimulate demand and, thirdly, we must reform both regulation and international financial institutions. Whether the Tories like it or not, the fact is that the problems we are facing are shared across an interconnected world. It is only by acting together that we can tackle them effectively. That is why the G20 conference is so important. Our national action will be more effective if it is accompanied by globally co-ordinated responses. That is especially true of boosting demand and reforming regulation. What have we heard from the Conservatives to match the scale of the task that we face? The need for major changes to our systems of financial services regulation is obvious—