Skip to main content

G8 and G20 Summits

Volume 512: debated on Monday 28 June 2010

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.

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?

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.

Order. Many right hon. and hon. Members are seeking to catch my eye, so brevity is required, a legendary example of which will, I know, now be provided by the hon. Member for Louth and Horncastle (Sir Peter Tapsell).

Is part of President Obama’s message to the leading industrial countries of continental Europe not to move too rapidly or too severely in cutting back on public expenditure or the money supply lest they precipitate a slump, as occurred in the case of Credit Anstaldt, as a result of applying similar policies, led by Germany?

The message is clear: countries that face big fiscal challenges have to address those challenges. Let me put it the other way around: for countries like us, with an 11% budget deficit, further fiscal action—or, indeed, no action—could lead to a serious problem with our economy. Where I agree with my hon. Friend is that when we tighten fiscal policy, as we should, that should be accompanied by a loose monetary policy. That is why I made the remarks that I did about the importance of not bringing in the banking rules too quickly, and why the Bank of England’s positive response to the Budget that my right hon. Friend the Chancellor introduced is so encouraging. However, for Britain, the right measure, as the G20, the EU and the OECD say, is to deal with our deficit. If we do not, we could be in real danger.

I was going to congratulate the Prime Minister on his first foray into the G8 and G20, but he has already congratulated himself.

In his discussions with the Canadian Prime Minister, did they talk about the consequences for ordinary men and women of too rapid a deficit reduction and, in particular, the reduction in Canada in the late 1990s, when the environmental services budget in Ontario was cut by $200 million and the town of Walkerton experienced the most enormous impact, with disease and, regrettably, death from E. coli? Does the Prime Minister agree that it is not grandiose announcements but the consequences for people in their lives with which we need to be concerned?

I thank the right hon. Gentleman for his question and his probably justified rebuke, which was well put. However, at the risk of quoting another Prime Minister, Stephen Harper did say that the UK Budget

“highlighted the very fiscal consolidation that we’re trying to steer the G20 towards,”

so there was strong support from the Canadians for what we are doing here. As we do the difficult job of dealing with the record deficit that we inherited, we of course have to do everything that we can to protect the poorest and ensure that we stimulate regional growth, a subject that we will be talking about tomorrow. However, I keep returning to this point: not acting would be more serious for the UK economy and would lead to greater hardship for people.

By what criteria will it be judged that Afghanistan is sufficiently stable to allow us to withdraw our troops, and how long will it be before we are talking to the Taliban, as suggested over the weekend by General Sir David Richards?

Let me try to answer both those questions briefly. The way to judge progress in Afghanistan is in terms of the basic level of security, stability and governance. So in Helmand, for instance, as we see districts that are under good provincial governors, with lead Afghan control over security, that is the time when we can judge that the job is getting done, and there is some prospect of some of that happening this year. As for talking to Taliban, as the right hon. and learned Gentleman puts it, a process of reconciliation and reintegration is taking place, where Taliban who are prepared to stop fighting and accept the basic tenets of the Afghan constitution can be reintegrated back into society. That should happen. That political track, which runs alongside the training of the Afghan army and the military surge, is vital, and we need to push further and faster on it.

May I push the Prime Minister slightly harder on the issue of Afghanistan and talking to the Taliban? It is true, as he says, that those who want to lay down their arms can be welcomed back, but there may be many who are not, but who will nevertheless be required to do so, in the event of a political situation being arrived at, which all of us in this House know is the only eventual outcome for Afghanistan. There is a limited amount that the Prime Minister can say, but it would be good if he could reassure the House that, come the right moment and in the right way, the British Government will indicate their willingness to talk?

I am grateful to the hon. Gentleman for the way in which he put his question. This is one of those things that it is better to get on and deal with, rather than endlessly theorising about it. There is a huge difference between that part of the insurgency that is linked to al-Qaeda and is extremist in its ideology, and what has become in some parts of Afghanistan an insurgency based on the way in which particular tribes have been dealt with or on particular local issues. There is a difference between the two, and we need to bear that in mind in this important political track that we have embarked on.

My right hon. Friend was absolutely right to say that none of us wants to stay in Afghanistan a moment longer than is necessary, but does he agree that we have to get our priorities right between leaving and succeeding? If our priority is to leave, that will make it harder to succeed, whereas if our priority is to succeed, that will make it easier to leave.

I very much agree with my right hon. Friend on that. Transitioning provinces and districts to Afghan control should be done on the basis of the facts on the ground and the capacity that they have to do that, rather than on the basis of a timetable. Having said that, I do not see anything wrong with saying, “This is a task that has to take place over the coming years, but we should not be there, for instance, for five years.” That is a perfectly fair point to make—[Interruption.] I can hear chuntering from the Opposition. The last Government set quite a lot of interim short-term targets, and I think that is where the problems have come from.

I thank the Prime Minister for the advance copy of his statement. I associate the Scottish National party and Plaid Cymru with the condolences that he expressed at the beginning of his statement. President Obama has set a timetable for beginning the draw-down of US troops from Afghanistan, as have the Canadian hosts of the G20. If that is right for the United States and for Canada, why is it wrong for the UK?

There is a difference between what Canada has decided and what President Obama is undertaking. Canada has set a firm deadline for withdrawing all its troops from combat and other operations, and that date is firmly set in stone. President Obama has spoke about a review towards the end of this year and, from July 2011, he hopes to be drawing down the surge in troops that has taken place this year. That is very different from what the Canadians are discussing. We are part of that US surge. We surged our troop numbers, as the US did—albeit by less, but we still have around 10,000 in Helmand. We, too, should be looking at progress at the end of the year, and at that July 2011 date. However, I would rather give the House and the people of this country the certain knowledge that we are not going to be there in five years’ time in the role that we are now. Between now and then, however, let us try to deliver on the ground as best we can, and train up the Afghan national army and the police in order to deliver that security and bring our troops home. And let us do it, as my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) suggested, on the basis of the facts on the ground.

I know that the Prime Minister wants the existing strategy to be given more time to succeed, but will he accept that, if it shows little sign of progress in the next few months, or even the next year or so, there should be an alternative to recommending total withdrawal? Total withdrawal would take us back to square one, and the existing strategy would mean our continuing to take excessive casualties. There has to be, and there could be, a middle way, and I hope that he will consider that if he sees that the present strategy is not moving in the direction that he would like to see.

I know that my hon. Friend is working hard on the middle way option, and that he is going to do further work on it. Of course I shall look carefully at what he produces. I would say to him that the surge in troop numbers has made a difference on the ground. In the parts of Afghanistan where previously it was impossible to step outside a military base, it is now possible to walk around the towns and visit the markets. I went to a training college, the last time I was in Helmand. The previous time, I went to a wheat seed distribution centre. Both times, I was able to have some freedom of movement. So there is some progress, and I think that this is the right strategy. We should use all that we have, this year, to give it every chance of success.

The Prime Minister prayed in aid the International Monetary Fund earlier, but he did not quote the IMF boss, Dominique Strauss-Kahn, who has warned that fiscal retrenchment wrongly done would cost 60 million jobs globally. How many of those 60 million jobs will be lost among the world’s poor, and how many will be lost among the poor of this country?

I discussed that with the IMF over the weekend. Dominique Strauss-Kahn’s own interventions in the debate at the G20 were very strongly in favour of fiscal consolidation, particularly for the countries—such as Britain—with the largest budget deficits. I looked around that table at the G20. According to the IMF’s figures, our budget deficit, at over 11 per cent., is the biggest. The answer to the question “Do they mean us when they are talking about excessive deficits?” is “Yes, they do.”

The key point made by Dominique Strauss-Kahn and others is that this is a package. If we are to maximise world growth, which will bring more jobs and livelihoods, we need a combination of fiscal consolidation in the countries that require it and measures to deal both with the imbalances in the developing world and with the structural problems in the developed economies such as Germany’s. That is what needs to be done. Dominique Strauss-Kahn is recommending exactly the sort of action that we are taking here in this country.

In the context of international development, the publication of the accountability report is very welcome, as is the specific commitment on maternal and child health. However, does my right hon. Friend agree that a commitment by the international community to a robust and specific process will be necessary in New York in September if we are to have any hope of achieving the millennium development goals by 2015?

My hon. Friend is absolutely right. We need a process of continual checking up on the progress being made towards the MDGs. Now, in 2010, we are two thirds of the way towards the final point, and we should be doing better. We chose maternal and child health at the G8 because those are two of the goals that we are furthest from meeting.

I, too, welcome the document to which my hon. Friend has referred, and I encourage my colleagues to read it. While it is not perfect, it sets out pretty clearly on pages 15, 16 and 17 what countries promised to do and what they have done. That is progress. We have all sat here and heard reports of the great things achieved at G8 summits, but this document holds countries’ feet to the fire and asks, “Did you do what you promised to do? If you did not, you must think again.”

The Prime Minister is right to draw attention to the likelihood of deaths in pregnancy in sub-Saharan Africa, but does he not think that the summit was a little bit complacent about the immediate and very serious problem of food shortages throughout that area, and the consequent large migration flows as people desperately seek somewhere to live and something to eat? Is there not a real sense of urgency when one in six of the world’s population are suffering from food shortages, the largest number in history?

I would not say that the summit was complacent. It was my first G8 summit, and I was struck by the fact that about half the sessions were opened up to visiting leaders from the African Union, Algeria, Egypt and elsewhere in Africa, so that they could keep reminding the richest countries in the world of what they had promised to do. The G8 cannot substitute for the work of the United Nations and other food programmes—it is not an emergency organisation—but I do not think that it is complacent about these challenges. At least, for the first time, it is checking up on itself a bit more, and that can only be a good thing.

Prime Minister Harper has reiterated his plans to start withdrawing Canadian troops from Afghanistan next year. What discussions has the Prime Minister had with Prime Minister Harper about retaining Canadian troops who are in non-combat roles, such as the medical teams and their air troop transport helicopter teams?

My hon. Friend is right to ask that question. A discussion has been held. However, I think we should put on record the fact that no one can accuse Canada of not playing an incredibly positive role in NATO. It has experienced a very large number of casualties in relation to the size of its population. It has made its decision about 2011, and we should not seek in any way to gainsay it over that. Of course we can all do what we can to encourage it to go on playing a role of some kind, perhaps medical or related to training, and obviously it will play a role in terms of development. However, I think that my hon. Friend’s point was well made.

I realise that watching the football with Angela Merkel cannot have been much fun for the Prime Minister, not least because—I think—he was not even born in 1966, and therefore could not console himself with the memory of that achievement.

In his statement, the Prime Minister mentioned Turkey and its important role in relation to the middle east process in Iran. Has he had any discussions with fellow European heads of state about the fact that if we go on making it difficult for Turkey to accede to the European Union, it may well turn its back on Europe, in which case we will be the losers?

I have had those conversations at both the G8 and the G20. It is good that there is all-party agreement in this House that we should do everything we can to encourage Turkey into the European Union, to anchor her into the west in all the ways we can. Clearly there is a disagreement—a disagreement that is not going to go away—between France and Germany on the one hand and Britain on the other about Turkey and the EU, but irrespective of those positions we should all be doing what we can to encourage Turkey to feel part of Europe and of the direction we are taking. The role she can play in terms of Iran and the middle east peace process is very important, but she will not be so inclined to play that role if Europe turns her back.

I am sure my right hon. Friend will agree that if we are to succeed in Afghanistan, we need unity of purpose. How concerned is he, therefore, by the resignation of General McChrystal and of key Ministers in President Karzai’s Government, and by the extended leave being taken by the UK special representative to Afghanistan?

On the issue of the Ministers resigning from President Karzai’s Government, he has put in place quite talented replacements. On the issue of Stanley McChrystal, he is a very talented general who we believe had delivered the right strategy. I was consulted on the issue twice by President Obama, but in the end it was about what General McChrystal had said about the US Administration in the interview in Rolling Stone magazine, so it was an issue between the US Administration and Stanley McChrystal, rather than necessarily a matter for me.

The Prime Minister has had three international outings and he has acquitted himself very well; it would be churlish not to acknowledge that. Ahead of them, he wrote in the Financial Times on 17 June:

“It is shocking that…women still do not have equal rights in the workplace. This is not just unfair; it makes no sense—because it deprives our economies of their full potential as workers and consumers.”

Will he therefore agree, in this spirit of bipartisanship, that having the gender pay audits that have been suggested in both the public and private sectors would be a way of getting rid of that huge problem?

We have supported—and, indeed, before the election we put forward a case for—gender pay audits, particularly based on those companies where any unfairness is found. The right hon. Gentleman makes a good point, quoting from my FT article, which is that that is one of the structural reforms that we in the west in the developed world should be carrying out in order to increase our growth rates, and as the right hon. Gentleman is being so friendly, I shall have to take away his thoughts and think about them again.

Whether it be Afghanistan, the global economy or, indeed, tackling climate change, the G8 and G20 summits are becoming useful vehicles for tackling global issues, but they make decisions that are then passed on to an organisation created just after the war, the United Nations, which is woefully out of date. Were there any discussions about updating the United Nations so that it can tackle these issues much better?

I am grateful for my hon. Friend’s question. The UN Secretary-General was, of course, at the G20 meeting and made a number of contributions, but my hon. Friend is right that the architecture of international relations is badly out of date. We have the rise of India, we have the enormous strength of Germany and Japan, and we have the great growth of Brazil, yet none of those countries is on the Security Council. We have to recognise that it is all very well all of us—we all do this—saying that we must share global leadership with India and China, but if we are going to share global leadership we need to change these institutions. This was discussed. It is fantastically difficult because people have so many vested interests—as, indeed, do we—but I do think that it is absolutely right for countries such as India and Brazil to have the sense that they should be on the UN Security Council.

I praise, of course, the troops who have died and those who, sadly and unfortunately, are likely to die in the future, but is it not the case that there can be hardly a single Member who believes that a military victory in Afghanistan in any meaningful sense is likely to come about even in another nine years? Therefore, is it not all the more important to start negotiations sooner rather than later, as suggested by General Richards? I think the Prime Minister should recognise that there is growing concern in the country at large about what is happening and the number of deaths in Afghanistan.

The hon. Gentleman is right. We are all concerned about the number of casualties in Afghanistan. He is also right in that when we look across history at fighting insurgencies, in very few of them has there ever been a complete military victory—it is a combination of what happens militarily and in the country at large and what happens in terms of some sort of reconciliation process. That is important. We are committed to the reconciliation process and would like to see it go further and faster, but as I said, it is important to maintain a distinction between Taliban linked to al-Qaeda, who would have the terrorist training camps come back and who want world terrorism, and people involved in insurgency for any number of other reasons. Yes, of course there must be a political track and of course we should develop it, but we need to differentiate the sorts of Taliban we face.

Does the Prime Minister agree that our global banking system remains incredibly risky, and that bearing in mind how long it has taken to get previous Basel agreements in place, it may be necessary to take steps to protect our particular vulnerability to the banking sector before then?

My hon. Friend is right. We are trying to put in place a system whereby banks have to ask themselves whether they have enough capital to withstand the sort of shock they suffered in 2008 and 2009. That is what needs to take place, and it is being put in place relatively quickly, but the rules need to be drawn up and agreed, and there may then be a pause before they are actually introduced, because at the moment the great risk is shrinkage of the monetary base—a shrinkage of bank lending—at this very sensitive time in our recovery.

How can the Prime Minister retain his optimism after 11 British deaths in 10 days? How can a stable Afghanistan be built on the crumbling foundations of an election-rigging president and his criminal family, on an Afghan army that is mercenary and drug-addicted and on a police force that is depraved and entirely corrupt? We are in the end game position, as Canada and the Netherlands have explained. At the end of the Vietnam war a question was asked that should haunt us all now: who will be the last soldier ordered into battle to die for a politician’s mistake?

The hon. Gentleman has long taken that view, but even though he makes that case he wildly overstates it. If we talk to British soldiers who serve with the Afghan national army they say that those soldiers are brave, they work hard and they are committed. Yes, of course we need to improve recruitment from all parts of the country, but I do not think it is fair to characterise the army as he does. There have been problems with the Afghan police force, but when we go to Afghanistan we see police trainers from European and American countries doing good work. I do not accept that all is as bleak as the hon. Gentleman puts it. We have had a number of casualties, which are heartbreaking in every individual case and it is heartbreaking that there are so many, but we have to remember what we are doing in Afghanistan. It is not creating the perfect society; it is training up the Afghans so that they can take care of their own security and we face fewer attacks from terrorist groups trained in the Afghanistan-Pakistan border area. The hon. Gentleman shakes his head, but the fact is that today the number of threats coming from that area is reduced, because of what we have done in Afghanistan and because of what the Pakistan Government are doing in Pakistan. Of course we should not be blind to people’s concerns, but we should try to take people with us on the success there has been in reducing those threats.

The Prime Minister will know that business growth is vital for the Chancellor’s plans and that credit is vital to business growth. The Governor of the Bank of England warned on Friday that lending to business remained weak and there was a risk of “disruption of credit”. The G20 proposals could cause banks more serious concern in that respect, so what will the Prime Minister and the Government do to make sure that small and medium-sized enterprises receive the credit they need to ensure growth in this country over the next three years?

My hon. Friend makes an extremely good point, and the concern that we should have about the economy is not the fiscal tightening that needs to happen, but to ensure that the banks are lending and that monetary policy is working effectively. Of course, monetary policy is not just interest rates—the price of money—but we also have to think about the quantity of money, which is bank lending. My right hon. Friend the Chancellor in the Budget made a number of improvements to the credit lending schemes. I think that we can look to see whether there is even more that should be done, but let me repeat that the key thing that we were trying to do at the G20 was not to enforce credit rules now that would restrict lending, but to put in place the measures for the long term that will stop the catastrophe that we suffered in 2008 and 2009. That is the key. In Europe, we are stress testing the banks to ensure that they have adequate capital. Again, that is important: we need to ensure the soundness of the banking system, because that is part of the key to recovery.

The Prime Minister mentioned that he had four useful bipartite meetings. Did he meet Juan Manuel Santos—the President-elect of Colombia—or did he indicate that he would meet him when he goes on tour? He is a gentleman who, as Defence Minister, dressed his troops as members of the International Committee of the Red Cross, carried out the extra-judicial murders of 2,000 innocent civilians and bombed Ecuador, where there is, I believe, a murder warrant out for him. Did the Prime Minister, or will he, raise those issues on behalf of concerned people in the UK who follow them very closely?

I did not meet the President-elect; I did meet the current President, President Uribe, who was at the G8 session on tackling corruption and the drugs trade, where there was a presentation from him and I had a conversation with him. I will take away the points that the hon. Gentleman makes and reflect on them when I have the conversation—I am sure that I will—with the President when he is not just the President-elect but the President.

Did the Prime Minister find time during the G20 summit to speak to the leaders of Russia and China about the ongoing diplomatic issues with Iran? May I urge him to work closely with those traditional allies of Iran to ensure that we try not to go anywhere near the military action that some hawkish nations want?

I had very positive meetings with President Hu of China and President Medvedev of Russia. We discussed, particularly in the Russian meeting at quite some length, the Iranian situation. It is encouraging that the Russians have voted for the sanctions resolution in the UN—resolution 1929—and it is important to show a united face to the Iranians about the unacceptability of their acquiring a nuclear weapon. The point is that nobody wants military action, by Israel or anyone else, to take place, and that is all the more reason for taking the sanctions route and trying to maximise the pressure and change the balance for Iran, to raise the costs for it of having a nuclear weapon. That is what this is all about.

Almost 80 years ago, countries across the world adopted policies of fiscal tightening and gave us the inter-war depression—the slump, with millions of people thrown out of work. We are now adopting policies of collective deflation. Is the Prime Minister not at all fearful that history might repeat itself and that we might see millions back unemployed?

It is quite difficult to talk about deflation when monetary policy is as loose as it is and when interest rates are as low as they are. This is where, with respect, the Labour party has not understood enough of the argument. We have to tighten fiscal policy in the UK. We are borrowing 11% of our gross domestic product. If we started borrowing more, or indeed we stood still, we could face the situation that others in Europe face—it is that serious—so where the demand should come from is by the combination of a fiscal tightening but with loose monetary policy. That is not the same thing that happened in the 1930s. The additional mistake made in the 1930s was to have trade wars, and hon. Members could hear from my statement just how hard this country is fighting to ensure that that does not happen.

As one of the many millions of disappointed football fans around our country today, may I thank the Prime Minister for raising the issue of goal-line technology? Does he agree that, when it comes to tackling the deficit, it is the Opposition who have taken their eyes off the ball?

That was an ingenious way of bringing goal-line technology into a statement on the G20, and I am amazed by your latitude, Mr Speaker—[Interruption.] There was no point blaming the referee; as I said, we were not robbed, we were beaten. However, to Chancellor Merkel’s credit, every time Germany slotted another one past us, she apologised.

Will the Prime Minister confirm that the only occasions in the past 25 years when England have beaten Germany at football have been under a Labour Government? When does he expect that we will be able to do that again?

In the Prime Minister’s absence last week, he might have missed two surprising events. First, the shadow Chancellor made a speech that contained lots of criticism, but not one recommendation for reducing the deficit. Secondly, we saw a five-minute silent cameo from the former Prime Minister, although amazingly, for such a fiscal champion, it was during Environment, Food and Rural Affairs questions.

Order. It is always a pleasure to listen to the hon. Gentleman, but the Prime Minister is not responsible for speeches made by the shadow Chancellor, nor even for the former Prime Minister, so I think that we will leave it there.

The Prime Minister said in his statement that the G8 sent a collective signal that “we want the Afghan security forces to ‘assume increasing responsibility for security within five years’”—he did not say “full responsibility”. He said later on that he wanted to give an indication that we will be out of Afghanistan in five years. Does that mean that we will be out of Afghanistan regardless of the situation in that country in five years’ time—full stop?

The point is that for many years after our troops have left, we will have a strong relationship with Afghanistan that will involve diplomacy and aid, and perhaps even helping to continue to train Afghan forces. However, in answer to the question of whether we should be in Afghanistan by then in the way that we are now, with large-scale military deployment and all the rest of it, no we should not. We should by then have trained up the Afghan army and police force, and seen an improvement in governance, so that we can bring our troops back home.

I read on page 3 of the G20 communiqué that fiscal consolidation plans should be credible and clearly communicated. Did the Prime Minister get the chance to read any of the weekend papers that suggested that the majority of the British people support the Budget and agree with some of the spending plans, which shows that our message is definitely getting across to all but Labour Members?

My hon. Friend makes the important point, which the International Monetary Fund also makes, that if we carry out fiscal consolidation and demonstrate that we have a plan and are getting on with it, that can enhance confidence. Confidence is the key to growth. If we are going to get people to spend and invest, they need to know that the Government have a plan for getting us out of the mess that we inherited, so that is key to getting our economy moving.

When the Prime Minister was discussing the banking levy at the G20, did he explain to his colleagues why he was so lenient on the banks? Instead of taking the axe to public services, he should be asking the banks to contribute more to address the mess that they created, instead of letting them off the hook.

I know that the hon. Gentleman missed the previous Parliament, but he could have read about some of the things that took place. During that Parliament, we argued for the introduction of a banking levy even if others did not follow suit. The position of the Labour party, although I am sure that it is changing by the minute, was that, under the great disappeared—the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—we had to wait for full agreement from every single country in the world. That was not our policy. We have introduced a banking levy, and quite rightly too.

May I urge caution on my right hon. Friend when it comes to Turkey’s membership of the European Union? Unless we have already left the EU by that stage—I can but hope—Turkey’s membership could lead only to the British taxpayer being asked to put his hand further in his pocket and further strain on immigration into this country.

As the hon. Gentleman says, there is not quite complete agreement on this issue, but as I would say to the French President or German Chancellor, even if people do not agree with me that Turkey should be a member of the EU, we should be straining every sinew to think of ways of encouraging Turkey to play a full role in the affairs of our continent. It is a member of NATO, and we have a strong bilateral relationship and a trading relationship with the country. Turkey wants those relationships with us, and we should do everything that we can to enhance them.

Has not the Prime Minister been a little selective in his quotes from the IMF? Did it not say clearly that there is a lack of co-ordination at the G20, that there are premature consolidations, particularly in Europe, and that if there were greater co-ordination between the G20 and other economies it would add 2.5% to world growth and create 8 million jobs?

The hon. Gentleman is right in one regard: the upside scenario posed by the IMF adds to growth and to jobs, but that scenario includes fiscal consolidation by countries such as Britain. I do not want to bore him with quotes from the IMF, but it said:

“Fiscal deficits and debt in some advanced economies reach unacceptably high levels… Sound fiscal finances are essential to sustain recovery”.

A key point from the declaration says that those countries

“with serious fiscal challenges need to accelerate the pace of consolidation.”

That is what the IMF is saying about us. Yes, there needs to be action across the board, including by emerging markets and developing countries which have very high surpluses, not just fiscal surpluses but trade surpluses. In a way, that is what the G20 was about—trying to get people to put into the process what they need to put in. From us, that is fiscal consolidation; from the Chinese, it is dealing with their surpluses. Not everyone acted as much as we did—Germany included.

The communiqué says that the present situation in Gaza is not sustainable and must be changed. Was there any discussion at the summit about practical assistance that international organisations could offer Israel to ensure that humanitarian aid gets into Gaza but weapons smuggling is stopped?

My hon. Friend is right. There were discussions about what could be done, such as having international bodies at the various crossing points to try to examine what is being brought in. The change that has taken place is encouraging on one level because instead of effectively banning everything, Israel has listed those things that it will not allow in, which should lead to increased humanitarian capacity in Gaza. That has a very long way to go, and everybody knows that we are not going to sort out the problem of the middle east peace process while there is, effectively, a giant open prison in Gaza.

Were there any discussions about the possibility of one of our European neighbours falling into further recession? In that eventuality, what contingencies would be considered?

There are great concerns, particularly in the eurozone, about the sovereign debt and other problems that countries face. We should be constructive. As I have said before, I do not think that we should join the euro. In my view, we should never join the euro. However, the eurozone is important to us, and those countries sorting out their problems is important to us. We should not stand in their way if they want to take steps to do that. The key point for us is not putting more money in and not passing powers from London to Brussels. Inasmuch as those countries find ways of sorting out their problems, we should back them.

Also in the newspapers this weekend were comments by Professor Joseph Stiglitz, Nobel prize-winning economist, who predicted the global financial meltdown, that announcements in our Budget will, at best, make Britain’s recovery from a recession longer, and, at worst, put us into the double-dip recession that we said would occur. Does the Prime Minister agree that we ignore Professor Joseph Stiglitz at our peril?

One can find any number of economists taking any number of different views. I say that as someone who studied under them. In the end, if we look at what the IMF says, at what the OECD says, at what, as I quoted, the Americans and the European Union say and at all the advice we have had from the Bank of England and the Treasury, we see that it is important to deal with our deficit. Unless we do that, we will not get confidence, and unless we have confidence, we will not get growth.

Apart from the military operation in Afghanistan, what steps are being taken to win over the hearts and minds of the people of Afghanistan? Linked to that, what steps are the Government of Afghanistan taking to reform the madrassahs, the religious schools, which are often seen as a breeding ground for radicalism?

My hon. Friend makes a very good point about religious education. It has been more of a problem in Pakistan than in Afghanistan. In terms of improving the quality of life for Afghans, it is worth remembering why the Taliban succeeded in the first place. They succeeded because there was no law and order, and no system of justice. Effective district governance and security, being able to go about one’s daily life, are key. Of course we want to see things such as girls going to school and better observance of human rights, but we should prioritise those things that I think the Afghans themselves would prioritise, which is safety and security.

The Prime Minister has cracked jokes about his bilateral last night with Chancellor Merkel, but millions of people will agree with me that last night’s performance was no laughing matter at all. Is it not time that the governance of the game was shaken up, so that we treat football as a sport, not as a business? Did the Prime Minister find time to discuss with President Sarkozy how he can follow his example and launch an inquiry so that we never have to witness that sort of performance again?

There are parts of sport and politics that probably should not mix. It is no laughing matter; it was very depressing. For all of us who wanted England to do well, it was heartbreaking to watch. At least we can say, “We weren’t robbed—we were beaten.” It was not all down to the disallowed Lampard goal—we were beaten fair and square. An interesting point that was made while I was watching was how much German football institutions put into youth training and their football academy. I am sure there are things that our own game, independent of the Government, as they should be—we only want to take credit when they win—can learn from that.