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G20 (Government Deficits)

Volume 520: debated on Tuesday 21 December 2010

20. What discussions he has had with his international counterparts since the G20 Seoul summit on co-ordination of efforts to reduce Government deficits. (31835)

At the G20 summit in Seoul in November, advanced countries committed to developing plans, which reflected their situations, to tackle their deficits and promote growth. The Chancellor has been actively involved in discussions with international and European counterparts since the Seoul summit. As was the case with previous Administrations, it is not the Government’s practice to provide details of all such discussions.

Has my hon. Friend discussed with his counterparts the fact that the key to securing low interests rates for the long term is to take effective and decisive action on Government deficits?

My hon. Friend is absolutely right. We are very fortunate in this country. Because the Government took difficult decisions to tackle the deficit when we came into office, we are in a much stronger place now—consider the turbulence in the eurozone. The difficult decisions that we took ensured that we stepped back from the brink of bankruptcy.

Global action on regulating the financial services sector through groups such as the G20 is vital. The House of Lords Economic Affairs Committee recommended a pre-funded deposit insurance scheme. It said:

“The Government should move towards pre-funding of the Financial Services Compensation Scheme as soon as”

possible. Why has the Treasury turned its back on that important measure?

If the hon. Lady speaks to building societies, which are finding it difficult to lend at the moment, she will hear their concern about the amount that they pay towards the financial services compensation scheme. Contributing to a pre-funded scheme would add to that burden and reduce the ability of banks and building societies to lend to support the recovery.

Government Members, including me, believe that the Chancellor and his team are doing an exceptionally good job for the country. May I suggest another policy to reduce the deficit in this country? A freeze on our contributions to the EU would save us £22 billion over the next five years, which should be given back in tax cuts.

My right hon. Friend the Prime Minister is working with his international partners to freeze the EU’s budget over the next financial perspective.