The whole world is watching events unfold in Zimbabwe, and with your permission, Mr. Speaker, I shall make a statement on the situation as we understand it. I hope and believe that the people of Zimbabwe will hear one message from this House today: we stand with them at this moment of opportunity for their country and we share their demand for a democratic future.

For obvious reasons the fragility of the current situation means that I and, I am sure, all hon. Members will want to choose our words carefully, given the risk that what we say will be distorted. That does not mean that there are not some fundamental truths that need to be expressed.

I have within the last 30 minutes spoken to our ambassador in Harare. The situation is obviously fluid and a Movement for Democratic Change press conference is in train as we speak. Zimbabwe’s political, civic and economic leaders are clearly considering their next moves and each others’ next moves. The full results of the parliamentary elections are still unclear. The latest tally, as of 10 minutes ago, is that 189 seats have been declared and 80 remain to be declared. The two main parties are running neck and neck, at least according to the official figures.

There is still no formal announcement about the presidential election. Many hon. Members will have seen the comments made by Opposition Leader Tsvangirai last night. His comments and demeanour were statesmanlike. He committed himself to following Zimbabwean law, providing all the more reason for the results to be announced promptly.

Although the situation in Harare is tense, there is no suggestion of crowds massing and no reports of violence. But it is not business as usual: many schools are still closed and people are watching and waiting to see what will happen. Let me assure the House that through both political and official channels there has been a high degree of contact and consultation between the UK Government and our international partners. The Prime Minister, Lord Malloch-Brown and I have been in touch with Presidents, Prime Ministers and Foreign Ministers in southern Africa and around the world. There is international consensus that the will of the Zimbabwean people must be properly revealed and respected.

Last Saturday, the people of Zimbabwe made their choice. Outside the 9,400 polling stations, the tallies have been posted. The Zimbabwean electoral commission knows what those results are and has a duty to announce them. The delay in announcing the outcome can be seen only as a deliberate and calculated tactic. It gives substance to the suspicion that the authorities are reluctant to accept the will of the people. They have a responsibility to do so, and Zimbabwe’s neighbours, who have borne a significant share of the burden of Zimbabwe’s collapse, have a responsibility to do all in their power to ensure that that occurs.

No one in the House would want me to hand ZANU-PF a propaganda coup by endorsing one candidate or another, or by taking it on myself to announce the result. In truth, in spite of what President Mugabe would want the world to believe, the crisis in Zimbabwe has never been about personalities. It is not a bilateral dispute between British and Zimbabwean politicians or anyone else. It is, and has always been, about the policies that Robert Mugabe and his Government have chosen to follow and the terrible destruction that has been wreaked on the Zimbabwean people. Now the choice is between democracy and continued chaos.

The situation preceding these elections was shocking. The conditions for free and fair elections were certainly not in place. The playing field was tilted heavily in favour of ZANU-PF. Up to 4 million people who had fled Zimbabwe’s crisis could not vote. In some areas, between 18 and 20 per cent. of those who tried to vote were frustrated by an inaccurate electoral roll. We will probably never know how many dead people on that roll cast ghost votes. In that context, it is worth saying that if a second round of voting is deemed necessary, it must be held in a way that gives far greater respect not just to our standards but to the Southern African Development Community electoral standards. We remain in contact with our SADC partners on the issue.

We do know, however, that in spite of those problems, millions of ordinary Zimbabweans still queued peacefully and voted. Now they are holding their breath: will their country reverse the spiral of decline or exacerbate it? The facts speak for themselves: life expectancy has halved to an average of 34, nearly 2,500 AIDS-related deaths occur each week, inflation is practically incalculable and day-to-day abuse of human rights and freedoms is commonplace.

Britain has always supported the Zimbabwean people through the pain of their national trauma, and must continue to do so. We are the second largest bilateral donor, and spent more than £40 million last year on aid. Our support provided HIV treatment for more than 30,000 HIV/AIDS patients and helped the World Food Programme to feed up to 3 million people, about one quarter of Zimbabwe’s population.

We want to do more to encourage development within Zimbabwe. When there is real and positive policy change on the ground, the House has my assurance that Britain will play a full part in supporting recovery. We know that the Zimbabwean people face a massive rebuilding task. We will help them to do that, with EU and international colleagues, but that can happen only when and if there is a return to real democracy and good governance in Zimbabwe.

We will continue to do all that we can to encourage that to happen and to encourage other countries in the region to exert what influence they have over the situation in Zimbabwe. Those with the greatest influence are of course those closest to Zimbabwe, but we are clear that the situation will not be one that Africans alone have to carry the burden of supporting.

The House will want to know that our ambassador and embassy staff are safe. Both UK-based and local staff are working tirelessly in very difficult circumstances. They are in very close contact with a wide range of Zimbabweans and stand ready to offer consular assistance to the many British nationals in Zimbabwe.

Many hon. Members in all parts of the House have been tireless advocates for the true interests of Zimbabwe over many years. The people of Zimbabwe have suffered for too long. Every hon. Member and every British citizen will yearn with them for that suffering to end, and for it to end now.

I thank the Foreign Secretary for coming to the House to make this statement. He said that he hoped and believed that the people of Zimbabwe would hear one message from this House—that we stand with them at this moment of opportunity. I absolutely support him in saying that so that they do hear that one message from this House, and we strongly support the Government’s calls for the immediate and full release of the results of the election.

This is obviously a crucial but dangerous time for Zimbabwe. As we saw recently in Kenya, contested election results in highly charged circumstances can lead to a very dangerous situation. In Zimbabwe, the combination of brutality and repression for many years, a desperate humanitarian crisis and decades-long stifling of political opposition create the circumstances of a political pressure cooker.

As the Foreign Secretary said, it is not about personalities. Mugabe is the author of Zimbabwe’s catastrophe, but it will no doubt take much more than his departure for the country to recover. However, there is now hope for change: the Mugabe Government may attempt to cling to power, but they may just be unable to resist the force of an overwhelming public rejection—if that is what has happened in the election.

I turn now to some specific questions. Is the Foreign Secretary aware of whether President Mugabe has spoken to any of the leaders of neighbouring countries? It does not seem so, but has he given those leaders any indication of his intentions?

There have been reports of negotiations between the Zimbabwean Government and Opposition leaders. Has the Foreign Secretary been able to confirm any of those reports? He rightly referred to our very hard working embassy officials, but have they been able to speak to Morgan Tsvangirai or his senior colleagues? What assessment has he made of the threat to Opposition figures, many of whom are reportedly in hiding in anticipation of a crackdown?

One of our immediate concerns, of course, is the safety of British citizens in Zimbabwe in the event of an outbreak of violence. The Foreign Secretary touched on that in his statement, but will he assure the House that our ambassador in Harare has well developed contingency plans if the situation suddenly deteriorates? Even before the crisis, it took Z$10 million to buy a loaf of bread, and 4 million people were dependent on food aid. Are the British Government liaising with the UN about preparations for emergency food and medical support, as well as for coping with a sudden outflow of refugees into neighbouring countries?

The Foreign Secretary mentioned continuing British support for the people of Zimbabwe. Does he agree that we must prepare actively now for the rehabilitation of Zimbabwe at the appropriate time—that is, when it is set on a clear course towards the rule of law and democracy? Whenever that happens, does he accept that Britain, with the international community, must be preparing a major programme of assistance now?

Does the Foreign Secretary agree that such a programme could include holding a donor conference, under the auspices of the European Union and the African Union, to develop a programme of assistance that is tailored to Zimbabwe’s needs? The programme could include setting up a contact group to provide sustained diplomatic support, and an offer to assist Zimbabwe in the move from being a culture of violence to one governed by the rule of law. That could be achieved by supporting thorough reform of the security sector, training officials in civilian policing and human rights, and assisting with the orderly return of the Zimbabwean refugees to whom the right hon. Gentleman referred. Could not that programme of assistance, in the event of a major deterioration in the situation in Zimbabwe, also include making preparations for an international observer mission or over-the-horizon humanitarian force, under the auspices of the AU and backed by the major powers in the world?

Does the Foreign Secretary agree that there might be something of a golden hour—a window of opportunity—when the international community ought to be prepared to take rapid and decisive steps to help the people of Zimbabwe in rebuilding their country’s economy and society? To succeed, that country will need support from its neighbours, international organisations and its friends. Will he do his utmost to ensure that all of those stand ready to help?

I am grateful to the right hon. Gentleman for his words today, not least because the speed of change in the situation in Zimbabwe has made it difficult to give him as much advance notice of the contents of my statement as would normally be the case. A number of his questions would be very interesting to discuss, although probably not in the full glare of publicity in the House of Commons, so I hope that he will accept the following answers.

I think that the right thing to say about President Mugabe is that he has been conspicuous by his absence from the air and telephone waves. The right hon. Gentleman mentioned reports of negotiations, and we have seen them as well. In my statement, I said that senior figures in Zimbabwe were watching and waiting, and it is clear that discussions have been taking place both within and between parties.

The right hon. Gentleman made an important point about the security situation and the security of Opposition figures; that is obviously a great source of concern. There is also the issue of the security of Zimbabweans of all backgrounds. He asked about consular planning. Of course we try to stay in close touch with as many as possible of the 10,000 or 12,000 British nationals in Zimbabwe. We have reached some far outlying areas, but of course we cannot be complacent, given some of the doomsday scenarios that have been mooted. I can assure him that there has been a serious degree of activity on our part, and on the part of the Department for International Development, to deal with that contingency.

The other side of the coin is, of course, a brighter future for Zimbabwe. As I suggested in my statement, it is important that the whole international community is ready, when it has a decent partner Government in Harare, to take part in the sort of comprehensive economic, social, political and security engagements that will help to rehabilitate—I think that was the right hon. Gentleman’s word—the country. The rehabilitation will be on a scale not seen by almost any country for a long time. I cannot remember the exact levels of inflation in the Weimar Republic, but he mentioned that a loaf of bread cost Z$10 million; I think that four weeks ago it was Z$1 million. That is a degree of chaos that is almost unknown. However, I can certainly assure him that discussions are taking place.

It is incumbent on the Government to try to prepare for all eventualities. One can never have perfect foresight, but it is important to refer to the second round of elections that might be deemed necessary. If they are, we want them to take place on a fairer and freer basis. The humanitarian situation also needs to be prepared for as far as possible, and I am grateful for the fact that on that matter, at least, there is cross-party support.

When the change in Zimbabwe comes, there will be, as the Foreign Secretary says, 4 million people who are outside their country. Many of them are in South Africa, but there are quite a large number of Zimbabweans in this country. Will he have urgent discussions with his colleagues in other Departments, including the Department for International Development, and with the people responsible for the Border and Immigration Agency, about providing assistance and help, in a careful manner, to those Zimbabweans—doctors, nurses, teachers and others—who wish to go back to Zimbabwe to help to rebuild their democratic country?

My hon. Friend raises an important point. We are not yet ready to cross that bridge, but hopefully the time will soon come when we are, and I assure him that we will seek to do so in an effective and efficient way.

Although the House will clearly want to debate Zimbabwe, and although I understand why the Foreign Secretary felt that he needed to make this statement today, in doing so does he not run the risk of being deliberately misinterpreted? Will he share with the House the exact reasons why he decided to make the statement, and why he did not contact the Opposition parties to see whether we would agree on whether to delay the statement? Will he reassure the Opposition parties that when there is something solid to comment on he will update us, especially during the recess?

The whole House will share the great hope and excitement, expressed by many voices coming out of Zimbabwe through blogs and other media, that we may be about to witness historic, positive change in that wonderful country, which was brought to its knees by misrule of the most odious kind. I therefore agree with the Foreign Secretary that the Zimbabwean electoral commission must publish all the election results without further delay. Is not the most striking and fantastic aspect of the Zimbabwean general election the strong showing of the opposition parties, despite the massive electoral fraud and despite the political corruption? May I therefore associate my right hon. and hon. Friends with the Foreign Secretary’s expression of solidarity with the people of Zimbabwe? We have a shared belief that the true democratic will of the Zimbabwean people must be heard and acted on. As I have made clear, I understand that the Foreign Secretary wishes to tread carefully, but will he confirm that the targeted EU sanctions will be maintained and toughened if the current regime tries to hold on to power in the face of a confirmed democratic verdict?

The Foreign Secretary has begun to outline some of the Government’s thinking on the help that Britain and the international community are already organising for a fresh Government. Will he assure the House that such support for recovery and reconstruction will be rapid and generous? Does he recognise that there must be no delay in providing support? Proposals such as new World Bank support and donor conferences are of course sensible, but assuming that those proposals go ahead, will he ensure that matters are so organised that international pledges of help actually materialise once the summit headlines have gone, as the record in Iraq and Afghanistan is not encouraging?

Finally, will the right hon. Gentleman ensure that the support that the international community supplies also flows into Zimbabwe’s neighbours, as their populations and economies have sheltered the vast majority of the refugees and exiles escaping Mugabe’s tyranny?

I hope I may suggest, in the nicest possible way, that the fact that the hon. Gentleman has been able to ask four or five perfectly sensible questions shows that perhaps it was not completely ridiculous to make a statement today. However, I do not want to fall out with him about that. I will check with my office, but I would not want it to stand on the record that there had been no contact with the Opposition parties over the last two days; it is important that there is contact.

The hon. Gentleman made an important point: one reason for being here today is the fact that the recess beckons, and I shall ensure that we stay in touch, even if not in quite such proximity, over the next two weeks.

The hon. Gentleman tempts me into a series of perfectly legitimate hypothetical situations, either where democratic will is frustrated and sanctions continue or where democratic will is respected and rehabilitation and reconstruction are necessary on a grand scale. It is important, particularly given what he said about the danger of misrepresentation, that we keep saying that the onus is on the Zimbabwean electoral commission to announce the results and that the international community shoulder its responsibilities as it does so, although we must be clear that we are prepared for a range of eventualities. I hope he understands that to go beyond that could be seen as not terribly helpful. The hon. Gentleman’s point about the impact of Zimbabwe on its neighbours is important, however, and many people will scratch their heads at how countries surrounding Zimbabwe have had to cope with such an influx of Zimbabwean refugees and how they have tried to manage the politics, as well as the social and economic consequences, of that.

I can assure the hon. Gentleman that the Secretary of State for International Development and I try to look at southern Africa regionally, as well as nationally and locally, in relation to how our aid and other programmes work. We will continue to do so.

First, may I endorse everything the Foreign Secretary has said and, secondly, put to him the following? One of the few things that Mr. Mugabe has been successful at is representing his difficulties as a bilateral dispute between him and the UK and a legacy of colonialism. He has succeeded in convincing many of his African colleagues of that. Therefore, those who consider themselves friends of Zimbabwe should, as my right hon. Friend said a moment ago, be cautious in what they say at this delicate time to ensure that our position is not misrepresented, as it will be if we put a foot wrong.

My hon. Friend speaks with the authority of a former Minister for Africa, and in short I agree with him. I know that he is a true friend of the Zimbabwean people, and in everything he has said and done he has shown that.

It certainly appears that the prayers of those of us in the House who have taken an interest in Zimbabwe over many years may finally have been answered and that, despite an election that was clearly anything but free and fair, a majority of the people of Zimbabwe have clearly indicated that they want change. I agree with everything the Foreign Secretary said, as I do with what my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) said.

Will the Foreign Secretary give the House further information about the immediate aid that we can give to the people, not a Government, of Zimbabwe to reduce starvation and to help in relation to health and with AIDS, as well as the problems associated with it? That would give them hope that what they have done so bravely will be rewarded by a country that was in part responsible for bringing Mr. Mugabe to power.

The hon. Gentleman speaks with real passion, born of long engagement with the struggles of the people of Zimbabwe, or long sympathy with their recent struggles. He will know that the aid programme is now almost £50 million. It is paid through the United Nations, whose role was highlighted earlier.

The best thing might be to ask my right hon. Friend the Secretary of State for International Development to put a note in the Library before the rise of the House tomorrow afternoon. I hope that there will be a double purpose in that: first, to inform hon. Members, but also to help to make it clear to the British people what difference their tax money is making today to the people of Zimbabwe.

Does the Foreign Secretary agree that one fact is crystal clear—Mugabe has lost? First, if he had won, he would triumphantly have proclaimed that fact, as he did on all previous occasions. Secondly, for the first time we have an aggregation by independent monitors of results posted up outside local polling stations, and they show that he has lost. That being the case, it is vital that the international community stand together with the UN, the European Union and the southern African countries to ensure that an orderly transition of power takes place, and that there is an end to the prevarication and, frankly, the complicity with Mugabe’s murderous rule, which there has been from Beijing to southern Africa for far too long. Mugabe has shown consistently that he will not go unless he has no alternative but to go. Quiet diplomacy has never worked with him.

My right hon. Friend, I am sure, is right about the significance of international unity, and seeking that international unity across the EU and the southern African countries is important. I very much concur about the significance and stress that he placed on the role of the civil society organisation ZENS—the Zimbabwe Election Support Network—and the highly innovative mobile phone-based photography it has produced of results posted outside polling stations, under quite some threat to the individual security of its members. I choose my words carefully: like my right hon. Friend, I have seen the results that came out of the sample—540 of 9,400—that the civil society organisation chose.

There will be time for a post mortem on how we got here, and no doubt there will be different views on which countries played what role. At the moment, however, I would prefer to stick with the importance that my right hon. Friend placed on unity and the role of civil society organisations.

I commend the Foreign Secretary for his restraint. Does he accept that although we here may feel a sense of responsibility, the harsh truth is that our influence is necessarily limited by the fact that we are the former colonial power? Is it not therefore the case that these events are a test for Zimbabwe and its people, but that, in a political sense, they are a real test for the countries of southern Africa—in particular, South Africa? Will he assure us that he has taken every opportunity to communicate our views to the Government of that country and, in particular, to Mr. Mbeki?

The right hon. and learned Gentleman raises an important point. As I think the Leader of the House said at Prime Minister’s questions today, our Prime Minister spoke to President Mbeki on Monday. I am sure that the right hon. and learned Gentleman would agree that that conversation is about not only communicating our views, which is the phrase he used, but trying to discuss with President Mbeki how both our countries can play an appropriate role in addressing this situation. I am sure the right hon. and learned Gentleman agrees with that.

As I said in my statement, the people who have suffered most are those in Zimbabwe. Those who know best the need for change are in Zimbabwe, but of course the neighbours close to Zimbabwe are greatly affected by these events.

In respect of our own role, it is important that we do not in any way—I know that the right hon. and learned Gentleman would not do this—fall into the trap that was highlighted by my hon. Friend the Member for Sunderland, South (Mr. Mullin). We should not say things that play in the wrong way.

Equally, we should not be at all ashamed of the aid and other programmes that we have sent to Zimbabwe over the last 28 years, destined to help the people of that country. In fact, we should try to be proud and to stand up for the fundamental truths that we have tried to express in the actions that we have taken. That is a difficult balance to strike, and I know that that is what the right hon. and learned Gentleman was referring to. Certainly, it is the balance that we are trying to strike. We are concerned about the situation in Zimbabwe because of the wrongs that are being done to people who deserve better.

I welcome the statement. This is an opportunity for us to send a simple message of support to the people of Zimbabwe without getting into any of the details that might be awkward. I also welcome the fact that both the Foreign Secretary and the Prime Minister have spent a great deal of time over the past few days on the telephone doing the work necessary to keep the international community and the European Union together on the issue. Does he agree—this follows on a little from the previous question—that the role of South Africa in the next couple of days will be crucial, and can he assure me and all those in this country who have supported South Africa and who have links with South Africa and President Mbeki that this is the opportunity for President Mbeki to show that he is a true world statesman?

My hon. Friend, like the hon. Member for Macclesfield (Sir Nicholas Winterton), has played a valiant role in highlighting the situation in Zimbabwe and campaigning for effective international action on the issue. The international unity to which she refers was brought home to me at the meeting that I held in Paris on Monday. When I suggested to my six EU colleagues that we should interrupt a meeting about the French European presidency to talk about the situation in Zimbabwe, they wanted that to be the first item on the agenda because they saw the importance of it. I took heart from that that the matter is not seen just as a bilateral issue. Of course my hon. Friend is right that South Africa has the opportunity to be a powerhouse, economically and politically, for the whole of southern Africa, and the partnership with South Africa is extremely important. It is important to register the fact that many South Africans would say that the elections would not have happened at all without their intervention. Hopefully, those elections will allow the democratic will of the Zimbabwean people to be expressed.

I welcome the Foreign Secretary’s statement. Although we must indeed be cautious about what we say today, those many of us in the House who have campaigned over the years for the democratic rights of the Zimbabwean people must hope and pray that this is the end of the long dark night of Zimbabwe and the breaking of a new democratic dawn. The lesson of history is that democracy can very quickly be undermined by chaos, and that the only way that can be avoided, as we have learned painfully in another area, is by having a comprehensive plan for reconstruction and aid in place, to be put into action immediately. While we wait for the result, can the Foreign Secretary, along with his international colleagues, begin to put that plan together so that once democracy is restored in Zimbabwe, as I hope it will be, there is no delay before that plan goes into action?

The right hon. and learned Gentleman makes an important point. I think he agrees with me that it is possible to be diplomatic in what one says without obscuring the fundamental truths that need to be expressed. He has expressed them in his own way. I have expressed the same sentiment. The shadow Foreign Secretary, the right hon. Member for Richmond, Yorks (Mr. Hague), referred earlier to Kenya. We want to try to avoid a Kenya situation. We are in a pre-Kenya situation in one way, which could easily become a Kenya situation, with the violence to which the right hon. and learned Member for Devizes (Mr. Ancram) was referring. That is a huge challenge. Every time we describe the chaos that has taken place in Zimbabwe over the past few years, we dramatise the difficulties of precisely the sort of operation that he mentioned, but he can be assured that although we are trying to engage on the immediate issue, we have an eye on tomorrow as well as on today. We will do our best in that respect.

I thank the Foreign Secretary for his sensitive approach to the matter. I agree with my right hon. Friend the Member for Neath (Mr. Hain) that had President Mugabe won, we would have known about it by now. My right hon. Friend the Foreign Secretary may not be able to answer this question exactly, but I hope he will understand what I am trying to say. Mugabe has had five days to move his money, resources, diamonds and the oil that he owns outside the country. Can my right hon. Friend reassure us that all the international banks will have a letter from us if not today, then tomorrow, asking them to search the electronic records to make sure that no money is moved in any of the hundreds of accounts that Mugabe owns, especially those in Cairo?

The important thing to say is that our focus is on the interests of the people of Zimbabwe. That is the foundation of what we are doing. It is better if I just say that.

Can the Foreign Secretary outline further what the Government will do to help the development of proper democracy in Zimbabwe and a move away from the corruption that has been endemic in that nation? Will he indicate what steps we can take to try to ensure that the 4 million refugees who had to leave Zimbabwe are allowed to return to help democracy flourish in that benighted land?

The hon. Gentleman makes an important point. It is worth remarking just how deep the democratic spirit is in Zimbabwe. Despite everything that has been thrown at them, far from forgetting how to vote or dispensing with their democratic rights, millions of people were determined to vote.

They were queuing.

The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) is right. The Zimbabwean people’s faith in the ballot box has, remarkably, been undimmed by the traumas and travails that they have been through. In some ways, the nurturing of the democratic spirit is far ahead of the nurturing of democratic institutions in that country. In respect of democratic institutions, I know that the hon. Member for East Londonderry (Mr. Campbell) is committed to the work of the Westminster Foundation and other party-to-party links, which are important in building a decent civil society. That will be very important in the difficult task of reconstruction.

I warmly welcome the statement made by the Foreign Secretary today and the fact that he and the Prime Minister have telephoned so many African leaders. May I press the point made by the Chairman of the Foreign Affairs Committee? Will the Foreign Secretary speak to the Home Secretary about the Zimbabwean citizens in this country, many of whom do not wish to go back until the situation is secure? Will he ensure that there is no change in Government policy and there will be no removals until the situation is secure?

I am happy to speak to my right hon. Friend the Home Secretary about the matter in due course. It has been a pervading aspect of all our discussions that no one should do anything precipitate. That is the approach that we will take.

There will be a great welcome when Zimbabwe again becomes a full member of the Commonwealth. When the election results come, may I commend to the Foreign Secretary two quick words? The first is from Kenneth Kaunda, who said when he stopped being President of Zambia, “You win some, you lose some,” and secondly, the words of the Lord Privy Seal 26 years ago who, when criticised for the result of the elections after Lancaster house, said, “With free and fair elections, you can’t always predict the result.”

Those are good points. An hon. Member referred earlier to the result that we had produced in the first elections of Zimbabwe. The result was produced by the Zimbabwean people, but the democratic spirit has lived on. Although I have been lucky enough in my political lifetime only to win some, I take the hon. Gentleman’s point that one wins some and loses some. Hopefully, we will not be able to enjoy that experience in the near future.

During 2004 the House of Commons Foreign Affairs Committee was somewhat surprised, during a visit to South Africa, at the level of support for President Mugabe and the criticism of the United Kingdom for the comments that we were making at the time in criticising his regime. African leaders have acquiesced in Mugabe’s tenure of office over the past few years. It is crucial—I echo calls from other Members around the House—that my right hon. Friend does all he can to engage those leaders and, if there is a result that represents the return of democracy to Zimbabwe, to ensure that it is implemented. That is the key. At present, democracy no longer exists in Zimbabwe.

My hon. Friend leads me towards an important point. The temptations of the megaphone are very large indeed, especially where terrible things are being done, but sometimes the megaphone is not the best tool of diplomacy. Equally, to be timid is not right. To be silent is therefore to become complicit. The challenge for us all is to find a way to be effective without resorting to the megaphone, which, in the end, becomes ineffective. We all need to recognise my hon. Friend’s point about the striking support that continues or previously continued to exist for Robert Mugabe. As I said to my right hon. Friend the Member for Neath (Mr. Hain), there will come a time for analysis. One of the things that will come out of that is that the megaphone that plays well here does not necessarily play well in the place that really matters. The challenge for us all is to make sure that we find the right implement.

In his discussions, has the Foreign Secretary had time to speak to President Seretse Khama Ian Khama, who was sworn in as President of Botswana only yesterday? I know that the President is a close personal friend of the Secretary of State for International Development. Will the Foreign Secretary be specific about the Commonwealth? If and when Zimbabwe returns to the road of democracy, as the Foreign Secretary describes it, will it be welcomed back into the Commonwealth immediately? That is one organisation to which the front-line states do belong and it could really participate in the rebuilding of civil society in Zimbabwe.

The hon. Gentleman makes an important point. In answering the hon. Member for Worthing, West (Peter Bottomley), I did not give due attention to that issue. This is an opportunity for the Commonwealth to show its real worth in the modern age. I will certainly be in touch with the new Commonwealth secretary-general, who started yesterday, at the appropriate time.

I believe in the Commonwealth. An organisation that covers a quarter of the world’s population—north, east, south and west, and all races and religions—has the opportunity to show what it means for different countries to work together and make the phrase “the international community” mean something. This situation is a good example.

I think that I am right in saying that it was Zimbabwe that pulled out of the Commonwealth, rather than the Commonwealth that kicked out Zimbabwe in the beginning. But I very much hope that, first, a new Government in Zimbabwe would want to rejoin the Commonwealth, and, secondly, that the Commonwealth would give the country a very warm embrace.

I welcome my right hon. Friend’s statement. Although I recognise the need for caution, does he not agree that the international community has a key role to play in standing absolutely firm and sending a clear message to the authorities in Zimbabwe that we recognise that this is a defining moment in the country’s history, and it is inconceivable that there cannot be change of some sort? There is also a role for us to step up to the plate with the funds and the support for development. I am sure that, with those, the many extremely able and talented Zimbabweans will more than succeed in rebuilding their country.

I agree with my hon. Friend, who knows a lot about these issues. She is absolutely right about the potential of the country. It is a tragedy for any country to do as badly as Zimbabwe; it is a double tragedy when it has the natural resources and people to make a great success of itself.

Will the Foreign Secretary confirm that there is enormous good will between the ordinary people of the United Kingdom and the ordinary people of Zimbabwe, no matter how they voted? Will he also agree that the front-line Southern African Development Community states have an important role to play, in particular in reversing the brain drain—to encourage ordinary hard-working people to go back to Zimbabwe and build the country back to its former success?

The hon. Gentleman makes good points. As I said, we do not want to do anything precipitate. However, the outflux of refugees to the neighbouring countries has certainly been a huge drain on Zimbabwe and a huge burden for South Africa and other neighbouring countries. It is important that Zimbabwe returns to the equilibrium that it deserves.

What direct contacts has the Foreign Secretary had with his opposite numbers in the front-line states at this critical time before the election results are formally announced, so that they may encourage recognition of the wish of the Zimbabwean people for the rule of law and democracy?

I am happy to give one of a number of examples. The first call that I had was with the Foreign Minister of Tanzania. Our conversation was precisely about the respective responsibilities of the states closest to Zimbabwe. The Minister’s President was deeply engaged on the issue. I shared with the Minister our hopes for the resolution of the situation, and we had a strong measure of agreement about the respective responsibilities of the different countries concerned.

In the past few days, constituents of mine with strong connections to the rural areas of Zimbabwe have brought me accounts of orphanages and elderly people’s homes in dire distress. In some cases, staff have already left and elderly people, often with serious geriatric conditions, are left wandering around to try to feed themselves. The children in the orphanages are left untended and, in many cases, unfed.

May I echo the plea of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) to the Government? When the will of the people of Zimbabwe is known and, as we all hope, Mugabe is removed, a programme of emergency relief must be immediately available from this country and we must not forget the elderly people’s homes and orphanages, particularly in the often forgotten rural areas.

My earlier comment to the shadow Foreign Secretary about the particular needs of British—as it happens—nationals in far-flung areas was a reference precisely to the issue of children and, especially, elderly people. I would prefer not to wait in respect of elderly or young people who are in the situation that the hon. and learned Gentleman describes; if he gets the details of those cases to my office, I will forward them to the embassy in Harare straight away. There is already a food aid programme with significant British taxpayers’ money behind it. It is administered through the UN. We need to know who the people whom the hon. and learned Gentleman mentions are, and find out why they are not part of the humanitarian support network.

Some of us warned many years ago that Mr. Mugabe was not a fit person to be entrusted with the governance of Zimbabwe. We have looked on with increasing dismay and horror as he has systematically gone about destroying his country—almost with the connivance of the South African Government, as the right hon. Member for Neath (Mr. Hain) said.

May I ask the Foreign Secretary a specific question about what he said about aid? Will he ensure that the British taxpayer, having already contributed a substantial amount of money to Zimbabwe, does not contribute more aid unless it is specifically linked to good governance in Zimbabwe in future?

The position that my right hon. Friend the International Development Secretary and I have taken consistently is that the amount of aid should be governed by the situation of the people of Zimbabwe and our ability to make a difference with that aid. As the hon. and learned Member for Torridge and West Devon (Mr. Cox) suggested in the previous question, we would not want to stand aside if pressing needs could be met through available aid.

As I keep on referring to the UN, I should say that we are not paying money through the Zimbabwean Government. If the concern of the hon. Member for Aldershot (Mr. Howarth) is that our money is being used for illegal or corrupt purposes, I should tell him that significant measures are taken to avoid that.

Although nothing that we say or do today in the House should in any way endanger attempts to persuade Mugabe to retire peacefully, will the Foreign Secretary reassure the House that the Government will not condone any deal that would eventually put Mugabe beyond the reach of The Hague?

Our position on that issue is well known; we are very committed to the role of the authorities at The Hague. I do not want to get into the issue of individual negotiations and discussions, but I can certainly say that they are not something in which I am involved.

Those of us who have been involved in this issue for many years might wish in our hearts to see a Ceausescu moment, when the world sees fear in the eyes of a despot. However, like all of us in the House, I recognise that such emotions are self-indulgent. Does the Foreign Secretary agree that, looking forward, one of the most important things that we have to do is stop the Zimbabwe central bank printing money like confetti? To do that, we need to implement the International Monetary Fund plan on which Mugabe reneged some time ago. Does the Foreign Secretary agree that that will require huge will from the international community? It is something that we really can do to bring about a rapid turnaround—I hope—in the Zimbabwean economy.

The situation has got significantly worse since that plan was rejected; I would want to be sure that the plan was appropriate to the circumstances. However, I know that my right hon. Friend the International Development Secretary, and the Chancellor when he goes to the IMF spring meetings, will ensure that the issue will be on the agenda so that there is a proper plan when the time comes.

I beg to move,

That leave be given to bring in a Bill to make it an offence for any importer or distributor to sell or distribute in the United Kingdom any wood harvested, manufactured or otherwise dealt with illegally in the country from which the wood originated or through which it passed or was transhipped; and for connected purposes.

In this House, we are charged with the responsibility of making law. Our constituents, who bestow that privilege upon MPs, expect us to use it wisely—that is, to solve genuine problems without imposing yet greater ones upon them. Good law should carry the consent of the public who are governed by it. To do so, it must be possible to explain clearly the need that the legislation seeks to address and how it meets that need efficiently and simply, with the minimum of bureaucracy. The Bill that I bring before the House meets those tests. I believe that the significant cross-party support and the public backing of more than 30 non-governmental organisations and industry bodies as diverse as the Environmental Investigation Agency, James Latham Ltd, the Royal Society for the Protection of Birds, Global Witness and the Born Free Foundation demonstrate that this Bill is urgently needed and widely welcomed.

Last year, the Stern report commissioned by my right hon. Friend the Prime Minister pointed out that between 18 and 24 per cent. of all the greenhouse gas emissions that are contributing to climate change come from deforestation. If we put all the power stations in the world together—coal-fired, nuclear and all the other technologies for producing electricity—only then would we have a sector that contributed more to global warming than the loss of trees.

Last December, in Bali, the United Nations forum on combating climate change led to an historic agreement among the nations of our world that deforestation was a major problem and that the means for avoiding it must form part of the post-Kyoto settlement. To do so requires that we create ways of rewarding sustainable forest management by the time of the Copenhagen conference of the parties in 2009.

On the issue of forests, the world has declared that it shall run before it has even begun to walk. We cannot jump to sustainable forestry until we have established legal forestry. The World Bank estimates that trade in illegal timber amounts to US$15 billion every year. The UK is the fourth largest consumer market of imported tropical timber, yet only a fraction of it can be said with any degree of certainty to have been legally sourced and harvested in its country of origin. Illegal logging is a criminal activity. It corrupts and undermines governance in many countries across the globe. In doing so, it not only destroys forest ecosystems and contributes to carbon emissions but directly harms some of the poorest people on our planet—the indigenous forest-dwelling communities whose very livelihoods depend upon the forest. The $15 billion of this illegal trade is $15 billion that should be going into health care and education for them and their children.

We declare our support for the millennium development goals, yet it is not an offence in the UK to trade for commercial gain timber that we know to have been harvested illegally in its country of origin. If we were dealing with private property such as stolen antiques or works of art, there would be no question but that those importing or selling those artefacts were regarded as criminals and dealt with according to the full force of the law. Yet in the UK, companies habitually trading in stolen timber have committed no crime and broken no law. My Bill would change that. Any distributor or importer who sold any wood that had been harvested, sold, taken or possessed illegally in the country from which the wood was originally harvested would be subject to various penalties, ranging from five years’ imprisonment and a £100,000 fine down to a simple £5,000 fine, depending upon the degree of knowledge and degree of recklessness or good faith involved.

I am grateful to the timber industry for its constructive engagement with my Bill, particularly given the severity of some of the penalties that it would impose. While recognising the pioneering work of companies such as Timbmet and others, I also want to acknowledge the help of the Timber Trade Federation, which has ensured that the Bill is much improved from its original draft. It now reflects the need to distinguish between three different cases: those who know full well that they are trading in illegal timber; those who should know but turn a blind eye and do not ask too many questions of their supplier if the price is right; and those who have acted at all times in good faith but are caught out by an honest mistake. Equally important, the best companies, which have diligently borne the expense of getting things right and have gone down the route of certification to ensure that they supply only legal and sustainable timber, would no longer see their products undercut by less scrupulous competitors.

My Bill would achieve that not by imposing a ban on illegal timber at the border—that would demand an army of Customs agents well versed in the changing legislation of each producer country and able to check the various certificates and licences that might be deemed proof of legality—but by shifting the balance of risk by providing a clear incentive for companies to drive the burden of due diligence back down their own supply chain. Seals and ribbons that are the trappings of legality can be bought for $5 in the ports of far too many producer countries around the globe—far better, then, that importers and distributors are put on notice that at any point they can be opened up to challenge and if found guilty will face substantial penalties. Not only Government agencies but NGOs and even the industry itself could bring forward evidence on which a prosecution could be based. The elegance of the Bill is that it does not seek to make a virtue out of catching those who do wrong but to alter the wrongdoers’ behaviour by shifting the balance of risk against them. Ultimately, it is a Bill about protecting the environment, not catching thieves. To that end, it would apply Occam’s razor by simplifying and cutting bureaucracy.

The Bill should be seen in an international context—not solely as it relates to trade between countries but in the context of other legislative measures. I particularly wish to recognise the international negotiations between the European Union and countries such as Ghana, Malaysia and Indonesia in negotiating forest law enforcement, governance and trade voluntary partnership agreements—FLEGT VPAs. That would introduce a voluntary licensing scheme that would allow only legal timber from VPA countries to enter European markets. My Bill would complement FLEGT by catching unlicensed timber from VPA countries that was laundered through third-party countries. It is no accident that the European Commission is considering measures similar to my Bill under the additional options paper. However, they would not be passed by the European Parliament until 2010, and we should not wait that long.

I must also point to the leadership given in the United States by Congressman Earl Blumenauer and Senator Ron Wyden, who have introduced similar legislation to that which I propose as an amendment to the Lacey Act. Their initiatives and foresight have inspired the content of my Bill. I acknowledge with gratitude the helpful discussions that I have had with them and their officials. If there is a race between us as to who can get such measures on to the statute book first, it is the only race I know where each runner is urging his competitor to go even faster than he himself is able. The signal that would be given to world markets by both our countries enacting such legislation is incalculable.

Perhaps the single most important legislative initiative in relation to illegal logging is that of Japan. This year, Japan hosts the G8 summit as its president. For the past three years, Japan has developed various initiatives against illegal timber, including its highly regarded Gojo wood policy. I have been privileged to chair, with my good friend Mr. Yoshino, the illegal logging dialogue. The purpose of that dialogue has been to make recommendations to the G8 summit in Hokkaido that will combat illegal logging. My Bill would be one that the legislators in the United States already—

Order. I fear that the rest will have to be taken as read.

Question put and agreed to.

Bill ordered to be brought in by Barry Gardiner, Margaret Beckett, Mr. Elliot Morley, Eric Joyce, Mr. Andrew Dismore, Chris Huhne, Alun Michael, Joan Walley, Mr. Graham Stuart, Mr. James Paice, Mr. Ian Cawsey and John Mann.

Illegally Logged Timber (Prohibition of Sale and Distribution)

Barry Gardiner accordingly presented a Bill to make it an offence for any importer or distributor to sell or distribute in the United Kingdom any wood harvested, manufactured or otherwise dealt with illegally in the country from which the wood originated or through which it passed or was transhipped; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 94].

I beg to move,

That this House notes with concern the risk of recession in the United Kingdom economy; recognises that although the collapse of the United States mortgage market and the global ‘credit crunch’ are a catalyst to the current downturn in the United Kingdom economy, record levels of personal debt and the extreme bubble in the housing market were already major destabilising factors; further notes that because of inflation and weak public finances there is little scope for stimulating demand; applauds the efforts of central banks to reintroduce stability into the world money markets, but warns against the use of taxpayers’ money in bailouts which cause serious concerns about moral hazard; further notes with dismay rising levels of personal debt, exacerbated by high mortgage interest rates; further notes the rising evidence of a major slowdown in the United Kingdom housing market; registers with concern the increasing number of people requesting help regarding mortgage payments; further notes with concern that repossession orders are now at the same level as in 1990; regrets the Government’s failure both to admit the current problems in the housing market and to act to prevent mass home repossessions; calls upon the Government to consider options being used in the United States, particularly to encourage banks to explore options other than repossession; and further calls upon the Bank of England to include house prices in the measure of inflation.

I am grateful for the opportunity to introduce this debate on a motion in my name and those of my colleagues. Perhaps I will be able to pursue answers to questions that I was not able to ask earlier in our proceedings. The Government’s reputation rests very heavily on their economic credibility and performance, and they have won two elections on that basis. Two propositions are at the heart of their credibility: the first is that they have enjoyed the longest period of economic growth since records began in 1701—I think that that is how the case is put—and the second is the mantra that there is now an end to boom and bust. The first of those two propositions is still true, but looking rather precarious, and the second is beginning to look rather ridiculous.

This is an Opposition day debate, and I know that the convention is to deal with such matters in a rather Punch and Judy way, but I shall try to avoid doing so for several reasons. First, we are at the beginning rather than the end of a difficult period for the economy, and it may be that with good policies and good luck, we shall avoid the worst, such as something similar to what happened under the Tories 15 years ago. Secondly, some of the problems are home-grown and result from failures of Government policy, but some are imported—particularly the credit crunch—and the Government are not responsible for those. We need to acknowledge that there is a mixture of the two.

The other point, which is technical but rather important, is that some of the problems we are now confronting are difficult and perhaps unprecedented. How does one deal with a big debt deflation problem, as it is called? How do we deal with the collapse of a bubble in an asset market such as housing? How do we deal with a drying up of credit in the banking system? Those are relatively new problems to which there are no obvious easy answers. I want to set some ideas for discussion as to how we might approach those questions.

However, I do not want to be too generous. There are clearly criticisms that one can make of Government performance, and the central one is complacency. Many of the problems that we face were anticipated in the past. I recall raising the issue of the housing market and debt with the current Prime Minister in 2003. At that time, I put this to him:

“On the housing market, is not the brutal truth that…the growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level?”—[Official Report, 13 November 2003; Vol. 413, c. 398.]

The then Chancellor’s reply was that I was scaremongering, but the scariest thing about my scaremongering is that my predictions turned out to be largely correct. There are major concerns in that area.

Let me just review the problems. First, we have an acknowledged slowdown in the economy. We are not in a recession, but the slowdown is acknowledged. The Government’s forecasts are significantly more optimistic than the consensus among independent forecasters, who, a few weeks ago, were predicting 1.7 per cent. growth for the next year. Those estimates have been marked down week by week. We have other estimates from companies such as JP Morgan, the bank advised by former Prime Minister Tony Blair, that there is a one third risk of recession. Lehman Brothers have now joined it in making such an assessment.

In addition, we have severe, outstanding problems, many of which relate to problems of personal debt in a range of households—not all of them, but a substantial number. The total amount of personal debt in relation to people’s income is now roughly 160 per cent.—twice what it was when the Government came to office. It is the highest figure in our recorded history, and the highest in the developed world. Now, that is just a figure, and it does not necessarily relate to people’s everyday lives. What does relate to their lives, however, is the amount of income that they have to spend in service of debt. That now stands at about 20 per cent. and comprises mortgage payments, interests on mortgages, unsecured loans and credit card payments. We are now at roughly the level of debt service required as during the great Tory recession of the early 1990s.

I am sure that most people will share the hon. Gentleman’s analysis of the problems. However, the Liberal Democrats are usually very good at telling everybody what the problems are, but very weak on the solutions. Does he agree that at a time when people are struggling to pay their mortgages, energy bills and petrol prices, and when their pay is going up slowly, if at all, one of the best things that the Government could do is reduce the burden of taxation on those hard-working families? It is quite the wrong time for the Government to scrap the 10p basic rate of tax.

We do agree with that, and we argued that case at the time. The hon. Gentleman was probably rehearsing his intervention while I was speaking, because I did say that half of what I wanted to say concerned constructive solutions. However, I agree with his specific point, which we have made many times.

In addition to the problems of debt and the problems of debt service, there is a problem at the heart of the economic difficulties, which is inflation in the housing market, its consequences and the turnaround that may come from it. Since this Government came to office, the relationship between price and earnings has roughly doubled for housing. That has meant that a lot of people are a great deal wealthier and they have been happy to spend that wealth, which raises the question of what happens as the market goes into reverse.

At the core of the Government’s case, which is summarised in their amendment, is a statement made by the Chancellor a few weeks ago:

“Housing market conditions today are very different to those we saw in the early 1990s. Interest rates remain at comparatively low levels—as do mortgage rates. And unemployment is currently at 30-year lows.”

That is true, as far as it goes, but it is deeply misleading and extremely complacent, for several reasons. First, if we look back at what I call the great Tory recession—[Hon. Members: “Which one?”] There were several, but I am talking about the last one, at the beginning of the 1990s—

Was that the one when we were in the ERM?

We were dealing with extreme conditions at the end of the Lawson boom—[Interruption.]

Order. I do not like to interrupt the hon. Gentleman—I am sure that he is capable of taking care of himself—but we really do not want sedentary exchanges across the Chamber. They spoil the debate.

Thank you, Mr. Deputy Speaker.

At the end of the Lawson boom, interest rates stood at 15 per cent. and inflation at 10 per cent. Those are extreme figures, but the practical reality was that the cost of borrowing was 15 minus 10—the real cost of borrowing was 5 per cent. real interest. Of course, we have different conditions today, as the Chancellor said. Someone borrowing at current rates will probably be paying 7.5 per cent. interest, but official inflation is about 2.5 per cent. The cost of borrowing in real terms is the same.

There is another problem that is a simple point of arithmetic and logic, but I sense that the Chancellor and some of his Ministers do not fully appreciate it. Since the last experience, prices and mortgages have increased enormously in absolute terms. The absolute value of a mortgage has grown from £40,000 in 1999 to about £160,000. In relation to earnings, the level has doubled. In practical terms, that means that somebody trying to buy a house has to pay roughly twice the amount in mortgage servicing as they would have done in 1990. Interest rates may have halved, but the total mortgage outlays are the same because the mortgage is so much bigger. That accounts for the fact that so many households are under enormous stress.

The Chancellor would argue—he is right up to a point—that these days we have a sensible way of managing interest rates with the Bank of England, and the Bank of England can cut interest rates. The context is rather different, however. The interest rates set by the Bank of England rose from 5.5 per cent. in March 2003 to 7.5 per cent. in July 2007—an increase of 2 per cent. Since then, it has been trying to cut rates, but the experience of households is not that of rate reductions. The alarming fact is that many households face increased interest rates because the banks are not passing on the cuts. They are not doing that because there is a credit crunch and credit has become unaffordable. Even those who have to refinance mortgages and can get them, which is unusual, pay increased rather than reduced rates.

Does my hon. Friend share my concern that 60,000 families now take home less than £1,000 a month and spend 75 per cent. of that take-home pay on mortgage repayments? Those people will feel the pressure, and nothing is being done to tackle the problem. The figure for those affected is more than double the total number of repossessions last year.

My hon. Friend is right. She describes an extreme situation, but many others approach that position. If interest rates remain high because of the crisis in the banking system, many people will find current circumstances unsustainable.

The key point in the Chancellor’s comment that I cited, about which he was right, is that unemployment is much lower. That specific problem does not therefore exist. However, I noted from the Red Book a table that describes the assumptions that the National Audit Office audited. The Government are assuming—I do not know whether the Financial Secretary is aware of it—an increase in unemployment this year of approximately a couple of hundred thousand to a million. That may be a small change, but the Government acknowledge in their forecast that unemployment will increase, albeit at a low level. People find their mortgages unaffordable for many other reasons, such as short-time working and lack of bonuses.

The new dimension, which changes the picture, is the fall in the price of homes that is beginning to occur. The obvious reaction is to believe that that is a good thing. If homes are unaffordable, it is surely desirable that their prices decrease to a more sensible level. That is correct, up to a point, but it depends on the extent to which and the speed at which it happens.

According to the Nationwide’s estimate, we have had five months of continually falling average prices. We have a forward market for property, which suggests that prices will fall by 10 per cent. this year and that, in five years, they will not increase at all—in other words, they will fall substantially in real terms. Some forecasters are talking about falls of 25 to 30 per cent. in a couple of years. Although the Government sensibly do not venture into forecasting houses prices, they assume that the market is heading for genuine difficulties. We know that because of the Red Book’s pessimistic forecasts for stamp duty receipts, which are due to fall by £800 million. They therefore assume a big fall in transactions.

The Council of Mortgage Lenders confirms that 3 million families currently have properties with a loan-to-value ratio of more than 90 per cent. If the numbers that I have cited, such as the 10 per cent. fall in a year, materialised, all those families would be in negative equity in a year. That is happening to many people now.

Is there not another new dimension that needs to be taken into account? Does not the hon. Gentleman accept that, back in the Lawson years, most borrowers would lend only up to two and a half times a family’s annual income, whereas nowadays, some borrowers lend up to five times the annual income?

The right hon. Gentleman is a right. A great deal of reckless lending is involved. The Financial Services Authority—the regulator—made that specific point a few weeks ago, when it estimated that 1 million families are at serious risk because of income multiples of around 3.5, as well as high loan-to-value ratios. There is a specific category of 1.4 million families who have taken the two-year, fixed-rate mortgages—teaser mortgages, as they are called—and now have to renegotiate them. Many find that they cannot raise the capital, that high deposits are being demanded of them or that even if they can raise the money, their interest rates are increasing from 4 per cent. to 7.5 per cent. That is only on the mortgage. Many were given unsecured loans, which are increasing to 15 per cent., as a part of the package. The position is therefore unsustainable for many of those 1.4 million families.

We are beginning to see evidence of that in the repossession process. The Government amendment correctly points out that repossessions are much fewer than in the previous major financial crisis that we experienced. There were five years in the early 1990s when 300,000 people lost their homes, and the rate last year was about 27,000. The prediction of the Council of Mortgage Lenders for this year is 45,000. That is somewhat reassuring, but I do not know whether Ministers have spotted that the first stage of the repossession process—the so-called orders, which go to court—now operates at a comparable level to that of the last slump. There are various reasons for that. Banks are no longer friendly, local high street banks. The securitisation of much mortgage debt means that many repossession orders are triggered by computer and no personal relationship is involved. As soon as somebody gets into difficulties, the order goes to court and that person is in the first stage of the repossession process. The problems may well be a great deal worse than in the last housing slump because of such changes.

The biggest employer in my constituency is probably the Bradford and Bingley bank. My experience shows that it does all it can to help people stay in their homes and that repossessing people’s property is a last resort. I hope that the hon. Gentleman will not try to go for an easy hit by attacking banks when many do an awful lot to try to help people stay in their homes.

The hon. Gentleman has a romantic view of contemporary banking, which is not reflected in the reality that most people experience. Perhaps he should have been here late on Monday when we discussed Northern Rock, which is one of the most aggressive banks.

Is not there a growing concern that it is not necessarily the mortgage but the credit card and other debts, about which there is even less tradition of concern for the individual, that trigger repossessions?

My hon. Friend is right. An especially nasty trick is being played at the moment whereby many banks offer “Together mortgages” that are 125 per cent. of the value of the house. The extra is used to buy cars and go on foreign holidays. Anyone who defaults on the extra bit, above the mortgage, can be taken straight to repossession. That is happening.

The current crisis could be much more difficult than the previous one because there are no safety nets. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) made an important policy decision when he was in government. I am not making a personal comment, but referring to his ministerial record. He abolished the system whereby people could go to social security for help with mortgage payments. It now takes nine months before that position is reached. In reaching that decision, the right hon. Gentleman made the calculation, which was probably realistic at the time, that half of all borrowers would take out insurance in future. In practice, that has not happened. Only one fifth of households have taken out insurance. We are now in a different environment from the early 1990s, and there is no safety net. There is no social security assistance and there is no insurance. A comparable degree of pressure on payments therefore results in a much greater likelihood of people being taken to court and losing their homes.

As a former Minister in the same Department as my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), let me tell the hon. Gentleman that the calculation was also made that, in the first instance, building societies would renegotiate and spread their payments for six months, thus relieving a pressure on the taxpayer, but not putting individual householders in a more difficult position, and that was indeed what happened.

That might have happened at the time, but it is not happening now, and I will come to how we might address that failing.

Does my hon. Friend agree that his figure of one fifth for insured households might be too optimistic or an overestimate of the cover available? Many of my constituents have found that those insurance policies do not work at the exact moment they need them to work.

That figure probably is an overestimate, which also reflects the fact that many policies are extraordinarily expensive. Those who now recommend insurance as a way of dealing with the problem fail to take into account the large cost associated with payments protection insurance, so my hon. Friend is right.

The concluding part of my remarks is about what can be done. Again, I want to be constructive and raise questions about ways forward, rather than just criticise how things are being managed now. First, what can be done within the conventional policy framework? Normally when there is an impending recession, the standard answer, which we learnt or taught from economics textbooks, is to cut interest rates and run a budget deficit—they are the standard apparatus of macro-economic policy—and that is indeed happening aggressively in the United States, but not here. We know that that is happening in the United States, because the chairman of the Federal Reserve, Mr. Bernanke, did his PhD thesis on the great depression from 1929 onwards. He is terrified, and says so publicly, that we are in danger of repeating that experience. He is desperate to head it off and is doing whatever he can.

Our problem is that the Government are enormously constrained in what they can do that is similar. They made a good decision 10 years ago to make the Bank of England independent. The Bank now sets interest rates, which are not politically driven, and is making it absolutely clear that its first responsibility is to follow its mandate, which takes account of inflation, which is currently above the level that it should be pursuing. Therefore, the Bank’s scope for cutting interest rates aggressively is limited. In addition, the Government claim that they have stayed within their rules for fiscal policy, but we do not know that, because there is no independent monitoring. In fact, the Government are up against the very limit of their fiscal rules and have absolutely no scope for the kind of expansionary policy that one would hope for in a period of recession.

Even if it were possible to do those things—to cut interest rates aggressively and run a fiscal deficit—there is little evidence to suggest that they would solve the problems that we now face, because interest rate cuts are not being passed on by the banking system, for the reasons that I have described. The conventional policy framework is therefore not adequate. The question is whether we could reform it.

My colleagues and I have argued for several years that the Bank of England should have within its mandate a responsibility to take account of the housing market, not just conventional inflation. If the Bank had done that, it would have raised interest rates sooner, in the boom, and would be able to cut them more aggressively in a slump, now. That is one concrete suggestion that should be considered.

The second policy question is whether the Government should simply be watching the drama of repossession unfold or whether they should intervene to do something about it. The Government’s position is currently entirely passive. They take the view that there is no great problem, and that in any event it is nothing to do with them. However, we should perhaps at least consider what the options are.

The first option, which the Council of Mortgage Lenders and several non-governmental organisations, such as Shelter and the citizens advice bureaux, are pursuing, is for the Government to revive the pre-1994 idea of giving greater social security help to people in mortgage difficulties. It has been suggested that it would help, for example, if the Department for Work and Pensions could secure a second charge on a home as a way of giving extra help. That is not the best way forward, because we would effectively be transferring all the risk from the mortgage lenders who made loans in the first place to the taxpayer. However, if the crisis develops momentum, that kind of idea might have to be considered.

What else could be done? One possibility, which we are keen to promote, is for the lenders to have much greater responsibility, so that if a default is triggered, there should be a process whereby the debtors have access to independent financial advice and the banks are required to offer a range of payment alternatives, which might include shared ownership, for example. The banks will say, “Well, that’s all in our code of conduct,” and indeed it is, but there are plenty of rogue lenders who are not bound by that code and others who do not observe its spirit. My question for the Government is whether they are considering the arguments for and against making the code of conduct binding on mortgage lenders, requiring them to do what is currently regarded as good practice.

The hon. Gentleman has spent the past year denouncing the lending practices of banks in the most dramatic terms, using such expressions as “close to a scam”, “irresponsible lending”, “rubbish mortgages” and “poor assets”—that was his phrase on Monday night. Now that he is staring the consequences of his own policies in the face and does not like them, his solution is to compel the banks to carry the problem, in the middle of a liquidity crisis, on their balance sheets.

I would have thought that the simple logic is that if lenders have behaved irresponsibly, there is an obligation on them to behave more responsibly in future. I will come to the question of how that affects liquidity and the balance sheet—quite rightly, because that is part of the argument—but there certainly should be an obligation on banks that have lent irresponsibly to the people who have borrowed and are now in considerable difficulties.

In looking for solutions, may I say that many families—probably more in the past year than at any time over the past 25 years in which I have been here—are coming to me with multiple debts and pressures in respect not just of their homes, but of credit cards and the like, which my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) mentioned, so could not the Government add one other thing to the list? Could they spend a bit of the money that they spend on publicity on helping people to go to the one-stop-shop advice centres that exist, which can consider their position in the round and give them advice that enables them to manage their way out of the problem, rather than just rely on the banks or one agency to help in their sector, while those people are struggling with the rest of their debts?

That is a constructive suggestion, which builds on a policy that we have been arguing for. An excellent report was published for the Government a few weeks ago by Mr. Thoresen that developed that point. Unfortunately, like so many other good reports prepared for the Government, it is in danger of sinking without trace, because it requires somebody to take responsibility for rolling out a network of advice, which, as my hon. Friend correctly says, is so necessary.

The final option that we need to consider is whether, in current circumstances, the Government, or social landlords on behalf of the Government, should act as a buyer of last resort in housing markets that are falling rapidly. In cities such as Leeds and Manchester, there are large amounts of empty buy-to-let accommodation that cannot find a user, quite apart from the properties that have been auctioned off as a result of repossessions. Social housing has been sold off over the past 10 to 15 years, as a result of the right-to-buy policy, but we now need to ask whether that policy should, in some degree, go into reverse, partly as a way of sustaining the market and partly as a way of providing more social housing where it is badly needed. That would clearly require an investigation of the borrowing powers of social landlords. I wonder whether the Minister could give an indication of whether the Government are thinking about that.

It might help my hon. Friend if I set that point in context: 1 million fewer homes are now available for social rent than at the time of the last housing market fall. In the last 10 years, we have seen social housing waiting lists rise by 60 per cent., so we are already in a position of high demand, which could get a lot worse.

My hon. Friend is absolutely right. That is another reason why the repossession crisis is so severe. It is not just a matter of people not having safety nets; the problem is that there is nowhere for them to go if they are repossessed. They are put into a desperate situation with virtually no social housing. There is an opportunity for the Government to reverse the negative net sale of public housing, which has been so damaging in the past.

Let me move on to a third area where the Government should be thinking of reform and change. I want to respond directly to the intervention of the hon. Member for Newcastle upon Tyne, Central (Jim Cousins), who correctly said that this problem is linked to the wider issue of the crisis within the banking system. I shall not digress widely into why the banks face a credit crunch, but we all know the essence of the problem: through very complicated financial instruments, debts, including bad debts from the sub-prime market, were bundled up and sold on in such a way that those bad debts can no longer be traced, as a result of which trust within the banking system has collapsed so that banks will no longer lend to each other, except at extreme rates, and the normal function of banking has broken down.

The question is what the British Government can do about it. This is partly an international problem, but it is also a very specifically British problem, because the City of London is probably the largest financial centre in the world and we are all affected by how its finances develop. What is happening—it has happened over the last few weeks—is that the banks are launching a major campaign to get the Bank of England to provide them with cash with minimum strings. What they would like is for the Government simply to advance cash in return for their mortgages, particularly their poor-quality mortgages. That is happening on a very large scale in the United States, where the state is effectively nationalising the losses and risks of the banking system. The banks would dearly love our Government and our authorities to do the same here.

The Governor of the Bank of England has been taking quite a hard line on that, rather differently from his opposite numbers in the US, and I have a good deal of sympathy with him. However, he and the rest of us are confronted with a practical problem—if the banks are to continue to function and the financial system is not to seize up, there needs to be liquidity. The question then becomes under what conditions it should be provided.

We may well be getting an answer to that question, but I would like to suggest an approach that I believe the Government should support in working with the Governor. By all means let more liquidity be provided in the banking system, which has to function as a lender to businesses and households, but there should be a condition. The condition is that the banks’ shareholders should accept the losses that come with bad debt. They will have to do that by accepting what are called write-downs. They will have to do that by cutting their dividend payments, by rights issues, by sales, by forgoing acquisitions—all the sort of things that banks like doing. The are going to have to go through a period of austerity in order to get their own accounts in order. That would be the condition for the advance of liquidity. The banks will hate it; they will run campaigns in the financial newspapers, saying how terrible the Governor of the Bank of England is for being so stingy and not giving them what they want, but in those circumstances it is the job of the Government to provide political support for the Bank of England. The basic point is that our banks are too big to fail, but, equally, they are too big for the Government to bail out all their losses and bad debts. They will have to carry this themselves and they will have to be helped to do it.

My final point is about the future of regulation. As a result of this crisis, many of the assumptions that underlay the regulation of the financial system in Britain are having to be re-examined. We had a system of so-called light-touch regulation, which has in practice led to major financial institutions in the City behaving irresponsibly—behaving like casinos rather than lenders in many cases—and that has to be stopped. In the emergency circumstances of the present, we cannot rewrite all the rules, but to prevent this from happening in future, there will have to be a complete rethink of the way in which our financial institutions are regulated.

The central change that needs to be made is to recognise that markets operate in cycles. This is not some unhappy circumstance; capitalist economies always operate cyclically. They may be more efficient and may function better at certain times, but they are very cyclical, so the authorities need to ensure that the reserves that banks hold reflect the cycle; in a boom period, they should be required to hold more, and they should be required to hold less in a downturn. The whole process by which financial institutions are managed needs to be much more proactive and much more aware of the cyclical nature of the industry.

I put forward those ideas in a constructive spirit. I think that if the Government were to address them and come up with positive solutions rather than just waiting for events to happen, they might well avoid the damage that would result if they were simply to relive the experience of the great Tory recession.

I inform the House that Mr. Speaker has chosen the amendment in the name of the Prime Minister.

I beg to move, To leave out from “House” to the end of the Question end and to add instead thereof:

“acknowledges the resilience of the United Kingdom economy, which grew faster than any other major economy in 2007 and in which employment is at record levels; notes that the record of economic stability since 1997 has laid the foundation for rising home ownership, with the number of owner-occupier households rising by 1.8 million since 1997; further notes that household finances remain strong, with household assets worth over £7.5 trillion, more than five times the level of personal debt; believes that the United Kingdom is well placed to respond to the challenges arising from the continuing international financial turbulence; applauds the Government for managing the public finances within its fiscal rules; recognises that the Bank of England Monetary Policy Committee has cut interest rates twice in recent months; further acknowledges that mortgage interest rates are currently around half the level of those reached in the early 1990s and that the proportion of repossessions is less than one third of the rate in the peak year of 1991; welcomes the Council of Mortgage Lenders’ recent statement, which sets out the steps that the industry is taking to support borrowers facing repossession, including working with debt advisers, pro-actively identifying at-risk borrowers and only repossessing as a last resort; and supports the Government’s initiatives to assist home ownership, including new measures to encourage long term fixed rate borrowing and new forms of shared equity.”

It is pleasure to discuss such an important topic. The hon. Member for Twickenham (Dr. Cable) raised a number of points in opening the debate, and I should like to deal with each of them in turn. It is a routine but important courtesy to say what a pleasure it is to follow the opening speech, but it was a sore trial for me to listen quietly and respectfully to the Liberal Democrat party give a lecture on financial probity—no matter how scholarly the hon. Gentleman’s manner. [Interruption.] I will say exactly why.

It is not what the Liberal Democrats say, but what they do in practice and in power that we should examine. Speaking as a Liverpool MP, I know how unfortunate it is for that city and its local economy to be one of the few places under Lib-Dem control and subject to their influence. Despite huge investment from the UK and the European Union, the Lib Dems have virtually bankrupted the city, which is officially classified as the worst council in the country for financial management. The burden of debt is beyond belief and former senior Liberal Democrats have characterised it as doing more damage to Liverpool than Militant. Having got that off my chest, I shall return to the points that the hon. Member for Twickenham made.

I am glad to hear that the right hon. Lady will be addressing my hon. Friend’s comments, because I am extremely concerned when the Government receive what I think is pretty sage advice, delivered in a non-partisan way, and they respond with lectures about Liberal Democrat policy, which is the last thing that the country needs to hear given that, collectively, we are on the brink of a repossession catastrophe. I hope that the Minister will confirm that she will work on a cross-party basis to try to ensure that the general public whom we serve—not the parties to which we belong—are given the support that they deserve.

I knew it was a good idea to give way to the hon. Gentleman. I always like listening to his interventions and hearing him urge us to engage in a non-partisan way in an important debate. He is right to make that point. However, it is very difficult to do that in a constructive way with a party that is preaching such doom and gloom, talking up the prospects of a recession.

rose—

Let me begin my comments in response to the Liberal Democrat motion and then I will happily give way to hon. Members. I do not want to spend as long on my feet as did the hon. Member for Twickenham.

Let me start with the condition of the economy, before I move on to the housing market more specifically. The world economy is clearly facing its most uncertain period for some time, which is having an effect across the world—and the UK is no exception. However, Britain is in a strong position to cope with the challenges ahead, and it is in a far stronger position than it was at the start of the last decade. Our economy is stable and it has been growing uninterruptedly for more than 15 years. It is true that growth is forecast to be slower this year than last, and slower than we had expected at the time of the pre-Budget report, but Britain’s economy is forecast to keep growing. That is not complacency. That is the forecast of not just the Treasury, but the International Monetary Fund, the OECD and the CBI. In fact, independent forecasters expect Britain to be the joint fastest growing economy in the G7 this year.

The right hon. Lady is entering a phase that concentrates on the good things that the Government have done—and there have been good things—following her petulant beginning that ignored any of the good things that my colleagues have done in Liverpool over 10 years. However, I know how anti-Liberal she is, so we understand that coming from her. Does she accept, however, that the burden of the case made by my hon. Friend the Member for Twickenham (Dr. Cable) is that whatever the history and the macro-economics, the over-commitment of British people—the over-expenditure with money that they do not have—is now at a crisis? I hope that she will give practical answers so that people outside the Chamber can see that politicians together are helping them to get out of the huge and terrifying financial holes that millions of families are in.

The Liberal Democrats hate it when the spotlight is shone on what they do when they are in power. I never lose any opportunity to shine that spotlight. However, I can assure the hon. Gentleman that I will shortly come to the practical steps that we are taking in government, if he will allow me to get there. I disagree with him; in the context of the debate, we cannot set aside the macro-economic situation in which we are working. That is of central importance and why we can say with confidence that we believe that the economy in the UK is strong enough and stable enough to sustain British home owners and those who want to be home owners through the coming months.

Is the right hon. Lady aware that the housing market has been the source of macro-economic disturbances for successive Chancellors of the Exchequer for certainly 30 years? Merely to brush the problems in the housing market aside as if they do not have macro-economic consequences, which is what I understand her to be doing, would be, frankly, irresponsible. My hon. Friend the Member for Twickenham (Dr. Cable) made some extremely constructive suggestions—they were not gloom-mongering, as she said—about underpinning the housing market at a point where it may do serious damage to the Government’s macro-economic strategy. I hope that we have a response from her to that point, and not silly tittle-tattle about Liverpool.

The hon. Member for Twickenham was either running around going, “We’re doomed, we’re doomed”, or he was saying, “Don’t panic, don’t panic.” I cannot quite establish which of the two characters he was casting himself in.

We have also had relatively low and stable inflation. At 2.5 per cent., consumer prices index inflation is currently lower than in both the euro area and the USA. It is forecast to pick up in the short term, but to return to target from next year onwards. There are also more people in work in Britain than ever before.

I felt somewhat patronised by the suggestion that Ministers might not know that there was a prediction that unemployment would rise. I was Minister with responsibility for work and remember that the unemployment figures grew slightly when I was at the Department for Work and Pensions. That increase was largely due to moving people in receipt of incapacity benefit on to jobseeker’s allowance to help them into work. In case the hon. Gentleman does not know, let me advise him that we have plans to move lone parents on to jobseeker’s allowance as a precursor to helping them to find work. It is those active, labour market policies which we have implemented in government that have transformed the experience of families in the UK. It is the labour market’s continuing strength that gives us cause for encouragement going forward. He, too, should take comfort from that.

Our economy is strong and stable. We have seen increasing resilience over the past decade in the face of a number of shocks. Britain used to be the first into recessions and the last out, but at the start of this decade we proved more resilient than any other major economy after, first, the bursting of the dotcom bubble and then the 9/11 attacks on the World Trade Centre. Britain was the only G7 country not to experience at least one quarter of negative growth in the years that followed.

I think that Britain is in a stronger position to deal with the challenges presented by the recent disruption to the world economy than the hon. Gentleman suggested. We are in a far stronger position than we were in the early 1990s. Back then, unemployment topped 10 per cent., inflation hit nearly 11 per cent., and interest rates rose to almost 15 per cent. That was a hugely different position from the one that we see today after nearly 11 years of continuous growth under this Government and the largest rise in income per head of any G7 country. The differences between today and the early ’90s are just as clear when we consider average mortgage rates. Today, the average rate on mortgages is 5.9 per cent. In 1990, it peaked at over 15 per cent.

Britain is in a far better economic position today than it was in the early ’90s, and that is the main reason why I do not agree with the suggestion that the housing market is about to repeat the pattern that it followed then.