Bank of England (Appointment of Governor) Bill

Lord Tyrie Excerpts

Friday 6th July 2012 Commons Chamber

[John McDonnell]

That is a really useful advert—it might be one of the most constructive things said this morning.

I shall be as brief as I possibly can. The message contained in the Bill is that the appointment of the new, powerful post of Governor of the Bank of England should not be left solely to the Executive, and that Parliament, on behalf of the people, should also play a decisive role. The appointment is too important to be left in the hands of a single Minister.

[Mr Andrew Tyrie (Chichester) (Con)]

As the hon. Gentleman knows, his Bill has the support of the Treasury Committee—it is similar to the Committee’s proposals. The principle of greater parliamentary engagement that he is articulating is a strong one, but does he agree that it could be enacted in a number of ways? Does he also agree that we need flexibility from the Government on accomplishing that engagement while the Financial Services Bill is in the Lords?

[John McDonnell]

That is an incredibly constructive proposal, and I hope the Minister heard it. There are other ways of approaching this matter and we should be open to considering them. Yesterday, the Government entrusted the hon. Gentleman with a major inquiry—the inquiry Committee will comprise members of the Treasury Committee and Members of the other House. If the Government have the confidence in Treasury Committee members to undertake that inquiry, it should have the confidence in their having a decisive role in the appointment of a new Governor of the Bank of England. I therefore welcome the hon. Gentleman’s constructive comments.

May I thank Kate Emms, the Clerk, and Gordon Nardell QC for their assistance in drafting the Bill and the explanatory notes? I am extremely grateful for their assistance. The Bill amends the Bank of England Act 1998 to give effect exactly to the recommendation of the Treasury Committee from its report of October 2011 that the appointment of the Governor should be subject to the approval of the Treasury Committee.

Between the time of choosing the appointment of the Governor of the Bank of England as the subject of my private Member’s Bill and debating it, the world has changed somewhat. Last week’s revelations about the role of Barclays bank—and, more than likely, others—in the LIBOR scandal have given the Bill a new context, and there is a new significance in the appointment of the Governor of the Bank of England. Mervyn King will retire in the next year, and the new Governor will play a pivotal role in what, it is increasingly clear, will of necessity be a radical reform and reconstruction of our financial system.

Professional Standards in the Banking Industry

Lord Tyrie Excerpts

Thursday 5th July 2012 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

The rigging of the LIBOR market is shocking. It is the worst case of City malpractice I can recall. The Chancellor proposed the idea of a Joint Committee to me in several phone calls over the weekend. It was an honour to be considered. None the less, I made clear right from the start what ingredients I viewed as required to make a success of it.

First, the Joint Committee’s terms of reference should be tightly drawn and forward looking. This cannot be a witch hunt. Having an exhaustive and inquisitorial committee of inquiry, whether it be within or outside Parliament, into the respective roles and responsibilities for mistakes of Ministers, civil servants, the Bank of England, regulators and commercial banks would do more for the history books than for the quality of legislation. The job of the Joint Committee must be to concentrate on how to get one part of the banking Bill into better shape, and in quick time. For that purpose it will need tightly drawn terms of reference, focused on improving standards and corporate governance in banking, and it can and should do the work quickly.

Secondly, as I said in that conversation, any committee of inquiry, particularly a parliamentary Committee, must have the support of the major parties across the House of Commons. It appears from what I am hearing here that it does not have that support at present.

[Mr Watts]

Is it not the case that any inquiry will have public support only if it is carried out on a cross-party basis? It is amazing that a Chancellor who seeks such co-operation from the Opposition should go out and the first thing that he does is tell lies about—

--- Later in debate ---

[Mr Watts]

I will withdraw that comment, Madam Deputy Speaker. I will say that the Chancellor gives the impression that he did something that he did not do, and then refuses to apologise. How does he think that he can secure co-operation across the Benches when he does that?

[Mr Tyrie]

I shall not address the second part of the hon. Gentleman’s question, but the first part was absolutely right. I think it essential for us to have cross-party support for any inquiry of whatever type.

Let me now refer to a tiny bit of history. A hundred years ago, partisanship made a mockery of an attempt by a Select Committee to investigate the Marconi scandal. The Conservative Opposition killed any value that that inquiry might have supplied, and as a result Select Committees were written out of the piece for inquiries for nearly 100 years. I think it vital for Parliament that another clash of the Titans—which seems to be going on now—does not leave us in a position in which we, as Parliament, cannot subject this issue to an inquiry of any type.

[Chris Bryant]

May I raise the issue of the powers that a Select Committee has? One of the things that we have learnt from the Leveson inquiry and the whole phone hacking experience is that the powers of the House of Commons are very, very uncertain. We do not know whether, once we have taken evidence on oath, a perjury case can be brought against anyone who has lied to Parliament, or misled Parliament. We do not know whether we can force someone to come here. However, we do know that courts can do it, which is why we—why I—support a judge-led inquiry.

[Mr Tyrie]

I am confident that can be sorted out if there is co-operation between the Front Benches, if necessary by means of Standing Orders, or by a very swift change in the statute book.

[Anna Soubry]

Will my hon. Friend give way?

[Mr Tyrie]

I will not, if my hon. Friend will forgive me. I am going to get on with my speech now.

The third point that I made to the Chancellor was that while the participation of some very experienced peers could add considerable value, any Committee should be Commons-led, should be governed by Commons rules of procedure, and should draw on existing membership of the Treasury Committee.

The fourth point—which has been made again today—was that the Committee would need full technical support, not only from private sector expertise but from officials and the Bank of England, and some legal advice as well. The absence of all that is the main factor that would inhibit the Treasury Committee from doing this work at the speed that would be required to enable it to contribute to the banking Bill.

Public confidence in banking is now very low. That is bad for Britain in so many ways, but it is particularly unfair on the hundreds of thousands of hard-working and trustworthy people in the financial services industry who do great work for this country, and who, having done nothing wrong, have found themselves impugned by implication. It is not realistic to expect that, in a few months, a Committee of this type would be able to draw the sting of the public anger about banking, but I do believe it realistic to hope that its recommendations could, once implemented, reduce the likelihood of such things happening again. The Wheatley review is due to report in about six weeks. We need to make sure that those perpetrating disgraceful practices such as the rigging of markets face stiff penalties, including jail. It is the fact that so many people have got off scot-free that really sticks in the gullet of the electorate.

Over my time here I have done what I can to strengthen the role of Parliament. If colleagues across the House—and I mean right across the House, including the Front Benches—want me to do this work, I will do everything possible to make an inquiry of this type succeed in order to clear up this scandal.

--- Later in debate ---

[Mr George Osborne]

Further to that point of order, Mr Deputy Speaker. I welcome the Opposition’s agreement in principle, as I take it, to take part in a joint parliamentary inquiry into what has happened. I suggest that the usual channels now work on the membership of that inquiry and that the Front-Bench teams and my hon. Friend the Member for Chichester (Mr Tyrie) discuss any concerns that Opposition Front Benchers have about resourcing, the secretariat and so on. What everyone now wants to do is get a resolution that all parties can agree on, which we can bring to the House before it rises, so that we can get the Joint Committee up and running, get to the bottom of what went wrong in our banking industry and with the LIBOR scandal, and make the changes needed to legislation to ensure that it never happens again. I would welcome the Opposition’s support in doing that.

[Mr Tyrie]

Further to that point of order, Mr Deputy Speaker. I think the whole House, and actually the whole country, will welcome the engagement that appears to be taking place across the Dispatch Boxes. I reiterate that I will do whatever the House asks me to do, but I believe it is worth my trying to chair the Committee only if it has the full support of all the major parties in the House of Commons.

[Mr Deputy Speaker]

I am grateful for all three points of order, and the Chair has nothing to add.

LIBOR (FSA Investigation)

Lord Tyrie Excerpts

Monday 2nd July 2012 Commons Chamber

[Mr Osborne]

First, the inquiry should be genuinely cross-party and it will, of course, be up to the Labour party to choose whom it would wish to be on the Committee, both in the Commons and in the Lords. So there will be a choice for the Labour leadership in that respect. Of course, I hope that they would consult my hon. Friend the Chair of the Treasury Committee, but it is ultimately their choice.

Secondly, the Treasury Committee, under its previous Chair, Lord McFall, did some very good work on investigating what went wrong. So the idea that the Select Committee or a Joint Committee is unable to do this work is nonsense. “The run on the Rock” was a very good report, as I think the right hon. Gentleman would concede, and it provided the basis for some of the changes in the Financial Services Bill. I think we can draw also on the expertise in the House of Lords in this area and have a Joint Committee. As I say, I hope that once tempers have cooled today, we will be able to reflect on that and have a joint-party consensus on it.

[Mr Andrew Tyrie (Chichester) (Con)]

First, may I assure the House that I will not countenance a partisan inquiry and I would not be prepared to chair one either? I do believe that Parliament—both MPs and the other place—has something to contribute to clearing this mess up; they cannot do it all on their own.

By any standards, the LIBOR scandal, for which 20 banks around the world are now being investigated, is shocking. It has corroded trust in the UK financial services industry and it is a shameful affair. I find it particularly sad that it will have unfairly damaged the reputations of hundreds of thousands of our constituents who work hard and honestly in the financial services industry. The UK’s reputation has been tarnished, but it can be restored and enhanced if we draw the right lessons. The Treasury Committee will continue with its inquiry into what exactly happened. We will be holding the inquiry on Wednesday with the chief executive of Barclays, and we will also probably call the British Bankers Association and the regulators to find out exactly how this all happened.

None the less, the immediate task to be conducted by the Financial Services Authority must be to ensure that we have appropriate sanctions for wrongdoing and a regulator strong enough to give us confidence that wrongdoers will be caught. Does the Chancellor agree that another task, on which the Joint Committee will and should concentrate, must be to learn the lessons of the LIBOR scandal for corporate governance and standards in the banking industry?

LIBOR (FSA Investigation)

Lord Tyrie Excerpts

Thursday 28th June 2012 Commons Chamber

[Mr Speaker]

Order. A very large number of hon. and right hon. Members are seeking to catch my eye, but I remind the House that there is significantly subscribed business to follow, under the auspices of the Backbench Business Committee; therefore, I must appeal for short questions and short answers.

[Mr Andrew Tyrie (Chichester) (Con)]

What is now left of trust between Parliament and the banks? Barclays and probably other banks were profiting by lying and rigging the markets at a crucial time in the last crisis, when the Government had a right to expect that they would supply the then Chancellor with reliable information on the basis of which to conduct policy. The Treasury Committee will now investigate properly. Under the current legislation, as the Chancellor has pointed out, the Financial Services Authority has no power to bring a criminal prosecution in relation to not only LIBOR, but derivatives. Will the Chancellor undertake now to amend the Financial Services Bill to include derivatives and LIBOR in the legislation before Parliament?

[Mr Osborne]

I completely agree with the sentiments that my hon. Friend has expressed. I congratulate him and his Committee on acting swiftly to ask Mr Diamond to come and account for himself. As I said in my statement, we are looking at strengthening the criminal sanctions regime in general for market abuse and market manipulation, not just of LIBOR but in other parts of the market; and next week, as planned, the consultation on potential sanctions for directors of failed banks will be published. Sadly, the Government have been in this situation before with the FSA’s report into the failure of Royal Bank of Scotland, when the authority reported to us that it did not have the powers it would have liked to hold to account those responsible for the failure.

Oral Answers to Questions

Lord Tyrie Excerpts

Tuesday 26th June 2012 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

Now that the Bank of England has finally shown more willingness to provide some liquidity support, there should be no obstacle to the exercising of more flexibility by the Financial Services Authority when it comes to how the liquidity buffers are used. That is being desperately demanded by banks. Does my right hon. Friend agree that the FSA should take action as soon as possible, and that such action is what is required to provide borrowing and lending at reasonable rates for the hundreds and thousands of businesses throughout the country that need it so desperately?

[Mr Osborne]

The liquidity auction undertaken by the Bank of England last week was very welcome, and the Bank is proposing future auctions. My hon. Friend, who chairs the Treasury Committee, has been prescient in pointing to some of the procyclical nature—if unintended—of some of the liquidity regulation in the United Kingdom in recent years. The Financial Policy Committee was set up to look at risks on both the downside and the upside. The Financial Services Authority must make its own independent decisions, but I am sure that it will have paid close attention to my speech and to the speech of the Governor of the Bank of England at the Mansion House.

Interest Rate Swap Products

Lord Tyrie Excerpts

Thursday 21st June 2012 Commons Chamber

[Guto Bebb]

Again, that is an important point. In significant numbers of cases a swap product has been sold to a business as a condition of a loan being made available, so that the future availability of credit was dependent on the acceptance of a swap product. Obviously, a business in need of finance would be persuaded of the need to take up that product in order to receive finance, and that is a key issue.

[Mr Andrew Tyrie (Chichester) (Con)]

rose—

[Guto Bebb]

I will, of course, give way to the Chair of the Treasury Committee.

[Mr Tyrie]

I am grateful to my hon. Friend for securing this important debate. As he will know, the Committee is already looking into this matter and has written to the FSA and the Financial Ombudsman Service asking them to investigate fully and get back to us. He may not be aware, however, that we also raised this issue with the chairman of the FSA, who has promised to provide a progress report by the end of July. The Committee is extremely anxious, not least because a number of its members, including me, have seen constituents with exactly the sort of complaint my hon. Friend outlines.

[Guto Bebb]

I am aware that the FSA has promised to provide a progress report, and I sincerely hope that that will be with us before the end of July, if not sooner. My concern is that businesses are being put into administration as we speak—we have seen examples of that this week alone—and in the current economic climate we should not accept the loss of any businesses or jobs as a result of mis-selling.

Banking Reform

Lord Tyrie Excerpts

Thursday 14th June 2012 Commons Chamber

[Mr Hoban]

The shadow Chancellor was the Minister who stood by when bank balance sheets ballooned and banks took on these risks. He did nothing to tackle that problem. As the Governor of the Bank of England said in May:

“With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called ‘light-touch’ regulation hadn't prevented any of this.”

Only two politicians were quoted in the FSA’s report on the failure of RBS as champions of light-touch regulation—the shadow Chancellor and the former Prime Minister, the architects and cheerleaders of light-touch regulation at home and abroad. They should recognise the costs that the British Government and economy have borne as a consequence of banking failure— £140 billion between 2007 and 2009. We must recognise the need for a stable banking system to ensure stable and sustainable growth in the UK economy.

As Sir John Vickers proposed, we are ring-fencing retail banking, imposing the higher capital standards required by him and introducing a binding minimum leverage ratio on banks. The shadow Chancellor asked some questions in the mix of his lengthy contribution, but he did not apologise for his role in the banking crisis. However, I shall respond to his tests. First, we have achieved international agreement with our European partners to implement Vickers through capital requirements directive 4 and capital requirements regulation. We have achieved that goal and are working to introduce a binding leverage ratio with international partners. Vickers can, therefore, be implemented through the existing international regulatory framework.

The shadow Chancellor talked about a banking union. Banking union is a product of the requirement for fiscal union and will be needed to promote stability in the eurozone, but that will not flow through to non-eurozone EU member states—an important distinction to make. Banking union is about the sustainability of the eurozone, not the EU.

The shadow Chancellor asked about hedging. Sir John Vickers recognised the need to ensure that retail customers and small businesses could access the hedging products necessary to manage risk on their balance sheets. However, we have gone beyond Vickers in imposing higher and tighter standards on how derivatives can be managed by a ring-fenced bank.

I have set out a clear programme of reform that responds to the mistakes of the previous Government and ensures a stable and sustainable banking system that underpins, not undermines, economic growth.

[Mr Andrew Tyrie (Chichester) (Con)]

The White Paper just published contains an impact assessment, paragraph 104 of which makes clear a point that we heard in extensive evidence—that costs to small businesses will rise as a consequence of these proposals. We also heard evidence that the scale of the rise would depend on the Government’s decision on the design of the ring fence. They have now published a lead option for that design, so what is their estimate of the increased cost of these proposals to small business lending?

[Mr Hoban]

We have considered Sir John’s recommendations carefully, including the cost on banks, the economy and business, but we felt it was in the interest of business to ensure that a wider range of products could be sold within the ring fence, including complex ones such as derivatives. We set out, in our cost-benefit analysis, to look at the cost of the package as a whole, not to break it up into particular areas. I am confident, however, that we will have a more stable banking system in a position to lend to business on a more sustainable basis. Through these reforms, we hope to increase competition in the banking system, which is in the interests of small businesses and will help to improve competition on price. I think, therefore, that this is a good package for businesses and will ensure the stability of the economy.

Financial Services Bill

Lord Tyrie Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

I much agree with the sentiment of the remarks of the hon. Member for Nottingham East (Chris Leslie) a moment ago, and I will elucidate a little on some of the points that I think their lordships might want to look at. The Bill is the most important overhaul of financial regulation ever undertaken in this country, and it has implications for the health of the whole economy and affects everybody—every citizen, every business up and down the land. Along with the forthcoming banking reform Bill, it will change the landscape of our financial services industry, in which we lead the world in many areas and on which so many jobs in the UK depend.

The legislation certainly leaves this place in better shape than it might have done, which I think has something to do with the number of amendments that have been tabled and arguments that have been listened to by Ministers. Sometimes those arguments have come from those on the Opposition Front Bench, sometimes from the Public Bill Committee, sometimes from the Joint Committee, and sometimes from the Treasury Committee, which I chair. On that, I would like particularly to thank my colleagues with whom I work on the Committee who have been so helpful and generated so many ideas, helping put together the succession of reports that we have put out. They have, to some degree, influenced the shape of this Bill.

None the less, it is the Treasury Committee’s considered conclusion that the Bill is still defective in a number of respects. On the first day on Report, the Committee proposed a new clause to make the court more transparent and to require it to act more like a proper board. The Bank must have a board that is capable of assessing the institution’s performance, but it is explicitly prohibited from doing so at present. In view of the Minister’s favourable response to that new clause in the debate a few weeks ago, I look forward to seeing movement on the issue in another place. A number of other defects remain in the Bill, a few of which I will list in a moment.

It is important to put on the record one or two other points. Right from the beginning, the Government made decisions about the reform and the timing of the Bill that, in my view, have made the legislative process more complex and difficult than it could have been. For a start, we should have had a new Bill, something on which the Governor of the Bank of England and the Treasury Select Committee wholly agree. The complexity of the Bill could turn out to make it a lawyers’ charter—I only hope not.

Then there is the rush to get all this done quickly. After all, the horse has bolted. We have just had a most serious financial crisis; a crisis of the sort that we might have hoped the legislative framework would have protected us from. We now seem to be legislating to what can only be described as an arbitrary timetable in order to get the Bill through by the end of the year. Neither I nor the Committee have heard a good reason why we cannot take a few more months to get the legislation right. That meant that the Bill was produced without taking into account a number of views, including that of the Treasury Select Committee, on the shape of the Financial Conduct Authority. Some of the Bill’s current weaknesses owe something to the fact that not enough attention was paid to those views. We must therefore depend on the other place to get the legislation right.

I will briefly summarise a number of areas to which the Treasury Select Committee has drawn attention and which I hope the other place will look at. First, I have already mentioned the new clause that my colleagues and I proposed for improving accountability, and I am glad that there has been Government movement on that.

As I said on Report, all proposals to improve accountability, both of the Bank to its board and to Parliament, should be judged against two criteria. First, does the proposal hold out the prospect of improving the performance of the institution, meaning the quality of public policy decisions that the Bank will take, and secondly, does the proposal help secure public consent for the decisions? That is particularly important in a powerful body that is remote from the citizenry, such as the Bank of England. On both criteria, and particularly the second, the appointment and dismissal of the Governor would benefit from a parliamentary veto. The Treasury Committee’s second point is that the independence, authority and, in a sense, legitimacy of the Governor’s decisions will be enhanced if there is a parliamentary veto, through the Committee, over the appointment and dismissal of the Governor.

Thirdly, the Financial Policy Committee and the court should publish full minutes. The Government’s proposed compromise, that a so-called record be published, simply will not do and will not be enough to satisfy the Treasury Committee. We will inevitably end up demanding the full minutes and, one way or another, will persist until we get them.

Fourthly, the Chancellor needs a general power to direct the Bank of England in a crisis when public funds are at stake, not the rather strictly circumscribed powers the Bill currently contains. The Government picked up part of the proposal that the Committee made in our report on the need for some kind of limited power of direction for the Chancellor over the Bank in a crisis in order to deal with the problem to which the previous Chancellor has alluded, not least in his rather graphic memoirs of that period. The measure that the Government are proposing to put on the statute book might deal with the current crisis, which we have had over the past few years, but it might not put at the Chancellor’s disposal the right tools in some future crisis.

Fifthly, there needs to be enhanced scrutiny of the secondary legislation that will accompany the Bank of England’s macro-prudential tools. The hon. Member for Nottingham East referred to exactly that when he talked about the need for a super-affirmative procedure, and the Treasury Committee agrees: we must have something that provides for full debate and time to consider the proposals, except in case of emergencies.

Sixthly, the MPC and the FPC should both have a majority of external members. We on the Treasury Committee think that, in the longer term, this is essential in order to guard against group-think on those committees.

Seventhly, the Lords needs to look again at the Financial Conduct Authority’s objectives. The FCA would work better if it focused on a single set of objectives. Midway through the process, the Government added to the proposals what they describe as overarching strategic objectives, but the Treasury Committee concluded that they add nothing to the operational objectives in the Bill and might, indeed, take something away by creating confusion.

Eighthly—but by no means last, and certainly not least, although I probably will end on this point—the Financial Conduct Authority’s accountability mechanisms need strengthening. The FCA should publish its minutes, its chief executive should be subject to pre-appointment scrutiny and it should review its own performance without the need for the Treasury Committee to force it to do so. The Committee managed to get the Financial Services Authority to review the collapse of RBS, but it was hard work persuading it to do so.

The Financial Conduct Authority has been the poor relation throughout this process of parliamentary scrutiny, and regrettably the legislation carries over into the new body many flaws—the box-ticking culture, the burdensome problems of regulation, its cost and some of the regulation’s apparent pointlessness—in existing FSA practice, so I very much hope that their lordships get their teeth into that problem.

Overall, therefore, this legislation is a big step forward from the legislative framework that was in place at the time of the crash, but much more could be done to improve it further. It really could be so much better, and there is still time to do something about it. Let us hope that, when it comes back from the other place, that work has been done.

Oral Answers to Questions

Lord Tyrie Excerpts

Tuesday 24th April 2012 Commons Chamber

[Danny Alexander]

The hon. Gentleman will know that we have put in place enhanced capital allowances in a number of enterprise zones around the country, particularly to focus investment in plant and equipment in such areas. We announced in the autumn statement improvements to the short-life capital allowances regime, which had been a major request by manufacturing and, in particular, the engineering sector. I would have thought that he would have welcomed those changes.

[Mr Andrew Tyrie (Chichester) (Con)]

The Budget identified a number of sectors for fiscal support. All Departments and all of us can think of deserving cases, particularly in our constituencies, but is it not the Treasury’s job to hold the line on industrial policy, remove the implicit subsidy from banking and other industries, and ensure that economic resources, through, for example, corporation tax cuts, flow to businesses that can succeed without state support?

[Danny Alexander]

I agree with my hon. Friend. I am sure that he would agree with me that the Vickers report on the banking sector does precisely the first thing he mentioned, and that our approach to corporation tax—reducing headline rates year by year to the lowest level in the G7 and one of the lowest levels in the G20—precisely achieves the objective that he set out.

IMF

Lord Tyrie Excerpts

Monday 23rd April 2012 Commons Chamber

[Mr Osborne]

I welcome the right hon. Gentleman’s support for the decision to provide extra resources for the IMF. He was Chancellor of the Exchequer in 2009, when we last made a contribution to it, and, as I said a moment ago, I think that that was one of the highlights—if not the highlight—of the last Labour Government.

The eurozone countries on the periphery are being asked to walk an incredibly difficult path. That is the consequence of being in a monetary union in which it is impossible to devalue. However, it is clear that Ireland, which has had to make some incredibly difficult decisions and take some very tough fiscal measures, is becoming dramatically more competitive—its current account is back in surplus, and its exports are increasing—so it is possible to walk that path.

I certainly agree with the right hon. Gentleman that further action is required on the banking systems in Europe. A European directive which is currently being debated transponds the Basel agreement into European law, and we are keen for it not to be watered down so that it is not used to disguise problems in the European banking system.

[Mr Andrew Tyrie (Chichester) (Con)]

Is not the lesson of the 1930s that the leading economic powers must stick together and support the global financial and trading system, and is that not exactly what the IMF decision is doing now? What we need is a strong and independent IMF. With that in mind, will the Chancellor tell us what discussions he has had with non-eurozone IMF members to ensure that the IMF sees off any special pleading from the eurozone?

[Mr Osborne]

I welcome the support of my hon. Friend, who chairs the Treasury Committee, for our decision to make a loan to the IMF, along with many other countries.

This weekend, plenty of countries, including the UK, made very clear that a contribution to additional IMF resources must come with strict IMF conditionality. They made clear that there could be no special favours for eurozone countries that needed support, and that there was no question of creating some special eurozone fund for IMF resources. Any contribution from the IMF’s shareholders must go into general resources which could be used for eurozone countries or, indeed, for any other country that needed help.

It is worth remembering that there are 53 IMF programmes, three for eurozone countries and 50 for other countries in the world, and that two of the largest programmes are for Poland and Mexico, which are not members of the IMF.