Cable, Öpik, Stunell and Hughes quiz Harman

6.59.00pm GMT Wed 25th Mar 2009

• Dr. Vincent Cable (Twickenham) (LD): YESTERDAY we had a very British coup d'état when the Governor of the Bank of England sent his tanks down the Mall, effectively seized control of the British economy through his command of monetary policy, and put the Government under house arrest.

If the Prime Minister still thinks it is worth his while returning from a sunny exile in south America, what freedom of manoeuvre do he and the Government have in respect of taxation and public spending?

Ms Harman: I know the hon. Gentleman understands that it is important that we work internationally as well as taking action in this country. It is important that every Government in the world support their economy so world trade can get going again. I know that he agrees with that, so I do not know why he decries the international action that the Prime Minister is taking. With reference to the Bank of England, it was this Government who made the Bank of England independent as to its interest rates.

• Dr. Cable: I think this discussion is about what the Government do at home, as well as what they do abroad. Would it not be sensible for the Government to concentrate now on taxing and spending more efficiently and fairly, to withdraw the pointless cut in value added tax, using the money to focus it on targeted investment in affordable housing and public transport, and to provide a tax cut for people on low pay, paid for-fully financed-by people who are very wealthy and who, under this Government, have enjoyed extraordinary tax reliefs, allowances and tax avoidance opportunities?

Ms Harman: The VAT cut was one of a range of measures and it is only temporary, for one year. We agree with the hon. Gentleman about the importance of investing in housing and public transport. We agree with him, too, that when it comes to bringing the public finances back into balance, it must be done fairly. Those who can afford most should contribute most. That is why we propose a new top rate of tax of 45 per cent. on income over £150,000. I hope that he will support it, even if the Tories will give support only with tax cuts for millionaires.

. . • Lembit Öpik (Montgomeryshire) (LD): A new European Commission report shows that despite prohibition, the illegal drugs trade is thriving, creating what United Nations drugs director, Antonio Maria Costa, calls a "staggering" criminal market, destabilising health policies and entire countries. Will the Leader of the House convey my request to meet the Prime Minister to propose a comprehensive impact assessment of current drugs policy, so that we can start tackling this crisis in an evidence-based way?

Ms Harman: I will pass on the hon. Gentleman's request for a meeting with the Prime Minister, who I know will agree that we need to provide all the support we can to those who have become addicted to drugs, and crack down hard on the dealers and traffickers.

. . • Andrew Stunell (Hazel Grove) (LD): Can the right hon. and learned Lady ask the Prime Minister to reassure my constituents that when he recently met the President of the United States, he picked up some tips about getting back ill-gotten bonuses from overpaid bankers? Can she set out for the House the start date for doing so, or if not, at least the Prime Minister's timetable for beginning to think about it, or if all else fails, his aspirations for a miracle?

Ms Harman: The Prime Minister has made it absolutely clear that there should be no reward for failure and that he does not want banks taking risks with other people's money. The Financial Services Authority, under Lord Turner, has issued a report on tightening up financial regulation and remuneration policy. We are working internationally on this as part of the G20 agenda. As far as Sir Fred Goodwin is concerned, UK Financial Investments Ltd. is on to it.

. . • Simon Hughes (North Southwark and Bermondsey) (LD): For every pound spent by Governments around the world on conflict prevention, about £2,000 is spent on military and defence budgets. Can the right hon. and learned Lady give any assurance to the parliamentarians from around the world meeting in London this week to discuss conflict prevention that there will be a greater UK Government commitment to conflict prevention and, in the short-term, to bringing about a resolution in Sri Lanka?

Ms Harman: The hon. Gentleman is right to draw the attention of the House to the situation in Sri Lanka, which remains grave. The Government are committed to supporting a range of conflict prevention, stabilisation and peacekeeping activity, focusing on countries where the risk of impact of conflict is greatest. We have had an unprecedented increase in our international development budget, part of which was to deal with conflict resolution. Conflict resolution involves international action-not just this country working alone, but with other countries around the world.

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