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8 Oct 2008 : Column 264

Kevin Brennan: The right hon. Gentleman is a former member of the west midlands mafia, having represented the constituency of my hon. Friend the Chancellor of the Duchy of Lancaster. I assure the right hon. Gentleman that I will take forward my role as Minister with responsibility for the third sector very much as the Prime Minister asked that I should—as a champion for the third sector in Government. I am sure that the right hon. Gentleman will welcome the £450,000 of funding to the Berkshire Association of Clubs for Young People for a v involved team in his area, delivering wonderful youth opportunities for volunteers in Bracknell.

Mr. Gregory Campbell (East Londonderry) (DUP): What steps can the Minister undertake, in association with his ministerial colleagues, to ensure that all those involved in voluntary work right across the United Kingdom, including Northern Ireland, can play a more significant role in the run-up to both the Commonwealth games and the Olympic games?

Kevin Brennan: Clearly, the Olympic games provide a wonderful opportunity for volunteers across the United Kingdom. The office of the third sector is working within the Cabinet Office to ensure that there is a real legacy of increased civic participation as a result of the 2012 games. We want to enable third sector organisations to make the most of the opportunity of the Olympics to increase volunteering and we will ensure that individuals will have easy access to the increased number of volunteering opportunities that will become available in the run-up to the Olympic games.

Mark Durkan (Foyle) (SDLP): Given that the Government now enjoy new influence on the banking sector, will my hon. Friend work to ensure that the banks show greater understanding for, and consideration of, the needs and working circumstances of the voluntary sector as it copes with a difficult fundraising cycle and the complexities of funding rounds? Banks are not always there to support that sector positively. Will the Government use their new influence to achieve a better result?

Kevin Brennan: I am grateful to my hon. Friend and the hon. Member for East Londonderry (Mr. Campbell), who, as the Celtic mafia, have given me welcome relief from the west midlands mafia during this Question Time. My answer to my hon. Friend is “very much so”, and I am prepared to look, with him, at the issue that he raises.

Mr. David Burrowes (Enfield, Southgate) (Con): Will the Minister ensure that funding continues for organisations that recruit volunteers, such as Chance UK? I spent a week volunteering at that organisation last month. Will the Minister commend its work in recruiting volunteers to mentor the most vulnerable five to 11-year-olds and raise their aspirations and behaviour? That work is so needed, particularly in respect of role models in our communities.

Kevin Brennan: There is a social inclusion taskforce project in that very area. The role of mentoring is important. From my previous posting at the Department for Children, Schools and Families, I know that it spent a lot of money, working in conjunction with the office of the third sector, to promote volunteering in the form of mentoring, particularly for young people. I commend that work.

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Third Sector

5. Christine Russell (City of Chester) (Lab): What research his Department has commissioned to underpin the development of its policies relating to the third sector in the last two years; and if he will make a statement. [224359]

The Parliamentary Secretary, Cabinet Office (Kevin Brennan): The office of the third sector recently commissioned the largest ever survey of the sector, reaching more than 104,000 third sector organisations. It conducts additional research on issues including social enterprise, consultation, volunteering and charitable giving. It is also laying the foundation for future third sector research by investing £5.7 million in two third sector research centres with the Economic and Social Research Council.

Christine Russell: I welcome that response from the new Minister and wish him well in his new job. He was an excellent Minister in the Department for Children, Schools and Families and I am sure that he will continue the good work at the Cabinet Office.

Not only the smaller charities and voluntary organisations help groups and people in our society now; many larger organisations are delivering front-line public services. However, in many of our towns and cities, charities, voluntary organisations and community groups are hampered in the development of their work by inadequate and inaccessible premises. As the Minister develops policies for the third sector in the next two or three years, will he consider that issue and the funding involved?

Kevin Brennan: Yes, I will do that. As my hon. Friend will know, helping third sector organisations to take over former local authority premises has been one of this Department’s large programmes, and it will continue to be so.

Mr. Simon Burns (West Chelmsford) (Con): Have the Government commissioned any research in the past two years that will not only underpin their policies but assist the third sector by identifying all those areas across Government Departments where the third sector can apply for grant, and would they publish that work to assist the third sector in knowing where it can go to seek funding?

Kevin Brennan: We are doing a great deal of that work. In fact, we are following four different research strands. We are carrying out the largest ever third sector survey, this month we will open the third sector research centre, we are supporting the Centre for Charitable Giving and Philanthropy, and we are commissioning rigorous evaluation of the work that we are undertaking. I am happy to talk further with the hon. Gentleman about those issues.

Social Inclusion

6. Mr. James Gray (North Wiltshire) (Con): What work programme has been put in place for the social exclusion taskforce for the next 12 months; and if he will make a statement. [224360]

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The Minister for the Cabinet Office (Mr. Liam Byrne): The principal focus of the taskforce’s work is in ensuring delivery of the public service agreement that we have agreed on excluded adults. There will also be scope for a number of additional projects, which will be announced shortly.

Mr. Gray: The Secretary of State has recognised the work of the social exclusion taskforce, but does he recognise the following words:

Does he agree with the right hon. Member for Kingston upon Hull, West and Hessle (Alan Johnson), the Secretary of State for Health?

Mr. Byrne: I think that my right hon. Friend would agree with me that what is important over the next year is not only that the Government take action such as the action announced today to stabilise the banking system but that we do everything possible to help families and businesses through these more difficult economic times. Labour Members are determined to ensure that we come through the next year not only stronger as a country but as one nation, leaving nobody—no community and no business—behind. I hope that that ambition is shared in all parts of the House.

Prime Minister

The Prime Minister was asked—


Q1. [224398] Mr. Robert Goodwill (Scarborough and Whitby) (Con): If he will list his official engagements for Wednesday 8 October.

The Prime Minister (Mr. Gordon Brown): Before listing my engagements, I know that the whole House will want to pay tribute to all the servicemen who have died in the summer months in Afghanistan and, in doing so, I send our profound condolences to their families and friends: Warrant Officer Class 2 Gary O’Donnell, Sergeant Jonathan Mathews, Corporals Jason Barnes and Barry Dempsey, Lance Corporals Kenneth Rowe and Nicky Mason, Private Peter Cowton, Private Jason Rawstron, Signaller Wayne Bland and Ranger Justin Cupples. We owe them, and all those who have lost their lives in conflict, a huge debt of gratitude. Like many Members, I have recently visited Afghanistan, and I have seen at first hand the superb job that our armed forces are doing. I believe that I can speak for the whole House in sending the full and unwavering support of this House for the great efforts of our armed forces.

This morning I had meetings with Ministers. I also talked to Chancellor Merkel, President Sarkozy and Prime Minister Berlusconi about the economic situation. I think that the House will want to know that the Governor of the Bank of England has just announced an immediate 0.5 per cent. cut in interest rates. He has done so in a co-ordinated action that is happening around the world, in which the US Fed has cut interest
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rates by 0.5 per cent. and the European Central Bank by 0.5 per cent. The Swiss, the Swedes and other members of the G10 have all cut interest rates, showing that global problems are best dealt with by global action.

Mr. Goodwill: I am sure that the whole House shares the sentiments expressed by the Prime Minister with regard to the fallen.

Does the Prime Minister agree with the International Monetary Fund that the British economy will shrink next year?

The Prime Minister: Every economy is facing problems, and I do not want to make predictions about the future. We are in very difficult times. However, I think that the hon. Gentleman will see, and the whole House will understand, the strength of the action that we have taken today. We have produced additional liquidity in the system of up to £200 billion. We have said that we are prepared to buy shares in our banks and recapitalise our banks to the tune of £50 billion. We have also done something that other countries will, I believe, follow very soon by providing medium-term financing of up to £250 billion, guaranteed by the Treasury. By taking co-ordinated action as a whole and leading the world in doing so, I believe that we can get our banking system on to a sound footing, and that is the key to the future. To have that combined with the macro-economic action—a cut in interest rates—is an important message that is being sent round the world: that we will do everything in our power to ensure that our economy moves forward.

Sir Gerald Kaufman (Manchester, Gorton) (Lab): Will my right hon. Friend guarantee that the fat cats of the City of London will not be allowed to line their pockets on the backs of the profound concerns of tens of millions of our fellow citizens? Will he assert that the jobs, homes, small businesses, savings and pensions of those fellow citizens of ours are the profound, top concern of this Government?

The Prime Minister: I was pleased to visit the constituency of my right hon. Friend when I opened a school only a few weeks ago, and we will do everything in our power to maintain our public services, to increase jobs in our economy and to protect the savings and deposits of the citizens of this country. I want to reassure people that everything that can be done will be done to ensure a flow of finance for mortgages and small businesses, despite the toughness of these times. I also say to him that the conditions we will lay down for support to banks in this country include executive performance and the way in which it is remunerated, and we will build on the Financial Services Authority’s work to ensure that excessive risk taking is not rewarded but punished.

Mr. David Cameron (Witney) (Con): May I join the Prime Minister in paying tribute to those servicemen who have lost their lives in Afghanistan since the House last met? Like the Prime Minister, I have been recently to Helmand, and I have seen for myself the courage, professionalism and dedication of people working in incredibly difficult conditions, and we owe each and every one of the fallen a huge debt of gratitude.

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Right across the country, people are worried about their savings, their pensions and their mortgages. That is why I said last week that if the Government needed to take major steps to secure the banking system, they would have our support. Does the Prime Minister agree that the message should go out loud and clear from this House that in a free enterprise economy, banks play such an important role for everyone—home owners, businesses and individuals with savings—that the banking system cannot be allowed to fail?

The Prime Minister: I am grateful for the Leader of the Opposition’s support for the action that we are taking. I hope that we can proceed on the basis that there will be all-party support for the actions taken today and those taken on future days.

I believe that the scheme we put forward, which is a stability and restructuring programme, is not simply about new capital for the banks. It is increasing liquidity into the system so that there is overnight and short-term lending available for the banks. It is dealing with what is perhaps the bigger problem at the moment, which is medium-term funding that small businesses in our country need, as everyone recognises, to get funding. At the same time, mortgage holders and prospective home owners need to know that the market can resume. The absence of medium-term funding of loans over six months, a year, two years or three years has hindered the market, which is indeed frozen up in those areas. We are guaranteeing £250 billion at commercial rates, but we will do the job that the banks usually do, and should be doing in normal circumstances, by providing the guarantee that that system will work forward. In addition, the cut in interest rates will assure people that all action is being taken in the economy so that we can help businesses move forward.

I welcome the right hon. Gentleman’s support. I say to him that the measures we took this morning are far more comprehensive and wider than those speculated about in the press, and we are showing that we will do everything in our power to maintain the stability of the economy in the interest of every single British person.

Mr. Cameron: Given, as the Prime Minister says, that we are trying to save the banking system not as an end in itself, but to save the wider economy, would he agree that the real test of success of these measures is not just, as he said, whether banks starting to lend to each other, but whether small business can get loans again and whether home owners can get mortgages again? Are they not the real tests that need to be met? Can he explain how he will measure whether they are met?

The Prime Minister: I am grateful to the right hon. Gentleman for giving me an opportunity to say, in addition, what we are doing to help small businesses. The key issues for small and medium-sized enterprises are cash flow, and, to some extent, access to finance, as I have just said. They need to be helped through this critical period. Late payment problems, which have intensified, with all firms on average lengthening the time it takes to pay their suppliers, including SMEs, go beyond agreed terms. The Government can ease the situation, and we will help cash flow through prompt payment. The Government have already agreed to move their procurement rules from payments within 30 days to a commitment to pay as soon as possible. In the
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current climate, we need to go further, with a harder target. We will therefore aim to make SME payments within 10 days. The Government will pick up the cost of that, but it is a small price for greatly increasing cash flow associated with £8 billion of contracts for SMEs.

As I announced last weekend, we propose that the European Investment Bank increase its loans worth up to £4 billion to United Kingdom banks for use by small and medium-sized enterprises. We are now pressing for further additional funding to be advanced, and for UK banks to be able to ensure that they take up the full funding available for SMEs. The Government will, of course, review the impact of any regulatory measures already agreed, but let me make it clear that we are doing, and will do, everything we can to assist SMEs throughout this period. Our restructuring of the banks is designed to ensure that, although it is difficult to achieve, credit lines can remain open to SMEs on a commercial basis. We will not accept that banks should cull their credit lines to eliminate their own exposure to risk, so we will do everything we can to help the 4 million small businesses of this country.

Mr. Cameron: Taxpayers are making an enormous investment and potentially have a huge liability. They want their interests to be protected. That should mean no more irresponsible behaviour, no more inappropriate dividend policies and no more indefensible bonus packages. Will the Prime Minister confirm that those will be conditions of the agreement for getting taxpayers’ cash? Crucially, how will the conditions be enforced once everyone has signed up?

The Prime Minister: Again, I am grateful for the chance to explain how we will move forward the proposal that the Chancellor announced this morning. On the remuneration packages available to executives, it will be a condition of the capitalisation of banks that they accept new conditions attached to executive remuneration. We are in discussion, on a case-by-case basis, with the banks that want to take up the scheme about the level of executive remuneration, especially the bonus system that has caused so much difficulty.

Our aim is to support and reward work, enterprise and responsible risk taking, but not irresponsible and excessive risk taking, which has caused so much damage. The Financial Services Authority— [Interruption.] I was asked a question, so I think I should have the chance to answer. The Financial Services Authority will soon publish a consultative document about the danger to company balance sheets if, by excessive risk taking, some of their executives put those balance sheets and companies at risk. That will form part of its estimate of what capital those companies need.

It is not only a question of the individual banks with which we are dealing having to accept new conditions—there are strings attached and conditions must be met—but throughout the system, the FSA will propose a new way of dealing with executive remuneration, especially bonuses, which will allow it to regulate according to the capital requirements of a company that takes excessive risk.

Mr. Cameron: May I ask a question that follows directly from the answer that the Prime Minister just gave? The banks that are most reliant on the scheme are those that have taken the greatest risks and, in some cases, behaved irresponsibly. Will the Prime Minister guarantee that, in those banks, there will be no bonuses for senior executives this year?

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