Richard Bruton
Question:46 Deputy Richard Bruton asked the Tánaiste and Minister for Finance his views on the affordability of public sector pay increases at this time; and if he will make a statement on the matter. [29716/07]
Priority Questions.
Benchmarking Awards.
The public service pay bill is the biggest single element in public expenditure, accounting for approximately half of all current expenditure. Every 1% increase in the public service pay bill costs approximately €180 million. The total cost of meeting the public service pay commitments arising from the current pay agreement under Towards 2016 will come to approximately €1.7 billion. This pay agreement expires at the end of September 2008 in the public service, but at various earlier dates in the private sector.
In preparing for any forthcoming negotiations on arrangements to follow the current pay agreement under Towards 2016, it is important that expectations are kept in line with the economic realities we face. In particular, regard must be had to the need to maintain and improve our competitiveness and, in the case of the public service, of the need to maintain budgetary discipline. The national partnership agreements have served us well over the past decade and I hope that this well-tested approach can once again be relied upon in helping us to meet the emerging challenges we must face as a small open economy.
The more recent national partnership agreements, the Programme for Prosperity and Fairness, Sustaining Progress and Towards 2016, have put in place a better framework for dealing with public service pay. It provides a system under which the pay of public servants can be reviewed periodically on the basis of fair comparison with pay rates across the economy. There is an equal set of ground rules that apply to every public service union. As I said on many occasions, Government policy on public service pay is that the public service should be in a position to attract its fair share of good quality staff at all levels. It should neither lead the market nor trail it.
The other key feature of the framework which the agreements have put in place in respect of public service pay is the conditionality and verification provisions associated with pay increases. Payment of any pay increases in the public service is contingent on co-operation with a robust agenda of measures to improve the effectiveness, efficiency and user-friendliness of our public services and to the maintenance of industrial peace. Payment of any increase under the agreement is subject to verification of co-operation with flexibility and ongoing change, including co-operation with the implementation of the agenda for modernisation.
Additional information not given on the floor of the House.
The report of the public service benchmarking body on the second benchmarking review of the pay of most public service grades is expected to be received around the end of the year. The question of the implementation of the outcome of the benchmarking processes will be discussed by the parties in the context of discussions on whatever arrangements on pay and conditions are to be put in place on the expiry of the current pay agreement.
I do not disagree with the Minister that expectations must be kept in line with realities, that we need to be conscious of competitiveness and that conditionality is vital in any public pay settlement. Against that background, how can he appeal for wage restraint from others when the Government will not apply it to itself? I cite the recent pay increase of 14% to the Taoiseach and similar increases to Ministers. If no demands for performance have been made of senior managers and Ministers, how can the Minister refer to conditionality of the pay settlements of others, reform and better delivery at the front line? Does the recent higher pay settlement repeat all the criticisms that were publicly made in the benchmarking process? There was no transparency in the evidence presented and no taxpayers representative to deal with issues from a taxpayer's point of view and this payment is made without any improved performance from those receiving it.
The situation that arose relates to the implementation of the independent review body on higher remuneration in the public sector. It was established in 1969 as an independent standing body, whose primary function was to advise the Government on the general levels of remuneration appropriate to higher public servants in the Civil Service, local authorities, former health boards, non-commercial State bodies, the Garda Síochána, the Defence Forces, hospital consultants, members of the Judiciary and holders of political office. It is established Government policy to accept the recommendations of this independent review body. It has been accepted by successive Governments.
In its report the review body set out the basis for its decisions. The Government has decided to phase in the increases over an 18-month period over three payments. The payments are based on comparing public sector posts to private sector posts where the duties and responsibilities are comparable. The recommendations are based on the lower quartile of the private sector rates and have been further reduced by 15% to allow for the superior value of public sector pensions relative to the private sector.
I am mindful of the fact that the findings of the review body will inevitably attract adverse criticism, in terms of public service and national pay policy. There is never a time when increases for top public service posts or the public service worker in general can be approved without attracting some adverse criticism.
The Tánaiste set out two pillars of pay policy. One was that expectations should be in line with reality. How is an increase of €38,000 for the Taoiseach in line with reality that our economy is facing? The Tánaiste also referred to conditionality, value for money for the taxpayer or users of public services. Where is the value for money in the higher remuneration settlement? There is no demand for higher performance and no performance linkage and the Tánaiste is allowing these increases without them meeting his criteria.
It is incorrect to state that the independent review body did not refer to performance pay. Those were in respect of further performance related payments they suggested should be paid. We have deferred consideration of these payments and they do not apply to the Judiciary or public office holders. The review body suggests it is much less than the proportion of the pay available as bonuses to many in the private sector. We were not prepared to go down that line.
The comparison with the private sector was modified by the review body. It was not a direct comparison with the private sector.
Everyone must tighten their belts except the Ministers. Where is the equity in that?
It has been the policy of successive Governments to accept the independent review body recommendations.
Not universally.
It has been. In respect of report No. 37 and the fifth general review, received in January 1997, on 4 March 1997 the Government published a report stating that in line with the established Government policy of accepting the recommendations of this independent review body, the Government had decided to accept the recommendations of report No. 37 in principle. It went on to say, because there was an election coming up, that the question of implementation of the rates that would flow from the recommendation would be considered at a later date. When the new Government took office it deferred implementation of the report until March 1998. The Government then announced the implementation of the recommended increases, backdated to 1 April 1997. All Members in that outgoing Administration took up that increase.
That is not the issue.
It is the issue. There is a fair deal of political hypocrisy emanating from this House.
That is not hypocrisy, the hypocrisy is the Government telling everyone to tighten their belts.
Top civil servants cannot negotiate with themselves on behalf of themselves. Since 1969 this independent review body has carried out that function. Successive Governments have adopted the recommendations.
Any independent person can see where the hypocrisy is.
Price Inflation.
Joan Burton
Question:47 Deputy Joan Burton asked the Tánaiste and Minister for Finance the way the most recent reported increase in inflation compares with the forecast he gave in his budget 2007 speech; the measures he will take to deal with the issue; the way he proposes to protect people on social welfare and lower incomes; and if he will make a statement on the matter. [29583/07]
On 6 December 2006, when I presented budget 2007, inflation, as measured by the consumer price index, was forecast to average 4.1% this year. This forecast was based on the normal technical assumption of unchanged interest rates. The budget day forecast for the harmonised index of consumer prices inflation — the EU inflation measure — was 2.6% this year.
The most recent inflation figures released by the Cental Statistics Office are those for October 2007. These show consumer price index inflation running at an annual rate of 4.8% and harmonised index of consumer prices inflation running at 3%. My Department published updated inflation forecasts in the pre-budget outlook in October. At that stage inflation as measured by the consumer price index for the year as a whole was forecast at 4.9% and on the same basis the harmonised index of consumer prices inflation was forecast at 2.8%.
Since budget day there have been three quarter-point interest rate increases. Mortgage interest currently accounts for a significant proportion of the current rate of consumer price index inflation so that if mortgage interest is excluded, the year-on-year consumer price index average in the 12 months to October 2007 would be 2.8%. On the normal assumption of no further interest rate increases, the rate of inflation is expected to moderate next year and this is reflected in the pre-budget outlook forecast for consumer price index inflation, which is forecast to average 2.2% over the period 2008 to 2010.
Based on census 2006 figures, it is estimated that only approximately 40% of households hold mortgages. That 40% can avail of mortgage interest relief, which currently applies at 20% and to a ceiling of €8,000 single or €16,000 married for first-time buyers for the initial seven years of their mortgage, and €3,000 and €6,000, respectively, for all others. The current level of mortgage interest relief for married first-time buyers is sufficient to cover the interest arising on a mortgage of up to approximately €321,500 over 33 years at an interest rate of 5.0%, which is well above the average mortgage.
Given his busy schedule, I do not know if the Taoiseach has had the opportunity to go shopping in a supermarket recently. The price of bread has increased by 7%, flour by 11% and milk by 8.2%. There has been a significant increase in the price of weekly shopping for an average family. One has little change from €150 for a family of three or from €200 for a family of four. What does the Tánaiste propose to do to take account of inflation? As the Tánaiste is fond of pointing out, there are more than 600,000 people on the lowest level of PAYE, who are effectively outside that net because incomes are so low. Does the Tánaiste have measures in mind for these people, social welfare recipients or pensioners on budget day given that we are close to the top of the euro inflation league?
Record social welfare packages were introduced in the past three budgets, in view of the revenue available and the growth rates achieved. Growth rates are changing and inflation must be monitored. We intend to assist those on social welfare and, in my time as Minister for Finance, which added to the successful efforts of my predecessor, we have met national anti-poverty targets by increasing the basic rates up to those targets. Significant funds were required to achieve this and we provided them. I do not wish to comment on the budget. However, continuing to try to maintain the living standards of those on social welfare payments is obviously a matter that we will continue to prioritise.
I am sure the Minister is aware that, even when one includes free schemes, a single pensioner's income does not amount to much more than €12,500. That is half of what Ministers each accepted in their recent salary increase of €25,000. How does the Minister expect to compensate people for the extraordinary increase in food costs? Poorer people spend more of their income on food. The Minister said nothing about the 600,000 plus on wages so low that they do not pay tax. Will he enlighten us as to what his approach will be on budget day? Does he propose to raise the tax on cigarettes?
An issue arises in respect of food costs. Pig farmers feed their animals cereal which is continually rising in price. They are being badly affected and not doing particularly well in terms of the price they pay versus their output. This is a complex matter. As the budget approaches, how does the Minister propose to address it?
The Deputy is aware that two weeks prior to the budget I cannot discuss issues of that nature in any level of detail. I can only provide a general indication of the Government's success up to now and refer to its and the previous Administration's intention to protect living standards of those in receipt of social welfare payments. We have been extremely successful in removing hundreds of thousands from the tax net. Some of the individuals concerned paid tax under previous Administrations, of which the Deputy was a member.
I take the point regarding the need to ensure the living standards of those on social welfare payments are protected. The price of food and non-alcoholic beverages rose by 4.4% in October's CPI. However, as this sector only accounts for less than 12% of the total weighting in the index, its impact would only have contributed approximately 0.5% to October's overall CPI increase. Food price inflation has largely been driven by increases in raw material prices in global markets. This matter is not within our control but, in the light of global developments, we must pay close attention to it.
Tax Code.
Kieran O'Donnell
Question:48 Deputy Kieran O’Donnell asked the Tánaiste and Minister for Finance his views on whether the present structure relating to stamp duty is equitable in its impact; and if the faltering in the housing market presents an opportunity for reform. [29950/07]
The question of equity in the treatment of housing, of which the stamp duty code is a part, must be seen in the context of the overall tax treatment of property owners. The OECD has reported that Ireland "has some of the most generous tax provisions for owner-occupied housing". Ireland is the only country to allow tax relief on rent, mortgage interest payments, capital gains and capital acquisitions, while not applying an annual property tax. Furthermore, stamp duty helps fund public services such as health and education, while keeping the direct tax burden low. This facilitates continued economic success which benefits all taxpayers and their families and has allowed us to reduce taxes on work and enterprise with clear benefits for the economy as a whole.
It is a long-standing tradition that the Minister for Finance does not comment on tax measures in the run-up to the budget. However, the programme for Government commitments in this regard have been met. The Finance (No. 2) Act 2007 introduced a full exemption from stamp duty for first-time buyers in accordance with the commitments made in the programme for Government. This change brought about a positive impact upon the ability of first-time buyers to purchase their first home. This has widened the choice available to first-time buyers and removed an obstacle to their establishing their own homes in the neighbourhoods and communities in which they grew up. These matters are monitored on a continual basis.
Does the Minister agree that the legislation he introduced prior to the summer recess was a sham? The legislation to which I refer did nothing in respect of introducing mobility to the market. As matters stand at the end of the third financial quarter, almost 10,600 fewer houses have been built this year compared to last. The Minister's pre-budget outlook is built on the estimated completion of approximately 60,000 houses. The eminent firm of Goodbody Stockbrokers has indicated that the actual figure may be as low as 50,000. As the Minister is aware, there is a loss of almost €1 billion for every reduction of 10,000 in the overall figure.
The Minister last night stated, as part of the Indecon public policy lecture he delivered at the Royal Irish Academy, that he was building his budget on three priorities, one of which was equity in tax treatment. The current position on stamp duty is inequitable. The Minister must follow through on his public pronouncements and make what he is saying part of policy.
Does the Minister agree that the Finance (No. 2) Act 2007 which was passed before the summer recess has had no impact on the market? He stated stamp duty was a great provider of revenue. However, the Exchequer is going to be short almost €600 million because he failed to introduce the stamp duty proposals he was supposed to bring forward. HIs former colleague, Michael McDowell, previously indicated that stamp duty was to be done away with. This week, another of his former colleagues, Tom Parlon, as head of the Construction Industry Federation stated the goose that was laying the golden eggs was no longer doing so. The Minister must reform the stamp duty regime. Will he do so?
These matters were widely amplified and articulated as the people went to the polls and made decisions in respect of some of them. I note the Deputy's interest in protecting the tax base. His party's election campaign proposal in respect of this matter would have cost €660 million in a full year and would not have had any impact on prices or accrued any benefits for first-time buyers, the only ones who come into the market without equity. The housing market has been extremely buoyant for the past decade. In the past, criticisms from the benches opposite in respect of this matter related to the affordability of house purchases.
It is important to consider this issue in the proper context. I am glad the Deputy referred to the speech I made last night in which I set out where the priorities for the economy in the next decade should lie. Since I became Minister for Finance, I have brought forward initiatives which have in my view and in any objective analysis improved equity within the tax system. When the Deputy's party was in office, hundreds of thousands on low pay or the minimum wage paid tax. They no longer do so. That is a testimony to the improvements in equity for those in most need who were not catered for when the Deputy's party was in office.
That we have continued to improve the lot of those paying tax at the standard rate by widening the bands is another achievement. When one considers the contribution of capital taxes as against that of income tax and consumption taxes paid by individuals, one can see that the percentage of the tax take has more than trebled, from 4% to almost 12%, since the Deputy's party was in office. These are indications of the improvements that have been made.
The facts do not speak for themselves. House prices have decreased by 5% in the past year. The tax take is down as regards stamp duty. The Minister is forgetting that stamp duty is part of a basket of taxes. If it is not collected in respect of houses, neither is VAT. We talk about stamp duty and CGT holding at 15% but that is not the case. The Minister must reform this area. During the election campaign Fine Gael put forward an extremely pragmatic proposal——
The Deputy must put a question.
——to the effect that the first €100,000 should be exempt, the next €350,000 should be taxed at 5% and the balance at 9%. Will the Minister adopt and introduce this practical measure? It would move the market which is in need of movement.
I know the Deputy was busy canvassing in his constituency at the time but these arguments were all rehearsed and a democratic decision was taken in respect of them, particularly in the context of his party's specific proposal.
Members of the public want reform.
In the two years prior to the general election house prices were rising. When one considers movements in house prices, it is important to recognise that one is coming at this matter against a background of previous rises in such prices.
There is also negative equity.
The rises to which I refer occurred during a period when we were trying to make house prices more affordable. One cannot, depending on which vested interest one talked to most recently, jump from one side of the argument to the other.
Tax Yield.
Richard Bruton
Question:49 Deputy Richard Bruton asked the Tánaiste and Minister for Finance the extent of the shortfall in his tax projections made at the time the programme for Government was drawn up for the year 2010 as a result of his revision in economic growth; and whether he plans to review the commitments in the programme for Government as a result. [29717/07]
In the pre-budget outlook released in mid-October, a technical fiscal position for the years 2008 to 2010 was set out in Table 6. The publication projected tax receipts for 2010 to be €56,520 million on a technical basis, an increase of 6.25% over the 2009 estimate. This was the first time my Department published a tax revenue projection for 2010. Tax revenue of this magnitude is substantial and will enable the Government to continue to make adequate provision for day-to-day public services and investment.
Revised economic and fiscal projections for the period from 2008 to 2010 as well as estimated outturns for 2007 will be provided in the annual budget which I will present to the House on 5 December. These updates will take account of all relevant developments since the publication of the pre-budget outlook.
The programme for Government is an agreed five-year programme between the Government parties in which we set out our guiding economic and budgetary policy principles. In this regard, I remind the Deputy we are fully committed to a responsible fiscal policy. Detailed spending and taxation plans for 2008 will also be presented to the House on budget day. These will represent the first instalment of the Government's delivery of the programme for Government.
In the manifesto set out by Fianna Fáil, tax revenue for 2010 was projected at €61.4 billion. This manifesto, which committed to major improvements, will have a black hole of €4.9 billion by that year. The total for the improvements committed to is €5.2 billion if the commitment to have a surplus that year is included. Given that the Minister will have less than 10% of the revenue he thought he would for these improvements, what is going to give? Will he revise these commitments or will we pretend the Minister will be able to fund 4,000 extra gardaí, 2,000 extra consultants and 4,000 extra teachers? Will he have a medium-term prospect of what is realistic given the resources available?
In our manifesto we set out what we expected from a 4.5% rise in growth per year and the spending priorities we would outline. Since then, we had the election and a programme for Government in which we set out the stall of the Government. In the second half of this year we saw a further slow down. The entire programme for Government and all manifesto commitments based on the assumptions set out are based on prudent and efficient management of the economy. If the suggestion is that I am obligated to proceed regardless of present economic circumstances or forecasts and proceeding with spending plans based on 4.5% growth which will not be achieved next year, I do not believe this is a responsible fiscal position to take.
During the course of the election campaign, I outlined what my priorities would be in the event of a slowdown and I note Fine Gael's attempt to continue to run it. Fianna Fáil documentation on jobs and employment which is available on the website confirm the priorities to maintain capital spending under the development plan and to target tax changes towards those most in need. This has always been my position. The budget will outline the Government's spending plans from 2008 to 2010 and what are our priorities in view of the economic circumstances with which we now contend.
What are we to make of the programme for Government published in June to which all parties signed up? The Minister will not tell us how much it will cost but I estimate the total will be at least €7.5 billion. The total amount of revenue which in May the Minister stated would underpin it will not be there. Is the programme for Government a work of fiction or a genuine planning document on the basis of which we can expect the Government to develop its ideas? If the Minister now states the money will not be there, let us have a realistic programme and we will consider priorities. Is the Government's priority the NDP or to have 4,000 extra teachers or 2,000 extra gardaí? The public deserves to know and we deserve to have a sensible programme so we know how the money will be used and how scarcities will be prioritised.
The programmes put forward in the election by Deputy Bruton's party and other parties with which it wished to coalesce were not specific when it was pointed out they were €1.7 billion above its programme commitments during the second week of the campaign. This was not Fine Gael's fault. It came from the then leader of the Labour Party who promised the sun, moon and stars to everybody.
Every programme is based on assumptions and we set out clearly what were our assumptions.
The programme for Government was written after the election.
I did not interrupt Deputy Bruton. I was quite rightly asked what are my priorities if 4.5% growth is not achieved and I set them out clearly.
Have they been agreed with the Green Party and the Progressive Democrats?
Unlike the Opposition at the time I received credit for the clarity which I applied to answering the question. With regard to the programme for Government, we have established the guiding economic principles for the next five years. We will aim to achieve further significant sustainable growth, operate a responsible fiscal policy, deliver the national development plan——
That is €184 billion. Will the Government deliver all of this?
——and we will invest in increasing the productive capacity of the economy. I intend to implement the capital investment programme in the national development plan——
Not the current——
——with regard to all current spending.
Deputy Bruton's critique is that I will not reduce current spending quickly enough. I do not know where this will leave his figures. I seek to accommodate all day-to-day expenditure in the context of a responsible fiscal policy which will not compromise capital investment because this was the mistake made by past successive Governments when faced with the same dilemma.
There is a black hole in the programme for Government and the Minister will not face up to it.
No, there is not. Every programme for Government, including the one negotiated by Deputy Lowry prior to Deputy Bruton's brother becoming Taoiseach, has a covering budgetary context in which it is achieved. This is no different in this programme for Government. A programme would be meaningless if it did not have such a covering budgetary parameter which confirms what will be done in the context of the growth the Government seeks to achieve. Without this, Deputy Bruton's contentions are meaningless. It is the budgetary context——
The programme for Government is a work of fiction.
The only fiction Deputy Bruton engaged in was that in which he engaged himself.
Financial Services Regulation.
Kieran O'Donnell
Question:50 Deputy Kieran O’Donnell asked the Tánaiste and Minister for Finance whether he has assessed the impact of the international credit crunch on Irish financial institutions and on credit conditions; and if he will make a statement on the matter. [29951/07]
The Financial Stability Report 2007 published last week by the Central Bank and Financial Services Authority of Ireland, CBFSAI, is a comprehensive and detailed assessment of the impact of international financial market conditions on the Irish financial services sector and on financial conditions in the economy generally. I welcome the CBFSAI's conclusion that the financial system is well placed to withstand any adverse economic and sectoral developments in the short to medium term. The report highlights that based on key indicators such as asset quality, profitability, solvency and liquidity the Irish banking system is strong and robust and is clear that domestic banks have no significant direct or indirect exposure to US sub-prime mortgages.
The Central Bank's report draws attention to a number of welcome improvements in the overall financial environment over the past year, in particular to the moderation in growth in house prices and private sector credit growth. The report also finds that underlying fundamentals of the residential property market continue to appear reasonably strong. It emphasises that the safeguarding of our international competitiveness is essential to securing the growth potential of our economy, particularly in the context of the expected moderation in the residential construction sector.
Effective and efficient financial regulation is a key element of overall financial stability in the context of international financial market developments. In Ireland, the Central Bank and Financial Services Authority of Ireland provides a highly effective financial regulatory and supervisory regime. This is central to the resilience and well-being of the sector, helping to maintain financial stability, ensuring effective prudential supervision and promoting the interests of consumers. The integrated structure we have adopted for the supervision of individual financial firms and the monitoring and maintaining of financial stability overall confers significant advantages in ensuring effective and timely co-ordination of these important functions.
The authority functions within the overall context of the Eurosystem and the European Central Bank whose operational framework has functioned well in response to recent financial market developments. My Department will continue to work closely with the Central Bank and Financial Services Authority of Ireland to oversee national financial stability planning arrangements in line with EU requirements.
Additional information not given on the floor of the House.
There is also a co-ordinated EU response to international financial market conditions. EU Finance Ministers have agreed on a set of common principles and a roadmap of further actions to enhance financial stability arrangements and the ability of authorities to respond to market developments. Ireland is of course participating fully in this work to ensure there is an effective EU-wide system to maintain financial stability taking into account the important cross-border linkages that now exist in EU financial markets.
In conclusion, I share the Central Bank's assessment that the Irish economy continues to support the stability of the financial system and that the Irish financial sector remains in good health.
I wish to ask two questions. The Minister raised the financial stability report of the Central Bank. However, he neglected to mention this report states the system has a weakness. The Central Bank carried out a survey of the licensed financial banks and found that joint ventures or special purpose vehicles are sub-prime conduits and are not regulated. Is the Minister concerned about this? We do not have proper controls. The ISTC, which is on the verge of going out of business, directly entered the retail sector through Friends First and 125 retailers invested in it, one of which was a credit union. That has an impact on the ordinary man on the street. Based on the financial instability report and what I have said, is the Tánaiste satisfied that proper controls are in place? Will he comment on the fact that the value of bank shares, which make up a substantial proportion of the Irish Stock Exchange's value, has dropped by nearly half? Can he explain this significant decrease?
Special investment vehicles fall outside the remit of regulation and do not have an interface with the public in terms of taking deposits.
Clearly they had.
The issue raised by the Deputy pertains to the fact that complex financial vehicles and arrangements are in place and we have to regulate them in so far as it is possible and consistent with normal commercial arrangements to do so. With regard to the Stock Exchange, markets react to sentiments and events in the sub-prime market and across the world. Obviously, the inter-bank market has experienced turbulence and that is feeding into market sentiment and affecting bank shares.
The Tánaiste did not answer my question. Does he think regulation should be introduced in the area of special investment vehicles? If the sector is so secure, based on the Central Bank's assurances, why are the share prices of banks falling? Is he satisfied the banking system does not have any inherent problems?
The Governor of the Central Bank spoke on the matter at the launch of the bank's financial stability report for 2007. He noted that while much depends on the possible evolution and duration of the current market turbulence, there are concerns that a prolonged period of market disruption could affect economic activity by increasing the cost of credit to firms and individuals and reducing the volume of credit banks are willing to extend to borrowers.
Is the Tánaiste happy?
I am happy that we have a robust financial system in Ireland which is well regulated.
Is the Tánaiste confident that we will experience no issues in the next several months similar to those which affected ISTC?
There is nothing, of which I am aware——
Should we not therefore have controls over the area?
If the Deputy wants a reply, I will give him one but if he asks ten further questions while I am answering, it will be difficult for anyone to know what is going on. I have given my reply and I concur with the Governor. The Central Bank and the regulatory authority continue constantly to monitor the situation. We have seen turbulence in financial markets but I am satisfied we have a well capitalised and regulated banking system.
Special investment vehicles are considered at European level. Deputies will recall that when the Northern Rock issue arose, a meeting was held that weekend of Finance Ministers. One of the conclusions of the meeting was that methods of working together needed to be found so as to address these issues in a way that does not hinder the efficacy of the system but enables commercial dealings to continue.