Cable quizzes the Chancellor

11.20.11am BST (GMT +0100) Fri 11th Jul 2008

• ' . . WHAT wisdom have they passed on to him from their experience of how to prevent the inevitable painful consequences of repossessions and negative equity . . ?'

[Jul 10] Vincent Cable (Deputy Party Leader; Twickenham, Liberal Democrat): When the Chancellor has met his G7 counterparts from Japan and the United States, has he compared notes with them about the economic hazards of allowing large bubbles to develop in property markets? Ours is arguably even more extreme than that of the United States. What wisdom have they passed on to him from their experience of how to prevent the inevitable painful consequences of repossessions and negative equity and of how to manage them humanely and properly?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour): The hon. Gentleman is right to say that, across the world, there have been problems with credit, especially in relation to the housing market. I have said on many occasions that lenders need to understand the security on which they are lending and to ensure that someone taking out a loan can repay it. The position of the housing market in the United States is different from that of the housing market in this country. The United States still has the problem that, in many parts of that country, there are larger numbers of houses that it is not possible to sell. As long as that problem endures, there will be problems in the United States economy.

More generally, there is widespread recognition that what is happening in the world is more profound than many people believed at the end of last year and even at the beginning of this year. That will have a profound effect on developed and developing countries alike. That is why it is necessary for us to take action where appropriate internationally, and why it will be increasingly necessary for us to take action here at home to help people through an undoubtedly difficult period.