Financial Assistance (Ireland)

Lord Beith Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr Osborne]

What I am proposing is a bilateral loan to another sovereign nation as part of an international package. Of course, I am doing it to provide stability for the entire UK economy, including the economy of Sheffield. I believe the steps that we have taken in the past six months to move this country, with the highest budget deficit in the G20, out of the financial danger zone provides the platform for economic growth, as it does for the rest of the UK.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Does the Chancellor realise that our constituents were very angry indeed at having to bail out mismanaged British banks, and will be even angrier at having to bail out even more irresponsibly managed Irish banks? Will he not have to give a clearer picture of some of the consequences for the British economy if such action is not taken?

[Mr Osborne]

I make two observations. The first is that this is a loan to a sovereign nation state and, barring a really extraordinary turn of events, we would expect Ireland to pay us back. So we are making a loan to another sovereign nation that we fully expect to be paid back. The long history of international packages shows that the IMF and others get their money back in almost all circumstances. This is a loan that we can afford to make and which we will get back. Secondly, there is a broader observation about banking systems in Ireland, the UK and elsewhere. They became vastly over-leveraged and vastly over-borrowed and they were very badly regulated. The assurance that I can give my constituents and those of the right hon. Gentleman is that we are sorting out the regulation of the UK banks. We hope that the Irish Government are now dealing with the situation of the Irish banks. They were interconnected with the UK and made a lot of loans in the UK, and it is in the interests of us all that we sort out the Irish banks as well.