European Union (Approval of Treaty Amendment Decision) Bill [HL]

Debate between Lord Brabazon of Tara and Lord Howell of Guildford

Wednesday 13th June 2012 Lords Chamber

[Lord Brabazon of Tara]

I wonder whether the noble Lord, Lord Foulkes, would reconsider his suggestion that Greece might be forced to leave the eurozone purely because of the action of the speculators. Is the real reason why Greece is in trouble not because it has been spending money it does not have, it has been borrowing money that it cannot pay back, and it is basically bust?

[Lord Howell of Guildford]

My Lords, I was interested to hear the noble Lord, Lord Foulkes, recount how he was accidentally drawn into the adventure of currency speculation. I hope that that is all in order, and I am sure that it is. However, having heard my noble friend Lord Sassoon say earlier, rightly and correctly, that he was not prepared to be drawn by the noble Lord into a discussion of Rangers’ tax affairs, I have equally to recognise that I am not prepared to be drawn into a discussion about the noble Lord’s own tax affairs either.

The purpose of these amendments is, first and obviously, to delay the entry into force of this Act until January of next year. Secondly, they would stop the Act coming into force at all if the membership of the euro area were to change between now and 1 January 2013. This Bill gives parliamentary approval to a European Council decision amending Article 136, as I am afraid I repeated ad nauseam in my earlier comments. This, in Her Majesty’s Government’s view, is firmly in the UK’s best interests. Once the European stability mechanism is established, the UK will not be exposed to any future programmes of financial assistance for the eurozone through the EU budget, specifically through the European financial stability mechanism. The mechanism will contribute to helping our neighbours in the eurozone in the continuing search for financial stability in the currency area. Delaying the coming into force of this Bill until 1 January is therefore not in our interests. It would create uncertainty about the UK’s intentions in relation to ratification of the decision.

In turn, as a knock-on effect, a delay would destabilise the European stability mechanism, which may or may not come into use in the times ahead depending on what occurs. It is not for me to speculate on any of the points that have been raised about whether there will be exits from the eurozone or whether there will be banking unions, insurance unions, fiscal pacts and so on. This move on the part of the House and this Parliament is intended to be a contribution to a very complex jigsaw of requirements. If the Bill were not to come into force at all, that would be even more damaging to what is without doubt a very difficult and challenging situation with many complex and component parts to it, which is what the eurozone states are presently confronting. I am sure that noble Lords will appreciate that it would not be appropriate for me to speculate further on that aspect of what is going to happen. However, what is certain is that, regardless of whether there is a change in member states whose currency is the euro, having a permanent stability mechanism, which is the decision of the eurozone states, is essential for those that remain.

If the Bill were not to be enacted and come into force, the UK would not be able to ratify the treaty change —the Article 136 amendment—and that amendment would not be able to enter into force. This instrument is the change that will provide eurozone members with the legal certainty they want in relation to the ESM, and it is very much in our interests that that at least should be in place.

We want the euro to sort out its problems, of course, as a strong and stable euro area is in the UK’s national interests because of our close economic links. I think that everyone realises that now. Setting up a permanent stability mechanism is part of the solution to the current crisis and this Bill confirms the ability of eurozone members to do that. Failing to approve or delaying the approval of the treaty amendment decision would further contribute to instability across the eurozone, of which there is plenty around already, and have a negative impact on the UK economy. As my right honourable friends the Prime Minister, the Foreign and Commonwealth Secretary and the Chancellor have all repeatedly made clear, a stable eurozone is directly in the UK’s interests. It is a major market for our trade, and some would argue that its stability is key to unlocking the prospects for recovery and expansion in all the European and, indeed, global economies, and certainly including this one. Accepting these amendments would risk undermining that prospect of stability and growth further.