International Development (Official Development Assistance Target) Bill

Debate between Lord Lamont of Lerwick and Lord Davies of Stamford

Friday 27th February 2015 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord, Lord Butler, in his normal way, spoke extremely powerfully. His arguments are extremely strong, his logic is irrefutable and his experience is something that no one would wish to challenge.

The trouble is that I think he has missed the essential point of the Bill, which is that it is a quite exceptional measure designed to send an exceptional message to the world. First, it says to the developing world, the poor countries containing the 4 billion or 5 billion people in this world who live on less than $1,000 a year per capita income, that we care about inequality and are making a fundamental qualitative change in order to demonstrate the authenticity, the reality, of that commitment and a desire to make a new move in that direction. The second reason is of course to send an equally unmistakable signal to other developed countries and to set an example that we hope they may follow.

The trouble with the amendment from the noble Lord, Lord Butler, for all the quite sincere compliments that I have just paid it, is that it undermines completely that sense of authenticity. If it is clear that at any time the Treasury can decide in a given year that our obligation to spend 0.7% of GDP on international development no longer applies, then the whole commitment that we are trying to make will simply be emptied of its content. The message will not have any strength at all for either the developing world or the rest of the developed world, and that is the basis on which, very sadly, I feel I have to oppose the amendment.

[Lord Lamont of Lerwick (Con)]

My Lords, I know that the mere appearance on the Marshalled List of the dread words “the Treasury” will send a shiver through most of my former colleagues and a very large part of the House. None the less, I feel that this amendment might be more persuasive if people unconnected with the Treasury supported it. I feel an obligation to support the proposal of my noble friend Lord Butler, and I strongly disagree with what the noble Lord, Lord Davies, said, which was that this amendment is incompatible with the 0.7%.

There is no reason, as I shall explain in a minute—I shall speak very briefly— why the 0.7% should not be compatible with rigorous examination by the Treasury of the budget of the department. One of the fears that have been expressed by those who are sceptical about this Bill is that it creates a perverse incentive to spend money so that the whole focus is on the quantity, not the quality, of expenditure. There is a risk that we may be jet-hosing the programme with money, with the only objective being to meet the 0.7%.

The noble Lord, Lord Davies, quite rightly reminded us of our obligations to the poor, and he made the point that there are huge numbers of people in this world who survive on tiny incomes. There are 2.8 billion people surviving on less than $2 a day, and 20% of those people survive on less than $1 a day. That fact makes it very important that we see that this expenditure is economically and properly spent, because every bit that is saved, every bit that is not wasted, can be the difference between life and death for people living on the poverty line.

Exempting overseas aid from the public expenditure process is the removal of the process. The process of the public expenditure round is that departments have to make a case for spending money, not just for the global total. There is examination in advance of the major items that make up the totality of the programme. Getting rid of that entirely removes the discipline that a spending department, or in this case DfID, has to make for the money that it wishes to spend.

There a provision in the Bill for examining the expenditure retrospectively, but that is not the same as examining it in advance. Surely the department would benefit from having the effectiveness of its programme examined not just retrospectively, when nothing can be done about it, but in advance, when people can be warned and when projects can be examined by people outside the department. It is a great pity that there is no single body in the Bill, as far as we can see. At previous stages, the noble Baroness, Lady Northover, made the point that they did not want to have one department looking at this, but that re-emphasises the need for the Treasury to have a look at this in advance. That is compatible with the 0.7%, because all that would be involved would be the Treasury examining it and saying, “We would like you to look at this project”, and, “We think this project is better than that project”.

Incidentally, Clause 2(3)(b) refers to how, if the Government fail to meet the target of 0.7%, they have to explain how it may be due to fiscal circumstances. If you are going to have fiscal circumstances involved in the calculation of the 0.7%, it seems very sensible that the Treasury should be involved. Who else would know about the likely fiscal circumstances? Indeed, it is implied in the Bill that the Treasury would have to be involved because nobody else can talk very persuasively about the fiscal circumstances.

I believe that in order to make the Bill effective and to make sure that expenditure reaches the poorest of the world, this amendment ought to be supported.

Genuine Economic and Monetary Union (EUC Report)

Debate between Lord Lamont of Lerwick and Lord Davies of Stamford

Wednesday 2nd July 2014 Grand Committee

[Lord Lamont of Lerwick]

Of course you can. You can be against transferring fiscal authority out of the UK but say that the only way in which you can make a monetary union work is for you to transfer it out of your country to a central organisation. There is no contradiction in that whatever.

[Lord Davies of Stamford]

I am sorry, I take a different view. It seems very contradictory to me. Either you should not have fiscal integration or you should. It is very important that politicians are coherent about these things and I do not think that the Eurosceptics are coherent, not least on the matter of democracy in the EU.

Incidentally, my noble friend Lord Desai made the excellent suggestion that we should have an election for the President of the European Union. I have always been in favour of that, and I quite agree that the EU lacks democratic accountability. You hear all the time from Eurosceptics that the EU lacks democratic accountability, but the moment you suggest any measure at all, whatever it might be—changes at parliamentary level, say, or the direct election of the President—that would supply much greater accountability, they are always against it. Again, there is a blatant contradiction running through their views on the subject. I have to say that if you pursue politics on a contradictory basis like that, you do not do great credit either to your reputation for intellectual clarity or to the good faith of your arguments.

Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill

Debate between Lord Lamont of Lerwick and Lord Davies of Stamford

Wednesday 15th June 2011 Lords Chamber

[Lord Lamont of Lerwick]

My Lords, when the noble Lord, Lord Kerr, spoke in the very first debate on the first amendment in Committee—or perhaps it was on Second Reading—he said that he was like a minor character in Shakespeare referred to in Act 1, Scene 1, and never heard of again. It has, however, been to the benefit of the entire House and the Committee that instead he has been bestride the stage like a colossus. Great as my respect for the noble Lord is, I do not feel that a sunset clause on this Bill is any more appropriate than a sunset clause on a local government reorganisation, a National Health Service reorganisation, or anything else.

However, there has always been an argument for attaching a sunset clause or a sunset condition to some EU legislation with great advantage, because so much EU legislation is irreversible. That is a point that I have made before, but I repeat it simply because I think that that is the problem of connection between the public, Parliament and the EU, and one of the reasons why there is scepticism and mistrust about the European Union.

[Lord Davies of Stamford]

Is the great distinction about referenda which the noble Lord is making—he has made it twice this afternoon—whether a decision once taken becomes irreversible, and that in that category there should be a referendum; and that in other categories there should not? If so, why will there not be a referendum on reform of the House of Lords? Surely that will in practice be an irreversible decision. Once you have a democratically elected legislative Chamber, you can hardly go back on that.

[Lord Lamont of Lerwick]

I have not heard that there is not going to be a referendum on legislation for the House of Lords; I have heard many people speculating that amendments may be moved. We shall see, and I shall see how I vote on the interesting suggestion made by the noble Lord.

It has been said that this debate has at times been something of a Second Reading debate on many of the amendments. That is because the Bill has been misrepresented in several of the debates in an exaggerated way. The noble Lord, Lord Howell, has made it clear again and again that we are not going to get a plethora of referendums, for several reasons. First, changes in competences and powers tend to come in packages, in treaties. Secondly, we have been assured many times that we will not have more great treaties. The fact that certain vetoes and certain competences remain after we have had Lisbon, Nice and Maastricht shows that there are very good reasons why national Governments wish to retain them. No Government are going to invest a huge amount of political capital in pursuing some relatively minor matter. That is not how these things operate; they tend to come in packages.

People talk about these issues being trivial. We are talking about competences and powers. We are talking about vetoes, for example. The noble Lord, Lord Kerr, referred to the amendment very well proposed last week by the noble Lord, Lord Davies—I think it was Amendment 22A—about exempting defence procurement from the requirements of the internal market. He said that that is something that could advantage the country, and surely we ought to have the flexibility to move to QMV. Actually, I think it is important to be able to buy certain types of defence equipment and certain weapons, or produce them where you want to, and not have them subject to the full rigour of the market. In the previous Government, Des Browne himself—now the noble Lord, Lord Browne of Ladyton—said that he regarded that as a vital power to be retained by the British Government. Judging by the previous Government and what the former Secretary of State said, that is an extremely important power for this country to retain.

The noble Lord said the Bill was otiose because the Government were not intending to hold referenda in this Parliament. As the noble Lord, Lord Howell, said, the Bill will apply in this Parliament. It is not otiose any more than the Act giving effect to the Maastricht treaty. It had an opt-in for Britain to opt into the euro, but it was made very clear that we were not going to opt into the euro in the next Parliament. That did not make it otiose.

Then we have heard the argument that we are legislating for future Parliaments, but of course it is perfectly open to any future Government to repeal the Bill. With great respect to my noble friend Lord Jopling, we would be getting the worst of all worlds if we enacted the Bill but then said that the whole floodgates could be opened again without any specific intention at the beginning of each Parliament. I can think of nothing that would inflame public opinion more and get the tabloid press—about which we have heard a lot in this debate—going again than if, without any specific intention, a Government decided at the beginning of each Parliament to open the floodgates to the reversal of this legislation. We are told that it will lead to inflexibility in negotiations. However, other countries have procedures that take a long time and they have certain provisions on which they have to hold referenda. We have seen how it takes time for some of these treaties to be legislated for in other countries. Therefore, I do not think that the position of Britain’s negotiators would be any different from that of other countries.

What has been confusing in these debates is that this legislation is about competence and powers, whereas people try to make it about issues and policies. Nice, Lisbon and Maastricht have all given a tremendous amount of power and transferred sovereignty to the European Union. What in terms of power and competence do the Opposition and those opposed to the Bill think the European Union needs? What is the issue? What is the European Union not able to deal with at the moment? We have had many changes in recent years. The United States constitution has had only 27 amendments since coming into existence but we produce endless changes. The European Charter of Fundamental Rights was written in very dense language and was much longer than the Universal Declaration of Human Rights or the charter of the United Nations.

The noble Lords, Lord Kerr and Lord Hannay, have certainly enlightened our debates with their enormous expertise and very abstruse knowledge of difficult and complex issues. However, when I listened to them I was reminded of what Winston Churchill said when he became Chancellor of the Exchequer. He came out of the Treasury and said, “These chaps speak Persian. I prefer generals and admirals”. Of course, the contributions of the noble Lords, Lord Hannay and Lord Kerr, have been extremely important and enlightening in these debates, but I think that with some of these abstruse issues—the language used and so on—there is a real problem of connection between ordinary people and the European Union.

What has not been recognised enough by opponents of the Bill is the tremendous crisis that is taking place in Europe over the European Union. We have seen dramatic changes in public opinion on European integration in countries such as Finland. However, I would particularly single out what has happened in Holland. Throughout my life, Holland has been the most pro EU-integrationist country in Europe; now, it is the most obstructionist. It is strongly opposed to the bailouts of Greece, Ireland and Portugal and it wants to dismantle the Schengen provisions as well. The Bill draws a red line to say that in this Parliament, and beyond if this Government are re-elected, there will not be a transfer of powers. It seems to me to be sensible legislation and we should be determined to carry it forward. I think that the red lines we are drawing will go some way to restore some trust in the European Union.

European Union Bill

Debate between Lord Lamont of Lerwick and Lord Davies of Stamford

Wednesday 8th June 2011 Lords Chamber

[Lord Lamont of Lerwick]

My Lords, I think that this is what might be called the Rumsfeld amendment, because it has been moved to deal with the unknown unknowns. That is what it is all about. I had not remotely intended to speak in this debate, but the noble Lord’s enthusiasm is so infectious. He looks at the European Union and sees that nothing has ever gone wrong with it. We ought always to be in there and engaging with it. We must be careful not to miss the train. We must always be positive regardless of what is happening. He tells us about the wonderful speech that Monsieur Trichet has made, saying that we ought to have fiscal union in order to save the euro. No mention is made that that comes out of the ashes of the disastrous ruin of monetary union.

I think it was the noble Lord who used the same arguments to try to persuade us to join the euro. He said that we are losing influence. Even though the euro has now itself faced enormous problems and even though some of my noble friends on the Back Benches have said that we shall never be able to have a single currency area without a fiscal union, we are told, “That is ridiculous. Now fiscal union is just another great step forward. We have got to be positive about it”.

The noble Lord also says that the European stability mechanism is another thing that we are missing out on, and that we ought to be involved in it. Of course, the ESM is in complete contradiction to the whole basis on which the euro was set up. It is not because it was an unexpected disaster—it was a predicted disaster. The reason the ESM had to be created was because the treaties totally forbade it. Yes, we do face some unknown unknowns.

I apologise to the House because we should not all give our own views on Europe, but I was completely provoked by the noble Lord, who seems to be like Alice through the looking-glass: every disaster is seen as a step forward. We just ought to take a step back, hold our breath, and think about it a little.

[Lord Davies of Stamford]

My Lords, I am going to resist the great temptation to respond to the noble Lord, Lord Lamont. I do so not because I do not think that he is completely wrong, which I think he is. He is quite wrong to write off the euro in this way, and he is wrong to suppose that we would not have had to face a systemic crisis caused by fiscal collapse in Ireland, Portugal and Greece. Whether or not the euro had ever existed, we would have needed to take intelligent and concerted action. The noble Lord, with whom I have debated these matters with great pleasure on many occasions over the years, is as wrong as he has always been. I am happy to give him good money in a private conversation afterwards that the euro is far from being in a state of crisis and that it will survive.

I hope noble Lords understand the very important distinction between a fiscal crisis, which has hit a number of countries that are members of the eurozone and have the euro currency, and a crisis for the euro itself. You can have a fiscal crisis caused by Governments overborrowing irrespective of the currency in which they are borrowing. Even if those countries had been members of the dollar area and had borrowed so much that the financial markets were in danger of ceasing to refinance them, there would have been a crisis affecting them; and because of the number of assets that we inevitably hold in those countries, which are major trading partners of ours here, we could not have been immune to a fiscal crisis irrespective of the currencies involved.

European Union Bill

Debate between Lord Lamont of Lerwick and Lord Davies of Stamford

Monday 9th May 2011 Lords Chamber

[Lord Davies of Stamford]

I am grateful for that intervention, but I must say to the noble Lord—I think that he will agree in principle—that it is a very bad excuse for a Government, when bringing forward legislation, to say, “This may be bad legislation with bad wording, but we copied it from a previous Government”. That is not the way that legislation should be brought forward in this or any other House. All proposed legislation should be justified on its own merits and on its own text; the Government of the day should be prepared to defend the texts that they bring forward and should not say simply that they are reproducing what may well be the errors of the past.

I move to the text before us. It would be useful to have on the record a clear statement from the Government of what this is intended to mean to Ministers. If the Act is passed, Ministers will need to know what scope they have for taking part in discussions. If the noble Lord says that they will be allowed to say, in the example that I quoted, “I personally am in favour of this, but I do not have support yet from my colleagues so I will take it back to them”, that would be useful to know. If they will be allowed to say, “The British Government are in favour of this in principle, but we need an Act of Parliament and a referendum”, that would be a very reasonable thing to say if this Act was passed. However, it is extremely important that we get this clear.

I will explain to the noble Lord why it is so important. There is an issue of good faith. We are parties to the treaty of Lisbon. The noble Lord probably voted for the treaty, and his noble friend Lord Howell probably did not. Nevertheless, we as a country are committed to the treaty of Lisbon, and we are therefore committed to the clauses of the treaty—including Article 31(3) of the TEU, which we will debate in a moment—which provide in certain circumstances for a decision by the Council to go to qualified majority voting to reach a decision. The treaty of Lisbon provides for these possibilities, but we are coming along with a proposed Act of Parliament—a Bill—that is designed to prevent Great Britain from ever being a party to mechanisms that we signed up to when we agreed to the treaty of Lisbon. If it appears that we are going to be censoring Ministers and saying, “You cannot take part in good faith in debates and discussion, you cannot have a normal exchange of views, you cannot make statements that you are in support of things and so forth”, this would constitute a determination to make sure that our contribution in the Council will be extremely negative and unproductive.

This is a matter of good faith and is about whether the Government—we had this discussion in another context during the debate on the Bill—want to bring about deliberately a degradation in the good relations between this country and our EU partners. I trust that they do not. The noble Lord, Lord Wallace, said on a number of occasions that they do not and that it was quite wrong for me to harbour that black suspicion. I hope that it is quite wrong of me, but it is therefore very important to see what kind of constraint will be imposed on Ministers. I am grateful for the noble Lord's intervention, which has gone some way to explaining the practical effect on a Minister of the Crown who takes part in the Council of Ministers. Anything further that he can add would be of great practical importance when Ministers find themselves in difficult situations in future discussions where they have to have regard to the Act, if it is an Act by that point.

[Lord Lamont of Lerwick]

My Lords, when the noble Lord, Lord Liddle, moved his amendment, he was careful and modest enough to say that it was a probing amendment, following which it was possibly unwise for the noble Lord, Lord Davies, to go in feet first when it was explained to him that the legislation was repeating what had been in previous legislation—apart from the referendum—and say, “That does not excuse it because it is bad legislation”. However, all the arguments that he applied about lack of flexibility surely would have applied before if his arguments were right.

[Lord Davies of Stamford]

I hope that the noble Lord, Lord Lamont, understood what I said. I stand by it, will repeat it and will ask him whether seriously he disagrees with it. This House and any serious legislature or democratic assembly anywhere in the world should look at the text of Bills proposed to it on their merits. It is no excuse simply to say, “We are just repeating mindlessly some formula that already exists”, without being prepared to justify it.

[Lord Lamont of Lerwick]

Yes, but the noble Lord's criticism might have been a little modified in the light of the explanation that the Minister gave, rather than being put forward in quite such an aggressive manner.

In an equally probing spirit—because I, too, would like to understand this—perhaps I might ask the Minister two questions. Is he saying, first, that there is a distinction between a draft decision and a full decision, and that a Minister could indicate an agreement in principle to a draft decision? That was what I understood happened when we debated the European financial stability mechanism—the first of the three bailout funds, if I may call them that, that were arranged—when my noble friend Lord Howell clarified a certain amount of confusion in the House. Some noble Lords thought that we were making a final decision; he made it clear that we were not, that Parliament would have to decide on the principle of the matter, and that there would be another debate later. If that is the correct example of how this operates, we can see that there would be plenty of time for flexibility and consideration.

Secondly, are the words “or otherwise support” meant to cover also a position where abstention on a decision occurs? Where there is a requirement for unanimity, abstention cannot stop a proposal going through. It may be that that, too, is covered by the words. I have seen the words of Mr Murphy that the Minister quoted, and I think that that was one of the points that he was making.

--- Later in debate ---

[Lord Lamont of Lerwick]

I am very sorry that the noble and learned Lord, Lord Goldsmith, is not here; he was here earlier. I read what he said the other day. If I have in any way misrepresented his views, I am sure he will correct me. I read that he was very firmly one of those in the previous Government who took the view that the best way of dealing with international crime was not by the creation of new international authorities but through co-operation between national authorities. That was his very firm view. I thank the noble Lord, Lord Goodhart, for what he said about the European arrest warrant. I know he felt it should have been combined with a system of European bail, which would have made it very different.

[Lord Davies of Stamford]

I want first to address some of the general points that have been made in this debate and then focus on Amendment 42, with which I thoroughly agree. I very much support the arguments of the noble Lord, Lord Goodhart, on that. Several general points have been made. Some of this debate has been a bit of a Second Reading debate, which is a very good thing. These issues are extremely important and I accept that many of these amendments cut across the thrust of the Bill itself. They force the Government to explain exactly what their purposes are. That is a most important aspect of this evening’s proceedings. We are making some progress. I am grateful to the noble Lord, Lord Lamont, for recognising that we on this side of the House are very much in favour of enhanced parliamentary scrutiny of European Union decisions. If the argument was about that, there would not be an argument. We would be pretty much in agreement and would have put the Bill to bed long ago. The issue is entirely about referenda, and whether it is sensible, practical and ever seriously intended to have referenda. It is important that, as a result of the proceedings of this Committee, we elucidate that point.

The noble Lord, Lord Hannay, said that he thought it was a sick joke—strong words, but justified—to suppose that the Bill would in any way enhance our relationship with our partners in the EU or enhance the British public’s support for our membership of the EU. I do not cast aspersions on the sincerity of any Member of this House. I am sure the people who say that they believe that the Bill will somehow enhance the British public’s understanding of and support for the European Union have genuinely persuaded themselves that that is the case. However, it is quite difficult to follow that argument, which is so obviously contrary to the historical facts. We all know what those are: Mr Cameron offered this Bill to his Eurosceptics as a sop. It was put to them as being a victory for the Conservative Party in the negotiations that led to the coalition agreement. Indeed, Mr Cameron and his Whips have been going around the Back Benches of the Tory party, as I know, saying, “You must be pleased with us now. We have at least brought forward this Bill, which stops any further growth in powers for the European Union and preserves parliamentary sovereignty”. That is an aspect we will come to later in the Bill. That is historical fact. That is how it has been presented and the way it happened. There is no question at all of anybody saying, “Let’s see what we can do to enhance the British public’s understanding of and support for membership of the Union”, and then coming up with this Bill. That is not how it occurred.

Loans to Ireland Bill

Debate between Lord Lamont of Lerwick and Lord Davies of Stamford

Tuesday 21st December 2010 Lords Chamber

[Lord Davies of Stamford]

My Lords, I begin by asking the Minister a question. I would have intervened on him earlier, but since I was hoping to speak in the debate I did not want to interrupt him unnecessarily. I think I heard him say that this potential transaction by which we lend three point something billion pounds to the state of Ireland will not increase our borrowing, because the Irish have an obligation to repay. I see the Minister shaking his head, so perhaps I misheard him. If I misheard him, I apologise. Clearly it may not increase net borrowing, because we have a corresponding asset—the Irish obligation to repay—but government borrowing figures are always stated on a gross basis, otherwise they would not be positive at all, because we always have substantial net assets. I thought that there was some confusion about that one phrase that the Minister used, but perhaps he will deal with that in his response. I am grateful to him.

I am very much in favour of the Bill. It seems to me to be absolutely the right measure for two reasons. One reason, which the Government seem rather to dismiss, is that Ireland is a neighbour, a great friend for all the reasons that the noble Lord, Lord Bew, set out, and a member of the European Union. I believe in the notion and the value of solidarity among nations, as in other branches of human affairs. I believe in soft power as well as hard power, in friendship and in good will. I believe in the value of these things, in the value of creating and maintaining them and that it is a mistake if you throw them away. That is an important consideration and I shall come, in a moment, to what I think of the Government’s attitude on that subject.

Secondly, I approve for the reasons that the Government appear to approve of it, which is that we have a very specific, practical and concrete interest in avoiding the kind of systemic crisis which could well be generated by a default by the Irish Government on their bond and other financial obligations, or, indeed, a default by the Irish banks, which are currently being guaranteed by the Irish Government. One default could well trigger another. Clearly, that would create a very difficult situation for us.

My regret about the Bill, how it has been brought before the two Houses of Parliament and the way in which the whole issue has been conducted by the Government is that the Government have given away a lot of the good will that might have been achieved by this gesture by an extremely grudging approach to this transaction. As my noble friend Lord Liddle pointed out, we deliberately decided that we do not want to be part of a collective solution; we want to do these things individually and bilaterally. The Government’s is a rather strange gesture to make, a rather strange signal to send. The Chancellor has been at pains to make clear that he was not responsible for Alistair Darling's agreement that we should join the stability mechanism back in May. Indeed, the Chancellor said in another place:

“I am doing everything I can to ensure that the UK is extricated from the commitment that was entered into, and we are making good progress”.—[Official Report, Commons, 15/12/10; col. 944.]

He said elsewhere in that debate that we will certainly not be part of the permanent mechanism when that is established.

I regret all those things for two reasons. The first is the practical and concrete reason of hard financial national interest; the other relates to my point about good will. In the first instance, there may well be other crises in future. It would be idiotic to exclude the possibility of our need to take part in such support operations in future to avoid some systemic crisis. It is always foolish in life to give up any flexibility. You want to maintain flexibility to respond in different ways. Excluding the idea of being part of a collective mechanism in the EU makes no sense. The other reason, as I said, is that it sends quite the wrong signal, and to my mind reduces the good will created by our decision to support Ireland in this way.

All that reflects an uneasy compromise in the coalition Government. I suspect that the Lib Dems in the Government very much take the view that I take and would have been in favour of this whole operation instinctively on principle in the first place, would then have wanted to negotiate details with our EU partners jointly, and would have had no inhibitions about doing that because they are European partners or members of the eurozone.

I suspect that the advice that the Government received from officials in the Foreign Office was that it would be disastrous, particularly after the centuries of Anglo-Irish history to which my colleague, the noble Lord, Lord Bew, referred—many incidents that are very much to the shame of this country. If we were the only major EU country that declined to take part in the support operation, it would have the most appalling effects on our relationship with Ireland. I imagine that the Foreign Office took that line—at the official level, at least. I imagine that the Treasury and the Bank of England were concerned with the potential systemic crisis and therefore urged the Government to take part.

I suspect that, against that, there were the Tories who, for Eurosceptic and chauvinistic ideological reasons, were reluctant to become party to this transaction and were certainly very keen to ensure that it had nothing to do with our European Union membership or the existence of the eurozone.

That uneasy compromise is reflected in the very grudging way in which the money has been advanced and the very grudging statement that I have just cited from the Chancellor, which I very much regret. I am sorry that I cannot come up with entirely effusive, uncompromising congratulations for the Government on this move, but I am glad that they have taken the right decision, however grudgingly, and I shall be delighted to support them if there is a vote on the subject, which I doubt that there will be.

I have a couple of remarks to make about the general context. So much complete nonsense, and dangerous nonsense, has been talked about the relationship between the euro, the banking crisis and the sovereign debt crisis that we have faced over the past year or two that I feel inspired to comment on it in this debate. It has been said openly and frequently in the Eurosceptic press in this country and by a number of Conservatives in the House of Commons that it shows the weakness of the euro system. It has also been suggested that the solution would be the break-up of the euro and that the countries with substantial debt should leave the eurozone. I regard both those comments as either completely incompetent, if people really do not understand what the logical consequences would be of the actions that they are urging, or frankly irresponsible and unpatriotic, because they do not take into account the interests of this country or are willing to sacrifice the interests of the people of this country for purely ideological, emotional or symbolic reasons.

Of course, the euro had nothing whatever to do with the banking crisis or the sovereign debt crisis. In fact, the sovereign debt crisis would almost certainly have been worse if the euro had not existed. I should be the first to admit that the fiscal rules in the Maastricht treaty—the maximum 3 per cent fiscal deficit unless there was the consent of the Union, and so forth—have not been enforced sufficiently strictly. We all know that now, and we need a tougher and tighter regime with proper monitoring and sanctions in future. Nevertheless, if that regime had not existed at all, people would have had even greater deficits. There is no doubt about that.

There was possibly some accounting fraud in the case of Greece, but if there had been no rules, constraints or restrictions at all, the situation would have been a great deal worse. The euro, far from contributing to the crisis, might—albeit too modestly to have greatly affected the outcome—have had a benign influence. As for the idea that the solution lies in breaking up the euro, my noble friend Lord Liddle has already commented on that. I thoroughly agree with him that that would be an astonishingly self-destructive, and therefore I say advisedly irresponsible and unpatriotic, view.

Undoubtedly, if the countries that are affected by the sovereign debt crisis—Spain, Ireland, Portugal or Greece— were to leave the euro, their currencies, whatever they might be, the successor drachma or punt No. 2, would suffer the most tremendous devaluation. As their liabilities are largely denominated in euros, they would find it completely impossible even to begin to meet the burden of that indebtedness. The result would be defaults or a massive restructuring that was far greater than any restructuring that might take place in an orderly fashion in the context of agreement within the EU or the eurozone. That would mean that our banks would have to write off substantial assets, reduce the size of their balance sheets and reduce their credit creation in this country; that the economy would suffer; that jobs would be lost; and so forth. That would be a deeply regrettable state of affairs and it is thoroughly irresponsible to wish that to happen.

I trust that people will be guided by a rational assessment of the national interest rather than by an emotional desire to see the eurozone collapse irrespective of the consequence for either our partners in the eurozone or us. There is no doubt that the euro is not a part of this crisis. It is not a part of the problem and it is not a contributor to the problem. It has been at least a minor reducer of the scale of the problem. It must be an essential part of the solution.

[Lord Lamont of Lerwick]

I do not disagree with much of what the noble Lord has said, but I think he is slightly overstating his case. It reminds me of when I went to Brussels and the European Commission told me that absolute disaster was going to follow when the rouble broke up into individual countries. The Commission sounded just like the noble Lord. However, let us leave that aside.

The noble Lord slightly overstated his case. Does he not think that the convergence of bond yields within the eurozone was a contributor to what happened, because the bond markets ceased to look at countries individually and the convergence of yields encouraged countries to spend too much and to borrow too much? The failure of the markets to distinguish between countries and that convergence of bond yields, which came from the view that Germany would ultimately bail out the other countries, was a contributing factor.

[Lord Davies of Stamford]

I agree entirely with the noble Lord’s indictment of the financial markets and a lot of lenders. I should say that I was a banker myself and sat on the board of a bank, Morgan Grenfell, which had a considerable lending book as well as being an investment bank at the time, and frequently sat on the credit committee meetings we had. I am appalled by the mistakes made by professional bankers in not wanting to look at the nature and unravel the packages of a class of asset—securitised debt packages, essentially, which were becoming very important as a class of their assets. I equally quite agree with the noble Lord that the bond markets were failing to price risk correctly in exactly the way that he describes. The rating agencies bear a tremendous part of the failings, the fault and the guilt for creating this crisis. Many bankers’ excuse is, “We thought we were buying paper with an AAA credit rating and in fact the credit agencies weren’t doing their job properly in unravelling these packages and seeing that what was in them was absolutely rubbish”.

I agree totally with—I think of calling him “my right honourable friend”—the noble Lord in what he said in indictment of the financial markets. I think that is the problem. It is not an indictment of the currency in existence at the time any more than you can say that the enormous failings of the American banking markets, the American bond markets or the American rating agencies were the fault of the fact that they have a currency called the dollar.

[Lord Lamont of Lerwick]

I hesitate to remind the noble Lord, but I remember him making speeches telling us that if only we were in the euro, we, too, could enjoy these very low bond rates.

[Lord Davies of Stamford]

Undoubtedly had we been in the euro—and I totally agree with the noble Lord that I was, and remain, a partisan of our joining the euro—as a result we would have had to adopt tighter fiscal policies. The noble Lord may feel that the result of that might not have been entirely unfortunate for the future history of the country. Nevertheless, we would have done, and the counterpart to that would have been that we would have had lower nominal and real interest rates throughout that period. I happen to think that that would have been a good thing as well.