EU: UK Net Contributions

Debate between Lord Pearson of Rannoch and Lord Sassoon

Wednesday 24th October 2012 Lords Chamber

[Lord Sassoon]

My Lords, as the House is aware, we are coming up to the negotiations of the multi-year financial perspective. That agreement requires unanimity of member states. My right honourable friend the Prime Minister has made it clear in a statement, jointly with other European colleagues, that the maximum acceptable expenditure increase through that period is a real freeze in payments. That continues to be the Government’s position. As for structural funds, we cannot just opt out of any particular area of EU expenditure, although I agree that in the area of structural and cohesion funds, it is absurd that so much money is recycled from wealthy member states back into other wealthy regions of Europe. That is one of the many issues that need to be addressed.

[Lord Pearson of Rannoch]

My Lords, to put this question into everyday perspective, do the Government accept that £10 billion per annum equates to the annual salaries of 91,320 nurses being thrown away down the Brussels drain—or policemen, soldiers, or any other public servants at £30,000 per annum? Does this Question not remind us that there is no such thing as EU aid to the United Kingdom? For every pound that Brussels sends us, we have sent them £2.20.

[Lord Sassoon]

My Lords, the UK benefits from its membership of the EU. The UK should make a proper contribution to the net EU budget, but we have to see that the completely unacceptable proposals from the European Commission for the next multi-year period are reined back. The Commission’s proposals, as opposed to a real freeze, would mean an increased UK contribution of £10 billion, or £1.4 billion a year. That is indeed many nurses, policemen and other front-line public servants.

Eurozone

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 9th July 2012 Lords Chamber

[Lord Sassoon]

My Lords, I am pleased to say that no encouragement is now needed from the UK. The paper by the four presidents—the presidents of the European Council, the European Commission, the European Central Bank and the Eurogroup—set out what they believed to be appropriate in relation to fiscal and monetary union. That work will continue and the UK is participating in the discussions in and around those reports. We are being fully supportive of those efforts.

[Lord Pearson of Rannoch]

My Lords, would it not be wise to ask the people of Germany and the other eurozone donor nations whether they agree to be burdened with the debts of Greece, Portugal, Spain, Italy and others, which even the Germans and the other countries cannot afford for long?

[Lord Sassoon]

My Lords, I thought I might have been asked a question about a UK referendum, instead of which I get a question about whether the German people will be consulted. I think I will leave that to German politicians to answer.

--- Later in debate ---

[Lord Sassoon]

My Lords, the UK is very much involved in the discussions in Brussels. That is why, as I have already said, we secured important parts of the EU patent court coming to London. That is why we recently secured a new British head for the European Bank for Reconstruction and Development. We are at the table and that is where we intend to stay.

[Lord Pearson of Rannoch]

My Lords, with the leave of the House and as there are some minutes on the clock, instead of going along with this madcap, dangerous scheme of European financial integration, why do the Government not encourage the eurozone countries to abandon the incurable euro and go back to their own currencies, each with their own interest rate and exchange rate? Would that not be less painful and expensive than to go on trying to save the wretched thing?

[Lord Sassoon]

My Lords, as we have discussed many times, 40% of our exports go to the eurozone. It is our most important trading bloc. The priority has to be to strengthen the eurozone countries. That is what they want to do and that is what we want to see them do and we must help them to achieve that.

Eurozone

Debate between Lord Pearson of Rannoch and Lord Sassoon

Thursday 17th May 2012 Lords Chamber

[Lord Sassoon]

My Lords, we do not offer advice to the Germans on how to manage their own economy any more than they would offer advice to us.

[Lord Pearson of Rannoch]

My Lords—

Scotland Bill

Debate between Lord Pearson of Rannoch and Lord Sassoon

Wednesday 28th March 2012 Lords Chamber

[Lord Pearson of Rannoch]

Forgive me, but that does not appear to be exactly what the Bill says. It may be helpful for those who follow our proceedings, but do not go into the detail of the Bill and the Explanatory Notes and all the rest of it, if I read out briefly what the Bill says and then put some questions to the Minister.

The part of the Bill that the noble Lord, Lord Forsyth, is attempting to remove is new Section 80B of the 1998 Act on the power to add new devolved taxes. It states:

“Her Majesty”,

who of course acts under the advice of Ministers, so it is not her fault,

“may by Order in Council amend this Part so as to … specify, as an additional devolved tax, a tax of any description … or … make any other modifications of the provisions relating to devolved taxes which She considers necessary or expedient”.

I repeat a question put to the Minister by the noble Lord, Lord Forsyth. Can he think of anywhere else where a new tax or taxes can be imposed on our people by Order in Council without their informed consent? Have they given that consent and, if not, how will they do so? Are the Government really suggesting that this process will take place without going through your Lordships’ House or the House of Commons? Are we not even to have the affirmative or negative procedure? We need to clarify this matter because, from what I know of it so far, this is going too far for our democracy.

[Lord Sassoon]

I do not want to keep popping up and down like a jack-in-the-box, but I shall try again.

--- Later in debate ---

[Lord Pearson of Rannoch]

My Lords, I, too, take the amendment as a small step in the right direction. I merely ask the noble Lord, Lord Browne of Ladyton, whether he agrees that if the Government do not accept the amendment, it will give great force to the previous amendment of the noble Lord, Lord Forsyth. Of course, if the Government do accept the amendment, it will be a small step in the right direction. However, it does not abrogate the point that I and—much more huffily—the noble Lord, Lord Forsyth, attempted to make when we debated the previous amendment, which remains the best one. I do not know whether the noble Lord, Lord Browne, is in a position to answer that before the Minister replies.

[Lord Sassoon]

My Lords, I take that as a no.

Economy: Quantitative Easing

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 19th March 2012 Lords Chamber

[Lord Sassoon]

No, my Lords, even the previous Chancellor, I am happy to say, was not acting illegally in this matter and the current Chancellor certainly is not. As I have already explained to the noble Lord, Lord Barnett, the only reason for the Chancellor having to authorise this is because HM Government indemnify the Bank for any losses that it may suffer by exercising purchases under the asset purchase facility.

[Lord Pearson of Rannoch]

My Lords, does the noble Lord agree that over history printing money has usually, if not always, led to inflation? If he does agree, can he tell your Lordships why quantitative easing will not do so this time?

[Lord Sassoon]

No, my Lords, I certainly will not. It has actually led to inflation already. In the estimates made by the Bank of England in the third quarter bulletin in September last year, it was estimated that quantitative easing had raised UK inflation by around 0.75 to 1.5 per cent. I firmly believe that the greater benefit of raising real GDP by around 1.5 to 2 per cent was what really mattered in the economic circumstances in which we find ourselves. Then the question is what happens to the unwinding of QE? The stock will be held and sold back into the market in due course.

EU: Economic and Financial Issues

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 12th March 2012 Lords Chamber

[Lord Sassoon]

My Lords, I believe that the coalition is driving forward our agenda on Europe with great coherence. As I have explained, the UK is leading the way not just on the single market and competitiveness issues but issues including Iran, Burma and many other areas on which we are very much at the forefront and lined up with many of our European partners.

[Lord Pearson of Rannoch]

My Lords, when will our estranged political class understand that the euro’s problems are embedded in its construction and cannot be cured by throwing yet more money and sticking plaster at the problems of Greece and others?

[Lord Sassoon]

My Lords, as I have already said, there is a remorseless logic that has to take monetary union towards closer fiscal co-ordination, if not union. That is what the latest intergovernmental agreement is one step towards.

Eurozone Crisis

Debate between Lord Pearson of Rannoch and Lord Sassoon

Tuesday 17th January 2012 Lords Chamber

[Lord Sassoon]

My Lords, the credit rating agencies have a useful and important part to play in the good working of the financial markets. Your Lordships produced a report in committee on aspects of the regulation of the credit rating agencies on which we had a good debate before Christmas. There are issues about the performance of the credit rating agencies in respect of the financial crisis, but their record generally on sovereign ratings has been perfectly acceptable in most people’s judgment. However, I am not going to comment on their individual judgments in the past couple of weeks.

[Lord Pearson of Rannoch]

My Lords, is it not now clear that there are really only two ways forward—either full fiscal union, which does not look as though it will be accepted by the peoples of Europe, or a return to national currencies? On the latter alternative, have the Government seen the research from Bank of America Merrill Lynch which suggests that an orderly return to national currencies need not be nearly as traumatic as the political class would have us believe?

[Lord Sassoon]

My Lords, there is a whole range of views about the effect of the eurozone breaking down in any way. All I can say is that 40 per cent of our trade goes to Europe, and we want to see a strengthened and healthy eurozone. That is fundamentally in the interests of the UK. A crisis in the eurozone presents the most imminent threat to growth in this country.

Taxation: Inheritance Tax

Debate between Lord Pearson of Rannoch and Lord Sassoon

Wednesday 21st December 2011 Lords Chamber

[Lord Sassoon]

My Lords, as I said, we have no plans to review the law, but we are always interested in constructive suggestions, wherever they come from.

[Lord Pearson of Rannoch]

My Lords, perhaps I may rely on noble Lords' generosity at Christmas and dare ask what the latest position is with the proposal from Brussels to harmonise inheritance tax across the whole European Union. Does that prospect not make this debate somewhat superfluous, and what will the position be under the proposal? Will there be majority voting or will we be able to veto it if we do not like it?

[Lord Sassoon]

My Lords, tax proposals from the European Commission require unanimity.

EU: Member States’ Budgets

Debate between Lord Pearson of Rannoch and Lord Sassoon

Tuesday 29th November 2011 Lords Chamber

[Lord Sassoon]

I am of course prepared to go a bit further in answer to my noble friend’s question. If such treaty changes are put forward, the Government will look to advance the UK’s national interest at that point, as appropriate. Above all, that means protecting and safeguarding our essential economic interests, and we will seek to do that.

[Lord Pearson of Rannoch]

My Lords, is it not grotesque that an organisation that has not had its accounts signed off by its own internal auditors for 17 years—there being no external auditor—should be handed these powers, given that if it had been a private company in this country the directors would have been in prison every year for the past 17 years?

[Lord Sassoon]

My Lords, I certainly agree that it is very unsatisfactory that for the 17th year in a row the Court of Auditors has not been able to give an unqualified statement of assurance.

European Union Membership (Economic Implications) Bill [HL]

Debate between Lord Pearson of Rannoch and Lord Sassoon

Friday 25th November 2011 Lords Chamber

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, I start by congratulating the noble Lord, Lord Pearson of Rannoch, on getting this debate today. I disagree with the noble Lord, Lord Davies of Oldham. It is quite right that we should be debating Europe at this very difficult and challenging time. I also thank all noble Lords for what has turned out to be a valuable and thought-provoking debate. Having said that, I make it clear at the beginning that the Government have significant reservations about the Bill that we are debating today.

I am between the rock of noble Lords wanting to move on to complete two other significant Private Member’s Bills’ Second Readings today and the hard place of doing justice to what has been a very stimulating debate. The noble Lord, Lord Davies of Oldham, has already pointed out my problem, and I am grateful to him for not adding to it. I thought that the string of questions was about to come, but it did not and I am grateful for that.

As we are all aware, these are extremely dangerous times for the global economy. The crisis in the euro area continues to undermine markets across the world, the UK included. As my right honourable friend the Chancellor has said, resolving the euro area crisis would be the biggest single boost to the UK economy this autumn.

As well as resolving the immediate crisis, Europe faces significant challenges that go to the very core of its raison d’être. What is the EU’s purpose in an open and competitive global economy? What do we need to change for it to meet that vision? We are right to ask these questions, but we will be heard and make a difference only so long as we are a core member of the EU, and we will make sure under this Government that our voice is heard in Europe, exactly as it has been heard most recently on the negotiations for the EU 2012 budget. I remind my noble friends Lord Liverpool and Lord Stevens of Ludgate of what we have done to peg back the proposed increase successfully, resisting proposals for inflation-busting increases. But of course I agree with my noble friend Lord Stevens that much more needs to be done and that there needs to be real budgetary restraint by the Commission for the next few years. We have saved €12 billion against the ceiling that was there in the 2005 financial perspective, but there is much more.

While we are on this topic, I would say to the noble Lords, Lord Pearson of Rannoch and Lord Willoughby de Broke, that I do not recognise the numbers that they were quoting. The net contribution of the UK to the EU in 2010-11 is estimated at £7.6 billion, up from £4.7 billion in 2009-10, but of course the reason for that increase is because of the give-away that the last Government gave on the UK’s abatement. Having stepped up very significantly to the new level, the OBR’s figures are that the numbers now remain broadly level over the next few years.

As well as financial discipline, it is equally important that Europe pursues an ambitious agenda for growth.

[Lord Pearson of Rannoch]

For clarity’s sake I should say, following on from what the Minister has just said about our gross and net contributions, that he is talking about the Treasury figures. The figures that we gave are from the pink book and include all our contributions to the European venture, whether they go through the Treasury or not, such as the DfID budget. So I am afraid that our figures are the correct figures.

[Lord Sassoon]

My Lords, I was quoting the figures of the independent Office for Budget Responsibility, not the Treasury’s own figures, but let us turn to the more important issue: that Europe must pursue an ambitious agenda for growth. In the single market, I believe that we have one of the most powerful tools to ensure strong, sustainable and balanced growth not only across the EU but for the UK. The noble Lord, Lord Watson of Invergowrie, quoted all the figures that Ministers would customarily quote, so I am very grateful to him for helping me out. I will simply emphasise that this is a market worth €12 trillion and home to 500 million consumers.

Despite what the single market has achieved to date, however, so much more can still be done, so in answer to noble Lords, including my noble friend Lady Noakes, who rightly argue that we need assessment for well informed debate, I should say that I agree up to a point. When it comes to the forward-looking challenges as to how we are going to get the most out of the single market, yes, we need the analysis. That is why, for example, in February this year BIS published a significant study into the effects of completing the single market and the 7 per cent increase in UK GDP that could be achieved if we press forward with that project. A truly free and open single market in services and the creation of a digital single market could add as much as €800 billion to EU GDP.

In answer to the second and third so-called misconceptions mentioned by the noble Lord, Lord Pearson of Rannoch—I do not shy away from those but am very happy to address all four of them head on—I believe that it is only by being in the EU that we will drive forward the benefits of the single market and capture the very significant gains that remain out there. There is a lot to be done and it is very frustrating that things do not move forward, but it is easy to say that we can be outside it and somehow get all those benefits. If the market is to be driven forward we need to be there, at the table. We can unlock a further €60 billion of benefits to the EU from world trade through completion of EU free-trade agreements with key markets such as India, Canada and Singapore. Again, I do not agree with the noble Lord about what we could achieve in these areas if we simply had our own seat at the WTO. Just as we are doing here in the UK, we have to drive down the regulatory burdens and costs of doing business across the EU—something that was identified by a number of noble Lords in this debate.

Finally, in response to these questions of whether we could be outside it and have the benefit of the free market, the comparison that the noble Lord, Lord Stoddart of Swindon, made with Norway, for example, is simply wrong. I am grateful to the noble Lord, Lord Lea of Crondall, who has already addressed that point. Norway is a small country blessed with huge oil and gas reserves, which is what makes it principally different from countries such as the UK. We cannot simply therefore step somehow magically into their shoes. I also say to the noble Lord, Lord Stoddart of Swindon, that while overall we have to fight to increase our share of world trade and our exports, a trade deficit, taken narrowly, is not in itself a bad thing. We have to recognise the benefits of trade to both sides, and therefore cannot simply dismiss the benefits that we have from EU trade by saying that we have a deficit.

The question about the benefits of going forward but nevertheless improving the EU market is precisely why my right honourable friend the Prime Minister secured a commitment for an EU growth test: to filter out EU legislation that is harmful to growth and jobs. The Commission’s proposed financial transaction tax is one such example. The European Commission itself expects that such a tax could reduce EU GDP by as much as 3.4 per cent or €422 billion—madness. More than that, as my right honourable friend the Chancellor has said it is “a bullet aimed”, squarely,

“at the heart of London”.

I say to my noble friends Lord Ahmad of Wimbledon and Lord Liverpool that the financial transaction tax requires unanimity to go forward, and that it will not get UK support. However, just as we have done and will do on directives in financial services and on the EU budget, we will continue through the current crisis to defend the full range of Britain’s interests in Europe.

Having picked up some of the important general themes that noble Lords have raised in this debate, I shall turn briefly to one or two questions about the analysis here. I certainly agree with my noble friends Lord Risby and Lady Falkner of Margravine and the self-styled noble and maverick Lord, Lord Desai, that this all goes much wider than some narrow cost-benefit analysis. Once we start this discussion, such an analysis is important but not nearly sufficient. I also agree with my noble friend Lady Falkner that there is plenty of material out there; it is not that the debate cannot be informed by a whole range of credible and indeed less credible commentators. In 2010 the Treasury reviewed that literature, which is available on the Treasury website, so we do not shy away from looking at the issue from time to time. There was also the 2005 study, which again is available on the Treasury website. I hope that it is of some reassurance to the noble Lords, Lord Bilimoria and Lord Empey, that we at the Treasury do not spend our time doing these studies on a daily basis—I hope they would expect us to be getting with doing some more valuable work with our time—but from time to time we look at what the outside experts are coming up with.

We should remind ourselves that, in addition to the costs and benefits of the EU, we as a nation risk downplaying our prospects at every turn. It is important to recognise, for example, that in the World Bank’s ease of business rankings the UK has got back into the top 10 and is now ranked seventh. That is critical. So I believe that Britain is well placed. We have lot to do internally in the UK, of course, and I have no doubt that there will be more discussion about that next week. As I said, the EU has much more to do with our active and positive participation.

I take the points made by the two noble Lord Davieses who have spoken in this debate about the location of manufacturing and the benefits that we get from it. I agree. On other issues of trade and investment, my noble friend Lord Ryder of Wensum referred to recent remarks by the chairman of the Chinese sovereign wealth fund, the CIC, on the eurozone. That gives me an opportunity to remind the House that the same chairman of the CIC was here two weeks ago with a very large delegation of Chinese officials and businesses, looking at the opportunities in UK infrastructure. While others have to go to Beijing begging for bailouts, we are very pleased to receive delegations here to look at opportunities in the UK. That is the context in which we should see this debate.

The noble Lord, Lord Kakkar, referred to another area of great strength for the UK: our world-beating excellence in clinical research. He made some telling points but, on the broad point about working time regulations, I stress that the Government are committed to the view that working people should decide the hours that they work, and we will continue to make that abundantly clear to the European Commission.

I did not get many questions directly, but a point was specifically addressed to me by my noble friend Lord Stevens of Ludgate about the UK’s exposure to losses of the ECB. I can confirm that net losses or profits are allocated to euro-area national banks and that non-euro-area national banks, such as the Bank of England, do not receive profits or losses from the ECB. The UK makes a contribution to the capital of the ECB but that is simply in relation to the bank’s running costs.

Finally, we had two interesting and remarkable contributions at the end from a more historical perspective from the noble Lord, Lord Gilbert, and my noble friend Lord Cormack. I merely say that, of those two contributions, I was rather attracted by and appreciate that of my noble friend and his important reminder of the insights that the late Lord Dahrendorf brought to these discussions and to the country more broadly.

In brief conclusion, let me be absolutely clear that the Government believe that leaving the EU is not remotely in our national interest. Standing on the outside, we would still be subject to the rules made in Brussels on the single market but powerless to influence them. Rest assured that rules written without us will not generally be in the UK’s national interest. We have always been the driving force for open markets and free trade in the EU, and that is a role that we will continue to fulfil to ensure that the UK’s voice is still heard and the UK’s interests are protected.

EU: Economy

Debate between Lord Pearson of Rannoch and Lord Sassoon

Wednesday 2nd November 2011 Lords Chamber

[Lord Sassoon]

My Lords, I do not accept the very simplistic idea that we are headed for a two-speed Europe. There is already a variable geometry in Europe in other areas apart from the euro, such as justice and home affairs, where there are different arrangements for certain member states. The critical lesson out of all this is that the UK must stick to its own fiscal deficit reduction policies because it is those which are giving us the benefit of 10-year interest rates today at 2.2 per cent, whereas countries such as Italy, which had interest rates very similar to ours before the financial crisis, have interest rates not at 2.2 per cent but at 6.2 per cent. So we must stick to keeping our own house in order.

[Lord Pearson of Rannoch]

My Lords, further to the question put by the Minister’s noble friend Lord Higgins, have the Government given any thought to the cost of returning first Greece and in due course the other crippled economies of the eurozone to their national currencies and, if necessary, supporting that transition with some variation of the Marshall plan? Have they thought about that concept, compared with continuing to throw unknown trillions at a project which cannot be saved?

[Lord Sassoon]

My Lords, the first thing to understand is that the UK is not part of the stability mechanism that the eurozone is putting in place, and we will not contribute to specific bailouts. On the other hand, the eurozone takes about 40 per cent of our exports and it continues to be the principal interest of the UK Government to make sure that the eurozone and the whole of the EU prosper and grow, to the benefit of our own economy.

Euro

Debate between Lord Pearson of Rannoch and Lord Sassoon

Thursday 27th October 2011 Lords Chamber

[Lord Pearson of Rannoch]

My Lords, is it not obvious that last night’s measures are merely yet more sticking plaster on a wound that will therefore continue to poison the world economy? Is not the only answer to abandon the whole ill-fated project of European integration, get rid of the euro and go back to the democracies of Europe freely trading together and with the rest of the world in their own currencies?

[Lord Sassoon]

No, my Lords, that is not the situation. Forty per cent of our trade goes to the eurozone, 50 per cent goes to the EU, and we have to work to preserve the structure.

Global Economy

Debate between Lord Pearson of Rannoch and Lord Sassoon

Thursday 11th August 2011 Lords Chamber

[Lord Sassoon]

My Lords, I do not pretend to be an economist. I am sure that if I was sitting an exam paper now, I would fall well short of the mark that the noble Lord, Lord Eatwell, would get. The problem is that we do not live in a pure economics world. A lot of what we are struggling with now is where the world of economists meets the world of markets.

I am not sure where to start with the many interesting interventions that we have had. I go back to the question about the deficit reduction plan: there were some concerns about the size of the deficit rising and others expressed the opinion that we should be investing more and driving borrowing up. It is worth getting a little bit economicsy about this and remembering that there are things called automatic stabilisers, which mean that if the economy does not grow as fast as anticipated there will be additional payments in areas such as welfare, for example. It is worth remembering that the deficit goes up and down. Within the Chancellor's fiscal plans, more money gets pumped into the economy—crudely put—if growth is lower. We should always bear that in mind. There is no absolute rigorous number at which we shoot that does not vary as economic circumstances change.

On the point raised by my noble friend Lord Oakeshott and others about interest rates, of course low bond yields themselves are not a guarantee of growth. Germany has been mentioned, and I will come back to that. Yes, it would be great if we had a deficit as low as Germany and bond yields as low as it does, but the fact is that we have a deficit as high as Greece but interest rates as low as Germany. They are not in themselves a guarantee of growth, but if we divert from the basic course we could very well find ourselves with both a very high deficit and very high interest rates. In those circumstances, growth would be choked off very quickly. That is fundamentally why we have to stick to our plan. My noble friend also talked about tax cuts. To remind noble Lords, the coalition is set out on a track which is significantly raising, and already has raised, the starting level of tax for those at the bottom end of the income scale. That is an important part of the whole rebalancing of the tax and welfare package to get people back into work. Equally, at the other end, my right honourable friend the Chancellor has made it clear that, over the medium term, a top rate of tax of 50 per cent is not conducive to an economy growing consistently and driven by entrepreneurial activity.

My noble friend Lady O’Cathain reminded us of the very big picture and questioned the chances of getting agreement to action on the imbalances. She was right to say that it will be for the autumn meetings of the G7, the G8 and the G20 to make further progress on that. Although there has been considerable frustration about turning good words into action, the latest statements from Ministers are, let us say, modestly encouraging, but it requires a big push this autumn. My noble friend then moved from the very big picture to more micro matters, with the question of regulation and how difficult it is for businesses that want to grow. That is precisely why we have a moratorium on new regulation for micro businesses in the period up to 2014 and that new tests under the “one in, one out” rule are being applied to all new proposals for regulation from Ministers.

[Lord Pearson of Rannoch]

My Lords, what about the regulations that come from our friends in Brussels? The Government’s Answer to me recently said that a majority of all our business regulation comes from Brussels, and we can do nothing about it.

[Lord Sassoon]

If the noble Lord will be a little patient, I will get back to Europe in a moment.

It was nice to have confirmation from the noble Lord, Lord Radice, that we are all on the same side when it comes to wanting to strengthen the eurozone, even if he questions the motives of some of us in wanting to do so. It really is very important that this happens, and we should give it all our support.

On the other European matters raised by the noble Lord, Lord Pearson of Rannoch, his main questions were around the cost of this country’s contribution to Europe. He makes that contribution £25 million a day. I cannot calculate things that quickly, but the fundamental difference between that £25 million a day and the £120 million a day of debt interest that I referred to earlier is that the £25-million-a-day contribution to Europe buys us value for money. Of course we believe that Europe needs to get its budget in hand, that there needs to be much greater fiscal discipline in Brussels and that the proposals for a great expansion of the European budget are unacceptable. Nevertheless, we have to bring ourselves back to the main point that this country gets considerable value from its membership of the European Union, and that that is fundamental to making sure that we have good strong markets for our exports. Yes, there is a burden of regulation from Brussels, and we must make sure that Brussels starts to apply the disciplines that we are applying in this country before it brings forward yet more regulation.

A number of questions were asked by my noble friends Lady Kramer and Lord Cotter and the noble Lord, Lord Harrison, about access to various domestic and European funds. All I say as a general point is that I hear very loudly what is being said. The Government’s objective is to make sure that in direct lending by the banks and in other finance—the most reverend Primate reminded us that the banks are far from blameless in the situation that we are in, and my noble friend Lord Oakeshott and other noble Lords reminded us of the importance of the banks—there is a whole range of financing channels. We have the critical Merlin agreement and European funds such as the regional growth fund—

Finance: Eurozone

Debate between Lord Pearson of Rannoch and Lord Sassoon

Tuesday 19th July 2011 Lords Chamber

[Lord Sassoon]

I certainly agree with my noble friend about the relative seriousness of different crises that are going on at the moment, and I repeat that the crisis in the eurozone is extremely serious. As to prescriptions and questions about what the eurozone would do, my noble friend speaks words of wisdom. However, it would not be appropriate for a UK government Minister to lecture the eurozone as to what to do. We shall look with considerable interest at what the meeting of eurozone leaders over the next two days comes up with. It is important that they make further considerable progress.

[Lord Pearson of Rannoch]

My Lords—

Finance: Off-exchange Trading Venues

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 18th July 2011 Lords Chamber

[Lord Sassoon]

My Lords, I certainly agree that mechanisms that help liquidity such as dark pools, which are run by investment banks, multilateral trading facilities or independent operators, are indeed aids to liquidity if they form a proper part of the market. The proponents of high-frequency trading, too, cite them as an aid to liquidity. I completely agree with the noble Lord, Lord Bilimoria, that the last thing we want for example the European Commission to do is to restrict sensible increases in liquidity in our markets without looking at the evidence base that needs to be assembled.

[Lord Pearson of Rannoch]

Does the noble Lord agree that we can all relax on this question, because we surrendered supervision of our financial services—

[Lord Pearson of Rannoch]

Yes, my Lords, and to the biggest black hole of them all in the shape of the European Commission. Do the Government agree that we can surely rely on this body to come up with an honest solution to any problem, if only because it has not been able to get its own accounts signed off by its internal auditors for the last 16 years?

[Lord Sassoon]

My Lords, I certainly do not think we should relax on the issue of high frequency trading. We only have to think back to the events of 6 May 2010. I do not need to remind your Lordships that there were two crashes on that day: one was the crash of the outgoing Government; the other was the so-called flash crash in which the Dow Jones index plummeted in a number of minutes by 9 per cent but fortunately, unlike the Labour Government, recovered by 9 per cent a few minutes later. We certainly take this issue very seriously but we need to continue to do the work and see where this leads us.

EU: Financial and Monetary Co-ordination

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 6th June 2011 Lords Chamber

[Lord Sassoon]

My Lords, the Government have secured a very clear agreement with the European Council. Whatever the analysis of Article 122 has been in the past, the Council of Ministers has been completely clear that Article 122 will not be used in the future. That is the critical thing. It is probably not right to go on raking over decisions about who was not in the eurozone in the first place. We have to make it work now, and one way of doing that is to get a proper interpretation of all the relevant articles in the treaty.

[Lord Pearson of Rannoch]

My Lords, does the noble Lord agree that the previous Government made a very expensive mistake two years ago when they failed to veto the overall supervision of our financial services passing through Brussels? Is it not grotesque that an outfit that has not been able to get its own accounts signed off for 16 years should now be in a position to dictate to the City of London, and thus cause lasting damage to its profitability and tax revenues?

EU: Budget

Debate between Lord Pearson of Rannoch and Lord Sassoon

Thursday 28th April 2011 Lords Chamber

[Lord Sassoon]

My Lords, I am happy to say that we are already on the case in this matter. At the ECOFIN in February, the UK issued a joint statement with the Netherlands and Sweden making various points about what we believed needed to be done by the European Commission and the auditors in coming years. That included, among other things, moving the European audit basis to a more risk-based approach, which I think precisely addresses the point that the noble Lord rightly brings up.

[Lord Pearson of Rannoch]

My Lords—

EU: European Financial Stabilisation Mechanism

Debate between Lord Pearson of Rannoch and Lord Sassoon

Thursday 31st March 2011 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend Lord Newby for again bringing us back to important current matters. The results of the Irish banks’ stress tests, as I understand it, will be released by the Central Bank of Ireland at 4.30 this afternoon, so it would be inappropriate to comment on them. Of course, the Irish authorities have consulted Her Majesty’s Treasury, the Bank of England and the FSA about the impact of bank restructuring, and the Government expect that the forthcoming announcement will remain in line with the broad principles of the support package provided to Ireland. I would just add that the Government have made clear their commitment to ensure that the Northern Ireland banking sector continues fully to meet the needs of businesses and consumers in Northern Ireland.

[Lord Pearson of Rannoch]

In view of what the noble Lord has said, whatever Mr Darling and Mr Osborne may have said to each other is entirely irrelevant because the Commission had the nerve to bring forward the mechanism under a clause in the treaty—in fact, the clause is to allow member nations to help one another in natural disasters—which is decided by majority voting in the Council. Therefore, the British Government had no hope of avoiding our 14 per cent share of £50 billion, which we can ill afford at the moment.

[Lord Sassoon]

My Lords, without rerunning previous discussions with the noble Lord, Lord Pearson of Rannoch, on the precise interpretation of the articles, the critical thing is that under the agreement reached at the European Council on 17 December, and very much led by my right honourable friend the Prime Minister, it is clear that Article 122(2) of the treaty will no longer be needed for purposes of support in this form. Without debating what has happened in the past, let me just say that my right honourable friend at the European Council has secured complete clarity for the future.

Currency Markets

Debate between Lord Pearson of Rannoch and Lord Sassoon

Wednesday 2nd February 2011 Lords Chamber

[Lord Sassoon]

I am grateful to the noble Lord and I thoroughly endorse his sentiments. This country has benefited greatly in recent years through the crisis by not being in the euro and by being able to develop our own policy responses. This coalition Government have no plans to enter the euro and are not making any preparations to do so at any future date.

[Lord Pearson of Rannoch]

Will the noble Lord go further and agree that, if the euro had never been invented, the currency markets and the world economy would not be in the trouble that they are?

[Lord Sassoon]

No, I would not want to go that far.

EU: Budget

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 10th January 2011 Lords Chamber

[Lord Sassoon]

My Lords, I am grateful to my noble friend for drawing attention to a clearly unsatisfactory situation. Year after year, the European accounts cannot get a clean audit opinion. However, it is the Government’s view that the way forward is not to press for treaty changes but to try to make sure that the whole system of accounting is made simpler and clarified. It should concentrate on what is important, and the capabilities of both the European Commission and other agencies—whether at the European level or, particularly, within member states—to manage the money should be enhanced so that we get out of an appalling situation that we do not want to see continue. However, treaty change is not the appropriate vehicle.

[Lord Pearson of Rannoch]

My Lords, can the Minister think of a better word than “grotesque” to describe the situation whereby the overall supervision of our priceless financial services has been passed to an organisation that, as he has mentioned, has been incapable of getting its own accounts signed off by its internal auditors for 16 years?

[Lord Sassoon]

My Lords, I said that the situation in which we find ourselves, with the European accounts not getting a clean audit opinion, is completely unacceptable. The connection between that and the regulation of financial services in Europe is somewhat tenuous. We should focus on ways of improving the budget situation. My right honourable friend the Prime Minister has already taken steps, both on this year’s budget and by talking about what we expect from the financial framework for the next seven years of the budget. Those are the ways in which we have to move forward determinedly.

Loans to Ireland Bill

Debate between Lord Pearson of Rannoch and Lord Sassoon

Tuesday 21st December 2010 Lords Chamber

[Lord Sassoon]

My Lords, it has been an interesting debate and I am grateful for the contributions. The noble Lord, Lord Davies, referred to the range of contributions made by noble Lords but I think that there has been some polarisation: on one pole, a noble Lord stands in rather lonely isolation, whereas most of the rest of the speakers have been closer to a dramatically different pole.

[Lord Pearson of Rannoch]

The Minister is very generous, but is he aware that the majority of the British people now wish to leave the European Union?

[Lord Sassoon]

My Lords, I was talking about where Members of the House stood on the Bill, which is where I ought to concentrate if the noble Lord will permit me.

I began to feel grateful to the noble Lord, Lord Davies of Oldham, when he started his response to the debate; I thought that he was going to relieve me of some of my responsibilities. However, his comments then turned in a different direction. He went into an analysis of the UK’s economic challenges—an essay that I do not quite share with him—and then he asked some questions. I shall attempt to respond to his questions and to those of other noble Lords.

The starting point, clearly, is that over the past two years Ireland has faced a series of extraordinarily difficult economic and financial challenges which have resulted in the country having debts of more than 90 per cent of its national income, high unemployment and low levels of growth—and the Irish economy, of course, remains on the brink.

The noble Lord, Lord McFall of Alcluith, reminded us of the centrality of the Irish banking situation to the Irish crisis and how the Irish banks became increasingly reliant on central bank funding. In his analysis, the noble Lord, Lord Pearson of Rannoch, referred to trading but made no mention of the interconnectedness of our two banking systems, which is central to the Irish problem and to why it is so important to the UK that we should contribute to finding a solution.

In contrast to Britain’s situation, Ireland’s credit rating remains under threat and its economy continues to struggle. The package we are discussing today is designed to contribute towards Ireland’s solution to its problem. It starts by contributing to the recapitalisation of Ireland’s banks; sets up a contingency reserve to deal with any future problems; and covers the current shortfall in the Irish budget. My noble friend Lord Tugendhat quite rightly questioned whether Ireland will grow sufficiently out of its problems. However, I remind noble Lords that the IMF has been central to the construction of the package and, from its wide experience of similar situations, it understands the importance of growth in an economy such as Ireland’s. I recommend to noble Lords the IMF’s interesting, well written and cogent analysis of the reasons for Ireland getting into this situation, and the logic for the construction of the package which is central to putting the Irish economy back on its feet.

The Bill gives the Treasury the statutory authority to deliver the UK’s bilateral contribution to the package. In this way, the UK will be ready in the new year to help one of our closest international partners in its hour of need. I was particularly grateful to the noble Lord, Lord Bew, and to my noble friends Lord Cope of Berkeley and Lord Tugendhat for pointing out the good will that has been created in Ireland by our response. We are doing this because it is in the economic interests of the UK to do so; nevertheless, it is good that we are doing it for a close friend. The noble Lord, Lord Bew, succinctly put the matter into its Irish historical context. I very much take his point that we need to think about how we build on the good will that has now been created. That point was indirectly touched on by the noble Lord, Lord McFall. It sits somewhat at odds with the stance taken by the noble Lord, Lord Liddle, who painted a picture that I do not recognise. He tried to paint us into an “our problems, their problems” situation. I thought that my noble friend Lord Tugendhat, who has deep and distinguished European experience and contributions to draw on, painted a much more nuanced and balanced picture. Of course, we are at the centre of the European debate. We are engaged with our European partners, not least for the reason that my noble friend gave: that we are one of the largest economies in Europe. Whether it is leading the way on bank stress tests and getting Europe to follow where the UK started on short-term stabilisation, or looking at the other end of the range of issues that needs now to be considered—for example, questions about structural reform programmes, the Europe 2020 vision and the lessons of this crisis—the UK is absolutely at the centre of the discussions.

--- Later in debate ---

[Lord Sassoon]

Indeed, my Lords, the money advanced to Ireland needs to be funded, but it is precisely because we have stabilised the fiscal position and secured the UK’s AAA credit rating that this matter is not a cause for particular concern.

I have already said why the Government believe that it is right that we should not be part of a permanent bailout mechanism—indeed, this is recognised in the recent Council conclusions. My noble friend Lord Newby asked about the process for adopting the treaty amendment that will be necessary. Parliament must of course give its approval to any treaty change that is agreed by member states, and ratification in the UK will be subject to the terms of the EU Bill that we are bringing forward. A treaty change will be subject to primary legislation. Since there is no question of transfer of competences in this case, the question of a referendum does not arise.

[Lord Pearson of Rannoch]

I do not know whether the Minister will come to some of my questions later, but this might be a convenient point to remind him that the amendment in fact gives the Prime Minister the opportunity to fulfil his promise that, if there were to be any treaty changes, he would use them to repatriate powers, particularly social and labour policy. Why does he not do that?

[Lord Sassoon]

The position is as I have explained it. There is no question of change of competencies in this case and therefore no referendum is required, but it will be the subject of primary legislation. This is not the time, if the noble Lord will permit me to say so, to start talking about other things that may or not may not be done in our relationship with Europe. We are talking about the Loans to Ireland Bill and its consequences and the position is completely clear. If the noble Lord would like me to give way, it will only eat into the time to answer his questions and other points that noble Lords have made. I am grateful to him.

I will come to his points immediately. The noble Lord, Lord Pearson, questioned the legality of this operation. The first thing that I hope we are completely clear about is that the bilateral loan is being made under domestic UK legislation. That is why we are here today. Provided that your Lordships see fit to give this Bill a clean passage, the question of the legality of this loan will not arise.

If the noble Lord was also, as I suspect he was, harking back to the question of the so-called no-bailout provision in Article 122(2) and the creation of the €60 billion fund, that was agreed by the previous Government. We said at the time that we did not approve of the use of this provision, which was originally intended for natural disasters, to create this mechanism. But it was, and we are where we are. The critical thing is that the current coalition Government have a clear commitment that when in 2013 the new mechanism is put in place this will fall away and not be used again. The question of illegality does not arise. It may be regrettable, but the position is legal.

[Lord Pearson of Rannoch]

My Lords, the noble Lord is being a little unfair to the previous Government. Surely, the decision was taken under Article 122(2) which is by qualified majority vote. That is the very reason the Eurocrats chose the clause that allows mutual support in the event of natural disasters to pass this Act. Through our membership of the European Union and the terms of the treaties that we have signed, there was nothing that the previous Government could do about it. I asked the Minister whether he agreed with the French Finance Minister who said that the whole bailout process is illegal.

[Lord Sassoon]

The noble Lord is possibly putting a spin on Madame Lagarde’s words that she would not entirely accept. If he wished to correspond with her I am sure she would explain her position. All I can do is explain the Government's position. I was not trying to be unfair to the previous Government but merely stating the facts of the situation as to when the €60 billion bailout fund was agreed. Yes, I accept that if the UK had opposed it, it would have been a matter dealt with under qualified majority voting.

I will spend one minute responding to points made by the noble Lord, Lord Davies of Oldham. I am grateful to him for being clear about the Official Opposition’s support for the Bill. He asked about the amount of the loan and why, if we could devote this amount of money to Ireland, we could not devote it to other causes. He quoted one possible use of funds. As I explained, the loan to Ireland does not affect the fiscal position. We are able to make it without in any way affecting the fiscal position. If it did affect it, we might need to look for other savings, but we are in a position that that is fortunately not required.

The noble Lord mentioned the global dimension. We have talked a lot about the need for the UK to be at the heart of the European debate on this. I completely agree that the global dimension is an important one. We have heard about the importance of global growth and we will continue to engage with the G20 and the other international forums which will reinforce the ongoing drive to make sure that we learn all the lessons on fiscal and financial stability.

It has been an interesting debate and it is understandable, given the size of the proposed package, that the importance of what we are discussing to Ireland, to our economy and to the wider European context has been fully debated. The financial crisis has shown just how closely linked the economies of Europe and the world have become. In times of prosperity we reap the rewards but in times of hardship, one nation's problems can quickly extend beyond its own borders. That is why we must act now and early to restore stability to Ireland’s economy. That is why we must be prepared and have been prepared to take the necessary steps including through the Bill. It is good for the recovery and good for growth and I ask the House to give the Bill a Second Reading.

[Lord Pearson of Rannoch]

Before the noble Lord sits down, there was one other important question that I asked him and I have asked it also in a Question for Written Answer. Have the Government made any estimation of the cost of Ireland going back to the punt, and if not will they do so?

[Lord Sassoon]

No and no.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Ireland: Financial Assistance

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 22nd November 2010 Lords Chamber

[Lord Sassoon]

My Lords, any bilateral loan, as my right honourable friend the Chancellor has said, will require primary legislation. So it will go through the normal processes, including those of this House. It is in the UK’s interest to ensure that there is a strong eurozone. The present difficulties have brought to the attention of eurozone members—and of those of us who wish to see a strong zone but who are not in it—the fact that there are a number of defects in the architecture, of which the need for a permanent bail-out arrangement is one. We will work constructively with our partners in Europe to ensure that the eurozone is better able in future to withstand any buffeting of individual economies such as we are seeing at the moment.

[Lord Pearson of Rannoch]

My Lords, have Her Majesty’s Government yet understood that the euro was always designed for disaster? Do they not see that the longer the political class props it up, with its single interest and exchange rates and its lack of a federal budget, the greater and more ruinous will be the crash when it comes? Are they also beginning to get an inkling—just an inkling—that, behind the euro, the project of European integration is also designed for disaster, as I have often pointed out in your Lordships' House?

To be constructive, instead of throwing billions upon billions of good money after bad, why do they not spend a fraction of it on returning their currency to the PIIGS, Portugal, Ireland, Italy, Greece and Spain? Would that not be just one small step away from the insanity that is the EU?

[Lord Sassoon]

It is always good to have the noble Lord with us on these occasions to share with us his big picture vision, even if it is not one that I or the Government share. We are where we are with the eurozone at the moment, and we must be constructive partners to make it work. It is clearly regrettable that articles of the European Union treaty, such as Article 122, which should have been used for such things as natural disasters, has been enabled to be used for a mechanism in which the UK was committed to be a contributor by the previous Government. There are certain things that we must get straight going forward so that the treaty is used for the purposes for which it was intended. There are a number of lessons, to which I have referred, but I repeat that it is absolutely in our interest to see a strong eurozone because, among other things, that is where 40 per cent of the UK's exports go.

EU: Membership

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 8th November 2010 Lords Chamber

[Lord Pearson of Rannoch]

To ask Her Majesty’s Government what is their latest estimate of the net cost to the United Kingdom of membership of the European Union.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the UK's net payment to the European Union budget is projected to increase from £3.8 billion in 2009-10 to £8.6 billion in 2014-15. The main reasons are the increase in the size of the budget and the disapplication of the abatement to non-agricultural spending in the new member states. Both were signed up by the previous Government for 2007-13. We are very concerned about those growing contributions, and we are working hard to moderate them.

[Lord Pearson of Rannoch]

My Lords, I am grateful to the noble Lord for his reply, which does not accord with the Treasury's spending review in October, which reveals that the net cash we are sending down the drain in Brussels this year is £8.3 billion, or £23 million a day, or the salaries of 750 nurses every day. Will the noble Lord confirm the other ruinous costs of our EU membership, which the Taxpayers’ Alliance has given as more than £100 billion a year? Also, what conceivable benefit do the British people get out of our EU membership? Do not the Government yet understand that we would create—

[Lord Pearson of Rannoch]

This is my second question. Do not the Government yet understand that we would create a great many jobs and be very much better off out of it?

[Lord Sassoon]

Now that the noble Lord has given up the strains of office of leading a party, we should allow him to be a bit more expansive—this afternoon, at least.

Of course, if we look at the wider benefits of EU membership, we can see that the UK gets much more out of it than it puts in, including in better access for British companies, whatever their size, to EU markets, cheaper prices and greater choice on our high street, more foreign investment, and a stronger voice for the EU in co-operation with countries such as India and China. The benefit of free trade with the EU alone has been estimated to boost GDP by more than 2 per cent—which, for the UK, would equate to benefits of about £25 billion to £30 billion each year.

Debt Management Office

Debate between Lord Pearson of Rannoch and Lord Sassoon

Tuesday 20th July 2010 Lords Chamber

[Lord Sassoon]

My Lords, we consider carefully each year and publish transparently the mandates for the Debt Management Office, but consider in that context the remit that we give to NS&I. Its essential task is to contribute in a cost-effective manner to debt raising. It has to look against the targets for debt raising, which we give it, at the appropriate product set that it offers to the public. It is in that context that it periodically withdraws or introduces new products.

[Lord Pearson of Rannoch]

My Lords, do the Government agree with the Written Answer of the previous Government on 21 July 2009 to the effect that overall supervision of all our financial services is to be vested in the European Union? Which category does this debt management fall under? Is it day-to-day supervision or will it be controlled by the overall supervision of all our financial services which we have passed to Brussels?

[Lord Sassoon]

My Lords, I do not recollect the previous Government’s Answer to that Question, but I would be surprised if they gave the Answer that we have just heard because supervision of our financial institutions is not being transferred to Brussels under any current proposal.

EU: Financial Assistance to Member States

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 19th July 2010 Lords Chamber

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, at the emergency ECOFIN meeting on 9 May, EU Finance Ministers agreed that up to €60 billion of emergency finance can be provided to any EU member state in accordance with Article 122(2) of the EU treaty. At the same time, euro-area Finance Ministers agreed a €440-billion package of assistance to be provided through a special purpose vehicle. Both these actions are consistent with Article 125 of the treaty.

[Lord Pearson of Rannoch]

My Lords, I am grateful to the noble Lord for that reply, which does not square with the Government’s Answer of 14 June when they agreed that no member state should be allowed to bail out another. Are not the proposed bailouts yet another example in a long line of examples of Brussels riding roughshod over its own legislation? Going slightly deeper, does not history teach us that trouble lies ahead when a regime feels free to break its own laws with impunity, when it is supported by a puppet court, and when its people are powerless to get rid of it? Is that not exactly what we now have with the European Union?

[Lord Sassoon]

My Lords, I fear that I will not be able to persuade the noble Lord, Lord Pearson of Rannoch, of what I am going to say. However, there is no question of any bailout. The one thing I agree with him on is that Article 125 does indeed rule out any bailout. However, no bailout has been proposed or implemented under Article 122(2) or any other article because what have been proposed are loans, which are fully permitted under Article 125.

Wealth

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 5th July 2010 Lords Chamber

[Lord Sassoon]

I suspect that it would not register significantly on the data.

[Lord Pearson of Rannoch]

My Lords, whatever the views of the Benches beside me and opposite me, does the Minister not agree that in socialist societies the differential is very much sharper than in democratic and capitalist societies? Does he, for instance, recall that in the Soviet Union some 95 per cent of the wealth and influence was controlled by less than 2 per cent of the population?

[Lord Sassoon]

My Lords, I have been looking for international comparison data, which are very hard to come by. I certainly do not know of any reliable statistics for the former Soviet Union. In the latest data of which I am aware, which is an Economic Policy Research Institute survey in 2000, the USA has the top 10 per cent of households earning 69.8 per cent of wealth, France is on 61 per cent, the UK on 56 per cent, Germany on 44 per cent and Japan on 39.3 per cent.

Government: Savings

Debate between Lord Pearson of Rannoch and Lord Sassoon

Thursday 24th June 2010 Lords Chamber

[Lord Sassoon]

My Lords, I thank my noble friend for that; we will indeed look right across government in the way that he suggested. The definition of what constitutes admin costs will itself be considered in the spending review and reported at that time.

[Lord Pearson of Rannoch]

My Lords, did the noble Lord see the recent article in the Daily Telegraph which estimates that up to 2,000 Eurocrats are paid more than the Prime Minister? Why do we go on sending some £8 billion in cash every year to support these people, who then go on to inflict such ruinous over-regulation on our economy?

Economy: Eurozone

Debate between Lord Pearson of Rannoch and Lord Sassoon

Monday 21st June 2010 Lords Chamber

[Lord Pearson of Rannoch]

My Lords, does the noble Lord agree that a good way in which to protect the British economy would be to refuse to underwrite massive sums for Brussels, such as the £8 billion mentioned by his noble friend Lord De Mauley on 8 June, which are illegal under the treaties? How many billions are we going to be exposed to through the illegal breach of Article 125, which forbids member states to bail out others?

[Lord Sassoon]

I thank the noble Lord for his questions. First, to be clear, it is the view of the UK Government that no illegal action has been taken under Article 125 or any of the other relevant articles. On the UK’s exposure, we have not as a country participated in the €440 billion special purpose vehicle for assistance. We do, however, participate in the €60 billion finance facility, which is available to any member state under Article 122.2 and which we think strikes an appropriate balance between the eurozone taking primary responsibility for stabilisation within the eurozone and the important part that we have to play as part of the wider EU 27. For completeness, we participate in the IMF standby facilities.