Eurozone Financial Assistance

Chris Heaton-Harris Excerpts

Tuesday 24th May 2011 Commons Chamber

[Chris Heaton-Harris (Daventry) (Con)]

I beg to move an amendment, to leave out from ‘unsound’ to the end of the Question and add:

‘urges the Government to raise the issue of the EFSM at the next meeting of the Council of Ministers or the European Council; and supports any measures which would lead to an agreement for a Eurozone-only arrangement.’.

As you have made amply clear, Mr Deputy Speaker, we do not have much time. I therefore intend to confine my remarks to the subjects raised in my amendment and to the politics behind it.

The motion argues that there is no legal base for making EU money available for bail-outs. It questions the idea that the natural disasters clause can be used to justify using EU funds to pay the countries concerned. Let me say at the outset that the amendment does not touch the very important line in the original motion that states that the European Scrutiny Committee, of which I am a member,

“has stated its view that the EFSM is legally unsound.”

Let me now deal with some of the politics of today, which were observed by the hon. Member for Vauxhall (Kate Hoey).

[Mr David Nuttall (Bury North) (Con)]

Was not that line left in the motion because it is a fact—which there is no point in denying—that the European Scrutiny Committee stated that the European financial stability mechanism was legally unsound?

[Chris Heaton-Harris]

I shall come to that point directly.

Members on both sides of the House know that the Government would not have accepted the motion tabled by my hon. Friend the Member for Rochester and Strood (Mark Reckless), and that if we were to vote on the original text it would be probably be defeated, and the House would be left without a view on this matter. My amendment, which I should like to think has a good chance of being passed, would enable the House to adopt the words of the European Scrutiny Committee.

I believe that the legality of the EFSM, and indeed that of the European financial stability facility—the EFSF—has been questioned in relation to the EU treaty’s “no bail-out” clause, which states that the EU and member states

“shall not be liable for or assume the commitments of”

other member states.

[Mrs Main]

I appreciate that my hon. Friend was trying to be helpful, but his amendment seems deeply unhelpful to those who wanted the strength of the original motion to be negated, and to have been able to vote on it.

[Chris Heaton-Harris]

I will say more about the politics later in my speech. In any event, I believe that if either my amendment or the original motion is passed, the House of Commons will be the first member state Parliament to question formally the legality of the stability mechanism.

The remaining part of my amendment involves a fairly academic argument. Does any Member in the House truly believe that, with the Greek economy running out of cash, market fears that the eurozone contagion will spread and reveal itself at the heart of the Spanish and Italian economies, and the continuing problems in Ireland and Portugal, this matter was not going to be up-front and central at the next meeting of the Council of Ministers or the European Council? I should like to think that those problems are not only the first item on the agenda for such meetings, but being discussed every day throughout the Governments of Europe.

Bail-outs have become what they were always going to be: politically toxic, not only for those who provide the cash—the local election results in Bremen at the weekend underlined that—but, much more, for the Governments of the countries receiving the money, who have to introduce economic measures that are politically unpalatable to the people, as so many Spanish socialists found last weekend. Whatever senior advisers of Governments across Europe may think, the markets have already decided—and I consider it to be a matter of fact—that the Greek bail-out has not worked and will be renegotiated.

What I believe my hon. Friend for the Member Rochester and Strood is after is a vote that will prevent us from providing any more money for these bail-outs through the EFSM. Alas, although the UK could vote against any proposal presented—and I should like to think that it would—the simple fact is that because of the disastrous advice given to the former Chancellor of the Exchequer and the consequent actions that he took at meetings on 9 and 10 May last year as the previous Government were leaving office, the UK entered the mechanism. Moreover, the Council decides on these matters now, and will do so in the future, by means of qualified majority voting.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend not agree that when the Conservatives were last in office they established a firm veto in precisely this context? That veto was given away in 2001 by the Labour party, and the present Government are now being forced to implement a decision that was sneaked through by Labour in the dying days of its Government.

[Chris Heaton-Harris]

Absolutely—and let me make it perfectly clear that, thanks to what Labour did a year ago as it was leaving office, the EU cannot veto the grant of an EU loan or credit line extended via the European financial stability mechanism.

[Kate Hoey]

The hon. Gentleman can say what he likes about why we cannot do this and cannot do that, but does he not accept that the people of this country do not care which party did what? They want us to veto this now, and if we cannot do so, we should simply not pay.

[Chris Heaton-Harris]

I should love to agree with the hon. Lady on that—so I will.

[Jacob Rees-Mogg]

Is there anything to prevent us from requiring the European Court of Justice to rule on whether this use of the mechanism is legal?

[Chris Heaton-Harris]

I honestly do not think so.

In the most basic terms, voting for the original motion will not mean that we are no longer liable to contribute to bail-outs via the EFSM. Worse than that—as I have said—because the Government signalled they were not likely to accept the original motion, it would in all likelihood have fallen, and therefore, far from this House having put its foot down, it would not have had a view at all. My amendment merely recognises that reality. It does not build up false hope that we can simply stop being involved in these matters, but it does send a message to Government that I hope will be reflected in the ongoing debates on them: that this House wants there to be a eurozone-only arrangement in the future.

Too regularly in this place and elsewhere, those of us who question various aspects of our relationship with the European Union march our supporters to the top of the hill only to find that we are outnumbered and outfoxed, and are then valiantly and gloriously defeated. We need to get real.

[Richard Drax (South Dorset) (Con)]

Perhaps we are led to the top of the hill and then let down by parliamentarians who do not have the guts to stand up for their country.

--- Later in debate ---

[Chris Heaton-Harris]

My hon. Friend could, perhaps, say that, but he would obviously have to have a good 10-year track record of actually standing up for this country in a different Parliament somewhere else.

The economics of our time is proving us right. It is time we changed tactics, and time we learned from the past. Let us win the arguments we can, bank the result and push forward. I am sure that those on the Treasury Bench have noted the feeling of the House on this matter. I would like to think they understand that we expect the Government to play all the cards they are dealt in negotiations with our European partners, and I would remind them of how much cross-party support they have for their negotiations on the next EU financial framework for 2014-2020. We have a veto on that matter, and are expecting great things.

My endgame is to spare the UK the costs of these bail-outs, leaving them as a proper matter for the euroland countries. I intend to press this amendment—tabled in my name and those of more than 50 other Members—to the vote.