Loans to Ireland Bill

Debate between David T C Davies and Alan Johnson

Wednesday 15th December 2010 Commons Chamber

[Alan Johnson (Kingston upon Hull West and Hessle) (Lab)]

We will support the Bill. The more I listen to the Chancellor, the more my admiration and respect grows for his predecessor, my right hon. Friend the Member for Edinburgh South West (Mr Darling). On 8 May, my right hon. Friend negotiated arrangements under which the UK remained outside the €440 billion European financial stability facility and ensured that we did not contribute as much as a rusty old drachma to the bail-out of Greece.

[David T. C. Davies]

Will the right hon. Gentleman give way?

[Alan Johnson]

I will take interventions later.

In his statement on 22 November—repeated today—the Chancellor said that he counselled his predecessor against joining the European financial stabilisation mechanism, which was a pre-existing fund involving all 27 member states and was worth only a seventh of the larger facility. As the Chancellor said, my right hon. Friend the Member for Edinburgh South West is in his place and if he catches your eye, Mr Deputy Speaker, he can give his recollection of that conversation.

However, given that the mechanism—the smaller amount—was decided by qualified majority voting, it seems that agreeing to ensure that we stay out of the €440 billion EFSF was a good deal for our country, particularly as my right hon. Friend ensured that none of the mechanism of which we were part was used to bail out Greece. That was a good deal all round, and a lesson for our inexperienced Chancellor in the art of negotiation. Indeed, the quip going round a couple of years ago, when the collapse of the banking industry in Iceland was closely followed by what happened in Ireland, was: what is the difference between Iceland and Ireland? Answer—one letter and six months. A modern variation could be to ask, what is the difference between Darling and Osborne? Answer—five letters, six months and £6.6 billion.

--- Later in debate ---

[Alan Johnson]

I believe that the hon. Gentleman will seek to address that in his amendment to clause 3, which we will discuss later. On the specific issue, there is no doubt that the mechanism was decided by qualified majority voting. All 27 European member states were part of that. I know from experience of negotiating in Europe over many years that it is a pretty turgid process and one has to be on one’s toes. My right hon. Friend the Member for Edinburgh South West can speak for himself, but I think he got a very good deal for this country on Greece.

The Chancellor must take responsibility for the deal that he has negotiated and not try spuriously to blame his predecessor, as he did again in his evidence to the Treasury Select Committee on 8 December. He had a choice about whether the UK should contribute to the Irish rescue plan. In principle, he has made the right choice, but before us today is a hastily drawn-up Bill that does not set out the terms of the loan, the interest rate or the repayment schedule. Colleagues from all parties will want to explore and probe those matters in Committee, and we particularly want to get to our amendments on clause 2, so a goodly proportion of the time available to us this afternoon may be better spent on that. It is therefore not my intention to detain the House for long on Second Reading.

[David T. C. Davies]

Does the shadow Chancellor share my gratitude that the decision is being taken in this Chamber and not by a group of unelected bankers in Frankfurt? That is because we did not listen to Opposition Members—we have never supported joining the euro, which would have meant that the decision would not have been ours to make in the first place.

[Alan Johnson]

I always try to avoid sharing the hon. Gentleman’s pleasure. I shall come to the nature of the deal, because in debating the Bill we are discussing one element that constitutes a little more than half of the money that the UK taxpayer is putting into the deal.

The argument for treating Ireland as a special case is clear. I shall reiterate some of the points that the Chancellor made. Our two countries are intertwined in commerce, in trade, in banking, in culture and in sport. We share a language and a land border. Not only is Ireland one of our five largest export markets but, as the Chancellor said, one part of the United Kingdom—Northern Ireland—sends 40% of its exports across the border to the Republic. The situation in Ireland could cause significant damage to UK financial institutions and create instability in both sovereign and bank debt markets. The UK is Ireland’s largest creditor—we are talking about almost €112 billion—and I understand from a newspaper report last week that the Royal Bank of Scotland and Lloyds have Irish loan books worth 82% and 53% of net assets respectively.

In its report last month, the International Monetary Fund singled out Ireland to demonstrate what it called the “key underlying vulnerability” of UK banks’ exposure to foreign banks. The support programme assures the protection of senior bond holders in Irish banks from any losses, thus affording a greater level of protection to UK banks. For all of those reasons and many more, it is in this country’s interest to support this package.

I want to raise three concerns. The first, which was raised in a couple of interventions—including by the hon. Member for Stone (Mr Cash)—is the open-ended nature of the commitment. There is a distinct possibility of more money being required for Ireland after 2013, given the tendency of Irish banks to downplay the severity of their situation and the tough conditionality being applied alongside concerns about European growth. In those circumstances, should we not make it clear to our European partners that the EFSF must be used for any further financial support, rather than giving the impression that this is a well into which further buckets can be dipped?

That is particularly relevant to my second concern about the balance between the contributions made by the various mechanisms. The €440 billion EFSF—the facility— for eurozone countries only is being tapped for 4% of the total resources that eurozone countries have agreed to make available for Ireland. The smaller EFSM—the mechanism—of which we are part and to which we contribute, was not used at all for the Greek bail-out. The EFSM is offering 37.5% of its available resources for the Irish bail-out. Why was that formulation chosen and why is the total amount we are contributing double the amount that we would have had to pay if we were a eurozone country?

Identity Documents Bill

Debate between David T C Davies and Alan Johnson

Wednesday 9th June 2010 Commons Chamber

[Alan Johnson]

I will make some progress and then give way.

Of course, for the Government, as the Home Secretary said, it is conveniently symbolic to have this debate so early on in this Session of Parliament. It is a symbolic act to prove that the coalition can actually agree on something, as it certainly cannot agree on Europe, the alternative vote, or even the Human Rights Act.

It is certainly true that the Prime Minister and the Deputy Prime Minister have been consistently smug in suggesting that a simple ID card scheme will mean the end of civilisation as we know it. Not for nothing are the Prime Minister and the Deputy Prime Minister known as the self-righteous brothers, although they are bound to have lost that loving feeling before too long. The Deputy Prime Minister has a Dutch mother and a Spanish wife, so he should know that the claim that ID cards are an affront to liberty and freedom would be greeted with bemusement in Holland, Spain, France, Finland, Sweden, Italy, Switzerland, Germany and all the other countries that have managed to provide their citizens with the cards’ pragmatic advantages without becoming despotic oligarchies.

The Bill has provisions to keep the clauses of the 2006 Act that relate to false documentation, and we welcome that, but we need much more than penalties for false documents if we are to win the fight against identity fraud and illegal immigration.

[David T. C. Davies (Monmouth) (Con)]

Was it the shadow Home Secretary’s intention that it would be compulsory for everyone to have ID cards? If not, how on earth could they help to prevent terrorism, benefit fraud or anything else, given that the people who were likely to commit those acts were unlikely to apply for an ID card?

[Alan Johnson]

That is a very good point. No, it was not my intention to make the cards compulsory. Indeed, we made it absolutely plain that people could use their biometric passport as an identity document or use an ID card, which was a smaller, simpler, cheaper version. France has a voluntary ID card scheme, as do many countries in Europe that would not go to the compulsory stage, and it helps people to protect and prove their identity, which is the fundamental reason behind it. As I said, it was the right hon. Member for Haltemprice and Howden who mentioned the link with terrorism, not moi.