Eurozone Financial Assistance

Debate between Jim Shannon and Ian Davidson

Tuesday 24th May 2011 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I rise to support the motion before the House and to add some comments to the debate. I want to give a couple of examples—fishermen and the farming industry—where the EU is creating more hassle than can be justified. I am of the school of thought that we should make the best of a bad job, and on many occasions we have to do that. The EU, along with the way in which it is run, is most certainly a bad job, yet at present we are in it whether we want it or not. It therefore falls on this House, MEPs and another place to do our best to hold the EU to account as far as possible for the events that take place over in Brussels. We have an opportunity today to debate that and vote on it.

It is clear that the European financial stabilisation mechanism is not fit for purpose; owing to this, the UK could be held liable as a member state. On 9 May 2010, the European financial stability facility was created, and it is a special purpose vehicle agreed by 16 members of the eurozone and aimed at preserving financial stability in Europe by providing financial assistance to eurozone states in economic difficulty. Thus far, we are not at all involved, but no to the euro meant no to the EFSF. The tricky part came with the notion that the facility may be combined with loans of up to €60 billion from the European financial stabilisation mechanism, which is again reliant on funds raised by the European Commission using the EU budget as collateral, and up to €250 billion from the IMF, all to secure a safety net of €750 billion.

If there is no financial operation in activity, the EFSF would close down after three years, on 30 June 2013. If there is a financial operation in activity—which of course there is—the facility would exist until its last obligation had been fully repaid. There has indeed been activity, and a good deal of it involving the EFSM, despite the fact that it should not have been involved to the extent that it had an equal if not greater share of the bail-outs. The purpose of the European financial stabilisation mechanism is to provide an emergency funding programme that is reliant on funds raised on the financial markets and guaranteed by the European Commission using the European Union budget as collateral. I want to give some examples of where things have gone pear-shaped, to use that terminology.

It seems abundantly clear that, as a non-eurozone member, we can be held accountable only for the EFSM, yet for some inexplicable reason it was this funding that bailed Ireland out—to the tune of €5 billion—as opposed to the eurozone funding, which should have borne the brunt. We are neighbours of Ireland, and I do not wish to be harsh. Of course we want to help out where we can, as a healthy Irish economy could benefit the Northern Ireland economy, owing to the shared land border. However, it is hard to grow this sense of neighbourliness when we see the fund enabling Ireland to undercut us on corporation tax, which subsequently encourages business investment in the Republic as opposed to Northern Ireland, or when we see that it has enabled fuel duty to be reduced, which has also taken flight business away from the Province. So, we bail them out and then they use that to our disadvantage. Why should we doubly lose out—through access to European funds, along with increased competition for our business in Northern Ireland within the United Kingdom—when the eurozone fund should have been responsible for bailing Ireland out all along?

[Mr Davidson]

That point is of significance to Scotland as well, because the pressure from Northern Ireland to reduce its corporation tax to compete with the Irish Republic is being replicated in Scotland. Does the hon. Gentleman have any idea why this Government are using British taxpayers’ money to fund an opportunity for the Irish Republic to undercut us on corporation tax in that way and thereby cannibalise British revenues?

[Jim Shannon]

The hon. Gentleman makes an appropriate intervention. We in Northern Ireland certainly do bear the brunt of that, and we feel the pain more than most, as does Scotland. Perhaps when the Minister responds we will get an idea of exactly why that has happened.

The second example is from Iceland—there is more than one cloud hanging over Iceland, by the way—and the second referendum there. Iceland rejected a proposed deal to repay €4 billion that Britain and Holland spent in 2008 to reimburse savers hit when Iceland’s banks collapsed. Meanwhile, I am hearing complaints from my constituents about the amount of fish that fishermen can catch and the number of days that they can work being restricted by EU legislation, as opposed to the Icelandic raiders—they are certainly not an ice hockey team—who are sweeping in, despite Euro-protests, and fishing mackerel that belong to our fishermen. Those are just two simple examples of the failure of the bail-out system in Europe. It is passed the time that this be brought to a head and we ensure fairness for all in Europe.

The hon. Member for Rochester and Strood (Mark Reckless) has stated that the legality of the EFSM is called into question by the current wording of the treaties, which must be changed accordingly. That is exactly the issue that we are trying to address. Therefore, the answer is very clear: use the upcoming meeting of the Council of Ministers or the European Council to vote against the continued use of the EFSM unless a eurozone-only arrangement that relieves the UK of liability under the EFSM has been agreed.

For far too long we have slavishly followed the dictates of Europe, throwing pound after pound into that deep hole that is Brussels and awaiting some kind of recompense for doing things the right way. For too long we have watched other countries prosper—and not too far away from us, either—with bail-out funding, while we cut funding to schools, hospitals and infrastructure in order to remain solvent and claw our way back to a sound financial footing. Everyone in the Chamber today will be able to give examples of that from their constituencies. For too long we have paid in while watching our farmers and fishermen flounder under the weight of European dictates, at the same time as we watch other nations flout the very same rules that our officials seem to have an almost evangelical zeal in enforcing. Indeed, we have been fined £60 million in Northern Ireland for mistakes in bureaucracy and forms that have been filled in.

We need to assert ourselves by saying to the EU that we will no longer be Europe’s nodding dog, making do with a pat on the head every now and again, as if that is okay. We more than pay our way. Others must be held to the dictates that we adhere to. That should start with the matter of this funding and how it is used. I fully support the motion and urge every Member here today—those who embrace Europe and those who oppose it alike—to state that from now on we will make a better job of what is currently a bad job and demand our rights as a member state, beginning with the right to exclude ourselves from the euro without paying for it through the back door.