Loans to Ireland Bill

Lindsay Hoyle Excerpts

Wednesday 15th December 2010 Commons Chamber

[Mr Cash]

I beg to move amendment 3, page 1, line 4, at end insert

‘other than a loan by virtue of any provision by or under the European Communities Act 1972’.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 7, page 1, line 7, at end insert—

‘(3A) Any loans made under this Act, and any repayment of principal or payment of interest received thereunder, shall be denominated in sterling.’.

Amendment 4, page 1, leave out lines 8 to 18.

Amendment 6, page 1, line 18, at end insert—

‘(7A) Before determining the interest to be charged on any payments under this Act, the Treasury must specify the rate of interest by order; and the Treasury may not make such an order unless—

(a) the House of Commons has determined by resolution the rate of interest to be charged; and

(b) the order provides for that specified rate to be charged.’.

Amendment 8, page 1, line 20, at end insert—

‘(8A) All loans made under this Act shall be repaid by 8 December 2040.’.

Amendment 10, page 1, line 20, at end insert—

‘(8A) Before any loan or binding offer of a loan is made, or guarantee given, under this section, the relevant agreement must be laid before, and approved by a resolution of, the House of Commons.’.

Clause stand part.

[Mr Cash]

I have just abstained on Second Reading for one simple reason. I had intended to vote for it, but I remain gravely dissatisfied by the answer that I received from the Chancellor regarding the increase in the amount specified in clause 1. I do not want in any way to misrepresent what he said, but as I understood it, it was that that was all right because it was about exchange rates. However, anybody who examines clause 1 carefully will notice that subsection (4) states:

“The Treasury may by order made by statutory instrument substitute a greater amount for the amount for the time being specified in subsection (3)”,

which is £3.25 billion.

The next two provisions simply determine whether any increase will be subject to affirmative or negative resolution. An order would be made under the negative resolution only if the increase is to do with exchange rates, but I can see nothing to say that an increase under subsection (4) would be affected by subsequent provisions. I was bound to take great exception to that. It is a serious matter, because we simply do not know what the greater amount would be. We are totally exposed, subject only to affirmative resolution, which cannot be amended. Such a measure would simply go through on a whipped vote, just as the rest of the Bill doubtless will. That is why I abstained on Second Reading.

Amendment 3 addresses the definition of “Irish loan”. I was staggered when I looked carefully at the Bill, because clause 1(2) states that “Irish loan” means simply

“a loan to Ireland by the United Kingdom.”

The background is the recent debates on economic governance, and the origins of the European financial stability mechanism and the alternative eurozone facility, which as someone pointed out is as much as €440 billion, which is easily enough to cope with the Irish situation. There is a very close interconnect at all points between the so-called bilateral loan proposed in the Bill and the mechanism that I described.

The difficulty is that there is an overall determination to do as much as possible by way of integrating with Europe when it is quite obvious to anybody that this is the time for us not only to step back, but to desegregate from the European venture. I believe very strongly that the technique that is consistently employed in all spheres of activity is to say, “We don’t like what goes on in the EU, but we can just go along with it. Alternatively, to satisfy the Eurosceptics or Eurorealists, as they prefer to be called, we can make parallel arrangements along the lines of what we would have done if we were in the eurozone.”

The research paper helpfully supplied by the Library states:

“It is worth noting that the bilateral element”—

assuming that that is what the Bill is—

“of the UK’s support is broadly equivalent to what the UK would have provided if it were part of the eurozone-only EFSF.”

In other words, we would have provided the loan anyway. The Minister may well say that that is not his intention, but that is what Library researchers believe, and they are often right.