European Financial Stability Mechanism

Lord Davies of Oldham Excerpts

Thursday 12th May 2011 Lords Chamber

[Lord Sassoon]

My Lords, my noble friend embedded a number of questions in what was apparently one question. As to the use of the different articles, another key part of the agreement at the European Council in December 2010 was that Article 122 would unequivocally not be used in future for these purposes. Without going into the debate about whether Article 122 should ever have been used for this sort of operation, it will not be used in future—that is agreed. As to Article 125, that is used for loans for medium-term financing under things such as the balance of payments facility and quite other purposes, and that will continue. As to the UK’s participation, the new mechanism has been agreed by the Council. Its resolution is completely clear. A treaty amendment will bring in the new mechanism. That position could not be clearer. As to Portugal, my right honourable friend the Chancellor has made it completely clear that as the negotiations go forward to completion, the UK will not participate in any bilateral loan to Portugal. Ireland was a special case, and the same considerations do not apply in the case of Portugal.

[Lord Davies of Oldham]

The House will have noted that the Minister brushed aside the constitutional preamble to the Question. I have some sympathy with him on that, but will he confirm that what took place after the general election had produced an inconclusive result and during the interim period was an entirely proper action by the Chancellor of the Exchequer at the time, Alistair Darling, who sought consensus from the Conservative Party before he went to ECOFIN and subsequently had that consensus confirmed by the Government when the Economic Secretary to the Treasury, Justine Greening, confirmed it on 21 July? Will the noble Lord take the opportunity to clear that up?

[Lord Sassoon]

I am very happy to clear up the matter; I thought we had done that a week or two ago. Let me be absolutely clear. The previous Chancellor, Mr Darling, took the decision—it was still for him and the previous Government to take that decision. He consulted the Opposition. My right honourable friend the current Chancellor made it clear that he did not agree with the decision. The previous Chancellor consulted him on the course of action that was proposed and, in the words of my right honourable friend, it was for the previous Chancellor to reach that decision. The previous Chancellor reached the wrong decision. That was his decision; he made it.