European Financial Stability Mechanism

Lord Harrison Excerpts

Thursday 12th May 2011 Lords Chamber

[Lord Sassoon]

My Lords, we inherited the UK’s participation in the European financial stability mechanism from the previous Government. The decision was made between the date of the general election and the change of Government. We inherited that position. We have taken rapid action, and reached agreement at the European Council in December 2010 that the current mechanism will be replaced by a permanent mechanism by 2013 at the very latest, and that the UK will not participate in it. It is great to hear that the eurozone leaders, who the noble Lord quoted, are completely committed—as we understand they are—to supporting the eurozone. That is for them, and the UK will not be part of that future mechanism.

[Lord Harrison]

My Lords—

[Lord Lamont of Lerwick]

My Lords—

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[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.

[Lord Harrison]

Once again, the Minister is providing inaccurate information. The EFSM, to which we contribute through membership of the IMF, and the ESM, which we will contribute to until 2013, will be conflated into the new European stability mechanism, which we will still be funding through our membership of the IMF. Will he make that very clear?

[Lord Sassoon]

The position as set out in the decision of the European Council is completely clear; it is that the new permanent mechanism will replace the current one. The current mechanism will cease to operate and the new permanent mechanism will deal with any matters that might arise after it comes into operation.