Ireland: Financial Assistance

Lord Higgins Excerpts

Monday 22nd November 2010 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend for his questions. In response to his first observation, I point out that the Government do not accept the general principle that we should participate alongside eurozone members in bailing out eurozone countries. When it comes to putting in place the permanent bailout arrangements that will be discussed in Europe in the coming months, it is the intention of the coalition Government that we should not be part of any such arrangements. The normal process should be that the eurozone is responsible for its own processes. I cannot go into any more detail of the terms of the package which is being negotiated, but my right honourable friend the Chancellor has said that he will come back to another place when he has more to report.

[Lord Higgins]

My Lords, it is very reassuring to hear what the noble Lord has just said. However, the Chancellor has made a very sound case for why we need to participate in addition to the help provided by the IMF and the European Union. When we are borrowing heavily, it is rather strange to be lending to Ireland. We shall need to look very carefully, as suggested, at the terms of the loan. The Chancellor says that the matter will be raised in another place. Will we have an opportunity to debate it in this House as well, given the expertise which exists here?

It is difficult to avoid the view that this is something of a sticking plaster, leaving a number of other issues unresolved. Ireland is still in the eurozone, and the interest rates that are determined by the European Union and the exchange rate give it very little scope. Has not the eurozone grown too large and are we not in danger of this kind of situation occurring not simply in Ireland and Greece but also in other countries? The whole system is formulated in such a way that it is not possible for members to withdraw when it might be better for them to do so, rather than get into the kind of situation that we have seen here. Despite the fact that this is clearly not something that would be welcomed in Brussels, and given that we have an interest in the matter along with those in the eurozone, should we not consider whether a more flexible arrangement is becoming essential?

[Lord Sassoon]

My Lords, any bilateral loan, as my right honourable friend the Chancellor has said, will require primary legislation. So it will go through the normal processes, including those of this House. It is in the UK’s interest to ensure that there is a strong eurozone. The present difficulties have brought to the attention of eurozone members—and of those of us who wish to see a strong zone but who are not in it—the fact that there are a number of defects in the architecture, of which the need for a permanent bail-out arrangement is one. We will work constructively with our partners in Europe to ensure that the eurozone is better able in future to withstand any buffeting of individual economies such as we are seeing at the moment.