Loans to Ireland Bill

Lord McFall of Alcluith Excerpts

Tuesday 21st December 2010 Lords Chamber

[Lord McFall of Alcluith]

My Lords, I commend the Government for this loan to Ireland initiative and I commend in particular the speech of the noble Lord, Lord Bew, which emphasised the social relationships. I come from Dumbarton, which has a very big Irish population. Indeed, my own family is part of the Irish diaspora. For many years, we have had very solid social contacts, and there is a part of my former constituency that is known as “Little Donegal”. When the 2001 election was put off until June due to the foot and mouth outbreak, I was advised to go and knock on a number of doors in Donegal to shore up my support, but I felt that my majority was big enough that I did not have to cross the Irish Sea, which proved to be the case. So these social contacts are very important. There have been many fine Irish men and women living in my community for many years, a lot of whom fought with the British Army in the Second World War. They adapted to and assimilated the culture of the UK, notwithstanding the problems existing at a wider level between Ireland and the United Kingdom.

In its latest manifestation, we see the concept of a private debt crisis being transferred to a sovereign debt crisis. To repeat a phrase that has been used a lot in the other place, we are all in this together. That is because what is happening in Ireland affects every other country in the EU, including ourselves here in the UK. The situation is that the banks in Ireland have brought that country to the verge of bankruptcy. The tensions in Ireland that were mentioned earlier have been experienced in other countries. Ireland itself is contributing €17.5 billion from its pension funds to the very important €67 billion bailout, so the people of Ireland are already saying, “It is our money. We are contributing to this. The problem started off in the banks, but as a result of that situation, it has ended up on the streets”.

We all have a responsibility to ensure that we manage this economic process well, taking account of the social instabilities, so that we end up with a sound economic system and a stable social system. As was said earlier, there are good reasons for the UK to provide the loan, not least of which is the fact that Ireland is a major trading partner and that UK banks are exposed in Ireland. Only last week, Lloyds and HBOS declared a £4.3 billion loss on the banking group’s Irish loans. Lloyds said that it had sufficient capital to withstand the loss, but that situation is an illustration of the interdependence that exists between the UK and the Republic of Ireland.

As a former Minister for Northern Ireland, I am very much aware of the border between Northern Ireland and the Republic—it is so porous that it really is not a border. I well remember chairing an inquiry into the euro in 2002, when I chaired the Treasury Select Committee. One of our visits was to Newry, where the currency in use included the euro because people were travelling there from across the border. That interlink between Northern Ireland and the Republic should make certain that we provide a friend in need with a loan.

If instead of doing that we were to sit on our hands, economic stagnation would take place. We need a strong Europe if we are to make the most of our competitive exchange rate. That is what the Bank of England said. The loan makes historical, economic and social sense, so I commend the Bill to the House.