European Union: Debts

Lord Pearson of Rannoch Excerpts

Tuesday 8th June 2010 Lords Chamber

Asked By

[Lord Pearson of Rannoch]

To ask Her Majesty’s Government whether Article 122.2 of the Treaty on the Functioning of the European Union has been or could be used to require the United Kingdom to underwrite £9.6 billion of other European Union member states’ debts.

[Lord De Mauley]

My Lords, EU finance Ministers agreed on 9 May that up to €60 billion of emergency finance can be provided to any member state in accordance with Article 122.2. Only where there are defaults on loan repayments would there be a cost to the EU budget. Member states would be liable for a share. Based on the United Kingdom’s contribution to the 2010 EU budget, the UK’s share would be approximately 13.6 per cent, or up to a maximum of around €8 billion. Euro-area finance Ministers have also agreed a €440 billion package of assistance to be provided through a special purpose vehicle. The United Kingdom has chosen not to participate in this, and there is therefore no question of any liability arising to the United Kingdom.

[Lord Pearson of Rannoch]

My Lords, I thank the Minister for that Answer, and I welcome him to his new position. However, I have to point out that this article can only be used legally to help with natural disasters, such as earthquakes and so on. Is he aware that the Eurocrats are also violating Article 125, which prohibits financial bailouts of any kind? If so, can he tell us what the sum of all this illegality is going to cost us? Secondly, since this year we have to send a further £9.7 billion in net cash to Brussels, and since the TaxPayers’ Alliance puts the cost of our overall membership at £120 billion a year, has the time not come to review that membership, starting perhaps with an independent cost-benefit analysis?

[Lord De Mauley]

My Lords, there were several questions in there. I shall first answer the noble Lord’s question about Article 125—the so-called bailout clause—which states:

“The Union shall not be liable for or assume the commitments of … governments … A Member State shall not be liable for or assume the commitments of … governments … of another Member State”.

That does not rule out member states lending each other money. The noble Lord refers to a figure of £9.6 billion. The Government do not recognise that figure. If he can give us a basis for it, we will look into it.