Finance Ministers’ Meeting (Ireland)

Peter Bone Excerpts

Wednesday 17th November 2010 Commons Chamber

[Mr Peter Bone (Wellingborough) (Con)]

(Urgent Question): To ask the Chancellor of the Exchequer whether he will make a statement on the Government’s position about the proposed financial rescue package for Ireland.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I am grateful for this opportunity to make a statement to the House about Ireland.

The House will understand that the Chancellor is currently in Brussels at the meeting of the Council of EU Finance Ministers. I understand that hon. Members are concerned about the events that have unfolded.

Ireland has been facing difficult economic and banking challenges for some time, and as a member of the euro area its ability to use policy to respond to economic shocks is less flexible than our own. As a result, there are ongoing market concerns about Ireland’s economic and financial resilience.

Let us be clear: there has been no formal request for assistance from Ireland, or for that matter from any other member state. I hope the House will understand that it would be inappropriate for me to engage in any speculation on what might happen in Ireland, given that it has made no request for assistance. It is not for me to say whether Ireland should request assistance, just as I would not tell it how to run any part of its economy. Its large financial institutions have obviously got themselves into difficultly, and we very much hope it will be able to resolve those pressures.

Ireland is one of our biggest export markets. We have very close economic ties with it and, as the Chancellor said this morning, it is in Britain’s national interest that the Irish economy is successful, so we stand ready to support Ireland in the steps that it needs to take to bring about stability. I am sure that our fellow EU member states will share that sentiment, and I assure the House that we will keep it informed of developments.

[Mr Bone]

I thank the Minister for his response. At a time when the United Kingdom is already contributing extra funds to the European Union—over the next five years our net contribution will be £41 billion, an increase of more than £21 billion compared with the past five years—and when we are making drastic cuts in the UK’s economy, does he think it is acceptable that any further funds should be committed to the EU?

The coalition Government have made it clear that we will not join the euro during this Parliament, arguing that the euro, with its single interest rate but diverse economies, cannot work. Will the Minister confirm that we will not be joining the euro?

The Government have also made it clear that the UK will not support the euro. Will the Minister therefore rule out the UK participating in any bail-out of the Irish economy? Will he also confirm that the €440 billion special-purpose vehicle facility—a voluntary intergovernmental agreement between eurozone countries —should be used for any such bail-out?

Does the Minister further agree that the use of the stabilisation mechanism, which the United Kingdom guarantees up to £8 billion, was not intended to be used to bail out eurozone countries facing financial pressure? Finally, does he agree that what is required from the EU is support for member states’ policies when, like Ireland, they are trying to do the right thing? Instead, the EU has undermined Ireland and created a crisis.

[Mr Hoban]

May I first reassure my hon. Friend that it is not the Government’s intention to join the euro during this Parliament? I am not entirely sure what the Opposition’s view is, but we have ruled that out.

My hon. Friend mentions the two mechanisms that are available for stabilisation. The stabilisation facility is purely for eurozone member states, outside the auspices of the current treaties and a bilateral, Government-to-Government arrangement. The mechanism that he refers to is available to all members of the European Union. The previous Government and the previous Chancellor decided to join it in the days prior to the formation of the current Government, and I believe that they need to be held to account for that decision.