Loans to Ireland Bill

Peter Bone Excerpts

Wednesday 15th December 2010 Commons Chamber

[The Chancellor of the Exchequer (Mr George Osborne)]

I beg to move, That the Bill be now read a Second time.

Two weeks ago I told the House that it was my intention to ask for authority to make a bilateral loan to Ireland as part of the multinational assistance programme for that country. I said that I judged it to be in our national interest, given our country’s close economic, financial and political connections to the Irish Republic, to be ready to help, and I want to thank all parts of this House for agreeing with that judgment.

Let me directly address the question of why we are taking this legislation through today, and why we are seeking to do it rapidly. The reason is that this week we expect the International Monetary Fund board to meet and agree the assistance package, the eurozone to sign off on its contribution, and the Irish Parliament to accept the international help that is offered. Let me say this to hon. Members in reference to the previous debate. I actually have the authority to make, under common law, a loan to Ireland and to seek at a much later date retrospective authority from Parliament. I decided—[Interruption.] Let me say that I decided that that was a wholly inappropriate thing to do, and that I should come to Parliament to seek its authority before signing the loan agreement. The loan agreement may be signed at any moment.

[Mr Peter Bone (Wellingborough) (Con)]

I am grateful to the Chancellor for giving way, but has he not let the cat out of the bag? He has just said that there is no urgency, because he had the power to do this anyway. If that had been said in the previous debate, the result of the vote might been different.

[Mr Osborne]

From what I could tell from what my hon. Friend was saying in the previous debate, he thought it important to have parliamentary scrutiny. It is true that I could have issued the loan under the common-law powers available to me, and come back at a later point to seek parliamentary approval. I thought the House would prefer me to seek parliamentary approval first, before making the loan—but there we go; you can’t please everyone.

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[Mr Osborne]

As I explained to the House previously—my predecessor, the right hon. Member for Edinburgh South West (Mr Darling) is here, and might at some point want to give his own version of events—my understanding is that in the period between the general election and the formation of the Government, an emergency ECOFIN meeting was held to address the Greek situation and to provide confidence that the European Union and the eurozone stood behind other member states that were potentially in difficulty.

My predecessor ensured that we stayed out of the eurozone facility—I have acknowledged that in the House —but acquiesced in the use of article 122 of the treaty, which allowed the European Union to disburse funds when a natural disaster, such as an extreme weather event, was affecting a member state, to create a mechanism that could stand behind countries that got into difficulties. The decision on the use of that mechanism is taken by qualified majority voting, so although we could vote against its use in this situation, I did not think that that would achieve anything. I am focused, in a way that I shall describe, on trying to extricate the UK from the EU-27 mechanisms that stand behind eurozone countries. If hon. Members will bear with me, I shall talk about that later, and if people want to intervene at that point, that would be more sensible.

Let me move on to the connections between our banking sectors. Our banking sector has a considerable exposure to Ireland, but I should stress that in the opinion of the Financial Services Authority, the UK banks are sufficiently well capitalised to more than manage the impact of the situation in Ireland. For a long time now the devaluation in Irish asset values has been accounted for and priced in.

One thing is clear. It is undoubtedly in Britain’s national interest to have a growing Irish economy and a stable Irish banking system. In the judgment of both the Irish Government and the international community that was not going to come about without the assistance package we debate today. I would now like to explain to Members the principles of the Bill, and then take them through the heads of terms of the loan agreement.

The Bill has two substantive clauses. Clause 1 sets out the parameters under which the Treasury may make payments under UK loans to Ireland. As I explained earlier, the total international assistance package, including our contribution, is denominated in euros. However, we are making a bilateral loan in sterling so that Ireland bears the exchange rate risk over the coming years. Subsection (3) of the clause includes a cap on the total size of our bilateral loan. It is written on the face of the Bill that

“the aggregate amount of payments made by the Treasury by way of Irish loans...must not exceed £3,250 million”.

In other words, the £3.25 billion we originally agreed will be the maximum total size of our bilateral loan to Ireland. A sunset clause is also, in effect, built into the legislation. The period over which the loans may be offered begins on 9 December 2010, when the Bill was published, and ends on 8 December 2015.

[Mr Bone]

Subsections (4) and (5) seem to say the opposite. They seem to say that the maximum amount may increase because of differences in the exchange rate. Is that not what they mean?

[Mr Osborne]

My hon. Friend is pre-empting my speech. I shall get on and explain exactly what those two subsections mean.

As I said, there is no expectation that we will have to make further loans to Ireland in the future. Subsection (4) is intended to prevent an increase in the size of the loan, unless an order is made by statutory instrument, but because the loan is denominated in sterling, a mechanism is needed to accommodate potential changes in the exchange rate in the period between the publication of the Bill and the signing of the loan agreement—that answers my hon. Friend’s point—which could happen in a matter of days. This is not about the exchange rate risk over the coming years—that risk is borne by Ireland—but merely a mechanism to deal with the fact that we are publishing the Bill before we sign the loan agreement, for the reasons that I set out earlier.

The Bill allows the Treasury, under subsections (5) to (7), to make an order once the Bill is in force to increase the limit, as long as that is done solely to take account of exchange rate fluctuations between now and 30 days after Royal Assent, without further Parliamentary procedure.

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[Alan Johnson]

This may be news to the hon. Gentleman, but his party is in government now. As I said, my party ensured that we contributed nothing—not a penny, not a euro, not a drachma—to the Greek bailout. The Chancellor is coming before this House with a £6.6 billion contribution to Ireland, which we support, but the various aspects of the mechanism need to be explained and understood.

[Mr Bone]

The shadow Chancellor is on to something here. It is bizarre that less money is being taken from the €440 billion fund than from the €60 billion in the EFSM. Would he have encouraged the Government to vote against the use of that €60 billion?

[Alan Johnson]

We have the €60 billion fund, about which the hon. Member for Dover (Charlie Elphicke) intervened, and we have a second fund of €440 billion. I am simply pointing out—the public deserve to know this—that only 4% is coming from the larger amount and 37% from the smaller amount. I am curious about that, and we need to understand the logic of it.

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[Mr Chope]

I am grateful to my hon. Friend for his observations.

None of my constituents, particularly those in the business community, understand how or why we can justify increasing our national debt to help Ireland. The line is that the Irish are friends in need, but I remind the House that there is a strong argument to suggest that the Irish Government exacerbated the original banking crisis. When we had problems with Bradford & Bingley and Northern Rock, and our Government limited the deposit guarantee to £50,000, the Irish increased their guarantee to all deposits. That helped the run on Bradford & Bingley and Northern Rock accounts, thereby developing our banking crisis. We did not get much help from the Irish when we were in need in that situation.

We must also not lose sight of the fact that the Irish people have received enormous sums of British taxpayers’ money through our membership of the EU. We make big net contributions to the EU, and a lot of that money was subsequently pushed into Ireland, enabling the Irish people to sustain for a time a much higher standard of living.

[Mr Bone]

Will my hon. Friend confirm that our net contributions to the EU over the next five years will be £41 billion, which is £21 billion more than in the previous five years?

[Mr Chope]

I am sure that my hon. Friend is absolutely right. We are contributing to Ireland through our EU membership, so the Irish people should be very grateful.

When, on behalf of my constituents, I weigh up whether we can be pleased with how Ireland conducts its affairs, I must express renewed disappointment that Ireland caved in on the Lisbon treaty, with the consequence that this country has been landed with it.

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[Mr Peter Bone (Wellingborough) (Con)]

It is a great pleasure to follow the right hon. Member for Belfast North (Mr Dodds). He made many powerful points, especially his last one. I note that the Bill is called the Loans to Ireland Bill, not the Loans to the Irish Republic Bill. I wonder whether the Government have had some foresight, and whether some of the loans will actually be provided to Northern Ireland, to help to reduce corporation tax there. Perhaps there is some hope in that regard.

I want to start by saying that we have an excellent Chancellor of the Exchequer and a first-class Treasury team, including my hon. Friend the Financial Secretary, who has the misfortune to be at the Dispatch Box to listen to my remarks. On this particular issue, however, I think that they have got it wrong for a number of reasons. Everyone in the House wants to see the Irish Republic prosper, but the question is: which is the best way to help it? Its problem is that it is part of the euro. Government Members have always argued that the United Kingdom should not be part of the euro, because it cannot possibly work. It is not possible to have one fixed interest rate and one fixed currency covering a number of different countries. What we are witnessing is a crisis in which that problem has come to light.

If Ireland were not part of the eurozone—if it had its own currency—it could change its interest rate, but more importantly, its currency could depreciate, which would make it more expensive for exports to come into Ireland and cheaper for exports to go out. It is a market mechanism for self-righting an economic collapse, and because Ireland is part of the eurozone, it cannot do that.

I take the view that in the next few months the euro will collapse. It will not just be Ireland and Greece; it will be Spain, Portugal and possibly Italy. At that stage, it will be necessary to abandon the euro entirely or have two eurozones. If I am right in that assumption, it is a mistake to give £3.25 billion to the Irish at a time when it will do no good at all and that money will never be repaid. If we were paving the way for the Irish to have their own currency again, which would be part of the sterling area, we would be more of a help to Ireland. My argument is that we are sending the money in the wrong direction.

The second issue we have—to be fair to the shadow Chancellor, I think he was on to it—is that we do not know how the figure has been arrived at. Nobody has explained—at least, I have not heard anyone do so—why we have settled on £3.25 billion, but I think the Chancellor was arguing that that is the sort of amount we would have had to provide through the European financial stability facility if we had been part of the eurozone. Well, we are not part of the eurozone, so why should we be contributing to something that eurozone countries should be providing on their own?

[Sajid Javid]

Is my hon. Friend aware that recently the Prime Minister of Luxembourg made a proposal that the EU should issue EU-wide bonds, and does he agree that Britain should have nothing to do with such a proposal?

[Mr Bone]

Of course; I thank my hon. Friend for raising that.

I disagreed with the shadow Chancellor when he said that there were two extremes. One was to have a unified eurozone with central controls over taxation and spending. It is one option, and I accept that such a model would work, but I reject it completely. However, no one can pretend that the current system will ever work. We would just end up putting billions and billions more pounds into a system that will eventually collapse, and, in my view, that will happen earlier rather than later.

Let me return to how the €85 billion package is made up. We have €17.7 billion from the facility and €22.5 billion from the mechanism. The mechanism was designed for natural emergencies; it was never designed for this purpose, and yet we are taking more out of the mechanism, which has a total pot of €60 billion, than out of the one that has €440 billion. Why? The simple answer is that the United Kingdom has to contribute to the mechanism, but we do not contribute to the facility because it is all eurozone money. In my view we do not need to make this £3.25 billion loan; it should come entirely from the €440 billion that is available for exactly this reason. That is why the facility was set up.

I also did not follow the Chancellor’s argument when he said that because of qualified majority voting, we would not have voted against the use of the mechanism because we would have been overruled. I have to say to him that on a number of occasions I have voted on measures on which I know I will not win, but it does not mean that one should not vote that way; one should vote as one sees fit. I think on that small point the Chancellor has also made a mistake.

Many hon. Members will refer to the man on the Clapham omnibus, but in my case it is the man on the Wellingborough 46 bus, and such people make the following very simple point. My county council has announced that it will fire all its lollipop ladies and close a number of libraries, and those people say to me, “If we’re having to do that because we’re not allowed to increase the national debt, how on earth can you provide £3.25 billion to a country that is in the eurozone?” It is very difficult for me to give an answer. In fact, the answer I give is, “We shouldn’t be doing it.”

If the House divides on the Government’s proposal, I will, reluctantly, have to vote against it, not because I think the Government’s aim is wrong—because, yes, we want to have a prosperous Ireland—but because of the way this is being done and the way it is being funded. Nobody is suggesting that because we trade a lot with the United States of America, if there were a crisis there, we would suddenly lend it money. Ireland is a grown-up country. It decided to become part of the euro. The problem lies in the eurozone, and it should sort this out, not us.

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

This has been a good debate about the principles underlying the Bill, and I welcome the Opposition’s support for it.

I am sorry that the shadow Chancellor is not in his place. He made a typical speech: a couple of jokes, a few quotations and then a shaky grasp of the facts. I shall not match him on jokes, but let me give the House a couple of quotations. He talked about the views on Ireland, but let me quote a former member of Labour’s shadow Cabinet, who said:

“The whole purpose is to bring the Welsh economy up to the standards of those of other countries in Europe, so that we can follow the lead of the Irish economy and become, in a matter of 10 or 20 years, one of the most successful regional economies in Europe.”—[Official Report, 28 February 2002; Vol. 380, c. 868.]

The right hon. Member for East Ham (Stephen Timms), when he was Chief Secretary to the Treasury, said:

“The Irish economy has enjoyed a good deal of success over the past few years. The corporation tax regime has contributed to that, but there have been a number of other factors”.––[Official Report, Finance Public Bill Committee, 8 May 2007; c. 19.]

There we go: a record of Opposition Members’ hymns of praise to the Irish economy.

It struck me as remarkable, however, that the shadow Chancellor did not understand the mechanisms being used to support the Irish economy. He seemed to think that the UK would bear a higher share of the bail-out costs than other European Union members, such as France and Germany, and that they do not contribute to the IMF or to the stability mechanism. Let me make it absolutely clear to the House that the UK is contributing through the IMF, the stability mechanism and a bilateral loan. Other European countries are contributing through the IMF, the stability mechanism and, if they are members of the eurozone, the stabilisation facility.

Owing to their share of the contribution to European Union funds, Germany and France are contributing more than the UK: some 27% of the contribution is through the facility. France contributes 20% through the facility, compared with our 14%. And through the mechanism, the UK’s contribution is 14%, Germany’s 20% and France’s 17%. It is a pity that the shadow Chancellor does not understand how the package actually works. The right hon. Gentleman also seemed to deny that the euro made any contribution to the crisis facing Ireland. However, the right hon. Member for Edinburgh South West (Mr Darling), who made a very thoughtful speech about the challenges facing the European Union, punctured his view that the euro had nothing to do with it.

My hon. Friend the Member for Chichester (Mr Tyrie) asked whether we considered buying bank assets. We have in place an agreement by the Irish Government to repay our loan in full, but that could not have been guaranteed if we had sought to buy individual assets of Irish banks. He also asked whether Ireland could repay early without a penalty, and the answer is yes, but the Irish Government would have to make break payments.

The right hon. Member for Belfast North (Mr Dodds) and the hon. Member for Belfast South (Dr McDonnell) talked about the impact on the Northern Ireland economy of what is happening south of the border, and we recognise that. We recognise also that more work needs to be done to strengthen the Northern Irish economy, which is why we are in discussions with the Northern Ireland Office about the issues to do with enabling the Executive to set their own corporation tax rate. There is another part to that deal, however, because, if they have that power, they will need to bear the risk with the revenue and see a reduction in their block grant.

A number of hon. Members, including my hon. Friends the Members for Wellingborough (Mr Bone) and for Kettering (Mr Hollobone) and the hon. Member for Nottingham East (Chris Leslie), asked how we can afford to do this, given the fiscal position that we are in. Let me make it clear that we are not paying for the loan out of revenue or capital expenditure; we are going to borrow the money. The measure will not lead to a reduction in the money we can spend in my constituency or theirs. In fact, as my right hon. Friend the Chancellor said, we will end up making a small profit on the loan because of interest rate differentials. The loan will not affect how much can be spent in our constituencies, and if that is the only reason hon. Members are opposing the measure, I ask them to think again.

[Mr Bone]

I entirely agree with what my hon. Friend is saying. However, the measure will increase our debt, which is something we are trying to get down. In addition, his comments are based on the assumption that the loan will eventually be repaid.

Loans to Ireland Bill

Peter Bone Excerpts

Wednesday 15th December 2010 Commons Chamber

We therefore tabled manuscript amendment (a), which achieves the same effect as amendment 1, but more clearly.

[Mr Bone]

Does that not show that this coalition Government are willing to listen to Parliament’s views and to change their mind now and again?

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[Chris Leslie]

I do not necessarily wish to pour more congratulations on to the shoulders of the Minister—that would not be doing my job correctly—but in the spirit of Christmas I have to acknowledge, albeit begrudgingly, my appreciation of manuscript amendment (a), which the Chancellor of the Exchequer himself has tabled. I like to imagine him poring over the Order Paper, happening upon my amendment 1 and immediately thinking, “I must accept that amendment, but the drafting is not quite right,” and therefore rewriting it in his own fair hand. However, I suspect that several dozen parliamentary draftsmen and women were involved in the process. As the Minister said, the intention was indeed to ensure that when we report every six months on what is happening with the loans, we are talking not just about the aggregate amount of the payments made and the interest, or about the sums that are returned, but about some of the other dimensions.

As the Minister said, the reporting arrangements as set out in the Bill do not exclude the ability to make the reports more comprehensive. Indeed, we ought to state at this stage that we would appreciate as much data being contained in them as possible. One piece of information that I would have found useful is the remaining term of the loan, although that is a small point; given how small it is, I am grateful that the Government have conceded it. Perhaps I should regard this as a famous victory for the Opposition.

[Mr Bone]

No, for Parliament.

[Chris Leslie]

I thank the hon. Gentleman. Just at what I thought was my moment of great glee, he took it away from me. Nevertheless, I will take some satisfaction from what the Government have decided.

I was trying to listen carefully to the Minister’s statement on amendment 2. As a lone traveller trying to amend the legislation, I might have misread the wording of clause 2, but I still do not quite understand the sequences of subsection (4), which states:

“No report is required to be prepared or laid in relation to a period if—

(a) no payments…are made…

(b) no sums…are received in the period, and

(c) no amount of principal or interest in respect of an Irish loan is outstanding at the end”.

I could not see any circumstances where paragraphs (a), (b) and (c) would simultaneously apply. For example, if no amount of principal or interest were outstanding, how could there be any circumstances where, under paragraph (a), payments had been made or, under paragraph (b), sums had been received? Surely if no report is required when no amounts are outstanding, the conditions under subsections (4)(a) and (b) are redundant. Looking at the drafting of subsection (4), it would be easy to imagine the parliamentary counsel becoming entangled in an arcane discourse on ontological logic. There are several twists to the double negatives set out in the drafting.

As a layman reading subsection (4), I could not see why paragraphs (a) and (b) were necessary, when they must be concurrent with subsection (4)(c), given that (4)(c) states that there is nothing left owing, according to my reading of it. If each of the three paragraphs were alternatives, or contrasting, perhaps using the words “either” or “or”, that might make sense. They are conjoined, however, by the non-contrasting linkage “and”, suggesting that each of the three conditions must be fulfilled simultaneously, and I am not quite sure that I follow that. Perhaps the Minister needs to walk me through it one more time. I do not wish to press this matter to a vote, because I am sure that there is a higher drafting power at work here, but as I read it, I could not see any circumstances in which paragraph (c) would be true simultaneously with paragraphs (a) and (b).

In general terms the reports will be important, not least because we need to see the terms of the loan that the people of Ireland will have to repay, as well as the amounts of money that the British people will have in return for adding to our national debt. There is a whole series of other questions to which I would eventually like answers. For example, what is the aggregate amount of interest that we expect to be paid by the Irish Government, and what is the impact for us in this country?

As I have said, it is a shame that the summary of the terms of the credit facility was deposited only at the eleventh hour, and I hope that we will have another opportunity to scrutinise it at another time. For the time being, however, that was the purpose of amendment 1, and I am grateful to the Minister for his acceptance of the first amendment that we tabled.

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[Mr Hoban]

It is right that the duty to report is extinguished when there is no principal outstanding, and that is the purpose of subsections (4) and (5).

I hope that, with that explanation, hon. Members will accept manuscript amendment (a) and will not seek to press amendments 1, 5 and 2.

Manuscript amendment (a) agreed to.

Clause 2, as amended, ordered to stand part of the Bill.

Clause 3

Short title, commencement and extent

Question proposed, That the clause stand part of the Bill.

[Mr Bone]

Can the Minister answer the following question, which has been raised several times during the debate: why is the Bill called the Loans to Ireland Bill rather than the Loans to the Republic of Ireland Bill? That seems very strange, as it gives others the impression that we are lending money to Northern Ireland as well as to southern Ireland.

[Mr Hoban]

That is an interesting question, as my hon. Friend the Deputy Leader of the House knows because he also recently asked it. I draw the attention of my hon. Friend the Member for Wellingborough (Mr Bone) to clause 1(2), which defines an “Irish loan” as

“a loan to Ireland by the United Kingdom.”

Of course the United Kingdom includes Northern Ireland. Therefore, the loan is clearly to what one technically might describe as the Republic of Ireland. I am grateful to my hon. Friend for raising that point, in order to enable me to put that clarification on the record.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill, as amended, reported.

Third Reading

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[Mr Peter Bone (Wellingborough) (Con)]

It is a great pleasure to follow the hon. Member for Foyle (Mark Durkan). The Bill has, as he said, been microwaved through the House today, but the trouble with microwaved meals is that although they are quick and do a job, they are not healthy and are not of good quality. That is how I regard the Bill, but I certainly do not seek to divide the House on Third Reading. I have made it clear that I am against the Bill, but it would be wrong to claim any victory today. My remarks and those of some of my colleagues resulted in at least seven Members going through the same Lobby as me, but the Chancellor’s remarks got several hundred Members to go through the same Lobby as him, so it probably is not a good idea to divide on Third Reading.

Let me take this opportunity to congratulate the coalition’s Treasury team, who are doing an exceptional job. They are the part of the coalition that is dealing with the economic crisis and we have a collection of very good Ministers here, headed by the Chancellor. It is just my opinion that we have got things wrong on this particular measure; I am very much in the minority but at least I have made my point today.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Financial Assistance (Ireland)

Peter Bone Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr Osborne]

If it is not possible to devalue the currency, there is a more difficult route, which is to try to enforce competitiveness through, for example, wage cuts, and that, of course, is part of the Irish package. It does make things more difficult, but, as I say, those of us who argued against Britain joining the euro made all these arguments at the time. That makes for a very good discussion, but at a very theoretical level given the very practical immediate challenges we face in Ireland.

[Mr Peter Bone (Wellingborough) (Con)]

The euro could collapse—nobody can doubt that point. During the Chancellor’s wide-ranging private talks with the Irish Government, was there any discussion of a contingency plan under which Ireland would come out of the euro and become part of the sterling area?

[Mr Osborne]

No, there was not.

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.

Oral Answers to Questions

Peter Bone Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr Gauke]

Let me put it this way: we would have a lot more inquiries if taxes were going up, which is the policy the Opposition advocate.

[Mr Peter Bone (Wellingborough) (Con)]

14. What assessment he has made of the effects on his Department’s ability to reduce the deficit of the reduction in the UK’s EU budgetary rebate; and if he will make a statement.

[The Economic Secretary to the Treasury (Justine Greening)]

The latest forecast of the UK contribution to the EU budget shows that the UK abatement will decline from £5.6 billion in financial year 2008-09 to £2.8 billion in financial year 2010-11. The Office for Budget Responsibility will publish new projections of the UK contribution to the EU budget, including the abatement, in its autumn forecast.

[Mr Bone]

Under the previous Labour Government our total net contribution to the EU was £19.8 billion; under the coalition Government it will be £41 billion. Will the British people not think it bizarre, bewildering and a betrayal that over half the money saved by cuts will go not to reduce the deficit, but to subsidise other western European countries?

[Justine Greening]

My hon. Friend is right that alongside the domestic economic mess we inherited, we also inherited an EU budget deal that was completely out of touch with the situation faced by many European countries. The fall in our abatement is largely due to the give-away agreed by the previous Government in 2005, which will be fully phased in from 2011. It is expected to cost the UK about £2 billion per annum. That is £2 billion that was needlessly given away for absolutely nothing in return—yet another failing of the British people by the Labour party.

European Union Economic Governance

Peter Bone Excerpts

Wednesday 10th November 2010 Commons Chamber

[Mr Hoban]

There is nothing new in the macro-economic surveillance processes outlined in the document and, as I have said, we are exempt from the sanctions regime that the Commission and others have proposed, which applies only to eurozone countries. Let me now make some progress.

We need to recognise that there are lessons to be learned from the economic crisis, but one lesson that stands out that is relevant to the debate this evening and to the documents is that in an open, global economy, no economy exists in isolation. The failures of economic policy in one country can be exported to other nations, and the imbalances in one economy can have an impact on others. Imbalances such as excessive domestic demand and growth can lead to asset bubbles, an over-reliance on exports or divergence in competition across countries. It is in all our interests to improve co-ordination and co-operation in policy making, to tackle those imbalances and increase the resilience and strength of the global economy.

However, in our view, increasing co-ordination and co-operation has to be consistent with national sovereignty and the accountability of Parliament. It is those principles that frame our response to the documents and our response to the global economic crisis. There is an intense global debate about those topics in the G20, the IMF and the OECD, and in Europe. We take part in those debates because, as an open economy, we have a strong interest in economic stability. We are acutely aware that imbalances and problems in one economy can have a spill-over effect in another.

[Mr Peter Bone (Wellingborough) (Con)]

Is the Financial Secretary saying that the taskforce document that I have, dated 21 October, has been rewritten? It concludes:

“Endorsement by the European Council of the recommendations in the present report will contribute to strengthening economic governance in the EU”.

It clearly says “in the EU” as a whole.

[Mr Hoban]

But the sanctions regime relates only to eurozone countries, and no sanctions can be imposed on the UK. All that the document is referring to is continuation of the macro-economic surveillance that has been taking place over the past 10 years.

Economic Governance (EU)

Peter Bone Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr Hoban]

Absolutely. That is why I would encourage my hon. Friend to read this document. He will see the gains that we have managed to secure in Europe to defend our position.

[Mr Peter Bone (Wellingborough) (Con)]

Does the Minister welcome the united approach of the coalition Government working together, under which the Prime Minister sent the hon. Member for Stone (Mr Cash) to Brussels yesterday to duff over the EU President and soften up the EU so that the Prime Minister can finish the job this weekend?

[Mr Hoban]

The coalition is at its best when all Members are united behind it.

Draft EU Budget 2011

Peter Bone Excerpts

Wednesday 13th October 2010 Commons Chamber

[Kerry McCarthy]

I shall come on to that point, if the hon. Gentleman will bear with me.

We support some of the structural and cohesion funding, but we agree with the Government that budget levels should be realistic and reflect absorption capacity. In certain areas throughout the EU budget, planned spending levels are indefensible, and, in response to the question that was just asked, we believe that spending under heading 2 on the preservation and management of natural resources should not be a priority in the current economic climate. We do not support that scale of spending on agricultural intervention, and we will support the Government’s close scrutiny of it.

We very much welcome, however, the Government’s statement that there should be an increased emphasis on development objectives, including on reaching the millennium development goals in poorer countries, and we believe that adequate funding is necessary to achieve those aims.

Finally, we also support the Government in pushing for reductions in the administration budget.

[Mr Peter Bone (Wellingborough) (Con)]

Will the hon. Lady give way?

[Kerry McCarthy]

No. I am coming to a conclusion, and the hon. Gentleman will have his chance to speak in a moment. Where efficiency savings can be found, they should be found, and there are significant savings to be made in that area. I can see that many Members want to speak, so I do not intend to delay the House any longer. I look forward to hearing the rest of the debate.

--- Later in debate ---

[Mr Bone]

My hon. Friend is making a powerful speech on something about which he knows more than anybody else in the House. His amendment would freeze the budget, while the other amendment calls for a reduction. That may be difficult to achieve, but would it not be helpful, rather than a hindrance to the Minister, as she flies off tomorrow, to know that a certain number of Members want a cut?

[Mr Cash]

That has to be a judgment for Members in deciding which way they will vote on these amendments. In my view, because of the complexity of this problem and the uncertainties about whether we will be able to achieve a blocking minority in the Council of Ministers—I shall explain the procedure in a minute—we must do nothing that would play into the hands of the Eurofanatics in some of the other member states who want to go down the same route as the European Parliament by endorsing this increase and increasing the budget resources, which is what they are intent on doing in the wake of the Lisbon treaty. That is the problem. It is a matter of judgment, but it is also one of analysis, which is why I take the position that I do.

I may say that I had no discussions whatever with the Government on this issue. I simply tabled my amendment last night because it struck me that in the light of the discussions in the European Parliament—and not in light of the amendment tabled by my hon. Friend the Member for Clacton, which I had not seen—the European Parliament was being thoroughly irresponsible, or at any rate the Budgets Committee was. We have yet to discover whether the European Parliament will persist in the same view.

On top of the proposal for the European budget, there is one to extend maternity rights. It is now clear that it is intended to have a £3 billion increase in the European budget for that reason. The 27 member states will be snubbed if the European Parliament votes in line with the European Commission’s proposal. Recent increases do not include the already agreed, and grossly extravagant, €1 billion increase in the European budget for 2010, which was caused largely by the Lisbon treaty.

On the subject of austerity and responsible measures, according to Government figures the collective budget deficit of the EU’s 27 member states will reach the staggering sum of €868 billion this year, which is more than 7% of the bloc’s gross domestic product. That, of course, is because the European financial crisis is real. One need only look at the countries otherwise known as PIGS—Portugal, Italy, Greece and Spain—not to mention France, which must be included in a lot of the analysis, to see the real implications of that for the individual lives of voters in this country. The governing economic and financial framework established by the EU must be not only revised but radically curtailed.

The budget increase also relates to the extensive bureaucracy that we are having to pay for, such as the European External Action Service, as my right hon. Friend the Member for Wokingham (Mr Redwood) rightly pointed out. Members, including me, raised the gravest objections to the proposals for that body that were made a few weeks ago.

While Westminster and Whitehall, and the country at large, are quite rightly being asked to make savings, what is happening in Brussels? The European Parliament adopted a resolution on 18 May proposing a budget of €1.707 billion, which is a 5.5% increase on the amended 2010 budget and represents 20.28% of the EU’s administration budget.

--- Later in debate ---

[Mr Davidson]

Are they all in it together? Yet again, I suspect that the Liberals are leaving the Conservatives to do the dirty work for them and put the budget through. I imagine that if the Conservatives carry on their course of action and we have an AV voting system next time around, the UK Independence party will do far better in the first ballot than it might have done in the past. I find it a great cause for regret that the Conservatives seem to have gone soft on Europe in such a short period.

[Mr Bone]

I normally agree entirely with the hon. Gentleman, but will he cast his mind back to the previous Parliament? When did a Minister talk the way our Minister has spoken tonight, and when were the Government Benches as full for a European debate as they are tonight?

[Mr Davidson]

That is a very fair point. Not many times were the Benches behind a Minister full of Members denouncing the Government for being too soft on Europe. There were a number of us doing so, but not nearly as many as there are tonight. I am grateful to the hon. Gentleman for making that point.

Some of my colleagues who spoke earlier touched on the iniquities of the EU budget. As someone who was a member of the Public Accounts Committee for a number of years, I am in complete sympathy with everything that has been said about how the auditors have qualified the accounts. The whole matter is a complete and utter disgrace. The audited accounts only tell part of the story, of course, because they do not cover the fact that EU income and the income of individual countries is enormously depressed by the extent of fraud, underpayment, under-collection of VAT and so on, which is reflected in the EU budget. [Interruption.] Can I have a lack of heckling from my hon. Friends in front of me, who support most of my arguments?

The EU budget is about not only the net and gross amounts of money flowing back and forward, but how that money is spent. Were it given by the EU to the British Government to spend, we would not be spending it in the way that we are. We have created a dependency culture among farmers. I know a number of farmers—admittedly not many of them are in my constituency—who concede that what they mostly farm now are subsidies. The whole pattern of their growing and activity is determined by the subsidies that are available from the EU, irrespective of the agricultural, financial or economic rationale. That is not rational or right, and such decisions ought to be repatriated to this country as quickly as possibly.

The hon. Member for Hertsmere (Mr Clappison) asked what the actions of Labour MEPs were likely to be, but I think that there is little doubt. We should remember that virtually all Labour MEPs were selected under the new Labour system of allowing only those in favour of ever-closer union to progress. I can remember when a number of Scotland Labour MEPs were Eurosceptic, but when the new system of proportional representation was introduced, Labour put them all out. Ever since, only those in favour of ever-closer union have come forward. I would be astonished if any Labour MEP does anything against those interests and the interests of the greater growth and development of the EU.

--- Later in debate ---

[Mr John Redwood (Wokingham) (Con)]

Conservative Members clearly have a very simple message for the Minister: we wish her well and we wish her to be strong and fierce in argument and debate, because we think she should be more ambitious. It is not enough just to freeze this budget; this budget has to be brought down. If there is any budget of all the budgets we look at in this difficult time about which we can say, “We can get away with cutting that,” it is this budget. I suspect many Opposition Members would agree with that, were they honest about it. We are talking about a budget of €143 billion or £120 billion, which is more than we spend on the national health service. A big chunk of that budget is down to us, and we get nothing like the value out of it that we get from the NHS.

I therefore hope the Minister will look to the following very important precedent. The last time we had a good battling female Minister who stood up for Britain she was armed only with a handbag, yet with that one piece of equipment she came back with the biggest rebate we ever got: the rebate the Labour party stupidly gave away, and the rebate we need back. That rebate would give us twice as much money as the amount the Government are hoping to save from the cut in child benefit. We know the Minister has the right equipment. She assures me that she has an excellent handbag, so we wish her every success in putting that argument.

The argument to the Greeks, Italians and Portuguese must be that they are having to make far worse cuts than any that are suggested for the European budget. We can cut collectively in a much more sensible way than the damaging domestic cuts they are having to put to their electors. The French have already had riots on the streets over their domestic cuts. I am sure they will agree with our Minister that there are some easy pickings to be had by removing items from this European budget. I therefore also hope the Minister will point out that because this is a levy on all the member states and all the member states are borrowing too much money, every penny and cent of that €143 billion is going to be borrowed. The taxpayers will not just have to pay once, therefore; they will also have to pay all the interest on that and be ready to repay the debt.

Is this really the kind of thing we want to be borrowing money for? Of course it is not. So Godspeed to you Minister: put the case, and win over all those other Governments. They will surely agree with us that it is better to cut the European budget than to cut important domestic programmes.

[Mr Bone]

rose—

[Madam Deputy Speaker]

I call Peter Bone and ask him to be brief.

[Mr Peter Bone (Wellingborough) (Con)]

I shall be brief. It is difficult to follow my right hon. Friend the Member for Wokingham (Mr Redwood), but I just wanted to say what a change it is to be in the House discussing a European issue when all on the Government side are united. New Back Bencher after new Back Bencher has said to the Minister, “We support what you say; go a little bit further.” We have heard the Minister accept an amendment tabled by my hon. Friend the Member for Stone (Mr Cash). I say to the hon. Member for Glasgow South West (Mr Davidson) that he has tabled a lot of amendments but I cannot remember his Government ever accepting any of them. The Minister was also kind enough to say that had amendment (b) been worded slightly differently, she would have accepted that too.

The coalition Government are united, but I want to give a little help to the Minister by suggesting that if amendment (b) is passed, or if many Members vote for it, that will help her in the negotiation tomorrow. Just peeking over, I can see that she has got a very large handbag, so I ask her to use it tomorrow.

Oral Answers to Questions

Peter Bone Excerpts

Tuesday 12th October 2010 Commons Chamber

[Justine Greening]

Sir Philip Green is one of those people I was talking about in my first answer: somebody who has got involved trying to come up with constructive suggestions on how we can tackle the fiscal deficit left by the hon. Gentleman’s party. The bottom line is that we want to ensure that we support business. His party was against the package of corporation tax reductions that we brought forward in the Budget, which will support companies across this country. We also got rid of his party’s job tax.

[Mr Peter Bone (Wellingborough) (Con)]

10. What recent discussions he has had with the Minister for the Cabinet Office on the cost to the public purse of the Government Whips Office and the Opposition Whips Office.

[The Chancellor of the Exchequer (Mr George Osborne)]

I have had discussions with my right hon. Friend on the overall Budget for the Cabinet Office as part of the spending review. As my hon. Friends might expect, I am keen to ensure maximum value for money from the Government Whips Office. When it comes to the Opposition Whips Office, that is an area of public spending where I am prepared to tolerate inefficiency and poor leadership.

[Mr Bone]

My right hon. Friend will be aware that during this Parliament, the additional salaries paid to Whips will be more than £6 million. As we now have a Backbench Business Committee and will soon have a House Committee, would that not be an area for cutting? After all, we are all in it together.

[Mr Osborne]

Unfortunately, the Parliamentary Secretary to the Treasury, the Government Chief Whip, is not here to listen to that question, but as Ministers in the Government Whips have already taken a 5% pay cut and had their salaries frozen during the Parliament, so they have already shown some restraint. If my hon. Friend wants to catch the ear of the Chief Whip in the Aye Lobby tonight, he can do so.

Proposed Public Expenditure Cuts

Peter Bone Excerpts

Monday 13th September 2010 Commons Chamber

[Mr Peter Bone (Wellingborough) (Con)]

Does the Chancellor appreciate that on the coalition Benches, there is unanimous support for his policy of shrinking the size of the state? Are we not lucky to have a Chancellor with the guts and ability to carry it out?

[Mr Osborne]

I thank my hon. Friend for his last remark. The state currently consumes almost half of national income and I do not think that there is a serious contender for high office on the Labour side who does not think that it needs to come down. Unfortunately, not a single proposal has been forthcoming. It is quite remarkable that this is the most contentious issue that we are debating, yet the people who aspire to lead the Labour party have absolutely nothing to say about it.