On 5 July, the Committee voted to increase the UK's contribution to the IMF. During the debate, Bill Cash made the following interventions:

The Financial Secretary to the Treasury (Mr Mark Hoban): I beg to move, That the Committee has considered the draft International Monetary Fund (Increase in Subscription) Order 2011.

It is a pleasure to serve under your chairmanship this morning, Mr Hollobone. The order will increase the UK subscription to the International Monetary Fund. It is in the UK’s interest to have a strong, effective and legitimate IMF at the heart of the international financial economy. The IMF has been at the centre of the international response to the economic crisis and demands for financial assistance from the IMF remain at record levels, with more than 50 IMF financial assistance arrangements currently in place. The present risks to the global recovery underscore the need to ensure that the IMF is adequately equipped to fulfil its core role of promoting financial stability and economic growth.

In April 2009, the G20 summit in London agreed to increase the IMF’s resources by $50 billion, to enable it to assist countries affected by the financial crisis. The G20 agreed to take immediate action to increase the IMF’s resources in the short to medium term. That has been provided through bilateral loans and expansion of the new arrangements to borrow framework—the NAB—as they were the quickest ways to mobilise the additional resources needed by the IMF, but bilateral arrangements are only temporary measures and the NAB is designed as a contingency mechanism, activated in times of crisis for a six-month period.

The G20 summit in London agreed on the importance of preserving the IMF’s status as a quota-based institution in the long term, so at the G20 meetings last November, agreement was reached to review the NAB and to reduce it in size once the quota increase was implemented. At the same time, the G20 reached agreement on a quota and governance reform package, which included doubling total quota resources and delivering a shift in quota shares to dynamic emerging and developing countries. Reaching that agreement represented a significant achievement for the G20 and the international community and the reforms will create an IMF that is representative of today’s global economy. It is now crucial that all countries take the necessary steps to implement that commitment. The subscription is denominated in the IMF’s unit of account, the special drawing right, and currently stands at 10.74 billion SDRs, which is approximately £10.7 billion at today’s exchange rate. The order will raise the subscription to 20.16 billion SDRs, equivalent to about £20.15 billion, representing an 88% increase in the UK’s commitment in quota lending to the IMF. Let me be clear, though: that does not represent an up-front financing commitment of £9.5 billion for the UK, but simply increases the potential amount of financing from the UK that the IMF can call on via quota subscriptions. As a member of the IMF’s executive board, the UK has an opportunity to scrutinise, debate and, if appropriate, vote against new IMF programmes. As a guide, at the end of March, the IMF had called on only £3.3 billion of our quota, which is less than a third of our current quota subscription.

The second and more important point is that lending to the IMF does not count as public spending. A loan to the IMF is a loan to probably the most creditworthy institution in the world. IMF loans have traditionally been afforded primary creditor status, meaning that they are repaid even if other creditors are not. No country has ever lost money lending to the IMF in such a manner. When the IMF calls for financing from the UK, we swap some of our reserves for a claim on the IMF, meaning that we are in essence exchanging one class of safe asset for another; we do not borrow or spend more to do that.

The Chancellor announced in the 2011 Budget that, partially to meet potential calls on the reserves from the IMF, an additional £6 billion of sterling financing would be provided for the official reserves in 2011-12. The Government envisage that financing for the reserves will remain at a similar level over the next three years, up to and including 2014-15.

Mr William Cash (Stone) (Con): Is the basis on which the figures announced do not count as part of public expenditure determined by the Office for National Statistics in its new form as the Statistics Board in the light of EUROSTAT rulings? In other words, it amounts to a dodge, because the amount of money that should be on our balance sheets is not included only under those rather artificial rules.

Mr Hoban: I was about to expand on that point, so my hon. Friend’s intervention is timely. Just as public spending is not affected by increased IMF contributions, public sector net debt remains unaffected by them. Loans to the IMF and SDR holdings remain an asset in our reserves, representing a shift in the composition, rather than the size, of those reserves. The money is a loan, not a grant, to the IMF, and we expect to get it back; accordingly, it is treated as an asset.

Mr Redwood: The Minister says that this money is a loan, which we will get back. Why did we not get any of our previous quota subscriptions back? When will we get this one back? Mr Hoban: There is a flow of money backward and forward between the IMF and the UK. We still have an asset with the IMF. By increasing that asset with the IMF, we are in no way reducing the resources available for public spending in the UK. That is an important distinction to note. This money is not coming from public spending or reducing the amounts available to spend on our schools, hospitals or police; it is simply a reallocation of reserves on our balance sheet.

Mr Cash: On the question of a formulaic system, does my hon. Friend not also think there is a practical system that we ought to bear in mind, which is the actual practicality of default? Most people believe that Greece will default—that seems to be the general consensus, however interpreted. In that context, does he not agree that our exposure to the IMF arrangements, quite apart from those relating to the eurozone, means that we are severely exposed and liable to lose money, so different considerations apply? It is like feeding heroin to a heroin addict.

Mr Hoban: I go back to what I said earlier: no one has lost money by lending to the IMF. The IMF’s status as a preferred creditor means that it is the last to make losses, and history shows that the IMF always gets its money back. My hon. Friend should take comfort from that.

Mr Cash: Does the Minister not accept that, apart from the extraordinary situation of the IMF’s bail-out increasing the amount of debt, as so well described by my hon. Friend the Member for Clacton, there is also a serious problem relating to the use of the word “legitimacy”, which the Minister mentioned at the beginning of his remarks? Madame Lagarde, who is now the head of the IMF, said about the bail-out arrangements for the eurozone, including those affecting us, that we broke all the rules because we had to save the eurozone. Furthermore, it broke the rules when it went into Ireland, because it went in before a request was made. Is there not something seriously wrong not only in its increasing the amount of debt, which the IMF is not there to provide except for a legitimate purpose, but in its now having a chief who overtly says that she will break the rules to achieve her political objectives?

Mr Hoban: My hon. Friend has raised Madame Lagarde’s comments before and he has also cast doubt on the legality of article 122 and its use to create the European financial stability facility, and we have debated those matters on several occasions. Is he really saying that it is in the interests of our economy for the Greek economy to collapse, given the contagion effect that that would have on Europe? Does he not agree with me that action needs to be taken to stabilise the Greek economy?

Mr Hoban: Let me continue. Does my hon. Friend agree that it is not in our and Europe’s interests for the Greek economy to collapse, given the impact that would have on jobs in the UK and across Europe?

Mr Cash: I am grateful to the Minister for issuing such a direct challenge. The answer is very simple: it looks as though this Government are completely incapable of being prepared to renegotiate the treaties so that we end up with a European Union—or whatever should replace it—that actually works, which it manifestly does not at the moment. That is the real problem. The Greek situation is merely a symptom of the underlying cause. The failure of the Government to renegotiate the treaties, or even to suggest that that should be done, lies at the root of the trouble. …

Chris Leslie: I will give way to the hon. Gentleman in a moment. The UK contributes through the IMF to countries such as Portugal, Ireland and Greece; it also contributes through the EFSM. The first test I was hoping the Minister would address is whether he can guarantee that the UK taxpayer will be exposed to potential sovereign default only through the IMF or through the EFSM, and not both, before the expiry of the EFSM in June 2013.

Mr Cash: I am sure the hon. Gentleman accepts that we will not allow the previous Labour Government to get away without taking responsibility. Does he not agree that it was they who entered into the unlawful arrangement on the EFSM under article 122, whatever acquiescence the present coalition Government may have given? Secondly, does he not agree that the EUROSTAT rules on the question of off-balance-sheet accounting were also agreed by the Labour Government? Thirdly, does he not agree that the increase in the IMF contribution was agreed under the aegis of the previous Labour Government at the G20 meeting in 2009? They are entirely culpable. It is no wonder that the hon. Gentleman is engaged in the greatest escape since the wooden horse.

Mr Redwood: Does the hon. Gentleman agree that there is a big difference between now and 2009? In 2009, people thought that increases to the IMF quota might be needed for countries such as Iceland that were freestanding and could devalue, or for poor third-world countries with falling commodity prices. People did not have in mind a bail-out for countries that could not devalue.

Chris Leslie: Absolutely. Under the Labour Government, discussions were started about how to bolster, improve and strengthen the IMF. In normal circumstances, I would agree that that must be done, but the facts and the situation have changed markedly in recent months. My advice to the Minister is that we ought to have brought forward some of the safety positions within the European bail-out arrangements to protect the UK taxpayer, or that he should defer the doubling of the subscription to the IMF until those arrangements have been made. Because he is introducing the order now, I am exceptionally worried.

Mr Redwood: Thank you, Mr Hollobone. It is a pleasure to serve under your excellent chairmanship. I always feel at home with someone who turns to cricketing metaphors to explain where we are. I will keep my remarks brief. This subject deserves a much longer debate on the Floor of the House, but we do not have that luxury, so I will just make the important points. I think there are two reasons why this item of apparently routine business has become so politically sensitive and of great interest. First, the increase is so enormous. There has been a history of increasing quotas over the years, and we have never got the money back, but this is a very large increase and quite out of the ordinary.

Mr Hoban: I remind my right hon. Friend that we have received a return of our quotas. It is a fluid arrangement, as I made clear in my response to his intervention. We had repayments in October 2010 of £107 million in special drawing rights and of £186 million in November 2010. It is a fluid arrangement.

Mr Redwood: The order proposes to double the total from £10 billion to £20 billion. That is a huge increase. There are movements on the account, as the Minister described, but if we had got the last £10 billion back, the IMF would not want an additional £10 billion; it could use the £10 billion that it had already been given, which it clearly cannot get back in time to do what it wants to do next. We are worried about the magnitude of the amount going in, but—

Mr Redwood: I am pushed for time. Above all, we are worried about the purpose to which the money might be applied. I have no objection whatever to Britain remaining a member of the IMF and making a sensible contribution so the IMF can lend money to poor and distressed countries where an IMF remedial programme is necessary and could do the country good. There are cases in which IMF programmes work well. Iceland is an example of a richer country where one is beginning to work, because Iceland was able to devalue as well as doing the other difficult things that countries must do in that situation.

However, I am concerned about the idea that IMF money should now be a private bank account to bail out the distressed in euroland when the problems are not soluble by lending more money and are inherent in the scheme itself. The IMF should not be sending money to distressed countries in euroland; it should send them a sharp economics lecture explaining why they cannot have a single currency on that basis. It should explain to countries such as Greece that they need to devalue to get people back into work, because their holidays are too dear and their export industries are no longer competitive. As it is asking too much of the Greeks to take a 25% or 35% wage reduction, which is the order of magnitude that would be necessary, the obvious thing to do is allow them to devalue in exactly the way that successive British Governments have done to get back jobs in the export industries, the way that America has done in the past year or two against the successful economies of India and China and the way that is always part of an IMF programme.

Steve Baker (Wycombe) (Con): I am extremely grateful to my right hon. Friend for giving way. As he knows, I generally am in full agreement with him and, indeed, look to him for advice. But on this question of devaluation, I demur slightly. Would he agree with me that when we talk about a 25% cut in wages, which people would have to tolerate, and we talk about devaluation of currencies, we are really saying that the state will impose that pay cut on people through devaluation?

Mr Redwood: It is an entirely open process and the consequence of a devaluation is to make the people in the country suffering it worse off because they have less spending power with their currency abroad and they therefore find imports dearer. That is part of the purpose of it. I think my hon. Friend would agree with me that given that we live in a world of fiat currencies and “Monopoly” money, which I know he does not support or like, it is more politically acceptable to do some of the adjustment by devaluation than to enforce wage cuts on people and run the risk of riot and protests, as we have seen already in Greece with the measures they are taking.

Indeed, as the Minister is such a fan of the IMF he should know that central to the IMF packages in the past for every country has been that threefold approach of reducing spending, trying to help them increase revenues and, above all, having a devaluation to get them into a more competitive shape. It is not intellectually pure in the way that my hon. Friend the Member for Wycombe would like; his method would require a complete change as he would want competing currencies and the end of “Monopoly” money and that is not the general view of political establishments around the world as of today.

We are worried about the magnitude and the purpose to which it would be applied. What flexibility do the British Government have? No member state can be forced to make an increase in quota payment once they are full members. The IMF rules are quite clear that the member state’s Government have to consent. It is quite true that indicative sums are requested of member states based on a formula. As the Minister surely knows, the formula is very vague. The 50% that is GDP sounds like a hard number, but there is scope for flexibility over how much is purchasing power parity and how much is real money, over which date is chosen for the exchange rate and all that kind of thing. An international GDP fluctuates massively when currencies move around as quickly as sterling, the renminbi, the dollar, the euro and so forth have been moving.

Then we get on to the other half and 15% of it is about economic variability. There is a lot of room for argument over how that is assessed: 30% is a judgmental issue of openness and 5% is about the state of the reserves. There is a very important rider: the IMF looks at the state of the country’s balance of payments and accepts that a country has to be in a strong financing position to meet its balance of payment deficits if it is in deficit, where again there is room for judgment and argument. So the British Government have some flexibility on the quantum. Colleagues have already mentioned that 88% is pretty heroic when Germany manages only 83% and is clearly in a stronger phase than we are at the moment. Canada is only 73% and Holland is 69%. They are both perfectly good economies. Then there are the oil countries—Kuwait at 40% and Saudi Arabia at 43%—who are in a very strong period of cash flow and growth because of the extremely high oil price, which has nearly trebled since the lows with the credit crunch.

I would ask the Minister to think again. As he is proud that Britain is on the board and has reasonable voting strength because of all this money we are putting in, we need to influence the IMF. The test I would apply to the Minister is this: has he taken his case to the IMF that we should not be bailing out euroland countries because we risk not getting the money back and because it will not solve their problem? If so, has he had any influence on that? Either he has not tried, or it turns out that we do not have any influence over the IMF because clearly the IMF is minded to go on this foolish course of pumping more of our money and other people’s money into economies like Greece where the requirements are very different.

I conclude by pointing out that the Greek army, including professionals and reserves, is 400,000 strong. The paid professional army is larger than the UK Army. Greece is a country under one fifth the size of the United Kingdom. How do I explain to my constituents that the UK is going to find some money to give to the IMF, to lend to Greece, to pay for a bigger army than the UK’s? There is surely something wrong there, when we are making cuts in our own Army. The idea that this is not real money is simply not true. It is real money that the UK has to subscribe to the IMF. I am afraid that the Minister’s point that we might get some of it back one day on the exchanges through the accounts does not wash. It already has £10 billion of our money; it does not apparently have that £10 billion available to give to Greece, and that is why it wants another £10 billion.

Mr Cash: I am grateful for the analysis from my right hon. Friend the Member for Wokingham, and the significant efforts of my hon. Friend the Member for Clacton to draw attention to this serious question. The issue on which I would like to concentrate is whether the rules matter at all. We are supposed to be a country that abides by the rule of law. I have already made the point that in respect of the arrangements for the bail-out of other countries and the whole of the euro system that was created last year, Madame Lagarde did say that we would break the rules in order to save the eurozone.

I understand that there is a serious case for maintaining stability in the world economic order. However, is the world economic order improved by breaking the rules? The answer is, no. It is destabilised, because the markets do not trust the basis on which the rules are being put together and put through. I have already given another example, regarding the manner in which the IMF went in, before the request was made, to Ireland. That was a clear breach of the rules. As I have already mentioned, there is also the use of article 122,which is a eurozone issue, rather than an IMF one.

I would also like to mention again the manipulation of the balance sheets and the use of EUROSTAT rules. I have talked to the Statistics Board and raised these matters over an extended period under the previous Government, as have my right hon. Friend the Member for Wokingham and my hon. Friend the Member for Castle Point (Rebecca Harris). The manner in which that situation has been gerrymandered, to give an impression that we are not exposed to the extent that we are off balance sheet, is a real problem.

That is something else that needs to be addressed.

The explanatory notes reveal some very serious problems. There is a heading,

“What is being done and why.”

I will go through that, because I am sure the Minister is responsible for writing it. If he did not write it personally, it was certainly someone in his office. The position is that we cannot find money for the Greek situation under EU rules, so we are going to bypass the system and do it through the IMF rules. That is what it boils down to, and if we are not going to mislead the Committee or the House, we ought to get that one straight down on the table. The rubric of what is being done and why states that:

“In November 2010, the Group of Twenty…countries agreed to increase the lending capacity of the IMF through a doubling of the quotas.” I refer back to the remarks of my right hon. Friend the Member for Wokingham on the purpose that underpins the normal arrangements of the IMF, which is to assist emerging and developing countries with problems such as northern Kenya’s drought conditions. Such things are the object of the exercise.

The explanatory memorandum goes on to say that the agreement in November 2010 “was part of a wider package of governance reforms intended to deliver greater quota and board representation to the dynamic emerging and developing countries.”

That is the basis on which the agreement was made, and it is the basis on which the resolutions were passed. That is the current Government, not the previous Government, although, as I have already indicated, I am also critical of them, and with good reason.

The agreement was followed on 15 December 2010 by a formal resolution of the board of governors of the IMF that proposed a general increase in quotas—I am interpolating the words—for that purpose. In other words, the object of increasing the quotas was explicit when the resolution was passed. I remind the shadow Minister that we cannot turn round subsequently and say, “Oh, the circumstances have changed, so we will adjust the manner in which the resolution is passed.” Any company that attempted retrospectively to justify its unlawful actions in breach of a resolution of the board and in breach of an agreement would be in serious trouble. The truth is that the resolution was for one purpose, but it is being used for another.

Mr Redwood: I want to draw on my hon. Friend’s legal expertise. Is it not also questionable whether the IMF is entitled to lend to a country such as Greece, because Greece is no longer economically sovereign in any normal sense? It is more like bailing out a county council or a metropolitan borough in Britain, because Greece has no monetary policy and no central bank. It is basically a wholly owned subsidiary of the European Central Bank.

Mr Cash: I agree with my right hon. Friend. Furthermore, it reminds me of King Midas, but instead of things turning to gold, they turn to dust, which is a serious Greek problem.

The Minister is the Geoff Boycott of the Treasury Bench. He goes in, sticks to the pitch and plays the ball very straight, but, unfortunately, the ball sometimes moves a bit off the wicket. I want to mention the Minister’s reference to legitimacy, which I have already dealt with, because, basically, this is illegitimate, even if it is not unlawful. Secondly, he quickly slipped through the words, “This is not earmarked for Greece”.

If he is not dead on, my right hon. Friend the Member for Wokingham is close to the target. The money is not specifically earmarked for Greece, but that is a subtlety—I do not accuse the Minister of this—of the general deceit that lies behind the whole international deal.

Mr Hoban: Will my hon. Friend explain how a deal struck in 2009 is earmarked for Greece?

Mr Cash: I am not suggesting that it was earmarked for Greece at that point in time but that the use of this particular mechanism is in itself illegitimate, at least for the use to which it is being put, both under the agreement and under the resolution of the IMF. We know that Madame Lagarde, who is now in charge of the whole shooting match, does not have any regard to the violation of rules to support the eurozone, because on 17 December 2010 she said just that.

We understand that the eurozone needs help because it is such a failed project. We also know that renegotiating treaties and creating real growth will be the way to make sure that neither the IMF nor countries such as the United Kingdom that are outside the eurozone should be expected to participate. That is the whole point.

This is a much deeper problem. This is really serious––it is a crisis. Bringing in the IMF for an illegitimate purpose in this context, however understandable it may be in terms of politics and attempting to cobble together some short-term solution, is not going to solve the ultimate and real problem that is the cause of the whole thing: the euro system that has been created needs proper, sensible and proportionate renegotiation at least.

I want to mention one last thing. It says under paragraph 7:

“The United Kingdom must accept, and pay for, the increase in its quota before the increase can become effective. This Order will authorise the payment of the additional subscription.”

I do not want to embarrass the Minister, but he specifically said that this was not actually a payment at all but a loan, effectively one of these underwriting arrangements. His own document contradicts that very statement and I would be grateful if he would explain to me and the Committee.

Mr Bone: Is it slightly worse that this order comes into effect the day after it is approved by Parliament, so that effectively the cheque will be written immediately, unless the explanatory notes are wrong?

Mr Cash: Absolutely. I am grateful to my hon. Friend as usual for his perspicacity. We have a Lords Commissioner of the Treasury sitting on the Front Bench. Perhaps he can explain whether he is going to put his signature to this cheque, because he may get used to having to do these things on a monumental scale. The words are:

“This Order will authorise the payment of the additional subscription.”

As the Prime Minister is often wont to say, there are some very serious questions for other people to answer.

Steve Baker: Never been so busy. I begin by welcoming the Minister’s resolve and composure in what are clearly historic and contentious circumstances. We have seen today that there is broad agreement across the Committee that what matters is human prosperity, and we are all deeply worried about our constituents. I am going to make three points. First, I do not believe that we have this money and that we cannot afford the liability. I do not think that my constituents will understand why they should pick up the liability. It seems to me that one way or another, this country will end up borrowing in order to lend to fund present consumption, and funding present consumption through borrowing is simply not a route to prosperity. I wish I felt that it was not necessary to expand on that point, but it seems these days that we forget. If we consume on credit, we are in fact making ourselves poorer.

I find the notion of getting the money back quite worrying. It seems to me that we will borrow some of this money, at least, from commercial banks, inevitably monetising the debt and debasing the currency further after 40 years of continuous debasement. That will involve inflation and further distortions in the structure of the economy. In short, this measure would simply kick the can down the road. We might argue that that is the job of the IMF these days, but the Greek people are already rioting and we have to ask ourselves whether they would be any more sympathetic to such austerity measures simply because they were brought forward by the IMF. I question the action itself.

Secondly, the IMF was created as part of the Bretton Woods system of currencies. We tend to talk as though our current monetary arrangements were a fixed point and had always been the same, but the present monetary orthodoxy has evolved over the years and centuries. Bretton Woods was constructed after the catastrophe of the second world war; the dollar was redeemable in gold, and all other currencies were pegged to the dollar. The job of the IMF was to stabilise exchange rates by bridging temporary gaps in nations’ balance of payments, but the IMF now seems to serve the purpose of ensuring the repayment of reckless financial institutions.

Above all, at all stages of its history the IMF has existed to bring financial stability, which I believe it has singularly failed to do. Turning to the monetary system and stability, I encourage Members to google a chart that I can make available, which shows the price of oil—index factor 1945, the origin of Bretton Woods—brought forward to today. It prices oil in dollars and in gold. I do not like to use the G-word, but I feel that since my hon. Friend the Member for Wellingborough has mentioned it already, I can continue. The price of oil has been high and volatile since 1971, but only when priced in dollars. If we price oil in gold, the price has been low and stable ever since the end of the second world war.

I simply make the point that our monetary arrangements are not fixed, that the IMF has not brought stability and that in fact many of our most important commodities are far more susceptible to the effects of our present, inflationary monetary arrangements than is generally considered. I would like to finish my point about the IMF with Hayek’s words. He said:

“monetary policy all over the world has followed the advice of the stabilisers. It is high time that their influence, which has already done harm enough, should be overthrown.”

He wrote that in 1932 in the preface to “Monetary Theory and the Trade Cycle”, which hon. Members can find by googling “prices and production.”

Thirdly, I want to talk about the contemporary mainstream. With great respect to hon. and right hon. Friends, although my right hon. Friend the Member for Wokingham foresaw many aspects of the crisis, the majority of the mainstream did not see this coming. I have sat at lunch with eminent economists who said that nobody saw this coming, to which I simply replied that they should read Huerta de Soto’s “Money, Bank Credit and Economic Cycles”. That book, which was written in 1998, clearly set out that this would happen and why, following in the footsteps of Hayek, Mises and others. The Queen asked why no one saw this coming. If she had asked me, I would have said that it was because economists pay too little attention to time—the simple matter of the importance of time. Production takes time and, in a market, interest rates should arise from people’s time preferences for consumption. In the jargon, the contemporary mainstream lacks an adequate theory of the inter-temporal structure of capital—that is, capital goods, or the means of production. We are at the end of an extremely long credit expansion. I depart from my right hon. Friend the Member for Wokingham, but that is because I follow that particular theory of capital. Hayek, it is not often known, was a socialist and confesses as much in the preface to Mises’ book, “Socialism”, but he and Mises together worked out the theory of the trade cycle. Mises wrote:

“The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” That is from “Human Action”, page 572.

Mr Cash: My hon. Friend’s contribution is very thoughtful; he knows a great deal about such things, in the tradition of Cobden. However, is the real problem one of human nature as well as of economics? People are competing in an environment in which there is no real or comparative advantage because the new world—if I may use that expression—of the Brits has a huge advantage over the others. Good money is being thrown after bad unless the real problem is tackled: cheap credit that is not based on real, tangible economic advantage.

Steve Baker: I absolutely agree with my hon. Friend. He makes an excellent point with which I am in full agreement. Mr Redwood: Before my hon. Friend sits down, I hope that he will give the Committee the benefit of his advice on the order, because we are not yet quite clear what he would do about the £9.5 billion sub.

Mr Cash: On the victory the Minister is predicting in the match that we are playing, does he recall the words of Walpole, who said, “They are ringing their bells now, but soon they will be wringing their hands”?

The Chair: Order. I now have to put the question to the Committee and collect voices. However tempting it may be, only members of the Committee should say “aye” or “no”.

Question put. The Committee divided: Ayes 10, Noes 6.