Bill Cash made the following interventions in a Westminster Hall debate on “Eurozone Crisis”, 15 November 2011:
Mr John Baron (Basildon and Billericay) (Con): Good morning to you, Mr Caton. In raising concerns about the UK’s liability to the eurozone bail-out via its contributions to the International Monetary Fund, I will ask various questions of the Minister. I will question the assumption that we always get our money back; whether the IMF’s policy will work; and why the IMF should be getting involved at all.
That we are talking about large sums of money cannot be denied. Our liability through the European financial stabilisation mechanism totals some £6.5 billion. Our liability through the bilateral loan to Ireland exceeds £3 billion. Despite Government assurances to the contrary, it does not stop there. Our IMF liability to the Greek, Portuguese and Irish bail-out packages announced before May 2011 totals some £3.5 billion, and that does not include the latest Greek bail-out. Adding in our additional contributions, which are almost doubling—from some £10 billion to nearly £20 billion—it is obvious to all that we are soon talking some big figures. I do not think the Minister can deny—I welcome his intervention if he thinks otherwise—that some of the additional IMF money will be routed through to the eurozone crisis. Therefore, the Government’s claim that our liability stops with the EFSM and our bilateral loan to Ireland simply does not wash.
Let me be clear: I support the IMF’s work. IMF programmes can and do work under certain conditions. However, there are real risks to those IMF contributions routed through to the eurozone crisis.
The Government take great comfort from the fact that no country that has lent money to the IMF has ever lost that money. However, this recession is very different. Having been a fund manager in the City of London, running pension funds, charity money and funds for private clients, I know that it is always dangerous to say, “This time it is different”, but economic history makes that clear. Recessions since the great depression have always been de-stocking events, where the problem has been a fall in demand. In response to that, the Keynesian approach of stimulating the economy through additional demand—if necessary, by borrowing—has by and large done the trick. This recession, however, is a deleveraging recession, which has been built on excessive debt. Governments and consumers have taken on too much debt. Demand is not the issue; excessive debt is. The only remedies for this recession are to pare down the debt and attain greater growth through increased competitiveness.
I worry that the Government are underestimating the scale of the debt. There is £300 billion-worth of Italian debt to be rolled over in the coming 12 to 18 months.
The eurozone went to the Chinese, who have massive reserves, but the Chinese did not want to know. The fact that the IMF wants an additional £10 billion from us clearly suggests that it does not have our original £10 billion. The Government would be foolish to ignore the omens. Does the Minister accept that there is at least some risk that the UK could lose some of the money routed through the IMF to the eurozone crisis? Again, he is welcome to intervene if he so wishes.
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Mr William Cash (Stone) (Con): My hon. Friend is making an important point. Last night, the Prime Minister made a speech at the Guildhall in which he called for fundamental reform in the European Union, but it is not really just a question of fundamental reform in the EU, is it? What we have to have is a fundamental change in the relationship between the United Kingdom and the European Union, because it is a failed project. We have been enmeshed in it and it is increasingly causing damage to our own economy.
Glyn Davies: My hon. Friend has anticipated my next point, although I shall not use precisely the same language that he uses and has used for a long time—probably about 30 years. The current Government’s policy, which I support, is that we should seek to repatriate powers from the European Union. That is easy to say, but for the Government to deliver that objective, the Prime Minister, Chancellor and Foreign Secretary have to have a way to do so. As Members of Parliament, we have a responsibility to think about exactly how we are going to do that. Which parts of European policy, precisely, do we wish to repatriate—whole blocks or just specific parts? The issue is hugely complex and a tremendous amount of work will have to be put in to enable it to be addressed.
We could speak for hours on the issue—I am sure that I could. A lot of Members want to speak. I have raised the points that I wanted to make and look forward to the Minister’s response.
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Mr Cash: Does my hon. Friend remember Madame Lagarde saying on 17 December 2010, when she was Finance Minister for France, that they broke all the rules because they wanted to save the euro at all costs? The rules have been broken, and that relates to the stability and growth pact and every single aspect of this.
Stephen Hammond: My hon. Friend is right, and my hon. Friend the Member for Basildon and Billericay made exactly that point in his speech. I will not go on, but it seems simply ridiculous. If the eurocrats of Europe think that saving the euro is more important than working out the solution to the economic crisis, then progress will be, at best, tortuous. (…)
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Mr Cash: What is my hon. Friend’s evidence for the success of the reduction of the deficit? Growth is running at almost zero, and much of that comes surely from the fact that we cannot trade with a completely stagnant Europe.
Neil Carmichael: One of the obvious pieces of evidence is that we are not talking about the IMF coming to bail us out—a huge achievement by the Government that should be recognised. We will have to move on from devaluation, but I think that I have made my point and others have attempted to make theirs.
Inflation would certainly help debt reduction, because it does in the long run. As I said in an earlier intervention, when Denis Healey borrowed money from the IMF, that did arrest devaluation. We were more easily able to pay the IMF back quite quickly because of the impact of inflation. I do not support inflating the economy in that way either, as a remedy.
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While you are seeking to repatriate powers from the European Union-which should never have been given to the EU in the first place, I respectfully suggest that you abandon immediately the EU’s Localism Bill you are putting through Parliament at this present time. This Localism Bill is on the Council of Europe’s website and is recorded in the UN, although from the dates it seems to have “gone upwards “ from the EU to the UN and not from the United Nations.
It is a Bill that is designed to divide the Nation and Country of ENGLAND permanently into Regions of the European Union. To be governed directly eventually through the EU by the Committee of the Regions. It is perhaps, the most destructive Bill that has come from the European Union up to now and something that even Hitler never managed to do through all the bombing of this Country in the last war. In fact his bombing brought the people of ENGLAND together.
By accepting the EU’s Localism Bill, you are allowing the European Union to have permanent “sovereignty” (authority) over our Country in telling our elected Government what it must do, how it must run and govern our own once proud ENGLAND.
This Bill divides the people-for they may be in competition with each other for funds from the EU etc. Our Governments is allowing a foreign organisation to dictate what our once sovereign Government does to our own Country. Scotland is already classed as an EU Region, as is Wales and London.
I understand you are to reduce the House of Commons by 50 people, yet in reality it is doubtful we would even need fifty people left in Parliament once the Regions took hold, plus the people cannot afford to contribute towards another extra layer of Governance, the EU Contributions are too much to pay anyway and that is without counting all the EU Agencies we also contribute to.