Yesterday MPs passed the Loans to Ireland Bill. During the debate, Bill Cash made the following interventions:
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 Osborne: In my remarks today, I intend to address both the substance of the legislation and the loan agreement, but before that let me briefly say something about how we got here. Over the course of this year, it became increasingly clear that the situation in the Irish economy was unsustainable. Their sovereign debt markets had effectively closed and had little prospect of re-opening. Ireland's market interest rates had risen to record levels, and Irish banks had become almost wholly reliant on central bank funding to maintain their operations, with no obviousspect that that was going to change. This situation simply could not go on. We had been monitoring the situation for many months and had engaged in confidential discussions with our partners in the G7 and at ECOFIN about possible solutions.
Over the weekend of 20 November, Ireland's Prime Minister made a formal request for international financial assistance. The UK, alongside the International Monetary Fund, the EU, the eurozone and some other member states-Sweden and Denmark-made an agreement in principle to take part in putting together an assistance package for Ireland. Since then, the various interested parties have been working round the clock with the Irish authorities to put together a package. Officials from the British Treasury have been in Dublin in recent days ensuring that our interests and concerns were represented, and I want to thank them for their hard work. At the end of November, Ireland agreed with the IMF and the EU a three-year financial assistance package worth €85 billion.
Mr Cash: The document to which my right hon. Friend just referred is "for information purposes only" and is clearly not intended to be construed as part and parcel of the Bill. So can he explain why in the document the "conditions precedent" to the arrangements interweave the so-called "bilateral loan" with the European financial stability mechanism, and why an attempt is then made to bypass that by referring to the "Governing law" as "English law"?
Mr Osborne: I am going to discuss some of the conditions attached to the loan. The particular condition that my hon. Friend refers to ensures that the UK is protected if other parties to this international agreement change their arrangement with Ireland in some way that materially affects our ability to be repaid. That condition gives us an ability at that point to step in.
Mr Cash: My right hon. Friend is perhaps confirming my concern, which is that the interweaving of the conditions between the so-called "bilateral loan" and the mechanism is such that they are, in effect, inseparable, so European Community law could well apply.
Mr Osborne: I know that my hon. Friend is assiduous on these points, but I think that on this occasion he is not correct. This is simply a fall-back mechanism for us to say that if Ireland in some way renegotiates its loan from the eurozone, from the EU or from the IMF, it is a condition of our loan to Ireland that we can step in at that point and examine our situation. That protects the British taxpayer and has absolutely nothing to do with European law or anything else; it is simply there to make sure that other parties to this international agreement must have due regard to what they are doing, and how that might have an impact on the ability of the British taxpayer to be repaid.
Mr Osborne: 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.
Mr Cash: I am sure that my right hon. Friend will understand my saying that it would have been so much simpler if what he has just said had been specified in the Bill, instead of a blanket wording referring to substituting a greater amount. We would have then known that that was only intended to allow a margin of error depending on currency fluctuations. Subsection (4) is absolutely clear that there is no restriction.
Mr Osborne: No, let me explain. There are two separate subsections. Subsection (4) allows the loan to be increased substantively, but only with the authority and vote of this Parliament. If I were ever to seek a larger loan to Ireland, I would have to come here and get the vote of the House of Commons. That is what subsection (4) is about. I am making it clear that I have no intention at the moment of doing that, but subsection (4) provides for it, and would prevent us from having to pass further primary legislation. The protection for Members of Parliament is the same-they can keep a check on the Executive-because I would be required to get that affirmative resolution.
Subsections (5) and (6) refer to something different, which is the gap between the passage of the Bill and the signing of the loan agreement. There might be small movements in the exchange rate. We have signed up to this package of a contribution in euros, but we are making a sterling loan. As I explained earlier, I had the opportunity to sign the loan agreement and come retrospectively to seek parliamentary approval, but I am trying to do it the other way around because it gives Members of Parliament a much greater degree of control. That is why these two subsections are required.
Mr Osborne: I see the speed with which my hon. Friend leaps to his feet at that point, but I shall take his intervention in a moment.
The eurozone needs to address that situation, and we need to ensure that it gets it right, because that is absolutely in our interests. Individual countries also need to address their problems. Portugal has a long-standing problem with its economic productivity, which the Portuguese Government are determined to address. The Irish banking system has caused enormous problems for the Irish Government, who are now addressing that. In a bipartisan debate, this is a slightly partisan point, but I think that the UK has demonstrated over the past six months that, by its own efforts, a country can earn market credibility, improve its credit rating and improve international confidence in its economy. We need the eurozone to sort out its mechanism, but individual countries in Europe also need to take decisive steps to deal with the particular problems that their economies face. Let me give way to my hon. Friend the Member for Stone (Mr Cash), and then I must conclude to allow others to speak.
Mr Cash: I have put a number of questions, as yet unanswered, to my right hon. Friend on that very issue, but I am glad that he has given, at any rate, a partial answer to one of them. The mechanism's transfer from what appears to be an unlawful basis in article 122 of the Lisbon treaty to the new proposals under article 136 will involve only the eurozone and represent an important step in the right direction. Does my right hon. Friend not accept, however, that much could happen over the next two or three years, between now and 2013, while the mechanism in which my right hon. Friend's predecessor engaged, and which I believe to be unlawful, continues? We could be locked into a Portuguese or a Spanish black hole. We do not know yet, but there is a danger.
Mr Cash: When the shadow Chancellor says, as the Chancellor said, that the process was triggered by a qualified majority vote, I am sure that he would agree that that is not strictly true, because it resulted from a request by a member state. The final solution or arrangements are made by virtue of a qualified majority vote at the end. That is a qualification, but it does not alter the fact that, on the basis it was explained to us, article 122 was almost certainly unlawful and the use of article 136 would have been a better route. However, we appear to be entrapped into article 122 for the current purposes.
Mr Cash: Is the shadow Chancellor aware that serious discussions are going on about increasing the €400 billion facility, and probably doubling it? In response to my hon. Friend the Member for Kettering (Mr Hollobone), is not the whole European Union, not to mention the world at large, confronting a very dangerous and difficult situation?
Alan Johnson: Yes, but that is a matter for the eurozone. If the Chancellor is right in his prediction that perhaps this can ensure that we come out of the €60 billion mechanism, the facility and the other moneys, then fine, but as we are making a big contribution-more than we would have done had we paid the amount that a eurozone country would have paid to rescue Ireland-we must be in a position to influence this debate.
Mr George Osborne: I must correct this point. We are paying pretty much exactly what we would have paid if we had been a member of the euro; that is how the bilateral loan is being calculated. Germany is paying both through the facility and through the mechanism, and so are France and the other members of the euro. Other countries are paying twice. Ours is a bilateral loan like those of Sweden and Denmark, and they too have been calculated in a similar way.
Mr Andrew Tyrie (Chichester) (Con): … It is important to bear in mind that demand for a bail-out originated not with a request from Ireland, but from the fear among eurozone members of contagion spreading from Ireland to Portugal and Spain. Most hon. Members agree that bailing out the eurozone is primarily its business and not ours. It is true that the collapse of the zone would generate shockwaves throughout the region, and possibly the world. However, the eurozone does have the capacity to bail out weaker members and, to the extent that the stability of the whole financial system is at stake, our contribution should usually be made via the International Monetary Fund. It is for those reasons that I was relieved when the Chancellor confirmed before the Select Committee that the legislation will be unique to Ireland and does not contain enabling powers for further bilateral eurozone bail-outs.
Mr Cash: My hon. Friend says that he was reassured by the Chancellor, but does he appreciate that until 2013, we will be trapped into that mechanism, unlawful as some of us believe it to be?
Mr Darling: The circumstances in which Ireland finds itself are complex, but there is no doubt that one problem is that a common interest rate right across Europe is perhaps inappropriate for an economy that is rapidly investing in an asset bubble. However, I do not have the same phobia about the euro that many Conservative Members still have, 20 years on.
Mr Cash: I am extremely grateful. Did the right hon. Gentleman take legal advice on whether, as I said at the time, the use of the financial stability mechanism was an unlawful deal? Article 122 of the treaty on the functioning of the European Union deals with natural disasters, energy supplies and so on, and it has absolutely nothing to do with financial mistakes or misjudgments. Really, the whole thing should never have gone through, and he should have repudiated it on those grounds.
Mr Darling: Yes, but as I said earlier, because of QMV, the deal would have gone through anyway. I also do not agree with the hon. Gentleman's analysis or that the legal position was that clear-cut. …
Chris Leslie (Nottingham East) (Lab/Co-op): … Clearly these are troubled times for the world economy and for the eurozone, and we must sincerely hope that we will not find ourselves here again. The Opposition recognise that there are interdependencies between Britain and the Irish nation in respect of economic trade, direct relationships between our banks and financial investments across Ireland. Moreover, it is our only land-bordered nation state. We therefore have a duty to support the principle and spirit of the legislation, because a failing Irish economy would create harm here in the United Kingdom.
Mr Cash: Does the hon. Gentleman agree that were there to be such a European dimension as effectively to subjugate the Bill to the jurisdiction of the European Court, he would wish that he had voted against it?
Mr Cash: I beg to move amendment 3, page 1, line 4, at end insert
'other than a loan by virtue of any provision by or under the European Communities Act 1972'.
Mr Cash: I have just abstained on Second Reading for one simple reason. I had intended to vote for it, but I remain gravely dissatisfied by the answer that I received from the Chancellor regarding the increase in the amount specified in clause 1. I do not want in any way to misrepresent what he said, but as I understood it, it was that that was all right because it was about exchange rates. However, anybody who examines clause 1 carefully will notice that subsection (4) states:
"The Treasury may by order made by statutory instrument substitute a greater amount for the amount for the time being specified in subsection (3)",
which is £3.25 billion.
The next two provisions simply determine whether any increase will be subject to affirmative or negative resolution. An order would be made under the negative resolution only if the increase is to do with exchange rates, but I can see nothing to say that an increase under subsection (4) would be affected by subsequent provisions. I was bound to take great exception to that. It is a serious matter, because we simply do not know what the greater amount would be. We are totally exposed, subject only to affirmative resolution, which cannot be amended. Such a measure would simply go through on a whipped vote, just as the rest of the Bill doubtless will. That is why I abstained on Second Reading.
Amendment 3 addresses the definition of "Irish loan". I was staggered when I looked carefully at the Bill, because clause 1(2) states that "Irish loan" means simply
"a loan to Ireland by the United Kingdom."
The background is the recent debates on economic governance, and the origins of the European financial stability mechanism and the alternative eurozone facility, which as someone pointed out is as much as €440 billion, which is easily enough to cope with the Irish situation. There is a very close interconnect at all points between the so-called bilateral loan proposed in the Bill and the mechanism that I described.
The difficulty is that there is an overall determination to do as much as possible by way of integrating with Europe when it is quite obvious to anybody that this is the time for us not only to step back, but to desegregate from the European venture. I believe very strongly that the technique that is consistently employed in all spheres of activity is to say, "We don't like what goes on in the EU, but we can just go along with it. Alternatively, to satisfy the Eurosceptics or Eurorealists, as they prefer to be called, we can make parallel arrangements along the lines of what we would have done if we were in the eurozone."
The research paper helpfully supplied by the Library states:
"It is worth noting that the bilateral element"-
assuming that that is what the Bill is-
"of the UK's support is broadly equivalent to what the UK would have provided if it were part of the eurozone-only EFSF."
In other words, we would have provided the loan anyway. The Minister may well say that that is not his intention, but that is what Library researchers believe, and they are often right.
Mr Redwood: A portion of the total loan package is contingent money for Irish banks-they may or may not need it. Is my hon. Friend worried that they could come back for even more, and that clause 1(4) could allow an extension of our loan for Irish banks?
Mr Cash: Yes I am. Treasury civil servants are exceedingly clever and may know of pitfalls, but they might not fully explain them to Ministers. Of course, the Minister takes ultimate responsibility, but the question is: what is the effect on the daily lives of the people whom we represent? That is the issue on which we have to concentrate.
Under the circumstances, I am extremely dubious about the way in which the whole thing has been put together. In particular, I would mention what I will call the mechanism, as compared with the facility. I had an exchange earlier about the mechanism with the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), who said, "This is all going to be done by qualified majority voting." However, that is not the case. Within the mechanism as it is set out, the request comes from the member state; it is only the final arrangement that requires qualified majority voting. Indeed, the EU sent in the European Central Bank and the International Monetary Fund in flagrant contradiction of the provisions of article 3 of the regulation in question.
In fact, the EU was operating the provision as if it were already law, when it was not. That it is typical of the European Union. It keeps on telling us about the rule of law, but when it suits, it completely ignores the law. What happened was unlawful. I also believe that it was unlawful in respect of article 122, which was the legal basis used to create the mechanism. I do not need to go into detail, but article 122 concerns natural disasters, energy supply and things of that kind. Anyone who looks at article 3, article 122 and the others provisions that they mention would reasonably conclude that they should not be used for the purposes of sorting out an unmitigated mess that was created by banks, as well as by the Government of Ireland and other parts of the European Union. Therefore, I am afraid that the answer that I received from the former Chancellor-that there really was no alternative to what was done, because such decisions are reached by qualified majority voting-does not stack up. If what happened was unlawful, it should have been resisted and, because of the consequences, it should, if necessary, have been taken to the European Court.
Mr Redwood: My hon. Friend has great legal expertise. I understand that the European Union is trying to negotiate an amendment to article 122 of the treaty in order to put the matter beyond doubt. Would that be retrospective, or could that undermine the current position?
Mr Cash: That is a very good question. I doubt very much whether an attempt to make the provision retrospective would remedy the mischief.
I am afraid that the question of illegality taints the Government's position as well, and I shall explain why-the Minister will know all the detail, because I think that he was the Minister responsible. There is provision for the European Scrutiny Committee under Standing Order No. 143 regarding scrutiny and scrutiny reserves. It so happens that the European Scrutiny Committee was not set up until November, a few weeks ago. However, I have here a table setting out the dates that shows that the date of deposit was 25 May 2010. The decision was taken on 9 May at ECOFIN, which happened to be 48 hours before the coalition was pushed through. In the case of ECOFIN's decision on the financial stability mechanism, the table states unequivocally that there was an override of both the European Scrutiny Committee and the Lords. On both counts, the then Government and the current Government breached the scrutiny arrangements. Indeed, it is quite extraordinary that the explanatory memorandum that accompanies the documents in question, and which should have been presented much earlier, was presented on 15 July. I know that the Minister will not dispute that, because it comes from Government documents. There is a serious worry about the manner in which this matter has been manipulated.
Just before the proceedings began, we were presented with another document, which reinforces my concern. If my amendment 3 were accepted, the Bill would read: "In this Act, 'Irish loan' means a loan to Ireland by the United Kingdom other than a loan by virtue of any provision by or under the European Communities Act 1972." I am very familiar with the way in which interweaving goes on, not only as Chairman of the European Scrutiny Committee but because, for the past 26 years, I have watched this process of integration and the manner in which, by extremely clever and adroit manoeuvring, we get further and further integrated into these arrangements. The mechanism is an open-ended invitation until 2013, as I ascertained during an exchange with the Chancellor of the Exchequer. Until 2013, we are stuck with the present arrangements.
I am sometimes a bit of a Cassandra, in that I make prophecies-more like predictions-about certain events, find out that I was right and then find out that nobody took any notice until they had happened. On this occasion, I am going to say that it is extremely likely that, if Portugal gets into really deep trouble-and perhaps Spain, too-that will happen before 2013. If this greater amount is interwoven into the stabilisation mechanism, or even if it is not, the mechanism itself will entrap us in the arrangements which, although not yet permanent, will go on until 2013.
I also think that the Government are struggling a bit in relation to article 122, under which this measure was introduced-unlawfully, in my opinion-because the Commissioner responsible, a Mr Sefcovic, has stated that the Commission is still considering whether to use article 136 or article 122. Against that background, the Van Rompuy Committee is sitting and might already have concluded that it would be appropriate to have a permanent mechanism in place only under article 136, and therefore only by reference to the eurozone. That would be a plus, but it would not alter the fact that, between now and 2013, we are at risk.
I am concerned about the deficient wording in clause 1(2), because not excluding what might be done under the European Union effectively leaves it open to the European Union's continuing to weave its way into the arrangements, despite the fact that they are described as a bilateral loan. Some people might say, "Ah, but you have to understand that when the explanatory notes talk about a bilateral loan, they mean that." It does not say that in the Bill, however. Furthermore, we have had some unpleasant experiences with explanatory notes in the European Scrutiny Committee recently, as anyone who wants to read the report that we have just issued will see. The explanatory notes in question were positively misleading, and distorted the legal position. That is a matter that we will be pursuing in Committee, when we ask whether parliamentary sovereignty or judicial supremacy should prevail. I do not need to go into the detail of that now, but the fact that a bilateral loan is mentioned in the explanatory notes has been severely vitiated by our experience of the explanatory notes to the European Union Bill.
My concern is about the weaving-interlocking is probably a better word-of the loan that is provided for in clause 1(2) and the proposals that I have put forward, under the mechanism. Helpfully-at least I think it was helpfully-several hours ago, before the debate started, for the first time we were given a document described as "Summary of key terms: credit facility for Ireland." It says at the front:
"This document has been prepared for information purposes only in connection with Second Reading in the House of Commons…Without prejudice to the ongoing negotiations"-
which might raise a few question marks-
"it contains a summary of terms agreed in principle and expected to be included in a credit agreement between Her Majesty's Treasury and Ireland."
I understand, although I am not certain, that the agreement has been signed off today, so perhaps it is now not for information purposes; it may now ne a concluded deal, but I will park that one.
Part of the problem is that the arrangements described in the document set down certain conditions precedent to the efficacy of the arrangements. Specifically, the conditions precedent include
"finalisation by the Borrower"-
that is Ireland-
"after consultation with the Lender"-
that is the UK-
"of a restructuring plan in relation to its banking sector with the IMF, European Commission and European Central Bank."
That sounds to me positively a matter of interweaving with the mechanism, which comes within the jurisdiction of the European Union and the European Court of Justice. That is the point I want to make.
Furthermore, the document says that the information covenants
"will include, in addition to information relevant to the loans and information relating to the progress of the Borrower's economic stabilisation plan"-
that is Ireland-
"copies of reports dispatched by"
"to the IMF, European Union or European Commission in respect of the Memoranda of Understanding."
The memoranda of understanding are also to do with arrangements within the framework of the European Union, and in that context in fact appear to be within the framework of the facility, which is the eurozone only. What we have here is a kaleidoscope of interacting, different fragments, which all ultimately seem to me to hang together.
Furthermore, the document goes on to say that the general covenants will include
" pari passu ranking of obligations"-
a point that my hon. Friend the Member for Rochester and Strood (Mark Reckless) raised earlier-
"under the credit agreement with all other unsecured, unsubordinated obligations (recognising the seniority of"-
but not different from-
"the support facilities provided by the IMF and European Financial Stability Mechanism)".
There are therefore two interacting, constantly interlocking arrangements, and I am left with the very deep worry that, in the absence of the clear wording that I have provided in my amendment, our so-called bilateral loan would effectively be part and parcel of the European jurisdiction. That is why I tabled the amendment.
Stewart Hosie: Could it not simply be the case that the UK is providing a loan to Ireland in a time of need-a country that takes 7% of our exports and whose banks provide a quarter of the banking facilities in Northern Ireland? While all this is academic and interesting for those who are interested in it, could it not simply be the case that we are providing a loan to a friend in need at an important time?
Mr Cash: I happen to agree with that, which is why I did not vote against the Bill, but I must say that this is not a matter of merely academic interest, because the consequence that I mentioned at the beginning of my speech, which led me to abstain, is that there is no restriction on the greater amount. I wait with enormous interest to hear whether the Minister will differ from the Chancellor of the Exchequer on that, but when it is an open-ended provision for a greater amount, I would like to know what that greater amount's limit would be.
In the context of the interlocking aspect to which I have just referred, I remain deeply concerned that the amount could be greater, and that this matter could get caught up in the complicated ongoing negotiations-I recognise that the Chancellor and his Ministers have had some very complicated negotiations. I remain worried about the direction in which we seem to be going, therefore. It would be so simple for the Government to give me either a direct assurance, which I would regard as a second-tier response, or a specific agreement to accept my amendment just to get me off their back. I would regard such an agreement as a useful way of dealing with the situation, but I bet I do not get that.
Mr Dodds: We will listen with interest to what the Minister has to say, but, just to be clear, is the hon. Gentleman's argument that the greater amount under clause 1(4) could be used to increase not only the amount of the loan to the Irish Republic, but interweaved with the financial stability mechanism to provide money for other countries? Is that his argument, or is it specifically about the loan to the Irish Republic?
Mr Cash: The provision appears to apply to the Irish component, but because of the implications of what I am saying and the interlocking aspects in the kaleidoscope, it is extremely difficult to work out exactly what is intended by such opaque words. What I am asking for is very modest: simply the removal of all doubt by making it clear that any such loan would be
"other than a loan by virtue of any provision by or under the European Communities Act 1972."
If all doubt were to be removed in that way, it would be the end of the story and there would be no problem, so why not do it? I look forward to the Minister's response.
Another issue arises under paragraph 6 of the summary of key terms document. The paragraph covers events of default, and sub-paragraph (h) states that one event of default will be
"not being or ceasing to be a member of the European Union".
Why would such a provision be wanted if it were not integral to the fact that Ireland is a member of the European Union? I do not think I need to advance the case any further as it is very simple: if we would exclude Ireland from the arrangements by virtue of its ceasing to be, or not being, a member of the EU, that must have special significance, otherwise it would not be stated. That is another exceedingly worrying feature.
Paragraph 8 refers to the governing law, and it states:
"The credit agreement and any non-contractual obligations arising out of or in connection with it will be governed by English law."
Paragraph 9 is on enforcement, and the document's authors have clearly thought a lot about this matter, and the more they think about it the more worried I get, because they are transposing their thinking into the provisions of the Bill and this document:
"The English courts will have exclusive jurisdiction in relation to any dispute including a dispute relating to non-contractual obligations arising out of or in connection with the credit agreement."
That gets to the heart of the problem, because anything that within law is under the jurisdiction of the European Union and within the framework of the European Court under the European Communities Act 1972 cannot be excluded from that jurisdiction by such words in a document of this kind that is "for information purposes"-hence our European Scrutiny Committee report on the relationship between parliamentary sovereignty and the judiciary. Therefore, merely writing in such a document that something will be governed by English law and that the English courts will have exclusive jurisdiction in relation to any dispute is not worth the paper it is written on.
If it is within the European Union legal framework, that means the European Court will get its hands on it. It may be that if there was a dispute or default or any of the other difficulties that could arise from the agreement in the Bill as enacted-as I rather suppose it will be-that will in no way alter the fact that ultimately, as long as parliamentary sovereignty prevails in the light of the European Communities Act, the Supreme Court will not prevent it from falling within the framework of the European Court of Justice.
Of course, it would be open to any future parliamentary Bill to try to unravel the arrangement, but what a pity it would be if we found that the fast-track arrangements we are experiencing today led us to the situation that I have described, simply because we were not prepared to listen to the argument that could resolve the problem by excluding the European jurisdiction. The legal advisers, the Treasury officials and the Minister may well be wrong. If they are wrong, we are in deep trouble. If they are doubtful, perhaps they could listen to those of us who have been proved right on a number of past occasions.
These are my final words-not from Cassandra, but from me. When things go wrong, it is much better to have taken advice beforehand and keep ahead of the curve, rather than allowing the curve to catch up with us.
Mark Durkan: On amendment 3, tabled by the hon. Member for Stone (Mr Cash), the amendment of itself does not preclude the fear that he and my hon. Friend the Member for Luton North (Kelvin Hopkins) have that at some point in the future there might be a loans to Spain Bill, a loans to Portugal Bill or something similar. The amendment would not preclude the possibility of any other such bilateral loans being arranged in future. I do not believe that the amendment, which is commended to us in those terms, will serve the purpose for which it was tabled.
Mr Cash: I agree with that, but that is not what I have said. I have said that under this Bill, the consequence of not adding the words that I have provided puts the Bill in jeopardy of falling within the framework of European jurisdiction, which is a different point.
Mr Cash: For the time being, I have decided against pressing amendment 3 to a Division. …Amendment, by leave, withdrawn.
Amendment proposed: 6, page 1, line 18, at end insert-
'(7A) Before determining the interest to be charged on any payments under this Act, the Treasury must specify the rate of interest by order; and the Treasury may not make such an order unless-
(a) the House of Commons has determined by resolution the rate of interest to be charged; and
(b) the order provides for that specified rate to be charged.'.- (Mr Carswell.)
Mr Hoban: In dealing with the issues emerging in Ireland, we have sought to keep the House informed as much as possible about the progress that was being made as the crisis emerged, and the role that the UK Government felt they should play in helping to resolve it and responding to the Irish Government's request for help at the end of last month. We have done that through statements to the House and the publication of the Bill last week, and to aid debate, we ensured that before today's debate started a copy of the loan agreement was placed in the Vote Office. I hope that hon. Members will recognise that we were not able to place the summary document in the Vote Office earlier-or, indeed, to place the full signed agreement there-because negotiations are still ongoing with the Irish Government. However, the principles that have been agreed were set out in the summary of key terms.
I think hon. Members would say, "Well, it's all very well that you've been transparent and open in the run-up to the loan process, but what's the next stage? Are you going to be transparent during the life of the loan? How are you going to keep the House informed of what's happening, whether the Irish Government are drawing down each of the eight tranches, how far they've got with repayments, and so on?" For that reason, we decided that there should be a clause to deal solely with reporting. It states that the Treasury will
"prepare a report about Irish loans and lay it before the House as soon as practicable after the end of that period."
The first period will end on 31 March 2011 and a report will be published for each subsequent six-month period. The clause states that those reports will include details of
"any payments made by the Treasury by way of"
the loan, and details of …"any sums received by the Treasury in that period by way of repayment of principal or the payment of interest"
"the aggregate amount of principal and interest in respect of…loans which is outstanding at the end of that period."
Clearly, we will not be required to report if no payments are made within subsection (3)(a), and if no sums under subsection (3)(b) are received as payment, or if
"no amount of principal or interest in respect of an Irish loan is outstanding at the end of the period."
Subsection (5) states that the clause will cease
"to have effect
if no report is required to be prepared in relation to the relevant period ending with 31 March 2016"
The shadow Chancellor, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), tabled amendment 1, which helpfully suggests that we broaden the information that should be supplied in Parliament. I believe that the Government would have supplied such information anyway, but the proposal prompted us to consider the matter carefully and to reflect on it, in the spirit of bipartisan co-operation that has characterised most of the debate.
Amendment 1 would require the Government to report on the original term of the loans and any amendments to it, as well as payments made, sums received and amounts outstanding. As I said, I would have expected our reports to cover those points, and for us to include the duration of the loans and-in reporting outstanding liabilities-their remaining terms. We accept the principle, but as I know from my experience as an Opposition spokesperson, Opposition Members do not have access to the full array of drafting skills that Governments have. That hampered my drafting of amendments previously, and I am grateful that I now have those resources to call upon.
We therefore tabled manuscript amendment (a), which achieves the same effect as amendment 1, but more clearly.
Mr Hoban: … I should make some holding remarks on amendment 5, which my hon. Friend the Member for Stone (Mr Cash) tabled. I am pleased to see him in the Chamber, because he may be able to be clearer about the thinking behind his proposal than I could.
Subsections (4) and (5) are there to ensure that the duty to report does not continue indefinitely once all loans made under the Bill have been repaid and the authority to make further loans has lapsed. The way in which my hon. Friend has drafted amendment 5 would turn the requirement to report on the loan while sums are outstanding into an open-ended requirement to report every six months ad infinitum, even once all the loans had been fully repaid. I hope that the Committee will agree that this would be unnecessary and undesirable.
Amendment 2, tabled by Her Majesty's Opposition, would do something slightly different. Whereas my hon. Friend seeks to amend clause 2 to ensure that reports appear ad infinitum, the Opposition seek to bring forward the date on which the duty to report would end, by removing the requirement to report where there were no outstanding liabilities, but where there had been repayments or payments of interest in the preceding reporting period. In effect, amendment 2 says that there should not be a report where there is no balance to be repaid at the end of the period, although payments have been received in those six months. It would seem odd to remove the need for a report on the period during which the last part of the loan was paid off. Clearly the Government should be required to report that that has happened, and that is what the Bill as drafted requires.
I hope that the Committee will accept amendment (a), and that the proposers of amendments 1, 2 and 5 will not press them to a vote.
Mr Cash: I have much the same curiosity as the hon. Member for Nottingham East (Chris Leslie). I was a bit puzzled by the drafting of this provision, and I wanted to find out what the Minister had in mind. I am not sure that he has left me any more satisfied than I was when I started out, however, because my experience over the past 26 years of the dogged fashion in which Ministers operate is that they just say, "We're not going to make the amendment." They do not usually explain the position satisfactorily either.
Having said that, it seems to me that if there is nothing to report, we should just not bother with the reports. Subsections (1), (2) and (3) will be necessary. It is possible that, in due course, the concerns that I raised on an earlier amendment might need to be included in the report. That was the case, for example, in relation to the reports on the Maastricht convergence criteria, despite all the footling remarks that were made during the debate on Maastricht, when we were assured that this, that and the other would not happen. When we came to the convergence reports, and got into the whole business of the golden rule, the stability and growth pact and all the other shenanigans and wriggling, we were proved right over and over again.
Chris Leslie: I just want to pick up the hon. Gentleman's point that if there is nothing to report there is no need to have any reports. I believe that it would be of interest to the House if, even when no payments were made, a report were still produced to set out that fact. That might seem a small point but, for example, in the unlikely event that default became an eventuality, the lack of a payment being received might be of interest. That was also part of the rationale behind deleting subsection 4(a) and (b).
Mr Cash: I think I might agree with that too, but I think that is catered for by subsection (3)(a), which says that each report must include details of
"any payments made by the Treasury".
One could have said, "payments, if any," but for practical purposes I think subsections (1), (2) and (3) would be sufficient. I am not particularly fussed about it; I just wanted to table a probing amendment. I got the usual stonewalling operation from the Minister. I have got used to it over the years; it makes no difference to me and it makes no difference to him.
Mr Cash: Perhaps a little bit of irritation, which is not usual in my case, is beginning to burgeon, because a number of questions that I tabled weeks ago about the legal advice regarding the stabilisation mechanism still have not been answered, and when I use the word "stonewall" I mean just that. When I do not get an answer, and I am told that I will get the answer as soon as possible but I still do not get it, and I have to put in a reminder but I still do not get it, there is something going on; I know that. They do not want to disclose the legal advice; they do not want even to disclose whether in fact it was given, or when it was given. I would like to know the answer to those questions because as Chairman of the European Scrutiny Committee-
Mr Cash: I, too, hope that this Bill succeeds, because it is important to help Ireland. I would like to see Ireland as part of a new configuration of the European Union, rejoining this country on a different footing from the arrangements that currently prevail in the European Union. The European Union is increasingly in its death throes and I hope that this does not lead to an implosion. We have seen riots in the streets here in the United Kingdom, in Greece, in Portugal and in Italy-there were riots in Rome only yesterday. The situation is extremely grave and a lot of it results from the very point made by the hon. Member for Nottingham East (Chris Leslie) about growth. The plain fact is that under the current arrangements there is no growth. Until powers are repatriated we will not get the sort of oxygen into the small business community that will be able to fill the gap between the requirements of the Irish economy and those of the UK economy.
In the meantime, we are considerably exposed to the indebtedness of the Irish banks. The amount that we have made available, small as it is comparatively but great as it is from the point of view of the British taxpayer, has been justified, but that is without prejudice to my concerns. They are that the former Chancellor of the Exchequer's explanation of how the financial stability mechanism came to be put through remains unsatisfactory. He could have referred the whole question to the European Court, because this was unlawful and remains so. I sent a note to the Chancellor of the Exchequer on this very question as he was going off to an ECOFIN meeting. I regret to say that the explanatory memorandum produced by the Government on 27 July-perhaps it was 25 July -endorsed the decision taken by the former Government, and that speaks for itself.
I am also deeply worried about this business of the "greater amount" under the provisions that we have already discussed because, irrespective of what the Chancellor said about the exchange rate, the reality is that the amount of the increase is simply a matter of whether or not it is carried by the affirmative resolution. It is only when the exchange rate issue comes into play and we are therefore just dealing with a fluctuation in the amounts to be made available that we revert to using the negative resolution. Therefore, the Bill still provides that this "greater amount" is an open-ended commitment, and I hope that the Government will keep this closely under surveillance. I have heard nothing from the Front Benchers to dissuade me from that view.
Finally, we need to deal with the question of the Euro-ectoplasm and the way in which the kaleidoscope of European legislation in conjunction with all the other arrangements that have been made parallel to this so-called "bilateral loan" weave together, because there is a serious risk that the European jurisdiction applies here. I did not press my amendment to a Division for reasons relating to another vote that did not, in fact, transpire along the lines anticipated.
Be that as it may, the Bill is understandable from the point of view of the Irish economy. However, the Irish Government and the Irish banking system have to take the blame for allowing their economy to get so far out of kilter, and that point needs to be made on the Floor of this House. We are helping them, but we are doing so without prejudice to the fact that they got themselves into the same kind of mess as the Labour Government did on our economy. This is not a day for excuses or congratulation; it is a day for a bit of sober reflection. If people spend what they have not got, they end up with it catching up with them. There is a great deal to be said for prudence, but not of the former Prime Minister's kind. Please read the full debate here.