Loans to Ireland Bill

Christopher Chope Excerpts

Wednesday 15th December 2010 Commons Chamber

[Mr Osborne]

The second intervention draws me back into the rest of my speech, but in response to my hon. Friend the Member for Clacton (Mr Carswell), I have common-law powers to issue the loan and sign the loan agreement. I then have to seek statutory authority, but that could be done retrospectively. I thought it more appropriate to seek parliamentary approval first, and that was a discretionary choice that I had.

I will answer my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) directly a bit later in my remarks, when I get on to the terms of the loan that we are going to consider.

[Mr Christopher Chope (Christchurch) (Con)]

Will my right hon. Friend give way on that point?

[Mr Osborne]

I will give way to my hon. Friend, and then I really must make some progress.

[Mr Chope]

I am grateful to my right hon. Friend. If the point that he is making is such a good one—it may well be—why did he not include it in paragraph 14 of the explanatory notes, making a virtue of the fact that he was bringing this matter before the House now rather than seeking retrospective approval?

[Mr Osborne]

I said in an earlier statement to the House that I was seeking to do that, and I had hoped that hon. Members were paying attention to what I said at the time.

The legislation that we shall pass today will allow the UK to be ready in the new year to meet its commitments to one of our closest international partners. As has been noted, the legislation before the House is narrow in scope—it is explicitly a Loans to Ireland Bill—but it is still enabling legislation. It sits alongside the actual loan agreement, which sets out in detail what we will offer Ireland. To ensure that Members have as much information as possible available to them for today’s discussion, a summary of the key terms of the loan agreement, which was agreed with the Irish Government only this morning, has been available in the Vote Office for more than an hour now.

--- Later in debate ---

[Mr Christopher Chope (Christchurch) (Con)]

I hope that the former Chancellor’s message to Germany is well received by the German people, because the fact that a price of eurozone membership was making transfer payments to sustain the currency in countries that are not so competitive was never sufficiently spelled out to them. This is essentially a eurozone problem and an Irish problem, and I do not think that we should put British taxpayers’ money into it other than to meet our obligations under our membership of the IMF. It is perfectly reasonable to contribute through that mechanism. As the Chancellor has said, in so doing, we get more security for our loan than we would from a bilateral agreement.

The proposed loan to Ireland is relatively soft. Interestingly, the Chancellor says that the proposed interest rate will probably be slightly less than that of the eurozone facility, and that that demonstrates the competitiveness of our economy. I see things differently. If we have such a competitive economy, why not make a profit on the interest rate and charge the same rate as the eurozone and get the benefit for the British taxpayer?

[Mark Reckless]

All we are doing is passing on to Ireland the quarter per cent. or so of benefit that we gain by being a better creditor than the eurozone. Most hon. Members feel that we should help Ireland, but I agree with my hon. Friend that it is not necessarily helpful to Ireland to have a huge amount of extra debt on top of the great debt it already has. On that basis, I understand his point.

--- Later in debate ---

[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.

[Mr Hollobone]

Does my hon. Friend recall Ireland’s position a few months ago, when the UK Government tried to bring the European Parliament budget under control and needed a blocking third to prevent the proposed budget increase? Where was Ireland at our time of need on that occasion?

[Mr Chope]

My hon. Friend asks a rhetorical question. The answer is that I am not sure where Ireland was at that time.

I agree with my right hon. Friend the Chancellor that we should allow the Irish to have their own domestic policy. That is why it would not be right for us to interfere with their low corporation tax policy—it should be for them to decide. However, the other side of the coin must be that we let the Irish take the consequences and accept the responsibility for what happens as a result. We cannot say, “We’re going to help pay for the consequences while not being able to influence the policy.” I find what is proposed very intellectually trying to deal with.

When we have a border—our hon. Friends from Northern Ireland have made their points about this—that low corporation tax policy makes things much more difficult. Indeed, it is possible to argue that we have lost the corporate headquarters of major international organisations from London to Dublin as a result of Ireland’s low corporation tax policy. Now we are subsidising that policy, the consequences of which are that the Irish have been unable to meet their financial obligations and are desperate for additional loans. I am not convinced that we should be getting involved with British taxpayers’ money. It would be different if we did not have an awful national debt crisis, but we do. One consequence of the Bill, if it goes through today, may be to send out a signal to our constituents that says, “Don’t worry, the debt crisis is not as bad as we’ve been telling you, because we can afford to add to that debt further by giving a soft loan to the Irish.” At the same time, we are having to argue to our constituents that we cannot put pressure on the banks to give more soft loans to businesses, even if those businesses go bust or cannot expand as a result, with all the damaging consequences for employment that that would have in our country, so I am not convinced.

[Mark Durkan (Foyle) (SDLP)]

Does the hon. Gentleman not acknowledge the scale of the exposure of British banks in the Irish Republic’s economy or the key dependence of Northern Ireland’s economy on the role of some of the Irish banks?

[Mr Chope]

Of course I acknowledge that, because it is a fact. However, my hon. Friend the Member for Chichester (Mr Tyrie) made the important point that, in negotiating a bilateral deal, we might have been able to deal with the debts owed to those banks and, in a sense, directed any money that we wanted to give into those British banks, rather than into the Irish coffers in general. We could have linked those things, if that was what was needed. However, I do not think that the difficulties of those banks are a justification for increasing our national debt further in the way that the Bill proposes.