EU: Financial Assistance to Member States

Lord Sassoon Excerpts

Monday 19th July 2010 Lords Chamber

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, at the emergency ECOFIN meeting on 9 May, EU Finance Ministers agreed that up to €60 billion of emergency finance can be provided to any EU member state in accordance with Article 122(2) of the EU treaty. At the same time, euro-area Finance Ministers agreed a €440-billion package of assistance to be provided through a special purpose vehicle. Both these actions are consistent with Article 125 of the treaty.

[Lord Pearson of Rannoch]

My Lords, I am grateful to the noble Lord for that reply, which does not square with the Government’s Answer of 14 June when they agreed that no member state should be allowed to bail out another. Are not the proposed bailouts yet another example in a long line of examples of Brussels riding roughshod over its own legislation? Going slightly deeper, does not history teach us that trouble lies ahead when a regime feels free to break its own laws with impunity, when it is supported by a puppet court, and when its people are powerless to get rid of it? Is that not exactly what we now have with the European Union?

[Lord Sassoon]

My Lords, I fear that I will not be able to persuade the noble Lord, Lord Pearson of Rannoch, of what I am going to say. However, there is no question of any bailout. The one thing I agree with him on is that Article 125 does indeed rule out any bailout. However, no bailout has been proposed or implemented under Article 122(2) or any other article because what have been proposed are loans, which are fully permitted under Article 125.

[Lord Davies of Oldham]

My Lords, given the range of opinions that exist on the coalition Benches, from Europhiles to Eurosceptics, would it be possible for the Minister to prevail on the Leader of the House to provide a little niche corner for the noble Lord, Lord Pearson of Rannoch, as he speaks neither for these Benches nor on behalf of these Benches, so he should not speak from them?

[Lord Sassoon]

My Lords, I am not sure what the question is or what it has to do with Article 125, but we were all entertained by it.

[Lord Hannay of Chiswick]

My Lords—

[Lord Stoddart of Swindon]

My Lords, does the Minister agree that Members of the House can speak from any Bench they wish? Does he recall that until 1985 the Labour Party was in favour of complete withdrawal from the European Union?

On the Question, should not the Government ensure that the European Commission and European authorities obey their own laws and not expect member countries to obey laws on pain of a fine?

[Lord Sassoon]

My Lords, as regards Article 125, about which we are talking today, there has been no suggestion that the Commission or anyone else has proposed anything illegal under the treaty. Indeed, Her Majesty’s Government take their own legal advice to confirm that position.

--- Later in debate ---

[Lord Newby]

My Lords, will the Minister confirm that, despite the predictions of the noble Lord, Lord Pearson of Rannoch, and others, the action taken by the EU in respect of the euro has meant that in recent days it has strengthened in relation to the dollar?

[Lord Sassoon]

My Lords, I have not had this kind of stereophonic or quadraphonic experience before.

I note what my noble friend says about strengthening currencies but it is not the Government’s practice to comment on movements in the currency markets.

[Lord Barnett]

My Lords, does the noble Lord accept that there are potential serious losses to UK banks, not least those owned by taxpayers? I hope he is saying that it would be sensible to occasionally join in with good and sensible proposals to help those UK taxpayers.

[Lord Sassoon]

Indeed, my Lords. Out of the €500-billion package agreed on 9 May, the UK participates in the €60-billion element of it. I agree that it is appropriate the UK should play its part. I remind the noble Lord that on Friday 23 July the bank stress tests will be published, which will be another important component in ensuring the stability of Europe and the eurozone.

[Lord Hannay of Chiswick]

My Lords, does not the Minister agree that during these current economic and financial difficulties in Europe we would all do well to remember that, to coin a phrase, “We are all in this together”? Therefore it is in this country’s interest that countries in difficulties should be helped, as they are being.

[Lord Sassoon]

My Lords, as I have set out, the UK is indeed playing its part. Forty per cent of our exports go to the eurozone and it is absolutely critical that we play our part, not only in the current ongoing crisis but in influencing the structural reforms that Europe requires going forward.

[Lord Campbell of Alloway]

My Lords, perhaps I may ask a simple question, speaking for no Benches at all. What is the Answer: are we or are we not liable?

[Lord Sassoon]

My Lords, the €60-billion element of the package agreed on 9 May comes out of the EU budget. So far there have been no loans advanced under this but, if there were and any question of loss arose, the UK would indirectly bear its proportionate share, along with any other item in the EU budget.