Clause 1 — United Kingdom loans to Ireland

Part of Loans to Ireland Bill (Allocation of Time) – in the House of Commons at 4:28 pm on 15th December 2010.

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Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee, Chair, European Scrutiny Committee 4:28 pm, 15th December 2010

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"

Ireland

"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 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.