The best innovation in this new Parliament is the creation of days when backbenchers can choose the business to be debated. I held one of the first debates under this scheme last year on the need to promote economic growth. On Tuesday I was one of the instigators of a debate on the bail outs of Euroland economies.
I do not think the current approach to Euroland financial repair is working. I see no reason why the UK should be expected to contribute any money to the questionable policy they are pursuing. The Coalition government agrees with me up to a point. The Chancellor has made clear his view that the UK will make no contributions to propping up Eurozone states after 2013, when they bring in new arrangements to allow bail outs from other Eurozone members alone. He argues that as much as possible of the current bail outs should also come from other Eurozone members. Where we disagree is over the use of general EU money voted under a provision of the Treaty to help other member states facing natural disasters.
The decision to commit UK funds through a common EU facility to help Euroland members in trouble was taken by Mr Darling acting as Chancellor after the General Election of May 2010. He consulted Mr Osborne who said he did not like the idea. Mr Osborne feels bound by Mr Darling’s decision. The purpose of our motion was to say we think the UK should question the legality of the whole approach. I do not think the problems of the Euro are a natural disaster. They were an entirely predictable debt disaster of the EU’s own making, which some of us forecast when the currency was set up. The debt problem was one of the reasons we recommended that the UK stay out of the currency, and one of the reasons we persuaded the British people that this was the right course of action. If you are in a single currency scheme you have to help pay the neighbours bills when they get into trouble.
In the UK’s current financial plight I do not think we have the spare money to go to the aid of Euroland members. I also fear their approach of extending more lending to countries that have already borrowed too much is not going to work. Unfortunately there are not enough MPs who share this view in the current Parliament, but I and some others felt we needed to make the point again. Maybe one day the government will move that extra distance, as it does agree with us in principle that the UK is not in a good position to be lending them more money.
I find it strange that commentators have been so kind about Mr Strauss Kahn’s economic brilliance when he was one of the cheer leaders for the Euro scheme, and one of the architects of the first Greek loan which clearly failed to solve the Greek problems. I find it worrying that the IMF, set up to help struggling poor countries, should now be spending so much of its time and our money propping up a currency scheme which is seriously malfunctioning for a group of relatively rich countries who should know better.