BRITAIN:CONSERVATIVE AND Labour MPs, who may end up having to defend a £7 billion loan to Ireland, have expressed a willingness to see Britain help Ireland out of its current difficulties, but they have raised concerns that the full extent of Ireland's debts are not known.
During an urgent debate in the Commons yesterday, financial secretary to the treasury Mark Hoban repeatedly insisted that it was in Britain’s “national interest to see a successful Irish economy, so we stand ready to support Ireland in the steps that it needs to take to bring about stability.
“It is not for me to say whether Ireland should request assistance, just as I would not tell it how to run any part of its economy.
“Its large financial institutions have obviously got themselves into difficulty, and we very much hope it will be able to resolve those pressures. Ireland is one of our biggest export markets. We have very close economic ties with it.”
However, a number of Conservative MPs made clear that the first port of call for Ireland should be the €440 billion fund set up by euro zone countries, rather than one agreed by Labour chancellor of the exchequer Alistair Darling in one of his final acts in office that would leave the UK vulnerable to having to provide £8 billion.
A number insisted that aid, if needed, should be provided bilaterally.
Conservative MP Peter Bone questioned whether any further funds should be committed to the EU over the next five years since the UK’s net contribution to the Brussels budget would be £41 billion, an increase of more than £21 billion compared with the past five years, particularly when “we are making drastic cuts in the UK’s economy”.
Seeking confirmation that the first source of funds would be the euro zone’s stability facility, Labour MP Christopher Leslie said Labour in office had been clear that “problems facing countries adopting the euro would need to be solved first and foremost by member states within the euro area.
“Ireland is a vital trading partner, to which 7 per cent of our exports are sold, and the current situation matters because its economic strength has a significant effect on our own growth prospects,” said Mr Leslie, who warned that UK banks had lent £83 billion directly to Irish households and companies.
Replying, Mr Hoban said the chancellor of the exchequer would act in accordance with the UK’s national interest.
“Ireland is our closest neighbour, and it is in our interests to ensure that the Irish economy is successful and that it has a stable banking system. The reality is that Ireland has got some things right. It has a flexible labour market and low taxes.
“Nonetheless, it made the same mistake as the previous government – it failed to regulate its banks properly.
“The problem in Ireland is driven not by high public spending but by a banking crisis.”
Mr Hoban added: “What is happening at the moment demonstrates that concerns about sovereign debt issues have not disappeared. We should be grateful that, thanks to the actions of this government, Britain has moved out of the fiscal danger zone.”
Long-time eurosceptic Conservative MP William Cash said the €440 billion rescue fund could be used without “infringing either UK liability or sovereignty”, while the one accepted by Mr Darling before he left power, which is decided by majority voting, “involves, unnecessarily, both UK liability and sovereignty”.
“Where it is in our national interest and we can afford it, why not provide a UK-Irish but non-EU loan?”
A number of Conservative MPs argued that Ireland should be encouraged to quit the euro.
Former Conservative minister John Redwood said: “As the Irish Government needs a work-out and not a bailout to deal with their risks and credit problems, should not the British government support them in resisting the foolish intervention by Germany, which is trying to use this as part of a power-grab for the EU?”
