Bill Cash MP: Neither Coalition or Labour Governments opposed the existing eurozone bailout agreement

Bill Cash is MP for Stone and Chairman of the House of Commons European Scrutiny Committee.

It is very important to look into who agreed what on the Darling ’agreement’ – the ‘European Financial Stability Mechanism – which effectively means that we are liable for bailouts in the eurozone until 2013. In other words, as the eurozone collapses around us, we in Britain, who chose to remain outside the euro are now paying for the system that I have always said will never work.

In fact, I did look into the negotiations but was denied the necessary information on most occasions. The European Scrutiny Committee, of which I am the Chairman, has already said in its report that the agreement on that particular mechanism was “legally unsound”.

The election took place on 6th May. At some point between 7th and 11th May, before the Coalition had been created the mechanism was agreed at an emergency Ecofin meeting and no European scrutiny did or could have taken place because the European Scrutiny Committee had not yet been set up. Between 7th and 11th May, the then Chancellor of the Exchequer – who was then about to be ejected by the electorate – had discussions with the Member for Tatton, the prospective Chancellor of the Exchequer and the Member for Twickenham.

I have asked what was discussed and why the then Chancellor of the Exchequer was having discussions with the Member for Twickenham and for this to be explained before the Committee takes place. The answer I received is: “All contact between the Treasury and the Opposition parties followed the agreed Cabinet Office guidelines for the 2010 General Election.”

On 12th May, the ‘legally unsound’ Council regulation was published and entered into force on the following day. It was deposited in the UK Parliament on 25th May. There was still no scrutiny. The Explanatory Memorandum is dated 15th July and it could only be considered by the European Scrutiny Committee on 8th September when it was recommended for debate.

I had asked for legal advice and other Treasury advice presumably supplied by John Cunlliffe, our proposed Ambassador to Europe and now in No. 10 and I was informed that I would receive answers to neither.

I have also asked for a statement – which had been refused – as to the basis of the discussions between Alistair Darling, the outgoing Chancellor, and the strange inclusion of the Member for Twickenham, Vince Cable, even before the Coalition agreement had been entered into. 

On 24th November, last year, I put down a parliamentary question “To ask the Chancellor of the Exchequer what recent representations he has received on the implementation of the regulation governing the procedure for the European Financial Stability Mechanism; and if he will make a statement.” [25687]

Financial Secretary, HM Treasury, Mark Hoban, answered “The regulation governing the European Financial Stability Mechanism is based on article 122(2) of the treaty on the functioning of the European Union. The regulation was immediately binding on all member states the day after its publication in the Official Journal of the European Union on 12th May. It is activated by the Council acting by Qualified Majority Voting on a proposal from the Commission. The Commission has not yet made a formal proposal.” So, no statement.

Further to other questions, I then put down another parliamentary question on 7th December, “To ask the Attorney-General what advice he has given to Cabinet colleagues on the legality of the European Financial Stability Mechanism in relation to its application to the United Kingdom.” [29298]

The Attorney-General replied: “By long-standing convention, observed by successive Administrations and embodied in the Ministerial Code, whether or not the Law Officers have advised or have been requested to advise on a particular issue, and the content of any advice, is not disclosed outside Government.” So, no legal advice to be supplied.

Again, on 14th December, I again put down a question: “To ask Mr Chancellor of the Exchequer what legal advice he has (a) sought and (b) received on the compatibility of the European Financial Stability Mechanism with provisions of the Treaties (i) prior to and (ii) subsequent to agreement to Council Regulation No. 407/2010; and if he will make a statement.” [30900]

Mr Hoban replied: “The European Financial Stability Mechanism (EFSM) was created following agreement by a qualified majority of member states at the ECOFIN meeting on 9 May 2010. The terms of the EFSM are set out in EU Council Regulation No. 407/2010 and it is compatible with the Treaty on the Functioning of the European Union. Treasury Ministers received advice on this issue, including legal advice, as part of the process of policy development.” Again, no legal advice to be given to me.

I also asked the former Chancellor of the Exchequer, Alistair Darling, in an intervention in the Chamber on 15th December: “Did the right hon. Gentleman take legal advice on whether, as I said at the time, the use of the financial stability mechanism was an unlawful deal? Article 122 of the treaty on the functioning of the European Union deals with natural disasters, energy supplies and so on, and it has absolutely nothing to do with financial mistakes or misjudgments. Really, the whole thing should never have gone through, and he should have repudiated it on those grounds.”

Alistair Darling replied: “Yes, but as I said earlier, because of QMV, the deal would have gone through anyway. I also do not agree with the hon. Gentleman's analysis or that the legal position was that clear-cut.” That does not mean that we should not have fought against the Mechanism, given it was not in our national interest. Again, if the Coalition Government and the Prime Minister are of the view that they inherited this tragedy, and that they do not want the British people to inherit this economic burden, then they should have pursued the repeal of the Mechanism in last week’s European Council – which they did not – as I suggested in my Urgent Question.

According to the Guardian, in a note on 15th July last year Justine Greening, the Economic Secretary to the Treasury, wrote: “It should be noted that whilst agreement on behalf of the UK was given by the previous administration, cross-party consensus had been gained.”

That does in fact help our understanding but without any information, how will we ever know who agreed what?