Tory battle lines drawn over bail-out
TORY BACKBENCHERS are putting pressure on David Cameron over plans to give billions of pounds of British money to help bail out the euro.
Senior Conservatives in the Commons and the Lords have said that they will seek to block any move by George Osborne, the Chancellor, to bolster the International Monetary Fund.
The IMF has signalled it needs a further $500billion (£320billion) to help stabilise the global economy, a large part of which could be used to prop up Greece, Portugal and other struggling states. Last weekend at the World Economic Forum in Davos, Christine Lagarde, the head of the IMF, said: “I am here with my little bag to actually collect a bit of money.”
Mr Osborne is walking a tight line, on the one hand pledging that Britain wants to support the fund, but only if the eurozone’s economies agree to strengthen their own bail-out fund.
The Government has parliamentary approval to hand a further £10billion to the fund, however it is thought that Britain would need to hand over £17billion if its share of the $500billion was in proportion to its previous contributions. Any additional funding by British taxpayers beyond the already agreed £10billion would need to be subject to a motion in the Commons and the Lords. Such a vote is at least a month away. The Chancellor will give European leaders time to bolster its bail-out fund and make several reforms before agreeing to inject extra money into the IMF’S reserves. The Government will hope that delaying the motion will give time to quell opposition.
David Davis, the former Tory leadership contender and a leading eurosceptic, told The
Sunday Telegraph: “I cannot think of a single reform the Europeans could make that would justify giving more British taxpayers’ money to propping up the eurozone.
“If, say, you had an uncle who was profligate, you’d try to cut his spending and get him a better job. All that people are trying to do with Europe is cut their spending. They are not trying to get in a position where it can grow and bring in more money.” Britain already has £40billion allocated into the IMF, £30billion of which has already been committed.
John Redwood, another senior Tory eurosceptic, said he thought the majority of the Tory backbenchers would vote against handing over more British money.
“I am happy for IMF money to go and help poor African countries – not to bail out broke but rich Western economies,” he said. “Greece is no longer a sovereign country. It is a region in a currency union. The IMF would not bail out California. On the same premise it should not give more money to save parts of euroland.” The US and Can- ada have already signalled that they are unwilling to give more money to the IMF, which is now hoping to encourage greater contributions from countries including China, Russia, Brazil, India, and Japan.
Ed Miliband, the Labour leader, last month signalled that the Opposition may also not support giving away more public money.
“The reason we’ve taken the position we have on the IMF is you can’t have a sticking plaster solution to the eurozone’s problems,” he said. “Seventeen countries of the eurozone have enough firepower to provide the backing for the eurozone countries.”