In an astounding display of irresponsible posturing and opportunism the Labour party has just voted against Britain contributing more to the IMF. The International Monetary Fund is increasing its total pool of reserves in order to stabilise the economies of struggling members. In a Parliamentary committee this morning to approve an increase in the UK’s contribution, Labour MPs voted against. The increase was approved by Coalition Government Lib Dem and Tory MPs, including me.
This is an astonishing decision by the Official Opposition in one of the IMF’s founder member states. This is the organisation that Gordon Brown was apparently keen to head up just a few weeks ago. Christine Lagarde took the helm today. When she’s finished her day one induction she might want to pick up the phone to Gordon and ask him what the hell are his colleagues playing at?
Labour have very little economic credibility in this Parliament. They oppose tax rises. They oppose cuts. They oppose welfare and pensions reform. They’ve even opposed measures to tackle tax avoidance! They’re against everything that the Coalition is doing to clear up the horrendous mess that Labour (with a lot of help from some bankers) left behind. But they have been clinging to one claim that had some credibility to it – that in 2009 Gordon Brown worked in concert with other world leaders to stop an international economic collapse. Indeed it was at the G20 London summit presided over by Brown that it was agreed the IMF needed to increase its fund by roughly $250 billion in order to stabilise the world economy over the next decade. By their actions today Labour have now destroyed the fig leaf of credibility they still wore.
So what was decided today? The IMF member states (187 of them, roughly the same as the UN) each subscribe a proportion of their own government reserves to the IMF, denominated in Special Drawing Rights (SDRs) which is a weighted average of the £, $, € and Y. Each member has a quota. The current total quota for all members is 238.4 billion SDRs. As agreed in London in April 2009 and again by the G20 in November 2010 the total will double to 476.8 billion SDRs. Until today the UK quota was SDR 10.738 B (roughly £10.54B) but after this morning’s vote it will increase to SDR 20.155B (roughly £19.77 billion), actually a slight fall in our share from 4.5% t0 4.3% of the total fund. Some emerging economies are increasing their share.
The IMF has acted to stabilise many economies over the years, including the UK in 1976. Often the package of fiscal austerity and reform that accompanies an IMF loan is controversial. Currently the main recipients of IMF assistance are Ukraine, Romania, Hungary and Greece. The latter are fellow member states of the European Union and Greece is also within the Euro currency zone. And this is where my Conservative coalition partners have their own internal difficulties.
The current Conservative group of MPs are the most Euro-sceptic ever. But the Coalition Government is performing a constructive role on the international stage, including in the EU. Many Tory MPs hate this fact. Some of them seem to want the € to collapse and openly advocate a Greek withdrawal from the single currency. In a Commons debate on the bail outs of Ireland, Portugal and Greece a few weeks ago I was just about the only Coalition MP to speak in favour of Britain’s participation.
This morning a gaggle of Tory Eurosceptic MPs turned up to speak (they were not voting members of the committee) against further help for Greece from the IMF. One of them, Douglas Carswell, did at least come up with a great phrase “this must be the only bail out in history where you ladle more water into the boat.” I’ve always got on well with Douglas and you can read his take on things here http://www.talkcarswell.com/ but I believe that Greece will need more assistance to help it through the austerity package agreed by Greek MPs last week.
But I’m more disturbed today by the actions of Labour. The party has flip-flopped several times over the decades on its attitude to European integration. But since 1945 it has been consistently (well apart from a mad period under Foot) in favour of international cooperation among the transatlantic democracies. Britain became of founder member of the World Bank, the IMF and NATO under Attlee’s government and economic growth and peace have followed. Labour often cite Aneurin Bevan and the creation of the NHS as their proudest legacy of the 1945 government. But Ernest Bevin, the other titan of that administration must be turning in his grave at the sight of the pathetic spectacle of today’s Labour leadership pulling up the economic drawbridge.