Eurozone: Osborne v new coalition?

  • 4 November 2011
  • From the section UK Politics
  • comments
MPs in the Commons
Would MPs back calls for more IMF funding?

I thought the chancellor sounded just a little tetchy about the BBC's reporting of the plans for Britain to pay more into the International Monetary Fund - first revealed here on Wednesday - I think I know why.

He is facing a powerful new coalition of Ed Balls and the Labour Party and his own party's newly resurgent Eurosceptics.

George Osborne knows how difficult it would be to get the idea through the Commons.

He will insist, as has the prime minister here in Cannes, that this is not a backdoor way of channelling funds to the eurozone - something he insisted Britain and the IMF would never do.

However, Tory Eurosceptics don't see it that way - see, for example, John Redwood or Douglas Carswell's blogs.

What's more, Labour's Ed Balls agrees.

We first saw this coalition in July when the government pushed through the legislation to enact an increase in IMF funds proposed by Gordon Brown during the last crisis.

Labour voted against the proposal of their former leader - on the grounds that it was important to be careful with taxpayers' money at a difficult time - and voted with more than 30 Tory rebels.

Ed Balls is making it clear that he believes it is the European Central Bank that should ride to Europe's rescue, not the IMF: "There should be no IMF funding to plug the gap in the bailout fund and do the job the ECB should be doing."

He explains that in more detail on his blog.

So, with more than 80 Tories having recently ignored a three-line whip on Europe, could this be a coalition that defeats the government?

The government would accuse Labour of opportunism but Messrs Cameron, Osborne and Hague - who served their apprenticeships under John Major - will remember that Labour's resolutely pro-European leader John Smith found an excuse to vote with the Eurosceptics over the Maastricht Treaty, producing chaos and division in the government.

Ed Miliband resisted the temptation to follow that example on a referendum - as he feared it would look cynical - but it will be so much easier to defend voting "no" to lending what Mrs Thatcher called "our money" to failing eurozone economies.

The government has, however, a trump card to play.

I understand that Britain's increased IMF contribution - which could be around £10bn - would not need a new Commons vote since it would not breach the ceiling agreed by that vote in July.

I wonder if Mr Balls and the sceptics will see it that way?