We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.Donate to our crowdfunder
I suspect that my hon. Friend is pushing me to go further than I am inclined to go at this point, but I want to explore the legal argument, because there is an issue to do with the basis of the powers. I know that he is an expert on the subject, so he may want to contribute to the debate on that point later.
Article 95 of the treaty, as currently drafted, will be used to create the ESRB. That article usually deals with matters relating to internal markets, and it operates under qualified majority voting, but if any action arising from the provisions requires treaty amendments, there will not be that capacity, and confusion and paralysis will reign. Article 105 will
"confer upon the ECB"-
"specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings", but of course it has an exception relating to insurance. Article 105 does not use QMV, and so allows for national vetoes. It is not clear where primacy sits, and what voting mechanism is appropriate.
There is an alternative basis for the powers in article 308-a residual power that could be used to set up the bodies. However, that requires unanimous decision making. Using that power would make more sense, if it turned out that decisions made by the ESAs were likely to be ultra vires to the European Community treaty if made under article 95. However, I gather that use of the power under article 308 would require amendments to a treaty, which is something that Governments and the European Commission might be reluctant to undertake at the moment. That gives the impression that article 95 is being used to set up the powers more for convenience than because it would give the documents a proper basis.
Let me turn to the detail. It is important that we tackle the timing and the legality of the arguments. The Minister rather glossed over those points, and in her winding-up speech she should give the House more clarity about the robustness of the arguments on the legal basis on which the new authorities are to be established.
We want measures to be taken to improve the quality of supervision and co-ordination across Europe, but we do not want that to impinge on the regulatory and fiscal sovereignty of individual member states. As the Chancellor wrote of the new regime, in his letter of response to the de Larosière proposals,
"it would not supervise individual banks...leaving that to national authorities...given that arrangements for resolving difficulties in these firms remain a national responsibility."
That is the dilemma that we need to resolve, and that is the principle on which the proposals will be judged in all parts of the House.
Copy and paste this code on your website