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My hon. Friend makes an important point about mission creep when it comes to these authorities, and he has been very critical of trade associations so far. However, the Association for Financial Markets in Europe has identified that as a potential issue. It is concerned that ESAs will go beyond technical issues and stray into policy. It said:
"It will be important to ensure, in the context of the 'Omnibus' Proposal, that technical standards do indeed respect the 'technical'/'policy' distinction, and in particular that they do not inappropriately constrain supervisory judgements by national authorities that are provided for in the sectoral Directives."
It also argued that checks and balances would be necessary to prevent such mission creep. There is therefore widespread recognition of the risk of mission creep, and delay is important so that we can work through the issues and say exactly what these new bodies can do, what constraints there will be on their activities in practice, and what their modus operandi and their approach to their mission will be. We also need to know what resources they will have to enable them to meddle in the activities of individual national supervisors. We are in danger of reaching a political agreement at ECOFIN and the Council without really thinking through the practical implications for London as a financial services centre. That is the challenge for the Government. Will they sign up to this tomorrow, or will they argue that the consequences have not been properly thought through? I hope that the Minister will respond to that challenge in this debate,
The Minister adopted a contradictory approach. She said that the final proposal must respect the red lines agreed at ECOFIN in June, but at the same time she seemed to accept that the supervisory authorities could make a decision that had an impact on our fiscal responsibilities. She was content that a safeguard mechanism would be in place to allow us to appeal if we thought that that was happening. However, we cannot on the one hand say that there must be no fiscal impact and on the other argue for improving the safeguard clause in article 23 by tightening up the wording. We either have red lines or we do not. The Minister needs to be much clearer about that. Lord Myners, when considering the disparity between the legislative proposals and the Council's recommendations, said:
"the legislative proposals appear to go further than what was agreed by heads of state at June European Council".
We are now being promised improvements to the fiscal safeguards, but can the Minister tell us what forms these might take?
There is also a challenge to the Government red line in dealing with emergencies. At the moment, the document is drafted so that it is the Commission that decides what constitutes an emergency and the ESA can override the national supervisor subject to the appeal mechanism set out in article 23. We know from our recent experience in the financial crisis that it is at moments of crisis and emergency that the interests of national Governments and taxpayers are paramount, but we seem to be allowing a situation in which the ESA, in a crisis determined by the Commission, could overrule the judgments of national supervisors and have an impact on fiscal responsibility.
We want the Government to maintain the red line and stick to their principle that there should be no impact on the UK's fiscal position. However, yesterday in the Financial Services Bill debate, when the Chancellor made his opening remarks, it sounded as though he was watering down the red line. He seemed to be going for a situation in which not the Commission but the Council declares a crisis. However, that still allows the European supervisory agencies potentially to override national supervisors, which I do not think respects the red lines agreed in June.
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