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
Actually, my point goes back to the exchange between me and some of my hon. Friends about the legal basis of the powers, which is not clear and about which there is some doubt. That could create confusion as people seek to test whether the pronouncements of the ESAs are valid in the context of European law. That is where some of the confusion will potentially emerge.
Let me move on to another aspect on which I am not entirely sure that the safeguards in article 3 are sufficiently robust. As I mentioned earlier, the ESRB has the power to propose changes in response to risks that it identifies in the European economy. It can propose actions, but it does not have a mechanism for enforcing those recommendations. The problem that I see in how the various bodies interlock is that although the ESAs have the power to ensure that supervisory authorities follow the recommendations of the ESRB, that is not covered by the safeguards in article 23. I wonder whether the Minister could assure the House that the safeguards set out in article 23 will be extended to cover situations in which the ESAs seek to implement the recommendations of the ESRB.
I intervened on the Minister about the composition of the steering committee of the ESRB. I made it clear then that we want to ensure that the final document contains some recognition of the fact that there should be two bank governors on the steering committee who come from non-eurozone countries. The Minister said that she would find out how any conclusions reached in the Council could be made binding.
There are a number of other issues that we could touch on in this afternoon's debate. I have already raised a couple in interventions on the Minister, such as who will be responsible for supervising the central clearing houses. There is also concern about the scope of the European securities and markets authority. There have been a number of representations from institutions in the City of London that are concerned that the authority's remit could impact on the takeover directive, on which there has been a hard-fought campaign to reach consensus across Europe. It appears that the takeover directive falls within the scope of the European securities and markets authority. There is concern that the authority might seek to move away from the consensus that has been achieved on the directive in respect of takeovers in the UK and undermine the work that the Panel on Takeovers and Mergers does. I wonder whether the Minister could clarify whether she expects the Government to call for the European securities and markets authority's remit to be restricted to exclude the work on the takeover directive.
I have talked about the concern in the City about whether the European securities and markets authority's role in fleshing out some of the technical detail on directives might be extended to cover policy issues, but there are other areas of concern. For example, shareholders in the UK receive greater protection when making substantial transactions here than they do elsewhere in Europe under existing directives. Will there be sufficient flexibility in the new regime for shareholders to continue to benefit from that additional protection?
Let us look at what happened in Spain in this financial crisis. Spain consciously diverged from the capital requirements directive by allowing dynamic provisioning in its banking sector, which many would argue safeguarded it against some of the problems seen elsewhere in the European financial sector. Would the European banking authority's powers prevent a central bank from imposing those additional requirements on banks in its country? If it did, the Spanish banks would have been in a detrimental position compared with the current status that they enjoy, and central banks would have less discretion to protect depositors and taxpayers.
In conclusion, there are a range of issues in the proposals before us that require further scrutiny. They also require the Government to adopt a tougher negotiating position at ECOFIN tomorrow and at the Council meeting later this month. I have to say that I am not optimistic about the Government's chances of insisting on their red lines, because they have repeatedly left debating these matters until too late in the process. They have too often been slow in getting involved in discussions about how these directives should be shaped when they are going through the processes in the Commission, leaving it until the directives have been published before engaging in the debate.
These legislative proposals have gone beyond the position agreed in the ECOFIN meeting in June and the later Council meeting, which I believe has happened because the Government have not been sufficiently proactive in engaging in the European debate. That is why Conservative Members say it is important for a senior Treasury Minister to spend as much time as necessary in Brussels and other European capitals to strengthen our opportunities to engage on these matters earlier and more effectively. We would have Ministers engage in the debate in ECOFIN, making sure that Britain's case is strongly and clearly made. We need to bolster our operations in Brussels and ensure that more Treasury civil servants are working on European matters. We also need to ensure that the regulator continues to engage vigorously in the debate. As these new European authorities are set up, it will become even more important that we are part of that set-up and arguing for the interests of London as a global financial services centre.
I think the stakes are high. The Government appear to be disengaged from the European process until the very end. Rather than engaging throughout that process, they come to life only then, trying to change already drafted documents rather than influencing the drafting. The Government's approach always appears to be about tactics, not about strategy. The financial services sector in London is a global success story, but I think the Government, through their cavalier and insouciant approach, are in danger of putting that success at risk. By opposing the motion today, we are sending out a very clear signal that that approach needs to change and will do so only with a change of Government.
Copy and paste this code on your website