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European Financial Services Proposals

Part of Oral Answers to Questions — Foreign and Commonwealth Office – in the House of Commons at 5:32 pm on 1st December 2009.

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Photo of Mark Todd Mark Todd Labour, South Derbyshire 5:32 pm, 1st December 2009

That is a slightly slippery response, because that is not the point I was making. I agree that the physical presence of Ministers and their activist role in negotiation is important, but I was addressing the outcomes of such negotiation, even in cases where they are there arguing their case. The hon. Gentleman chose not to comment on that.

We seem to be heading down a path, and I can see where its origins lie. There was an understandable reaction to financial collapse-I sense a lack of confidence, to some extent, in the Anglo-Saxon models of financial services-and a space opened up for activism at the European level. I can well understand how that arose, but I am concerned to ensure that we limit this progress as far as possible. Some red lines can be drawn, but my worry is whether the lines are really red, or pink. Given the decision-making process, about which we have had much more informed discussion, I am not utterly persuaded as to how hard we will be able to hold to those red lines if others do not endorse our positions, however rationally we put them.

I want to set out what these red lines should be, although most of them have been mentioned. First, there should clearly be no intrusion into the fiscal responsibility of individual member states. The hon. Member for Fareham quoted from the Select Committee report. Hon. Members may contradict me if I am wrong, but I believe that I strengthened some of that report through our debates, and, thus, I endorse its sentiments. Secondly, there should be no ability-I stress the word "no"-for any of these agencies to intervene over the heads of the national regulator; they should not be able to intervene individually with companies or to direct the role and actions of the national regulator. Neither of those activities is an appropriate function for the individual European agencies.

Thirdly, I can see no value in setting aside a particular function in an "emergency"-quite how one defines that is another matter-to any of the European agencies. Such an approach appears likely not only to raise the issue of legality, which has been touched on, but, more practically, to get in the way of the urgent action that will be required in many instances. I dread to think what would have happened if we had felt that the most appropriate response to the collapse of the Icelandic banking system and its consequences in the UK was to ask some European agencies how best we should deal with that. Criticisms of how the Government acted in that instance have been made, but I am much more comfortable with having those decisions made by a UK authority in the interests of UK taxpayers and account holders, than with passing the task to a European agency.

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