My Lords, I pay tribute to the noble Lord, Lord Harrison. It is not just that he made a very good speech on our report; he has also been a very good chairman of Sub-Committee A, a committee which is quite tough to guide because there is such a diversity of view on the EU among its membership. That diversity is thrown into ever sharper focus as one EU crisis develops into the next.
I suppose that in your Lordships' House and in the country as a whole the views can be seen as stretching from the totally disillusioned, who now feel that the whole enterprise should be abandoned-at least by the UK, to those whose tribal loyalty to the EU leads them to feel that we have to stick with it come what may.
I am not saying that either of those persuasions is directly represented on the committee. But inevitably, as events unfold, we are aware of those positions even if neither of them is actually an option. Incidentally, I should say that I do not regard myself as either a euroenthusiast or a eurosceptic. I suppose if I am anything at all, I am a eurochallenger.
The second reason it is a tough committee is that there is a very high technical content to many of the issues we seek to address. What makes it particularly hard is that factual information is often either deliberately concealed by the parties or simply not available.
This has, of course, been the case since the world financial crisis first started to unfold back in May 2007, when the depth and breadth of the toxicity of financial instruments, initially mainly inside the United States, started to emerge.
What a far cry it is since the American state-sponsored mortgage-granting agencies, Freddie Mac and Fannie Mae, appeared to be a brilliant concept for increasing home ownership, an objective that the now shrunken giant of American banking, Alan Greenspan, so enthusiastically and unwisely espoused. But the lesson in all this is that, to quote the NKVD man in Kravchenko's I Chose Freedom:
"Comrade Stalin has taught us to trust one another but at the same time to check and recheck".
I make no apology for saying once again that it is now recognised, as it was by many at the time that, conceptually, the euro was flawed from the start, based as it was on a single monetary policy but independent fiscal policies. From that emerged the myth, peddled over the past 10 years, that the sovereign debt of all euro countries was equally safe. This suggestion on its own has created a moral hazard of the ECB having a potential liability which it could only meet by switching its printing machines onto constant. And we all know where that leads.
To state that the necessary change for the system to work is the establishment of a euro-area ministry of finance is futile, as the people of Europe show no signs of wanting it. We therefore have this plethora of new supervisory bodies: ESRB, three ESAs, EBA, ESMA, EIOPA-which the noble Lord, Lord Harrison, and our report have described very clearly. The whole question of these bodies being able to override national supervisors is a central issue. It has been suggested that this should only be done in emergencies but who defines an emergency? If the existence of an emergency is seen as too sensitive to be revealed, what then?
There is the crucial question of whether the European Banking Authority has the capacity to carry out the stress tests which are intended to give early warning that banks are in danger of going bust. As banks spend a great deal of their time concealing the reality of their financial positions, I would put my money on the bankers hiding what they wish to hide.
I have for some years been concerned about credit card debt in this country, the £60 billion debt on which interest is being paid, currently at a rate of 17 per cent. It amounts to nearly £1,000 for every man, woman and child in Britain. At my instigation, the noble Lord, Lord Myners, when he was the Minister responsible in the last Government, wrote to the banks, asking them at what level they were valuing these assets. Only one of them even replied. One thing on which I warmly congratulate the Government is their decision to separate high-street banking from the much more risky investment banking. This is being done in the teeth of opposition from the banks.
I am worried about the way in which some of the senior eurocrats are suggesting that they might be able to suppress inconvenient facts. I am thinking of course of Commissioner Barnier, who is keen to ensure that the credit-rating agencies do not publish inconvenient truths about the value of sovereign debt in euro-area countries. Having realised that his edict would not be enough to get what he wants, the Commission is now putting together a complicated set of procedures which credit rating agencies would have to comply with before the European Securities and Markets Authority allowed them to publish their credit rating. There was an interesting piece in yesterday's FT by Martin Fridson, in which he expresses considerable doubt as to the merits of such proposals. I certainly share those doubts. I have absolutely no brief for the credit rating agencies-which Sub-committee A has also recently studied-which failed investors and savers deplorably with their absurd endorsement of doubtful financial instruments of debt.
Finally, to illustrate my readiness to see the merit of regulatory action in financial matters on a European level when it is appropriate, I would like to make a specific proposal, which I hope the Minister will communicate to his Treasury colleagues. There has been much fully justified criticism of the way in which overseas entities and individuals have been able to avoid paying stamp duty on transfers of expensive houses in the UK. This could be dealt with at an EU level by simply requiring full compliance with national law, including tax, before any transfer of real estate is accepted as having taken place. In the UK, the courts would simply refuse to recognise title unless the proper stamp duty had been paid on a change of ownership. That, I think, would fix it.
In conclusion, I am rather doubtful that Humpty Dumpty can be put together again. I hope that he can, because I am a strong supporter of the EU single market and even the EU as a global political player. Sadly, the debacle over the eurozone has diverted a vast amount of the time-some say as much as 80 per cent-that Europe's top leaders have been able to apply to world problems of peace and stability. I fear that that means that EU influence has greatly diminished over that period. As Britain is probably the most financially sophisticated and experienced country in the world, it is crucial that we play a full part in offering our expertise to help the euro-area put together the best financial supervisory framework possible. I hope that the House of Lords Sub-committee A can play some small part in that.