Exiting the European Union: Financial Services and Markets

Alison Thewliss Excerpts

Tuesday 16th June 2020 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

I welcome the right hon. Member for Wolverhampton South East (Mr McFadden) to his place, and I concur with the comments he made about Jo Cox. Jo’s family are never far from my thoughts in this place, and we do all miss her very much.

As a veteran of many statutory instrument Committees with the Minister, I must say that I have missed them terribly. It has been such a shame not to have been in all those Committees of late, but I suppose what we have in front of us this evening is a smorgasbord of delights—of things that have not gone quite right so far: things that have had to be corrected as things have moved on the EU side and bits, perhaps, that were missed in the shuffle beforehand.

As the Minister said, this is not the first time that corrections have come back before us. It is, I suppose, a symptom of the way the Government have conducted themselves during the whole Brexit shambles that these statutory instruments have come to us with a bunch of corrections and a load of other things squashed into them. It really seems that we are playing a continual game of catch-up with the EU, and even with ourselves, to ensure that the measures the UK has in place meet what the EU has written in our absence. If we want to be part of what the Minister calls a coherent and functioning system—such ambition!—we will have to keep adding on to these rules to meet what the EU has decided. These are decisions that the EU has taken, without us, about things on which it is in its interests to have co-operation. For the Brexiteers in the room, we will continue to be rule-takers in this House if we want to have any say in financial services.

As the right hon. Member for Wolverhampton South East so eloquently said, this instrument is about services and financial services, which make up a significant amount of our economy. They account for a significant number of jobs in my constituency, Edinburgh, Aberdeen and other places in Scotland besides. Those services and financial services will not have the access to the European market that they had before this Government’s reckless Brexit plans, which is very, very upsetting, particularly for Scotland, which did not vote for Brexit. We voted overwhelmingly to remain within the EU and it is deeply regrettable that we are being forced into this situation by the UK Government.

The issues around equivalence and passporting really speak to a situation which is not as good as the one that we had before. The UK Government need to think carefully about how they want to progress, because we will not have equivalence. There are the risks and the balances within equivalence about who decides what is equivalent and then whether that will suddenly stop, and that puts at risk the future of financial services particularly within the UK.

I note that there are some broadly positive things in the regulations. The UK has taken on the benchmarking regulations, adding them to the low-carbon benchmarks—climate transition benchmarks and Paris-aligned benchmarks—that the EU has proposed. It is good that we are picking them up, but all we are really doing is catching up with the EU. The EU has proposed those benchmarks and we are now catching up down the line, rather than being part of forming them in the first place. If the EU continues to develop such benchmarks, and if climate change and green finance continue to be high on the agenda, we will have to change again and think about how we manage to compete if we are not keeping pace.

The regulations mention that they transfer relevant legislative and non-legislative functions from EU bodies to HM Treasury and the Financial Conduct Authority. This speaks to the point mentioned by the right hon. Member for Wolverhampton South East that these powers are not coming to us as parliamentarians and legislators. These are powers that are being hived off to the FCA, the Bank of England and other regulators and they will be responsible, not us here in this House, for keeping checks. Again, for the Brexiteers, that is not taking back control in this House. That is taking things that were drafted by civil servants somewhere else—some bunker in the EU—in Europe and then moving them to a bunker somewhere in London where we will have very little say on them, which is hugely regrettable and, arguably, does not really help the financial services industry.

All of this is about trying to mend or fix something, patching it up and putting tape around it to try to build something coherent and functioning, when it will be less good and less useful. It will be suboptimal, as Ministers are often wont to say, and it will cost us money in the future as well. There are various figures that I could cite, but I will take, as an example, the Bank of England’s analysis, which suggests that the Brexit deal will take as much as 1.25% from GDP relative to the trend before the referendum.

Another warning is that if the Government’s proposed Brexit deal is implemented, GDP in the longer term will be around 4% lower than it would have been had the UK stayed in the EU. That will have a disproportionate impact on places such as Scotland. London may be able to insulate itself, but the further away that we get from London and from where these powers will reside in the Bank of England, the more difficult it will be. For me and my colleagues, the only sensible option is to take the matter back into Scotland’s hands and for Scotland to be an independent country and part of the EU. In that way, our financial services industry would continue to have the access that it has had and we would be where the talent and skills of people of Scotland can be best utilised for the future.