Financial Transaction Tax and Economic and Monetary Union

Debate between Bill Esterson and Greg Clark

Tuesday 18th June 2013 Commons Chamber

[The Financial Secretary to the Treasury (Greg Clark)]

I beg to move,

That this House takes note of European Union Document No. 16988/1/12, a Commission Communication on a Blueprint for a Deep and Genuine EMU: Launching a European debate, an Un-numbered European Document dated 5 December 2012, a Report from the President of the European Council: Towards a Genuine Economic and Monetary Union, European Union Documents No. 15390/12, a draft Council Decision authorising enhanced co-operation in the area of financial transaction tax, and No. 6442/13 and Addenda 1 and 2, a draft Council Directive implementing enhanced co-operation in the area of financial transaction tax; observes that the European Scrutiny Committee has reported on these documents and concluded that they raise questions relating to parliamentary sovereignty and primacy as well as fiscal and monetary issues; notes that the European Commission Communication states that ‘Interparliamentary co-operation as such does not, however, ensure democratic legitimacy for EU decisions. That requires a parliamentary assembly representatively composed in which votes can be taken. The European Parliament, and only it, is that assembly for the EU and hence for the euro’, and that the report from the President of the European Council concludes that ‘further integration of policy making and a greater pooling of competences at the European level should first and foremost be accompanied with a commensurate involvement of the European Parliament in the integrated frameworks for a genuine EMU’; further notes that the proposals for the Financial Transaction Tax have been challenged by the Government in the European Court of Justice; notes that recent European Treaties and protocols have emphasised the role of national parliaments throughout the European Union as the foundation of democratic legitimacy and accountability; and believes that this role is the pivot upon which democracy in the United Kingdom must be based on behalf of the voters in every constituency.

I am grateful for the opportunity to discuss these important issues and thank the European Scrutiny Committee for recommending them for debate. I shall focus on the financial transaction tax before turning to the matter of economic and monetary union. As many hon. Members, and certainly members of the European Scrutiny Committee, will know, the Government have applied to the European Court of Justice for the annulment of the Council decision authorising an FTT under the enhanced co-operation mechanism. I am pleased to be able to set out our concerns about the initiative.

Many Members will know that we have been here before, in 2011, when the European Commission proposed a wide-ranging financial transaction tax that would have applied across the entire European Union. Just like the current proposal, that tax would have applied to all trades, market participants and financial instruments; it would have applied to Government bonds, corporate bonds, equities, derivatives and other financing instruments, and to long-term and short-term transactions. Just like the current proposal, too, that tax would have affected the entire financial system, reducing returns to pension funds and savers, increasing companies’ and Governments’ financing costs and reducing European competitiveness at a time when the EU, frankly, needed competitiveness and growth. It might have been conceived as a way of raising revenue from a small number of people in the financial industry, but it would in fact have been paid by savers and by companies. The Commission itself forecast an impact—a negative impact, I need hardly say—on EU-wide gross domestic product of 1.76%.

The Chancellor made it clear that we would not accept the measure—certainly not at a time when the EU was trying to grow and attract business. He said the UK would have no part in it, and partly as a result, the proposal was dropped. Sadly, however, it was not dead, and this January, under a procedure known as “enhanced co-operation”, 11 member states chose to resurrect it. We believe that member states should be free to set their own tax policies, and if they choose to co-ordinate their tax policies, that, too, is their right. Although we believed and continue to believe that the proposed FTT is a bad idea, it is of course open to member states to pursue it—provided it is lawful, complies with the EU treaty and respects the rights and competences of those member states that choose not to participate.

[Bill Esterson (Sefton Central) (Lab)]

I am grateful to the Minister for apparently making the argument for international co-operation in order to overcome the concerns that he has raised. President Obama has made the point that Wall street was responsible for the financial crisis, so Wall street had a responsibility to solve the problem. Does not the same apply here, provided that there is an attempt at international co-operation?

[Greg Clark]

I will come on to the hon. Gentleman’s point. I would point out that President Obama and his Treasury Secretary are deeply concerned about the progress of this financial transaction tax, which does not meet any of the in-principle ambitions that people have had for some time. It is a cause of a great alarm among those who believe in free trade around the world.

The proposal under the enhanced co-operation procedure is modelled substantially on the 2011 version. It contains a feature known as the “establishment rule”, under which a UK financial institution would be deemed to be established in the FTT area for the purpose of the tax by virtue of the mere fact that its trading counterparty is headquartered in a country participating in the tax. So in practice, a UK pension fund purchasing a UK Government bond from a UK branch of a German bank would be obliged to pay the tax, and it would pay the tax not to the Exchequer in this country, as would have been the case if we had signed up to the FTT, but to an overseas authority. Likewise, a UK company with significant Treasury operations would potentially be in scope of the FTT when its counterparty happened to be headquartered in the FTT area.

Oral Answers to Questions

Debate between Bill Esterson and Greg Clark

Tuesday 6th November 2012 Commons Chamber

[Greg Clark]

I do agree that we need much more competition in the banking industry, and account portability can play a major role in advancing that. The Vickers commission looked at it, and my hon. Friend has been very vigorous in proposing ways in which she thinks it can be implemented. My hon. Friend the Economic Secretary and I will meet her to discuss how we can advance these proposals.

[Bill Esterson (Sefton Central) (Lab)]

Small businesses are responsible for 40% of the jobs in my constituency, but with the banks not lending to small businesses, it is very hard for them to grow and create the extra jobs that are needed. What action will the Minister take to make sure that the banks do lend to small businesses so that they can play their part in the growth and jobs desperately needed in my constituency and elsewhere in the country?

[Greg Clark]

The hon. Gentleman makes an important point. It is crucial that we get funds to small businesses to get them lending. In fact, lending to small and medium-sized enterprises is up 13% over the past year. He will know that the new funding for lending scheme, which is being conducted in co-operation with the Bank of England, is making £80 billion available to the banking system for the purpose of lending.

National Planning Policy Framework

Debate between Bill Esterson and Greg Clark

Tuesday 27th March 2012 Commons Chamber

[Greg Clark]

Again, one of the points of abolishing the regional bodies is to take away the threat to the green belt that they introduced. They will be removed, and decisions will be taken locally, with national protection for the green belt.

[Bill Esterson (Sefton Central) (Lab)]

Will councils be able to use the housing numbers from windfall sites as part of their core strategies?

[Greg Clark]

Yes. Where there is evidence that windfalls are, paradoxically, predictable and there is a record of them coming through that can be relied on—as happens in many places—they can be included in housing numbers, with the exception of back gardens, which are in a separate category.

National Planning Policy Framework

Debate between Bill Esterson and Greg Clark

Thursday 20th October 2011 Commons Chamber

[Greg Clark]

The hon. Gentleman is absolutely right, but it is important to tackle the fundamentals. That is why, following our commitment to review the planning framework, our analysis was that it needed a fundamental review, even though it would have been easy simply to tinker with it and make minor changes. That is why we have made the proposals that we have and why I wanted the fullest possible consideration. We will take all representations into account. I am convinced that we will have a planning system that everyone in this Chamber can be proud of, and that we will take this opportunity to create a planning system that offers future generations better prospects.

[Bill Esterson (Sefton Central) (Lab)]

rose—

--- Later in debate ---

[Greg Clark]

I am pleased that the hon. Lady has raised that point. We are indeed giving power to local councils, which are the democratically elected representatives of local people. We are also scrapping the regional strategies that impose decisions on them. Crucially, however, the Localism Bill—many Members participated in the debates on it—creates the legal right to a neighbourhood plan in any parish, town or neighbourhood below the local authority level. It is absolutely right that neighbourhoods should have that ability, which is part of our reforms.

[Bill Esterson]

My constituents have similar concerns to those of my hon. Friends about the Bill’s impact. The biggest issue in my constituency is protection of the green belt. I am sure that the Minister is aware of the legal opinion obtained by the Campaign to Protect Rural England, which says that green-belt policy

“could be undermined by the sustainable development presumption together with the expectation that applications should be approved unless there are adverse impacts to policies in the NPPF as a whole.”

I hope that he will take that opinion on board, or does he have an alternative legal opinion that counters what the CPRE has said?

[Greg Clark]

I will address that point explicitly later in my remarks. I might just say, however, that the hon. Gentleman’s predecessor in Sunderland—

[Bill Esterson]

indicated dissent.

[Greg Clark]

I do apologise; the hon. Gentleman is from Sefton. I will therefore not make the point that I intended to.

Let me continue the point about the importance of putting local people in charge. The British people are a pretty bolshie lot, and when we feel that we are being dictated to from above, the natural response is to seek to frustrate, thwart, resist and impede whatever is being imposed without enjoying the consent of the community. We know from this country and around the world that it is good practice to involve people in plan-making early and to allow them a genuine say in producing plans for their area, because then they will participate with enthusiasm. People are right to resist when bad planning is done to them, but when good planning is done with them, they will prefer to get involved and create positive places. That is why we are scrapping the regional strategies and the right of the Planning Inspectorate to rewrite local plans and why we are introducing compulsory pre-application scrutiny for major developments and neighbourhood plans to ensure a local voice.

Oral Answers to Questions

Debate between Bill Esterson and Greg Clark

Monday 5th September 2011 Commons Chamber

[Greg Clark]

The cost of developing a neighbourhood plan will depend on how detailed the plan being executed is. However, we are providing support for every neighbourhood that wants to produce a neighbourhood plan. We have ensured that support will be available even before the Bill is introduced, so that every community that wants to have a neighbourhood plan can get on with it.

[Bill Esterson (Sefton Central) (Lab)]

Is it not the case that the presumption in favour of development at the heart of the new planning framework puts every piece of green space at risk of development?

[Greg Clark]

I am glad that the hon. Gentleman has raised that question because it enables me to say categorically: no, the answer is that it does not. What the presumption says is that when a local plan is absent or silent, there will be an assessment of whether a development should go ahead, the test of which will be whether it is sustainable, which is absolutely crucial. I have been campaigning for the environment for my entire political career, and I will continue to do so.