European Union (Withdrawal Agreement) Bill

Debate between James Duddridge and William Cash

Committee stage & Committee: 2nd sitting: House of Commons & Committee: 2nd sitting
Wednesday 8th January 2020 Commons Chamber

[The Parliamentary Under-Secretary of State for Exiting the European Union (James Duddridge)]

Parliament is sovereign, was sovereign and will be sovereign, and the clause recognises that fundamental principle in our constitutional arrangement, which is of great significance to many hon. Members. Membership of the European Union has felt as though we have ceded control. We cannot pull back sovereignty piece by piece—Conservative Back Benchers mentioned a number of examples. Anybody who has sat on a delegated legislation Committee will have been told by the Minister, “We cannot change this because it has gone through the European processes and we have to rubber stamp it.” The presumption was that we were full members, and that was made worse by qualified majority voting; previously, we had the ability to come back to each individual matter.

[Sir William Cash]

A very simple example of what my hon. Friend mentions is the EU’s port services regulation, which was opposed by every trade union, by the Government and by every one of the 47 port employers but went through this House simply because it had been passed by a majority vote in the Council of Ministers. That regulation was imposed upon us by the abdication of our sovereignty under section 2 of the European Communities Act 1972.

[James Duddridge]

My hon. Friend is right. We could not do anything about that law or any other specific issue without coming out of the European Union, taking back control and asserting our sovereignty. Clause 38 reaffirms that sovereignty going forward and, crucially, during the implementation period.

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[James Duddridge]

Yes. Clause 38 not only restates the historical position but reasserts our sovereignty during the implementation period. Parliament will be given extra powers, such as the powers being taken by the European Scrutiny Committee, which is important because we will not be participants in the decision-making process.

[Sir William Cash]

In a nutshell, laws are democratic when they are made in line with a manifesto following a general election. The bottom line, therefore, is that decisions taken by the European Scrutiny Committee on vital national interests will also go through departmental Select Committees, and then there will be a vote on the Floor of the House. That means this House will decide whether it wants to obey a legislative arrangement that has come out of the European Union, which is completely different from anything that happened since 1972.

[James Duddridge]

I thank the Chair of the European Scrutiny Committee. As he knows, the powers will also extend to the House of Lords, allowing for an additional check.

Compliance with the European Union (Withdrawal) (No. 2) Act 2019

Debate between James Duddridge and William Cash

Thursday 26th September 2019 Commons Chamber

[James Duddridge]

The right hon. and learned Gentleman says that we are at a low point. I agree. One of the reasons we are at a low point is that we asked the public for their views, and now Parliament is ignoring their views. We do have a responsibility—the whole Government have a responsibility—to unite, but not necessarily to unite this Parliament. Our responsibility is to unite the country behind the decision that the country has taken.

The right hon. and learned Gentleman asked me specific questions about 19 October. The Government will obey the law on 18, 19 and 20 October, and will always do so.

[Sir William Cash (Stone) (Con)]

The issue of compliance raises a very simple question. I say this to the right hon. and learned Member for Holborn and St Pancras (Keir Starmer): it is by no means certain that the law of the land is reflected in the passing of the European Union (Withdrawal) (No. 2) Act, because there is an apparent inconsistency between that Act and the European Union (Withdrawal) Act 2018. I have no time to go into the details, but the reality is that compliance is not just a simple question. It is a matter of grave importance in terms of which law is the law of the land.

[James Duddridge]

I thank my hon. Friend for advancing that argument. I think that the House will be grateful if I take it outside the House and have a detailed discussion with him, rather than detaining the House when it is dealing with urgent questions.

It appears that that was one of my more popular answers.

London Stock Exchange

Debate between James Duddridge and William Cash

Tuesday 21st February 2017 Westminster Hall

[Sir William Cash]

There is severe detriment to our national interest in allowing a merger of that kind when the London Stock Exchange and its group are the jewel in the crown of the City of London. Any merger raises matters of national interest such as, first, financial stability and UK taxpayer liability. The merger would create a new financial market infrastructure group controlling, inter alia, about 90% of European-listed and over-the-counter derivatives transactions, but operated for the benefit of shareholders, not users, with an unprecedented complexity of risk profile and significant uncertainty as to whether the UK taxpayer would pick up the bill were part of the combined infrastructure to fail. The uncertainty created by the lack right now of a clear Brexit deal adds considerably to the stability and taxpayer risks.

Secondly, there is loss of control of a key UK asset post-Brexit. The London Stock Exchange is a major centre of global financial markets: more than 500 foreign companies are listed in London, which is 20% of global foreign listings; and it has the highest equity market capitalisation, 170%, in relation to the GDP of all the largest economies. Majority control of that vital business will pass to Deutsche Börse shareholders, who will own 54% of the new group post-merger. Passing control of the London Stock Exchange to Deutsche Börse in the context of Brexit is not in the national interest and might undermine our negotiations with the 27 member states as we leave the EU.

The issue is not where the headquarters of the new company is located technically. I am told that formally moving the HQ to Germany, as the state of Hesse has insisted, is not likely given the need for a significant shareholder vote, but that is beside the point. The real issue is who calls the shots and in whose interests critical decisions are made. It is no answer to say that the HQ will remain in the UK if the reality is that the people really in charge are flying in for the day from Germany. Decisions must be taken in the UK and in the interests of the UK.

My third point is about competition concerns. The only substantial remedy offered by the parties to the EU Commission to allay concerns about significantly impeding effective competition is the sale of the central counterparty, Clearnet SA, based in Paris, and part of the LSEG. No disposals have been offered by Deutsche Börse, which owns trading platforms, central counterparties and settlement systems that have been integrated into a single vertical silo in Frankfurt. That is not sufficient, and I am concerned that the outcome of the European Commission’s review of the proposed merger will be determined by the EU’s political priority to ensure that Germany has control over London’s capital market infrastructure, instead of by genuine market concentration and anti-trust concerns.

Fourthly, there has been a lack of public scrutiny and industry comment; there has been little proactive support for, or indeed criticism of, the merger from the main UK financial institutions. That is not surprising, since the parties have given 12 major investment banks a role in the deal and they are destined to share about £353 million in fees if the deal succeeds. There has also been little comment by the UK Government so far on a deal concerning a major UK asset, although they still have a public interest role to play under the Enterprise Act 2002. We need to know why it was, and who decided not to refer the merger when it first came before the Secretary of State. Vast profits and sums of money are involved, and some stand to gain financially on a grand scale. All of that can be ascertained, but the national interest must prevail.

Precious little has been put into the public domain to suggest that the deal is remotely in the public interest. On what possible basis can it be argued, in particular post-23 June and the passage through the House of Commons of the European Union (Notification of Withdrawal) Bill, that the merger is in the national interest? Furthermore, under section 1JA of the Financial Services and Markets Act 2000, the Treasury

“may at any time by notice in writing to the FCA make recommendations to the FCA about aspects of the economic policy of…Government”,

including how to ensure compatibility with the FCA’s “strategic objective”, to ensure that the London Stock Exchange functions well, and how to advance the FCA’s objective to ensure the soundness, stability and resilience of the UK’s financial system, which is defined as including the London Stock Exchange and the London Clearing House.

[James Duddridge (Rochford and Southend East) (Con)]

Has my hon. Friend thought about what would happen, were the merger to go ahead, if the eurozone collapsed, given some of its fundamental difficulties? Having extricated ourselves from involvement in the euro and, on Brexit, from the European Union, would the merger not lock in some of the potential downsides to the UK equity and capital markets without gaining us any of the upsides?

[Sir William Cash]

As I have said, the withdrawal Bill is quite clear. We will leave. That means that we will be insulated from the catastrophe that could occur if the eurozone collapsed. I could enlarge that point, but I will not for the time being.

There is another statutory requirement to ensure the principle of the desirability of sustainable growth in the UK’s economy in the medium or long term. Those are all statutory functions, and I strongly suggest that Her Majesty’s Treasury should decide—in fact, I urge it to—that it is not in the UK’s interests to allow a deal where there is a clear intention to take action that would cause systemic risks in the UK and be detrimental to UK tax revenues.

I move to the powers of the Bank of England, which is under a judicially reviewable statutory duty in respect of the test of approval for any acquisition of the London Clearing House. Under the European market infrastructure regulation, the test for approval in general terms for the purpose of ensuring the sound and prudent management of the London Clearing House raises questions of the suitability of the proposed acquirer and the soundness of the proposed acquisition, including the person who will direct the business of the London Clearing House. It also includes questions relating to whether the Bank of England would be able effectively to supervise, and several other factors. All those are in question in this instance.

I turn to the powers of the Financial Conduct Authority, which is required to approve the acquisition of the London Stock Exchange because it involves the acquisition of the “control” over the LSE by the new holding company. In those circumstances, the FCA has to consider the suitability of the new group holding company and the financial soundness of the acquisition to ensure sound and prudent management, and have regard to the key influence that the new group holding company will have on the London Stock Exchange. There are grave concerns about all those matters that pose a threat to the sound and prudent management of the London Stock Exchange, including questions relating to moving euro clearing out of London. The removal of euro clearing to Germany would undermine UK economic growth, because it may lead to the movement of other currency clearing out of the UK and undermine the City’s success. Moving the new holding company to Frankfurt would also be against the UK national interest.