European Union (Withdrawal) Bill

Debate between John Baron and Chris Leslie

Committee: 8th sitting: House of Commons
Wednesday 20th December 2017 Commons Chamber

[Mr Baron]

Before the hon. Gentleman whips himself up into too much of a state of pessimism, may I gently remind him that inward investment is at a record high? If anything, it has picked up recently. In addition, because the EU has no free trade deals with big trading partners such as the US, China, Australia and New Zealand, and neither do we. That has not prevented trade from being conducted handsomely; if anything, our surpluses are with those countries rather than with the EU.

[Mr Leslie]

I will come to the US situation in a moment. I have to tell the hon. Gentleman that the inward investment figures are massively inflated because of mergers and acquisitions data. When we consider the buy-outs of some of the large technology companies—[Interruption.] Well, I do not believe that the hon. Gentleman should necessarily interpret the stripping out of British ownership of such companies as a great British success. If he digs beneath the statistics, he might see a slightly different picture.

Our mythology about the UK’s potential to strike a great and bountiful set of trade deals if we could only rid ourselves of the shackles of the customs union is becoming a bit of a joke across the British economy.

--- Later in debate ---

[Mr Leslie]

Absolutely. My hon. Friend makes his point well. The idea is that we should turn a blind eye to the trading arrangements we have with our nearest neighbours—50% of our markets—in pursuit, as an alternative or substitute, of some deal with far-flung countries a lot further away, but Australia accounts for 2% or 3% of our current trade and a deal with Australia will not offset many of these problems. It is not just the 50% that we have directly with our nearest neighbours. All those free trade agreements that the European Union has worked up and signed, to which we have been a party, over the past 40 years add up to a further 14% of our trade. So going on for two thirds of our trade is tied into the customs union process—36 bilateral free trade agreements with 63 different countries. How shall we ensure that they continue the day after we exit?

[Mr Baron]

rose—

[Mr Leslie]

I will not give way; other Members want to speak.

The Secretary of State for International Trade and President of the Board of Trade has said, “These can be grandfathered; they can be cut and pasted and we will just sort all those out,” and junior Ministers at the Department for International Trade have said in the past, “Those countries have all agreed to roll them over.” That is not the case. Maybe a bit of dialogue has begun, but those other countries might want to take the opportunity to reopen some of those long-standing agreements—who knows? The Minister will give us the answers when he winds up the debate.

[Mr Baron]

rose—

[Mr Leslie]

I want to conclude my remarks because others want to speak. I simply want to make a final point about why the customs union is such a crucial issue, and why I urge my hon. Friends on the Front Bench and hon. Members across the House to think about the consequences of not staying in the customs union.

If this country ends up with hard borders again, there will be big consequences. Our ports could grind to a halt. Lorries will clog up our motorways, with, potentially, vast lorry parks near the ports. The expensive, wasteful spending on bureaucratic checks will hurt our industries, and we ought to be evaluating the economic impact of industries, potentially, gradually relocating elsewhere because it is easier to do business in a different jurisdiction. Think of the jobs lost, particularly in the manufacturing sector, if we get this wrong. Bear in mind that we will not have any say on what happens on the EU side of the border after this whole process. There is no guarantee about what happens at the other end of the channel tunnel or in Calais.

The reason I have pushed new clause 13 as I have, is to do with the austerity that we risk in this country for the next decade—a decade of Brexit austerity that will potentially befall many of our constituents because of the lost revenues. Unless we stay in the single market and the customs union, we will have that austerity on our conscience, and I urge hon. Members, especially all my hon. Friends, to think very seriously. We have to make sure we stay in the customs union.

Banking Union and Economic and Monetary Union

Debate between John Baron and Chris Leslie

Tuesday 6th November 2012 Commons Chamber

[Chris Leslie]

I will not give way yet, as I am conscious of the time.

We were right, too, to bail out the banks in 2008, but that came at a high cost for the taxpayer and for the country’s economic prospects. UK public debt was adversely affected by the purchase of banking assets and the subsequent loss of revenues from financial services. These issues are now affecting countries around the world, especially in the EU. Monetary policy sovereignty has allowed the UK to adopt an active interest rate policy to counteract those economic headwinds—something less available to those in the eurozone.

To save the euro, the eurozone has looked at new rules to grip the fiscal policies of its member states. Fiscal union in the EU is now widely recognised as dependent on banking union. Germany initially insisted on that, and it has asked that the single supervisory mechanism—the eurozone nation state regulators and Governments—be completed before banks can access the European stability mechanism and the European Central Bank’s outright monetary transactions programme, hence the imperative to agree these matters. In recent weeks, however, Germany is rumoured to have lost some enthusiasm for that tougher banking union and its consequences, especially as some of its smaller banks face major regulatory upheaval.

It is right that the ECB’s role in supervisory policy should be triggered, by unanimity if necessary, as required in the Maastricht treaty. Central banks are increasingly in the driving seat in financial regulation, as is the case in the UK, and it is necessary for the ECB to have a clear capability in its role overseeing the operation of the eurozone. The ECB is a full treaty institution, and it must be governed by treaty rules and member state unanimity, as we heard from the Minister. In that process, the rights of non-eurozone members, particularly the UK, must be safeguarded in several ways. We should not be party to any deposit guarantee mechanisms or pre-fund recovery or resolution mechanisms. The UK has undertaken its own measures in that respect, and there are no proposals on the table that would affect our taxpayers directly.

The rules for the single market, including a single rule book for the financial services sector in the EU, should involve all 27 member states. The European Banking Authority—as well as other European supervisory authorities—is the vehicle for preserving the integrity of the single market. The Commission says in its documentation that

“it is proposed that voting arrangements within the EBA should be adapted to ensure EBA decision-making structures continue to be balanced and effective and preserve fully the integrity of the Single Market”.

That is absolutely crucial, but we need far more details about how that will work. The 17 eurozone countries will act en bloc through the ECB in their seats on the EBA, which could represent a permanent majority on all issues, as the Minister explained. The EBA has rule-making powers under qualified majority voting decisions, it mediates between supervisory institutions, and it shares supervisory best practice. There is a real risk of the ECB bloc acting as a permanent caucus to overrule the 10 non-eurozone nation states.

[Mr Baron]

What does the hon. Gentleman understand our guarantees to be to ensure that City interests are not adversely affected by QMV if the regulations go through unamended?

[Chris Leslie]

As I shall come to, we should seek such key guarantees. I do not think that there is a sufficiency under the proposals on the table. As I said, I am sympathetic to the Government’s situation. However, there is a crucial difference between the Opposition and the Government. We believe that it is really important that we stay in the room somehow so that our voice continues to be heard and we can shape and mould supervisory rules, given the importance of financial services to our economy. How can we continue to be involved while not being at risk of being overridden by the 17 eurozone members? That is the conundrum with which we are trying to grapple, and it is shaping up to be a test case in the two-speed Europe debate.