Banking Union and Economic and Monetary Union

Martin Horwood Excerpts

Tuesday 6th November 2012 Commons Chamber

[Mr James Clappison (Hertsmere) (Con)]

I warmly welcome the approach taken by my right hon. Friend the Minister for Europe and the words that he used to describe the situation. However, I support the amendment tabled by my hon. Friend the Member for Stone (Mr Cash). It is an important amendment, which complements the Government’s motion. It questions the legality of the arrangements and, in particular, the voting arrangements, which I drew attention to in an intervention.

My right hon. Friend spoke entirely correctly—with great conviction and accuracy—about the lawfulness of the delegation of powers. The only comment that I make in addition to what my hon. Friend the Member for Stone said is that it is important, given that the EU is governed by a legal framework and is a treaty organisation, that we should have certainty when it comes to the legal provisions of those treaty arrangements. All too often we have seen not certainty but legal terms and conditions being overridden by political will. The situation that we are discussing looks very much like another case of that type, and in such cases one simply cannot trust the legal arrangements.

On the voting arrangements set out in the regulation on the European Central Bank and their implications for the European Banking Authority, while the single supervisory mechanism in the ECB concerns the eurozone, the European Banking Authority concerns all members of the European Union and the whole single market. It sets the rulebook for the single market and has important supervisory responsibilities. The arrangements in the ECB regulation are breathtaking. It is not just a question of having the political will for nations to cohere together; it is a condition of the EU’s law—a regulation—that the member states of the eurozone work together, co-ordinate their actions and take a common position when it comes to the European Banking Authority. That means that in the European Banking Authority’s arrangements for voting, the eurozone bloc will have the whip hand in each of the decisions taken. They will be determined in advance.

The situation is a bit like those council meetings that we sometimes see in this country in which political groups with a majority decide everything in advance in a caucus. They then go into the council to debate a decision, but everybody knows what it is going to be. The same is happening here—the European Banking Authority is being turned into a sham. All the decisions will have been taken elsewhere and in advance and we will be deprived of our say.

[Martin Horwood (Cheltenham) (LD)]

rose—

[Mr Clappison]

I shall give way to the hon. Gentleman if he is able to put a different complexion on the matter.

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[Martin Horwood]

The hon. Gentleman is making an important point, but it surely only emphasises the importance of carefully negotiating the voting rights of the United Kingdom and non-eurozone members within the European Banking Authority. Does not the process advocated by the amendment—a veto and then Court adjudication, effectively—blow that negotiation out of the water and risk damaging this country’s rights within Europe?

[Mr Clappison]

The proposals are here in black and white. I hope very much that the hon. Gentleman will join us in supporting the Government to take every measure, up to and including a veto if necessary, to preserve our position and to stand up for our interests in the European Banking Authority. We simply cannot have a sham.

It is no use pretending that by talking nicely, going into the room, being at the top table and all the rest of it is going to be the solution. We have heard those warm sentiments so many times in the past. We are discussing a matter of negotiation to protect our interests, and we have to be prepared to take decisions that are unpalatable.

--- Later in debate ---

[Martin Horwood]

Just to put the record straight for the benefit of Hansard, I do not love everything that comes out of the European Union. I simply regard it as another level of authority with which we must negotiate gently and carefully, rather than necessarily taking the rather Gaullist approach that the hon. Gentleman and his colleagues are taking today.

[Jacob Rees-Mogg]

I am enormously grateful to my hon. Friend, who gives me an extra minute every time.

This is an important and good opportunity for the Government to get back powers that should never have been given away. It was a great folly to give away financial regulation to the power of the European Union, because as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) so wisely said, we have much more financial services in this country—I think she gave the figure of 36% for wholesale financial markets in the whole of the European Union that are in the UK. Therefore, we ought to regulate our own affairs and we ought not have delegated that to the European Union. We need to be careful about what is being proposed when it comes to the regulation of what are substantial international banks based in the United Kingdom in their business—which may be subsidiary business—with eurozone countries, because there is obviously a risk that they will find themselves under the auspices of a European regulator when they ought more appropriately to be under the auspices of a British regulator.

I think the Government’s position is quite strong, and I think the amendment is extremely sensible. It is interesting that we learn only through the Financial Times that the proposals that have come forth from the Commission are illegal. We do not learn it from the Government or the Commission; we learn it from an underhand leak, which comes via a newspaper to inform our debates, which is a pity. It would be nice if we could get such information directly to a sovereign Parliament, so that we knew what was or was not legal. Perhaps the Government will consider releasing the legal advice that will guide them—or perhaps ought to guide them—in their approach to this debate.

I would encourage the Government to accept the amendment tabled by my hon. Friend the Member for Stone. I listened very carefully to the Minister—I always do: he is a great Minister, who is much admired on this side of the House, and I imagine in other parts too. There was nothing he said which in essence contradicted my hon. Friend’s amendment, so I ended up thinking that what we were really debating was which way up an egg should be eaten—whether it should be the big side or the little side up. We are united as egg eaters in this context, and we think it would be “egg-cellent”—if I may carry on with this theme—to support my hon. Friend’s amendment, to which I was pleased to add my name, because it provides us with a solution in our negotiations in Europe and a clear way forward.