Banking Union and Economic and Monetary Union

Nigel Evans Excerpts

Tuesday 6th November 2012 Commons Chamber

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Before I call the shadow Minister, let me remind the House that the debate is time-limited and will end at 6.29 pm. When the shadow Minister sits down, I will announce the time limit to ensure that all Members who have indicated that they wish to speak get in.

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[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. We will start with a six-minute limit, but it will have to be lowered. I call Mr Cash to move his amendment.

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[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The time limit has been reduced to five minutes.

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[Mr Brian Binley (Northampton South) (Con)]

I remember well those long-gone days when we were told that monetary union would bring strength to the EU, be enduring and serve to bring our economies together. By golly, how time does fly, and how truth changes the vision. Recent experience has shown that political ambitions exceeded economic reality, and fault lines were built into the single currency from the start. Structures have been put to the test and, quite frankly, been found wanting.

The problems facing the euro might not have started in financial services, but the crisis has certainly highlighted those fundamental flaws. Sovereign debt might not be limited to the eurozone, but its constraints within the economic and monetary union exacerbated the crisis. Unless Europe gets to grips with those problems, the entire project could disintegrate before our very eyes. That is the situation we are facing. We are debating a desperate attempt to apply sticking plaster to a serious wound. The flaw is inherent; the mistake already made. Membership of the single currency was extended way beyond that initially envisaged, and therein lies the fault, which is not dealt with by any of the measures proposed today. Banking union may sound like a measured response, but the creation of a European banking union is a world away from a co-ordinated international response. President Barroso revealed his agenda in his “State of the Union” speech, raising the issue of banking union in the context of a push towards a federal European state. That is the truth of the matter.

Our first priority must be to resist any financial transaction tax. That is not a new idea; in 1984, Sweden introduced a 0.5% tax on the purchase or sale of shares. By 1990, 30% of all Swedish equity trading had moved offshore—more than half of it to London—and the volume of bond trading had declined by 85%. That is the damage that a financial transactions tax can do to this country. It is vital that the Government have the courage to resist it.

Will the Minister expand on the references to fiscal probity that allow for spending on social fairness? Is that a get-out clause for grossly indebted Governments who want to keep spending they do not have? It sounds very like it to me.

The report on EMU accepts that public opinion is key, but that is another way to justify spending taxpayers’ money on propaganda. Our Government have stopped the money-go-round in local government and quangos. It would be totally inconsistent to allow Eurocrats to deploy hard-earned taxpayers’ money to propagate grand visions that have already proved to be failures.

Earlier comments on the document made it clear that fiscal integration is about a continued movement to a federal Europe. I could quote page after page, but I will not bore the House. The truth of the matter is that we need to be sure that our Government’s promises to us are absolutely watertight, fast and hard-held. If they are not, the House will be doing a massive disservice to our children and grandchildren. That is what this measure is about.

I noticed a slight smile on the face of the Minister when I made a point about social well-being. If he looks into it a little more, he might begin to agree with me. If I had the time, I would explain.

Finally, as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) said, we need to take this opportunity as a base to renegotiate—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

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[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I am calling the wind-up at 6.24 and we have two speakers left.

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[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I call Mr John Baron, and I ask him to sit down no later than 6.24 pm.

[Mr John Baron (Basildon and Billericay) (Con)]

Like many other Members, particularly on the Government Benches, I have a healthy respect for the Ministers sitting on the Front Bench this evening—the Financial Secretary to the Treasury, my right hon. Friend the Member for Tunbridge Wells (Greg Clark) and the Minister for Europe, my right hon. Friend the Member for Aylesbury (Mr Lidington)—but I believe that they are trying to defend the indefensible. I find it hard to understand how a Government who are prepared to use the veto, and who have used it in defence of City interests, can be prepared, by passing these regulations unamended, to enter negotiations without being able to assure the House that cast-iron guarantees are in place to ensure that qualified majority voting will not be allowed adversely to affect the City.

I have asked the Minister at the Dispatch Box where those concrete guarantees are. Unfortunately, I have not heard anything to convince me that they actually exist. The idea that the European Central Bank would not be allowed to overrule or override non-members of the eurozone is, I am afraid, not a strong enough guarantee. I do not see where that stands up, particularly given that the legal opinion that has been sought and confirmed brings that sort of red line very much into dispute. There is no guarantee there at all. I very much look forward to hearing what the Minister has to say about what other concrete guarantees exist in defence of the City. Going into negotiations or allowing these regulations to pass without a clear idea of what the guarantees are could, I suggest, turn out to be a fool’s errand.

We all know how the eurozone has got into this mess. The eurozone went for monetary union, courtesy of the single currency, but we all know that there cannot be monetary union without fiscal union, so now it is playing catch-up. Easy credit and easy money have led to Governments borrowing too much, and the eurozone is trying to sort out this mess.

I have to say to the Minister, if he is listening, that having just returned from Germany with the Foreign Affairs Committee and having asked about the possible solution, I know that fiscal union or fiscal compact is definitely on the table—despite the fact that most members of the fiscal compact that is coming into effect next year have already broken the parameters of the financial limits set. The universal answer, whether one spoke to politicians of the left or the right or to trade unions, businesses or lobby groups, was more integration and more political union in order to make the fiscal compact work. We are on a collision course with the proposals that are now coming out of the eurozone.

My suggestion is that that is fine: let the eurozone members get on with it; we wish them well in their endeavour. I doubt whether it will succeed, because the economics do not stand up and time does not allow any further exploration. Let them proceed, but my concern as they do proceed along that journey is what damage they will do to our interests. My deep concern is that, if we are not careful, we are going to walk into negotiations without having the ability to call upon cast-iron guarantees if they are needed, and that our interests will be adversely affected as a result.

We all accept that in this country we perhaps need to rebalance the economy somewhat and to get manufacturing up. We cannot, however, ignore the importance of the City to our economy. We have been prepared to use the veto in the past, and it makes no sense for the Government’s proposals to proceed without those cast-iron guarantees in place. There is little doubt that if we enter into negotiations without those safeguards in place, we will stand a real risk of allowing others adversely to affect the City’s interests and, in the end, our prosperity as well.

I look to hear from the Minister what those concrete guarantees are. If, as I believe, they are not forthcoming, I will have no hesitation, having put my name to the amendment of my hon. Friend the Member for Stone (Mr Cash), in supporting him in the Lobby—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

I am grateful to the Minister for agreeing to cut back his winding-up speech to just five minutes so that every Back Bencher who wanted to could participate in the debate.