Financial Markets and insolvency (Transitional Provision) (EU Exit) (Amendment) Regulations 2021

Pat McFadden Excerpts

Thursday 24th June 2021 General Committees

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Thank you for your chairmanship this morning, Mr Robertson. I have a feeling of déjà vu—in fact, Mr Robertson, it might be déjà vu all over again: not only have we been in this movie before, but we might be in it again in the future. But if I have a feeling of déjà vu, it must be nothing compared with the Minister’s. He has spent a large part of the last couple of years taking through these statutory instruments. He mentioned that there were 65 from the Treasury; I do not know what proportion of those he took through—a large proportion, I would guess. A lot of that was the rolling over of particular European regimes. Now he is back doing that again.

As the Minister said, the regulations are about protecting assets in mid-transaction from being clawed back in the event of an insolvency, increasing confidence in the financial system and contributing to its stability. Such fire breaks in clearing and transactions are an established part of the system. They are important because they are designed to stop an insolvency in one company from leading to a chain reaction right through other parts of the system. That much is uncontroversial.

The original form of the regulations was to offer protection for up to six months after the end of the transition period to firms that were part of the EEA processes; as the Minister said, the timetable runs out next Wednesday. But not all firms have completed the transfer to a new system, so we have this further extension for a two-year period. I appreciate why the Minister has gone for two years: he does not want to be doing this every six months, and there is some rationale in that.

Brexit was sold as being an end to red tape—nobody said it would be replaced with all this red, white and blue tape that we are debating today. I am not just talking about this instrument. Yesterday, the Financial Secretary to the Treasury was in a room somewhere along this corridor doing exactly the same thing to the extension process for customs safety and procedures—that was supposed to be for six months and is now having to be rolled over again. It will not be just these two financial instruments; there will be others too. This is the legislative process that keeps on giving—the rollover of the rollover, but no EuroMillions prize at the end.

I do not know whether you were listening to the news this morning, Mr Robertson. There was a report about long covid, which is defined as people having symptoms for 12 weeks or more after they have been diagnosed. What we are dealing with here is long Brexit: the legislative process that never ends of extensions to transition measures, where British regulations were supposed to be replacing the ones that we were leaving.

On the substance, I should say that of course we are not going to oppose something designed to contribute to financial stability and avoid the kind of financial chain reaction that can come with an insolvency in one part of the system. But the broader point is about how long the process is going to go on. I cannot predict the Minister’s future and personally I wish him well, but it is certainly within realistic possibility that a different Economic Secretary to the Treasury and Opposition spokesperson will be standing here in two years’ time debating the rollover to the rollover to the rollover.

We do not oppose the substance of the regulations, but we are casting a wry eye over the process of legislative long Brexit.