Capital Markets Union

Roger Mullin Excerpts

Thursday 3rd December 2015 General Committees

[Harriett Baldwin]

Let me take those points in turn. As a distinguished member of the Select Committee on the Treasury, my hon. Friend knows that the UK does not object in principle to financial transaction taxes. The UK has a financial transaction tax on stocks that are bought in the UK. However, the Government are concerned about the application of a financial transaction tax on instruments that could be traded elsewhere in the world, because if it were applied to something that is easily mobile and can be moved quickly to another jurisdiction, that is what would happen. There are no proposals in the capital markets union steps outlined today to harmonise taxation in any way. The Government stand strongly on our belief that taxation is a matter for member states and we continue to argue that case.

On the more general points about renegotiation and the Prime Minister’s letter to Donald Tusk, it is clear that the European Union needs to address the fact that nine countries continue to have their own currencies and 19 have chosen to adopt the euro. There is absolutely no prospect of the UK ever joining the euro, so as part of the renegotiation we need to make it clear across the 28 EU countries that positive initiatives such as this on capital markets must reflect the fact that this is a multi-currency single market for capital. We will fight vigorously against any proposals that threaten that. That is a key part of the renegotiation.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure, Mr Hanson, to serve under your chairmanship for the first time. My question is on a fairly narrow point. On a number of occasions the Minister has mentioned risk, and some of the documents refer to risk. She will know that there is no unit of measurement for risk. I often think that Governments would be well advised to disaggregate risk into its different components so that they can be clearer about measuring probabilities and chances, and negative outcomes in financial terms, for example. I would like to hear her remarks about whether that would be worth while. I am asking because I was pleased to hear her remark about a rigorous impact assessment. It strikes me that in such an assessment particular care will have to be taken about how risk is measured.

[Harriett Baldwin]

I welcome the hon. Gentleman’s question about risk and I draw his attention to this incredibly thorough document. With his academic interest in such subjects, he will want to read the academic articles cited in this weighty tome. He will know that there are of course many risks in capital markets. Not only is there market risk, there is credit risk, regulatory risk and, in a multi-currency single market, currency risk. In a previous life, I specialised in this subject, so perhaps he and I could go for a drink some time and talk about leptokurtic distributions and other such esoteric matters, which might not fascinate the rest of the Committee as much as us.

--- Later in debate ---

[Roger Mullin]

My remarks are also based on having read next to nothing, since I received very little information in appropriate time to be able to study these matters. I have been helped considerably by the Minister’s opening statement, which was very clear and helpful. I will restrict my comments to matters she mentioned in her speech and some of the things to which the hon. Member for Leeds East referred.

Everyone would welcome any change that allowed for more effective and better competition than has been the case. From that point of view, I have no great objections to the proposals, although it is very early days before we find out whether we will eventually need legislation or other ways to implement the intended changes. Given the Minister’s remarks in her opening statement about concerns regarding the private pensions sector, will she say a little more about that when she sums up? It would also be very helpful indeed if she explained precisely why the Government are not in favour of binding mediation. Again, she indicated that but did not expand on it.

There might be concerns in some quarters about whether CMU is going to help long-term rather than short-term investment. If she could reflect on that and the need to secure longer-term commitment and investment for the benefit of the whole economy, it would be useful.

Finally, I am keen on the idea of creating markets that are more international in nature, enabling the simple saver, for example, to look more widely than the domestic market to save. It would be useful, not least from the Scottish perspective, if the Minister could say a little more about cross-border matters in this area.