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European Financial Services Proposals

That is the model for trade negotiations now, and it would certainly be a possible logical outcome of this approach. My constituency does not contain a financial services community—people make things there, and I am glad of that—but financial services constitute an important part of our economy. I respect that position and would wish to defend it, but I do not think that that would be the best means of defending it. I am not persuaded that the case has been properly made, but if we accept that the intellectual basis of these changes is a wish to improve market functioning to ensure that we have a single market that works more effectively, and to increase the resilience of that marketplace—in other words, if the aim is the protection of the various entities to which I referred earlier—I am not sure that that will result from the actions we are taking in agreeing to the establishment of these agencies. I would like that case to be set out in practical terms—what does this mean, and how will it deliver added protection and added value in this critically important sector of our economy? There is also the issue of deciding both how we are to proceed and how these bodies will operate once they have been decided on and set up. The decision-making process is somewhat strange. I devoted some time to this issue in Treasury Committee discussions. We have by far the largest financial services sector in Europe, yet in the decision-making framework and processes of these bodies—and they will be making decisions—our voice appears to have no greater weight than any other member state. We therefore face some risk of having to spend a significant amount of our time seeking to persuade regulators and their representatives from member states with tiny financial services sectors of the merits of our arguments in horse-trading discussions on technical matters that are largely irrelevant to them, but which they nevertheless have a say in and a vote on. One has to wonder about the merits of that. Let me relate an exchange I had on this subject with Lord Myners in the Treasury Committee. I pointed out the rather different degrees of importance of the financial sector for various member states, and he said:""I think we would expect our voice and credibility to be reflective of the significance of the financial services industry. Of course it is also worth remembering that we have consistently made the case that European legislation and proposals must be evidence-based and must be the consequence of proper consultation with an impact assessment. We have seen things come out of the Commission which do not meet those criteria"." I hinted to him that I had heard a suggestion that one of those things was the venture into hedge fund regulation, and he said, "Absolutely." I asked whether that exemplified the problem of constructing European responses in sectors where one nation state has virtually no industry at all and another has a very large industry. He replied:""One would expect those nation states which have the greatest economic interest in this area to be the leaders of debate and discussion, as indeed you would over aspects of European policy such as fisheries or agriculture."" I have spent a considerable chunk of my parliamentary life debating fisheries and agriculture, and I do not find great reassurance in such a reference to the decision-making processes on those matters within Europe. What we have, therefore, is a hope—or an expectation, to refer to the word used by the Minister—that Britain's voice on these matters will be heard loud and clear. I must admit, however, that I would like more than a hope, and even more than an expectation, that we will be able to protect our interests when decisions are made. I had expected to hear some of the points I am making from official Opposition Members, but such is their new love-in with Mr. de Larosière that perhaps they have tempered their thinking in this area. We shall see.