European Affairs

My right hon. Friend may be pleased to know that I did notice that, but I have noticed that for a good year or so in these debates, as Labour Members' morale has steadily sunk lower—although not quite as low as their party's election results last week. I was talking about the European Commission. Not all its legislative agenda has been wise; it is not coherent to seek to cut the costs of regulation on business on the one hand and then raise them by putting up the cost of employing temporary workers. The agency workers directive was rightly opposed by the Government until, in one of too many instances of their flaccid defence of British interest, that resistance was abandoned. That emphasises how important it is for us to restore our national control over social and employment legislation so that once again decisions on how best to help our families and businesses can be made here in Britain—a policy that today again received the support of the CBI. Most importantly of all, the Commission has stood against those who have called for protectionism—a brave position that was not helped by the Prime Minister's ill-advised use of the slogan, "British jobs for British workers". If Mr. Barroso is to be reappointed, I hope that the British Government will seek assurances that he will not be diverted from the course that he has set on free market issues over the past five years, that that will be reflected in the composition of the next Commission overall, and that the Government will urge that this recommendation is made now rather than drifting on until October. The Foreign Secretary referred to the discussion of new financial regulations in the context of this weekend's summit. The alternative investment fund managers directive and the proposals on EU financial services supervision could have a most serious effect on Britain's financial services industry, as one or two colleagues, including my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), said. The truth is that we have reason to be extremely concerned about how this legislation is shaping up and how the Government are handling the issue. There is not so much any fundamental difference of principle between the two Front Benches as a concern about how well the Government are pursuing the British national interest in these matters. There is a widespread belief that the Government have taken their eye off the ball, and it is now very important that Ministers focus on this. In the draft Council conclusions, there is a great deal of language about the need for "rapid progress" and legislation "as soon as possible", but it is surely far more important that we get the regulations right than that we get them quickly. Otherwise, we risk making the same mistake at European level that the United States made with the Sarbanes-Oxley Act. Instead of rushing into ill-considered regulation, we should be facing the immediate challenge of rebuilding confidence in European banks. Even within the Commission grave concerns are privately expressed about the lack of proper consultation and of a thorough regulatory impact on the proposed fund managers directive. That point has been powerfully reinforced this week by the Lords EU Committee report into the future of EU financial regulation, which concluded that""the desire for speedy action must not come at the expense of thorough consultation, impact assessment and risk analysis by the Commission in line with their own Better Regulation principles."" After months in which Treasury Ministers have been absent from the European debate, although they are part of a Government who always lecture us on taking part in European discussions, we welcome the news that at last Lord Myners is to visit Sweden to discuss these issues with the incoming presidency. We hope that at the Council the Government will ensure that the final language reflects Britain's interests. The establishment of a European systemic risk board is to be strongly welcomed; we support better analysis of the macro-prudential risks. However, decisions on what action should be taken in response to the risks that the board identifies are taken by national Governments, not by the EU. The board must embrace the whole of the EU, so it would clearly be inappropriate for it to be chaired by the president of the European Central Bank.