European Affairs

Thank you for calling me, Mr. Deputy Speaker, and let me say that I think my remarks should fall well within the available time limit. I am a member of the European Scrutiny Committee, and I should perhaps begin my remarks by conveying the apologies and regrets of its Chairman, my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty), who ordinarily would have wished to have participated in the debate. Unfortunately, however, he is away on other European scrutiny business. I do not claim to be a representative of the Committee because, as other Members will appreciate, it can be difficult to secure consensus on a body that incorporates those with a fairly pro-EU stance such as myself—I say that with due deference to my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart)—and those such as the hon. Member for Stone (Mr. Cash), the right hon. Member for Wells (Mr. Heathcoat-Amory) and my hon. Friend the Member for Luton, North (Kelvin Hopkins), whom I will not categorise, but who would fairly describe themselves as not being historically pro-Europe. We might, however, agree that the Committee has been well engaged in debates on matters to be discussed at the Council, particularly those to do with European financial regulation and supervision. It has rigorously examined the ministerial position by questioning a Minister from the other place, Lord Myners. Although Committee members do not all share the same European or other political views, I think it is fair to say that the issues have been thoroughly debated. I have my own views, of course, and not only on broad European issues. Wearing my other hat as chair of the all-party group on building societies and financial mutuals, I also come at these matters from the perspective of a long-standing supporter of the mutual sector of the financial services industry, so I am alert to the impact that any proposals from Europe may have on such bodies. It is important to recognise the context of the debate that will take place. It has, of course, in a sense been ongoing since the onset of the credit crunch. I think it is fair to say that our Ministers and Prime Minister have led the moves in Europe to ensure that there has been a Europe-wide response to the problems created by the credit crunch, and my right hon. Friend the Foreign Secretary outlined some of them in his opening remarks. There may be issues of concern for the Government—and, indeed, for all Members present—in the proposals for financial regulation and supervision, but our Government's track record in pursuing the interests not only of this country, but of Europe in general, has so far been fairly effective. The proposals have developed from the original ones—the European economic recovery plan in December—to "driving economic recovery" in the March Council and now an element for debate is""restoring and maintaining a stable and reliable financial system"." That is, obviously, at the core of my remarks. There are two pillars to this approach. The European systemic risk council—the so-called "euro early warning system" or "macro-prudential board"—which is to be under the president of the European Central Bank, is an essential pillar. I think there is a huge degree of consensus on the need for an international body to examine and highlight any potential deficiencies in the European and international financial services industry. It was precisely the absence of such a body that allowed the problems in the American sub-prime market to continue. They were recognised long before the financial institutions and the regulators realised that what appeared to be a local problem in the United States had huge international significance that would have such a profound impact on the British economy, and the entire European economy. The other pillar is the European system of financial supervisors. It will be made up of national supervisors, but will be overseen by three new European supervisory authorities, which would, in effect, develop European regulatory policy on supervision within the individual countries. Those proposals are due to be debated and delivered over the forthcoming year.