European Affairs

I am grateful for those comments—particularly the last one. I was kind enough to let the right hon. Gentleman intervene, so if he were to drop a line to my right hon. Friend the Member for Witney (Mr. Cameron) I would be indebted unto him for that. Returning to the First Secretary of State and the business of appointments, I think that the First Secretary realised, after he did not get the High Representative's job, that a further blunder had been made. He wrote in the Financial Times—a week after my right hon. Friend the Member for Richmond, Yorks had written in that publication—that""the distribution of the big economic portfolios in the next European Commission"" is""critically important… The men and women that José Manuel Barroso, Commission president, appoints to key dossiers such as competition, the internal market and trade will carry much weight in defining the direction of EU policy." We know what followed. Against this Government's belated objections, Michel Barnier was appointed as the Internal Market Commissioner. Against this Government's further objections, his portfolio includes financial services. Both the Prime Minister and the President of France had a number of conversations with Mr. Barroso about that portfolio, and it is clear that the Commission President took a great deal more notice of his conversations with the French President than he did of those with our Prime Minister. The French President now says that""the English are big losers in this affair"" and that""French ideas for regulation are triumphing in Europe"." It is clear that this Government have been comprehensively outmanoeuvred by the French, and that this country is now left playing catch-up. That leads us on to the financial services industry and its relations with the EU. The financial services industry is a vital national economic interest, and to further it we need to learn the lessons from the crisis and improve the global co-ordination of supervision and regulation. However, as Mervyn King said,""banks are global in life, but national in death"." Bank failures can have fiscal consequences—something that we are only too familiar with in the United Kingdom. That means not only that European co-operation is essential for the promotion of financial stability, but that we must safeguard taxpayers' interests when it comes to decisions that the new European authorities make. That must remain the clearest of red lines. Yesterday's ECOFIN conclusions seemed to be clear:""decisions taken by the ESAs should not impinge in any way on the fiscal responsibilities of the member states."" The Chancellor claims now to have secured his red line, but that represents staggering complacency when we look beyond the press release and into the detail. The new supervisory bodies can make decisions that have a fiscal impact either in a crisis or as a consequence of binding mediation. However, to overturn such decisions, the UK will need to secure the support of a majority of member states under qualified majority voting. We have no veto over those decisions, and as one EU official put it:""The real concession is that burden of proof will rest with Britain"." That makes it very clear that the real loser from yesterday is the Chancellor of the Exchequer and the British taxpayer. Sadly, that complacency is indicative of the Government's broader approach. We have seen it before over the alternative investment fund managers directive and the appointment of the Internal Market Commissioner.