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The Prime Minister (Mr. Gordon Brown): With permission, Mr Speaker, I would like to make a statement on the European Council held in Brussels last Thursday and Friday, which I attended with the Foreign Secretary, and which focused on the intensive economic co-operation needed within Europe and across the world as we follow through the agreements made at the G20 summit and ensure the co-operation needed in economic and environmental policies.
The Council expressed its determination to continue playing a leading role at global level. It called on its international partners to implement fully the commitments made at the London G20 summit, in particular by providing additional resources to international financial institutions and accelerating the reform of the financial and regulatory framework.
Member states have already stated their readiness to provide fast temporary support of up to a total of €75 billion to encourage growth and jobs. The Council also concluded that member states stand ready to take their share of further financing needs agreed by the London summit.
For many months, the UK Government have rightly been at the forefront of proposals to strengthen international regulation. That is why we have taken forward Lord Turners report. Radical proposals for reform of regulation were also a key outcome of the G20 in London. With so much of Britains financial sector activities linked to Europe as well as to the rest of the world, and with cross-border investments between the UK and the rest of Europe alone amounting to more than £200 billion every year, Britain needs greater European as well as wider international cross-border supervision. So in line with the recommendations of the reports from Lord Turner and de Larosière, the Council agreed the principles on which a new international framework for the regulation and supervision of financial services in Europe would be delivered.
First, there will be better early warning of financial sector risks through the creation of a new European systemic risk board, which will complement the work of the International Monetary Fund and the Financial Stability Board, and will help to identify problems early and thus prevent future financial crises from developing. Secondly, as proposed by Lord Turners review, which was itself welcomed by most people in the House, there was agreement to develop a strengthened and more detailed set of European rules for the single market in financial services, with measures to raise the quality and consistency of supervision across Europe, ensure that common rules are enforced, and improve co-ordination between national supervisors; and measures for mediation between the supervisors of institutions with operations in more than one member state. Thirdly, there was a clear commitment from the Council that
stresses that decisions taken by the European Supervisory Authorities should not impinge in any way on the fiscal responsibilities of Member States.
The principles agreed at the Council provide the foundation for a new financial supervisory architecture with the aim of protecting our financial system from future risks and helping to ensure that the international regulatory failures of the past will not be repeated. The
G20 also decided that countries should take similar actions on economic policies, to get through what is recognised by the Leader of the Opposition as a recession all over Europe.
have been successful in preventing financial meltdown and in beginning to restore the prospects for real growth,
imperative...to continue to develop...the measures required to respond to the crisis.
do what is necessary to restore jobs and growth.
Recognising the worldwide nature of the financial crisis and that about 1 billion people face poverty, malnutrition or hunger, the European Council also decided that countries should continue to pursue together the millennium development goals, and also co-operate further on the environment.
the time has now come for the international community to make the necessary commitments needed to limit global warming to under 2 degrees,
and that a coherent response to the challenges of both climate change and the economic and financial crisis would, by enabling the move to a low-carbon economy, offer new opportunities for jobs and growth.
The Council repeated its call for all parties to co-operate in reaching an ambitious agreement in Copenhagen later this year, and to accelerate the pace of negotiations at forthcoming high-level international meetings, including the G8 and the Major Economies Forum next month. The Council agreed that both developed and developing countries should contribute finance in the fight against climate change, and that such global burden sharing should be done strictly on the basis of two principles: the ability to pay and the scale of emissions.
When the Council met in December, we agreed that we would seek to provide the legal assurances that Ireland needed to move forward on the Lisbon treatythat is, on taxation, defence, the right to life, education and the family. But we were equally clear in doing so that there could be no change or amendment to the treaty, only clarification of what it will and will not do. That is exactly the purpose of the guarantees that the Council has agreed for Ireland. To be absolutely clear,
the Heads of State or Government have declared:
the Protocol will in no way alter the relationship between the EU and its Member States. The sole purpose of the Protocol will be to give full Treaty status to the clarifications set out in the Decision to meet the concerns of the Irish people. The Protocol will clarify but not change either the content or the application of the Treaty of Lisbon,
its content is fully compatible with the Treaty of Lisbon and will not necessitate any re-ratification of that Treaty.
These guarantees will be set out in a protocol only at the time of the next accession treaty. This will be specific to Irish concerns. Its status will be no different from our own protocols and will be subject to ratification in this House.
On Burma, the Council marked the 64th birthday of Aung San Suu Kyi by expressing its deep concern at her continued imprisonment as the Burmese regime still pursues its contemptible and absurd sham trial. The Council called for her immediate unconditional release and agreed that if this does not happen, Europe
will respond with additional targeted measures
against the Burmese regime. It is absolutely right that we stand ready to step up sanctions. We will also work with Asia to further increase international pressure. I have talked to the Secretary-General of the United Nations, Ban Ki-moon, and I hope he will be able to visit Burma soon.
stressed that the outcome of the Iranian elections should reflect the aspirations and choices of the people of Iran.
The onus is on Iran to show the Iranian people that recent elections have been credible, and that the repression and curtailment of democratic rights that we have seen in the past few days will cease.
We, too, have an expectation of Iranthat it meets its obligations as a member of the international community. I hope that Iran will respond to our efforts to achieve a genuine dialogue. It is therefore with regret that I should inform the House that Iran yesterday took the unjustified step of expelling two British diplomats over allegations that are absolutely without foundation. In response to that action, we informed the Iranian ambassador earlier today that we would expel two Iranian diplomats from their embassy in London. I am disappointed that Iran has placed us in this position, but we will continue to seek good relations with Iran and to call for the regime to respect the human rights and democratic freedoms of the Iranian people.
The Council unanimously agreed that it intends to nominate José Manuel Barroso to lead the next European Commission. As we look forward to the next five years, so this Council has put in place some of the building blocks for the future of Europe. It is by co-operating on the basis of our interdependence that we achieve more. By engaging and working in partnership with Europe and globally, we take forward our commitments from the G20 in April. By putting Britain at the heart of Europe, not on the sidelines, with Europes single market worth over £10 trillion, we in Britain can responsibly deliver security, new jobs, prosperity and a strong future for all our people. I commend this statement to the House.
Mr. David Cameron (Witney) (Con): I thank the Prime Minister for his statement. There are some areas of agreement: we very much welcome what he says about climate change and Decembers vital Copenhagen conference; we also agree with what he said about Burma; and we very much agree about the future of José Manuel Barroso. Let me put it like this: it is important that we work together to keep the socialists out, and I am always pleased to do that.
On Iran, while the decision on how the Iranian people are governed must be a matter for them, is it not important to reiterate that their yearning for freedom and democracy reflects a yearning for universal values that we should support? Irans expulsion of diplomats is clearly not acceptable, and the British Government were absolutely right to respond. Should not we be clear
that this is a dispute not between Britain and Iran, but among different groups in Iran about democracy and the future of their country?
On the economy, the Prime Minister says that measures are being taken throughout Europe to get the economy going again, but will he confirm that seven months after we proposed a proper national loan guarantee scheme to get lending flowing
Mr. Cameron: He says for goodness sake, but it would have made a good lot of difference. If he concentrated on the figures instead of shouting from a sedentary position, he would know that the latest figures on Britain show the weakest lending to business for almost a decade.
lets be honest: if the crisis we face today was created by people borrowing too much, the solution cannot be for governments to act in the same way?
Can the Prime Minister tell us why Britain is heading for the biggest budget deficit in the G20? Have we not now reached the stage at which the best way to restore confidence and get our economy back on track is to be honest about the measures that are needed to sort out the mess that the Prime Minister has made of the public finances? When is he going to make a start on that?
Next, on financial regulation, we have long pressed for counter-cyclical capital requirements that force banks to hold more capital when the economy is strong, but does the Prime Minister agree that there seems to beI put it politelysome confusion about precisely what was agreed about financial regulation? Of course, we agree about the early warnings that he mentioned, but he is missing the key question. Before the summit, the Government arguedquite rightly, in our viewthat national supervision must be pre-eminent. Does he recall telling the House in March that he did not want any new body to have powers over national supervisors? If so, why does the communiqué say that the decision-making powers of the European system of financial supervisors will be binding? And why did President Sarkozy say that the UK had performed a U-turn and that such institutions always end up doing more than is foreseen? Is that not why the City of London says that we now have a situation in which binding arbitration, dictated by Brussels, could overrule the UKs Financial Services Authority? Will the Prime Minister answer that point when he gets to his feet?
Next, on Lisbon, will the Prime Minister tell us why Irish voters are being forced to give their views twice when the British people have not been asked for their views once? Will he explain why the protocols that go into the treaty will not be debated or put into place until the next countries join the EU? Is it not the case that the Government want to delay the process until after the election? Is that not because they do not want the
embarrassment of having to vote yet again in this place to deny people the referendum that they originally promised?
The Prime Minister said very clearly in his statementI hope that I was following it carefullythat the Irish guarantees make no change at all to the Lisbon treaty. I am sure that the Irish people will receive that statement with great interest. Perhaps the Prime Minister should go and campaign for a yes vote; it would probably be the best way of securing the result that many of us would like to see.
Less than a fortnight ago, the Prime Minister promised a new era of openness and democratic accountability, yet in the last week he has tried to sneak through a secret inquiry into Iraq, deny the British people a say on the European constitution and avoid a debate in Parliament on the new protocols that have been agreed in Brussels. If he really believes in openness and accountability, should he not start by holding a debate now on the protocols agreed in Brussels and by offering people the referendum on the constitution that he promised, and while he is at it, why not do a proper U-turn on the Iraq inquiryright here, right now?
The Prime Minister: I am sorry to have to start by saying one thing: 3 million jobs are dependent on Europe, 60 per cent. of our exports go to Europe and 700,000 companies trade with Europe, yet not one pro-European word has been stated by the Leader of the Opposition.
I agree with what the right hon. Gentleman has said on climate change; we both look forward to a Copenhagen agreement. I am glad that he also supports what we are saying on Burma. On the Iranian situation, we are both in agreement that we have to take action when our diplomats are expelled from Iran. But we do want good relations with the Iranian people, and we do want to remind Iran of the importance of human rights and respecting democracy.
As to the issues that the right hon. Gentleman raised about the European Council decisions on financial regulation, let me just say that a few months ago the Conservative party was telling us that we should be deregulating more. What we have had to do is work with other countries to build a regulatory system that can deal with the problem that exists when international institutionsbanks and financial institutionswork in other countries.
Let me just tell the right hon. Gentleman that London depends on proper cross-border supervision. Four hundred European institutions operate in London, and we need a good regulatory system, in other countries as well as in our own, for financial supervision and the financial sector to work. He should be supporting the efforts that we are making to bring Europe and the rest of the world together to agree a common financial supervisory system.
I have to repeat to the right hon. Gentleman that what we agreed in Brussels was that there be shared and common rules; I believe that, the whole world over, we will get agreement on shared rules. We agreed that there be a system of proper audit; that means that what is happening in individual countries will have to be properly
audited in future. We agreed a system of common supervision of financial institutions, but only in this sense: that each countrys individual financial services authority will be responsible for the individual institutions. Only when there is a dispute between the home and the host countries, or a dispute about the application of the general rulebook, will mediation take place within the European agency. That is the right way forward, because London is likely to benefit more from that, not less. The right hon. Gentleman should cast aside his habitual anti-Europeanism and support what is necessary in the interests of the financial services.
Let me also say to the right hon. Gentleman that I read out to the House exactly the undertakings that had been given by Ireland and given also as a decision of the European Council. They are very clear:
the Protocol will in no way alter the relationship between the EU and its Member States. The sole purpose of the Protocol will be to give full Treaty status to the clarifications set out in the Decision to meet the concerns of the Irish people. The Protocol will clarify but not change either the content or the application of the Treaty of Lisbon.
That is the right thing to do. The Irish were looking for clarifications about the impact of the treaty. They have received their clarifications, and that will be set out in a protocol. It will come to all Houses of Parliament and Assemblies in other countries when they have to confirm the next accession treaty. That is the right thing to do.
Instead of saying that somehow we have got it wrong, the right hon. Gentleman should know that we have done what is necessary, so that the Irish people are sure about the application of the treatyin the same way as we got a protocol in Britain to ensure that the British people knew what the application of the treaty was. I repeat: more than a year ago, the constitutional concept was abandoned. That was the statement of the Brussels European Council.
The Leader of the Opposition failed to tell us about his partys having joined a new European grouping only yesterday. It makes his party even more isolated and on the fringes of Europe. [Interruption.]
The Prime Minister: I know why Conservative Members do not want me to say this. While we are engaging in co-operation with the rest of Europe, the Leader of the Opposition is isolated and on the fringes, unable to support the level of economic intervention that we need. While we are taking action with other European countries against unemployment, his party opposes the action against unemployment that we are taking in Britain. He is isolated and on the fringes. We are working with other countries in Europe, but he cannot work with Germany, France or Italy, even when they have right-wing Governments. The Conservatives are isolated and on the fringes of the European Union.
Mr. Nick Clegg (Sheffield, Hallam) (LD): I thank the Prime Minister for his statement, and I agree with what he said in light of the expulsion of the British diplomats from Iran. While we should of course monitor what is unfolding in Iran with due sensitivity, we should be utterly uncompromising in our view that hardliners in Iran should not seek to scapegoat either British diplomats or the media for problems entirely of their own making.
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