1.48 pm
Roger Williams (Brecon and Radnorshire) (LD): I draw the attention of Members to my entry in the Register of Members’ Financial Interests.
Miss McIntosh: On a point of order, Mr Deputy Speaker. I omitted to refer to my entry in the Register of Members’ Financial Interests.
Sir James Paice: On a point of order, Mr Deputy Speaker. May I too apologise for forgetting to refer to my entry in the Register of Members’ Financial Interests?
Mr Deputy Speaker (Mr Lindsay Hoyle): Is there anybody else while we are on the record? If not, I call Roger Williams.
Roger Williams: Thank you, Mr Deputy Speaker. I am glad that my contribution has caused so much interest in the Chamber.
The shadow Minister was rather fierce in his criticism of the Minister. Only yesterday, a Minister from the Department for Environment, Food and Rural Affairs came to the House to make a statement on the common fisheries policy. That was always seen to be intractable, yet the outcome seemed to have the support of the whole Chamber. Indeed, we hope that the CAP negotiations will meet with the same success.
It has been said that little progress has been made in reforming the CAP—the hon. Member for Coventry South (Mr Cunningham), who is no longer in his place, said so at the beginning of the debate—but I must remind everybody that 25 years ago CAP expenditure amounted to 75% of EU funding, whereas it now amounts to just over 40%. In that time, the amount spent by the average UK family on food has decreased from 25% of disposable income to about 15%, although sadly that trend is moving in the opposite direction because of the increases in commodity prices. Back in the 1980s, the CAP depended on market support and intervention through export subsidies and import tariffs, which were really trade-distorting implements and very unfair on developing countries. Things moved on, however, and in 1993 the MacSharry proposals introduced direct payments that were not so trade distorting, and in 2003, the Fischler proposals decoupled support, which was another step forward.
Why do we still need a CAP? It was first introduced to ensure that people working in agriculture and the countryside had incomes comparable to those in more urban and industrial occupations. Sadly, it has been unsuccessful in doing that, and incomes in the countryside are still less than in towns. Many farming businesses in this country would be making no profit at all, if it were not for direct payments.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC):
How concerned is the hon. Gentleman, therefore, about the drive towards a referendum on the British
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state’s membership of the EU based on renegotiated terms, including the repatriation of the CAP and convergence funding? How concerned is he about the impact that that would have on the industry in Wales?
Roger Williams: I share the hon. Gentleman’s concern. The Farmers Union of Wales has made it clear that is sees EU membership as fundamental to a successful Welsh agricultural sector.
We need resilience in our farming communities and businesses. As has been pointed out, farming businesses across the country have experienced poor conditions in the past two years. The Chairman of the Environment, Food and Rural Affairs Committee pointed out that for two years now the UK has been a net importer of cereals, whereas we used to be a net exporter. We need resilience in our farming businesses, therefore, if they are to survive from one difficult period to another period in which they can rebuild their resources and capital. We will experience great difficulties with food security over the coming years. With the world population now reaching 7 billion and probably reaching 9 billion by 2050, the demand for food will increase, and it is thought that northern Europe, particularly its maritime areas, might be well placed after climate change to maintain its agricultural production. We should be looking to the CAP to ensure that.
I ask the Minister to address a number of issues that have already been raised. The first is co-financing of voluntary modulation. The UK farming community is concerned about voluntary modulation, because it would put it at a competitive disadvantage against other countries that compete with us on food production. Co-financing, if possible, could mitigate some of the problems perceived by British agriculture. Secondly, the greening proposals should be as simple and easy to follow as possible. The last thing we want are complex proposals leading to penalties being applied to individual farmers or DEFRA. I was on the EFRA Committee when the single farm payment was first introduced. The Rural Payments Agency made a terrible mess of delivering those payments and, as a result, a lot of DEFRA money had to be returned to the EU, rather than being spent on supporting our agricultural sector, so simplicity is important. Some large-scale arable and horticultural businesses would be willing to forgo the greening element—30% of the single farm payment—in order to maintain their focus on commercial activity, so what proposals does the Minister have for using those elements not taken up by businesses?
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. There are four speakers and 16 minutes left.
1.55 pm
Mrs Mary Glindon (North Tyneside) (Lab): Last year, in its first report of the Session under the able chairmanship of the hon. Member for Thirsk and Malton (Miss McIntosh), the EFRA Committee stated that DEFRA had
“to put the UK’s case that the CAP should support both the agricultural sector and provide environmental protection”
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and do so by engaging with reliable allies in the EU and by having the resources to put the case effectively and persuasively, so it was sad to read this week that figures from Brussels showed that the Government had not so far succeeded and had failed to protect pillar two funding.
The National Farmers Union claims that the UK will now be allocated the lowest share of funds of all member states on a per-hectare basis, meaning significant reductions compared with the current budget. It also states that in the first year of the new programme the UK’s allocation of budget will be cut by 16% and that this figure will rise to 27% in the final year, meaning that by 2020 UK farmers will see less money coming back to the UK than they contributed to the pot through the compulsory EU modulation transfers this year. This situation is exacerbated by the fact that other countries, including France, Italy and Ireland, have all managed to get a more successful deal so far.
The former Agriculture Minister, the right hon. Member for South East Cambridgeshire (Sir James Paice), echoed the concern that the Minister’s arguments will disadvantage English farmers, who will not be given a level playing field on which to compete. The Opposition want a level playing field and no advantage for our farmers.
Bill Wiggin (North Herefordshire) (Con): I think the hon. Lady means that she does not want any disadvantage for our farmers. I hope she will take this opportunity to put the record straight.
Mrs Glindon: I thank the hon. Gentleman for correcting me. I did not realise I had said that. I clearly meant that we did not want any disadvantage.
How can the Minister guarantee that UK farming will continue to deliver environmental and other public benefits with severe cuts to its pillar two funding? By failing to protect our farmers, the Government are putting at risk our food security, future environmental benefits, conservation, animal welfare standards and the successful promotion of access to the countryside. The Government’s current CAP negotiations are letting down not just our farmers and rural communities, but the whole country. They have to be much more effective and persuasive on our behalf.
1.59 pm
Nia Griffith (Llanelli) (Lab): Very briefly, I draw the House’s attention to my entry in the Register of Members’ Financial Interests, although I can confirm that I am not in receipt of any European funds at the moment.
Quite clearly this debate will have to be curtailed. The key principles set out in 2011 were high sounding and were certainly things that we would support—for instance, better targeted income support, greening measures, support for young farmers, measures to stimulate the rural economy and simpler, more efficient CAP funding. We certainly want to see those things, but it is the transition that worries me most. Because of how we did things in Wales under the last set of changes—we kept a stronger historical element than in England—we have a bigger change to make. I pay tribute to Alun Davies, the Welsh Government Minister, who has had a considerable conversation with farmers in Wales. The Welsh Government have stated that they would like a much longer transition period—ideally 10 years rather than five, but if that is
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not possible, at least seven—to ensure that farmers do not go out of business because of sudden, cliff-edge changes.
That is important, because when a farmer goes out of business, it is not just a catastrophe for that farmer and his or her family and a change in their way of life; it also has a detrimental effect on the rural economy, food production and our food security. Moreover, it is incredibly difficult to re-start. We all know from when we have talked about things such as foot and mouth how difficult it is to re-stock, but to re-start altogether—to go into farming, build up expertise again and build up generations of breeding to get the best animals possible—is extremely difficult these days and takes a long time, so we do not want a sudden, mass exodus. We want a cushioned transition to ensure that we do not have casualties.
The Farmers Union of Wales is absolutely right to say that the current Euroscepticism is extremely worrying. Just as we do not want to see farmers thrown out of business because of an ill-thought-out transition, we do not want them to have trouble when they go to the bank, under the shadow of our possible departure from the EU and a sudden drop in their income. We do not want farmers to have to fight for funds to invest in our food production. We do not want them suddenly finding themselves unable to encourage their sons and daughters into farming because no one can see a future in it or because they are so worried about the changes in income that might ensue if we pulled out of the EU. I therefore hope that Government Members will be able to influence some of their colleagues who are making these unhelpful noises and will ensure that Britain is at the heart of the negotiations in Europe so that we get a good deal for Britain, a smooth transition and the best possible help for our farmers in future.
2.2 pm
Kelvin Hopkins (Luton North) (Lab): I wrote my first paper on the CAP some 33 years ago. I suggested at that time that either it should be abolished or Britain should withdraw from it. I have not changed my view, even though the CAP is very different from how it was then, although it is still essentially ill designed and inefficient, and a bit of a bureaucratic monster. I was supported at that time by the Consumers Association. Having a purely urban constituency, I represent consumers rather than farmers, although I absolutely support farmers, too.
Agriculture is very different in all the member states, and in some cases the difference is quite extreme. It would be better if member states managed their own agriculture and did not rely on a supranational regime imposed by the EU. It would be better for those countries and everyone else if that happened. If we must have transfers between member states, we should run the scheme as a fiscal transfer, so that the rich pay in and the poor draw out, but not try to manipulate agriculture in the way that happens at the moment.
The report from the Select Committee on Environment, Food and Rural Affairs suggests:
“A one-size-fits-all approach is not appropriate,”
“The CAP is complex and burdensome.”
I agree. Some of these points do not necessarily apply to the whole of the CAP, but they seem to fit in with the case for returning agriculture to member states. Much of
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what we have heard in today’s debate seems implicitly, if not explicitly, to support that case as well. Each member state ought to decide what it produces, how much of each product it should produce, whether subsidies are appropriate, what should be subsidised and, indeed, what that member state should import. Those things should be left to those countries.
In Britain, we very wisely intensified our agriculture as a result of being an island and being threatened in the second world war. We developed an efficient agriculture sector that is still with us today, even though it seems that we are currently importing wheat. We want to continue to have a strong agriculture sector in terms of production for strategic reasons. We do not want to become beholden to other countries to feed ourselves.
Last week I had the pleasure of visiting Lithuania with other members of the European Scrutiny Committee. I found to my surprise that 30% of Lithuania’s agricultural land is not being used for production. That was not the case before Lithuania joined the EU and the CAP. Strangely, for a small country that used to be mainly an agricultural nation, Lithuania has now become a net importer of food, which is all due to the distorting effects, apparently, of the CAP. Even in the poorer countries, things are not going well under the CAP regime. Surely Lithuania would be able to produce agricultural products very cheaply and sell to countries that want to import them, but it is not doing that and is now a net importer of food, which is nonsense.
If we want to redistribute wealth and income between European nations—there is a case for doing that—it should be above board and done by means of fiscal transfers. A key factor of any renegotiation of our relationship with the EU should be getting out of the common fisheries policy, getting out of the CAP and avoiding all contact with single currencies.
2.5 pm
Dr Eilidh Whiteford (Banff and Buchan) (SNP): I am disappointed that we have such a short amount of time to debate these issues. We are talking about complex, extensive regulations that have significant implications for my constituents and everyone else who farms or works in rural industries or lives in a rural community, not just in Scotland but throughout the UK.
The Minister did an admirable job of setting out the structural flaws of the CAP, but he was a bit less forthcoming in presenting an alternative to it for the 60% of farmers who would not have a viable farm business were it not for the support they receive from the CAP. It is important to remember that the CAP is not only about market support; it is also about land stewardship, food security and sustaining resilient rural communities. I think we are all agreed that the CAP is a profoundly flawed system, but we have to be pragmatic about where we are in the negotiations and how we defend our rural communities and get the best possible deal for our farmers.
I will try to rattle through some of the issues in what is a short time frame, but I will be unable to say everything that I had hoped to say. I am pleased that there will be more flexibility for greening measures. I also think that the proposed definition of “eligible pasture”, which would include non-herbaceous grazing—in other words, heather—will be of significant benefit to
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upland farmers. However, I would still like more flexibility, so that people can qualify for greening measures through a number of options. I hope the Government will seek to resolve outstanding issues in the negotiations next week.
Another welcome step is the definition of an “active farmer”, which should help to tackle the long-standing problem of “slipper farmers”, whereby some people have received large sums of public money with little accountability or public benefit. I hope that will also form part of the final agreement. The flip side of the “slipper farmer” problem is that not nearly enough support was given to new entrants in the previous CAP. It is important that new entrants have a level playing field in entitlements with established farmers. Under the proposals, they should be eligible for an initial grant of entitlements in the first year of the new scheme, so long as they can show that they have been actively farming. New entrants should also be able to receive support from the national reserve.
The issue of the proposed cap on basic payments to individuals has been controversial in some quarters, but I personally think it is a progressive measure. A small number of large farm businesses receive levels of direct payments that are totally unjustifiable. We have to be transparent and accountable in how we use public money. It is only right that the redistributed surplus should be made available for more beneficial forms of rural development. I am pleased that the Commission proposes to increase CAP transparency by publishing the details of CAP beneficiaries and the money they have received.
Another controversial issue has been the use of coupled support, which I wanted to say more about. I know that progress has been made, particularly on the different views that exist across the UK about what is needed in certain circumstances. All I would say is that the beef sector is critical to the economy of north-east Scotland. It anchors hundreds of jobs in the rural economy and gives a welcome boost to exports, which is important. I have raised the issue of the compliance regime many times with Ministers over the last couple of years. I am glad that there is a more proportionate set of proposals on the table, which means that farmers will not be penalised for small oversights or administrative errors.
However, the big issue is the overall budget. In the context of austerity, we all understand that the overall pot is smaller, but the UK has negotiated itself the lowest share of the CAP budget of any EU member state. On average, member states get €72 a hectare, whereas the figure for the UK has fallen to €20. I do not think farmers want to be subsidised, but they do want to be on a level playing field and they want to be recompensed for their efforts to comply with European regulation.
I think we went into the CAP reform negotiations with a very strong case for a bigger share of the CAP budget for Scotland, but that is not what has come out. Compared with farmers in neighbouring countries—and, indeed, farmers in other countries and parts of the UK—Scottish farmers continue to get a very raw deal, even though many are stewarding land in environmentally responsible ways, providing a basis for a much bigger
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food and drink export industry. I do not think it is right for farmers in Scotland to get significantly lower payments than their counterparts in England, Wales and Northern Ireland. Nor do I think it right that those farming comparable land in Ireland receive €70 a hectare, in Finland €158 a hectare and in the Czech Republic €83 a hectare.
We need basic fairness in the system, and we just do not have it. Under pillar one, Scotland’s rate is so low that it means that the whole UK external convergence mechanism will benefit the UK by about €60 million. I hope that the Minister will confirm that that can come to Scotland. I hope that while we have a CAP system, we will continue to fight for the best deal for our farmers. I hope that Ministers will do that.
2.10 pm
Mr Heath: I have limited time to reply to a very interesting debate, including to the rather ungenerous comments of the hon. Member for Ogmore (Huw Irranca-Davies). I always know that the more flowery his language, the more he secretly agrees with the Government. When he resorts to Alfred, Lord Tennyson, I know that I have total agreement across the Dispatch Box.
Some important points were raised. One was about the opt-out for greening measures. Yes, there is in the current proposals a penalty for opting out, but we are seeking to remove it if we possibly can, so that the penalty will be the loss of income from not applying the greening measures.
Several Members—the hon. Member for Thirsk and Malton (Miss McIntosh) and many others—talked about co-financing measures. It is our view and it is the Prime Minister’s negotiating position in the budget discussions that these arrangements will not require co-financing. It is obviously always possible for the Treasury to put more money into the pot, but I have to say that I do not see the prospects for that as extraordinarily high at the moment.
The hon. Member for South Down (Ms Ritchie) mentioned farmers without entitlement. We are continuing to negotiate on that, because we see—
2.12 pm
One and a half hours having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Standing Order No. 16(1)).
That this House takes note of European Union Document No. 15396/11, a draft Regulation establishing rules for direct payments to farmers under support schemes within the framework of the Common Agricultural Policy, No. 15425/11, a draft Regulation on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), No. 15397/11, relating to a draft Regulation on establishing a common organisation of the markets in agricultural products (Single CMO Regulation), and No. 15426/11, a draft Regulation on the financing, management and monitoring of the Common Agricultural Policy; and supports the Government’s continuing efforts to amend these proposals in order to secure better value for money for the taxpayer and establish a greener, simpler CAP that enables the development of an innovative, competitive and market-orientated farming industry and thriving rural communities.
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Financial Transaction Tax and Economic and Monetary Union
[Relevant documents: 26th Report of the European Scrutiny Committee, Session 2012-13, HC 86-xxvi, Chapter 5; 28th Report of the European Scrutiny Committee, Session 2012-13, HC 86-xxviii, Chapter 1; 34th Report of the European Scrutiny Committee, Session 2012-13, HC 86-xxxiv, Chapter 1; 38th Report of the European Scrutiny Committee, Session 2012-13, HC 86-xxxvii, Chapter 2; 40th Report of the European Scrutiny Committee, Session 2012-13, HC 86-xxxix, Chapter 2; 4th Report of the European Scrutiny Committee, HC 83-iv, Chapter 1.]
Mr Deputy Speaker (Mr Lindsay Hoyle): I inform the House that Mr Speaker has selected the amendment in the name of Edward Miliband.
2.12 pm
The Financial Secretary to the Treasury (Greg Clark): I beg to move,
That this House takes note of European Union Document No. 16988/1/12, a Commission Communication on a Blueprint for a Deep and Genuine EMU: Launching a European debate, an Un-numbered European Document dated 5 December 2012, a Report from the President of the European Council: Towards a Genuine Economic and Monetary Union, European Union Documents No. 15390/12, a draft Council Decision authorising enhanced co-operation in the area of financial transaction tax, and No. 6442/13 and Addenda 1 and 2, a draft Council Directive implementing enhanced co-operation in the area of financial transaction tax; observes that the European Scrutiny Committee has reported on these documents and concluded that they raise questions relating to parliamentary sovereignty and primacy as well as fiscal and monetary issues; notes that the European Commission Communication states that ‘Interparliamentary co-operation as such does not, however, ensure democratic legitimacy for EU decisions. That requires a parliamentary assembly representatively composed in which votes can be taken. The European Parliament, and only it, is that assembly for the EU and hence for the euro’, and that the report from the President of the European Council concludes that ‘further integration of policy making and a greater pooling of competences at the European level should first and foremost be accompanied with a commensurate involvement of the European Parliament in the integrated frameworks for a genuine EMU’; further notes that the proposals for the Financial Transaction Tax have been challenged by the Government in the European Court of Justice; notes that recent European Treaties and protocols have emphasised the role of national parliaments throughout the European Union as the foundation of democratic legitimacy and accountability; and believes that this role is the pivot upon which democracy in the United Kingdom must be based on behalf of the voters in every constituency.
I am grateful for the opportunity to discuss these important issues and thank the European Scrutiny Committee for recommending them for debate. I shall focus on the financial transaction tax before turning to the matter of economic and monetary union. As many hon. Members, and certainly members of the European Scrutiny Committee, will know, the Government have applied to the European Court of Justice for the annulment of the Council decision authorising an FTT under the enhanced co-operation mechanism. I am pleased to be able to set out our concerns about the initiative.
Many Members will know that we have been here before, in 2011, when the European Commission proposed a wide-ranging financial transaction tax that would have applied across the entire European Union. Just like the current proposal, that tax would have applied to all trades, market participants and financial instruments;
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it would have applied to Government bonds, corporate bonds, equities, derivatives and other financing instruments, and to long-term and short-term transactions. Just like the current proposal, too, that tax would have affected the entire financial system, reducing returns to pension funds and savers, increasing companies’ and Governments’ financing costs and reducing European competitiveness at a time when the EU, frankly, needed competitiveness and growth. It might have been conceived as a way of raising revenue from a small number of people in the financial industry, but it would in fact have been paid by savers and by companies. The Commission itself forecast an impact—a negative impact, I need hardly say—on EU-wide gross domestic product of 1.76%.
The Chancellor made it clear that we would not accept the measure—certainly not at a time when the EU was trying to grow and attract business. He said the UK would have no part in it, and partly as a result, the proposal was dropped. Sadly, however, it was not dead, and this January, under a procedure known as “enhanced co-operation”, 11 member states chose to resurrect it. We believe that member states should be free to set their own tax policies, and if they choose to co-ordinate their tax policies, that, too, is their right. Although we believed and continue to believe that the proposed FTT is a bad idea, it is of course open to member states to pursue it—provided it is lawful, complies with the EU treaty and respects the rights and competences of those member states that choose not to participate.
Bill Esterson (Sefton Central) (Lab): I am grateful to the Minister for apparently making the argument for international co-operation in order to overcome the concerns that he has raised. President Obama has made the point that Wall street was responsible for the financial crisis, so Wall street had a responsibility to solve the problem. Does not the same apply here, provided that there is an attempt at international co-operation?
Greg Clark: I will come on to the hon. Gentleman’s point. I would point out that President Obama and his Treasury Secretary are deeply concerned about the progress of this financial transaction tax, which does not meet any of the in-principle ambitions that people have had for some time. It is a cause of a great alarm among those who believe in free trade around the world.
The proposal under the enhanced co-operation procedure is modelled substantially on the 2011 version. It contains a feature known as the “establishment rule”, under which a UK financial institution would be deemed to be established in the FTT area for the purpose of the tax by virtue of the mere fact that its trading counterparty is headquartered in a country participating in the tax. So in practice, a UK pension fund purchasing a UK Government bond from a UK branch of a German bank would be obliged to pay the tax, and it would pay the tax not to the Exchequer in this country, as would have been the case if we had signed up to the FTT, but to an overseas authority. Likewise, a UK company with significant Treasury operations would potentially be in scope of the FTT when its counterparty happened to be headquartered in the FTT area.
Jacob Rees-Mogg (North East Somerset) (Con): What obligation would the British Government be under either to enforce or to collect this tax if the FTT were adopted as proposed?
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Greg Clark: That goes to the heart of our concern, because under the mechanism set out, we would be under such an obligation, which we consider to be a breach of the protections we enjoy, in particular not to have to incur costs when the benefits do not flow to a non-participating member state. That is precisely one of our objections.
Mr Bernard Jenkin (Harwich and North Essex) (Con): Does the proposal not expose the beguiling attraction of allowing enhanced co-operation as a gesture of good will to our European partners, when in fact it is a trap enabling them to exercise powers through qualified majority voting, without our participation, which then creates obligations in relation to our own financial transactions, even though they might be taking place outside the EU? My right hon. Friend expresses support for co-operation between free, sovereign states in their tax affairs, but that is not what we are talking about here, because enhanced co-operation is likely to result in obligations that are enforceable in European Community law, even though we have not had a chance to vote on them.
Greg Clark: My hon. Friend makes a powerful point. That is precisely why we are challenging the legitimacy of the proposal. The enhanced co-operation procedure is available to member states provided it is legal and compliant with the treaty, and our view is that it is certainly not. In particular, the extra-territorial effects—exactly what my hon. Friend is concerned about—are contrary to article 327 of the treaty on the functioning of the European Union, as it fails to respect the competences, rights and obligations of the non-participating member states. Furthermore, the decision to proceed with the FTT has extra-territorial effects for which there is simply no justification in customary international law. The Select Committee has been prominent in its scrutiny of that, and no doubt its Chair will have something to say about it.
We should consider the economic effects of the tax as well as the legal issues. What we are discussing is obviously very important to the economy of the United Kingdom, where 2 million people are employed in financial and related professional services. That sector has created a trade surplus for the country at a time when I think all nations should be trying to increase their trade, and its activities are highly integrated with those in other EU countries. Our best estimate is that 30% of over-the-counter derivatives trading in London involves a counterparty in a proposed FTT zone country; similarly, about 30% of investors in UK gilts are located overseas, which means that the FTT is even likely to affect UK Government funding costs.
However, it is not only the financial sector that would be affected. The European Association of Corporate Treasurers, which represents those who manage companies' finances throughout Europe, has said, very explicitly, that the FTT
“will fall on companies in the real economy, and compound the negative effects of the financial crisis.”
In this country, the CBI agrees.
Alison Seabeck (Plymouth, Moor View) (Lab): What would be the implications of the UK’s rejection of the FTT? Would the Government raise the bank levy rate for what I believe would be the sixth or seventh time?
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Greg Clark: As the hon. Lady helpfully points out, we, unlike many other European countries, have a bank levy. The levy is targeted to raise £2.5 billion a year, but it will raise more than that this year, because we said we would increase it to ensure that it raised the amount it was targeted to raise. It is rather higher than the French and German levies.
The CBI has said that the FTT proposal “discourages important business activities” and
“undermines the ability of the financial sector to promote economic recovery”.
The European fund managers association, which is responsible for the welfare of millions of pensioners throughout Europe, has described the FTT—again, very explicitly—as a tax on savers, which will threaten the operation of capital markets and have a damaging impact. I am interested to note that the hon. Member for Nottingham East (Chris Leslie) appears to be sanguine about the effects on savers. I should have thought that the views of pensioners and others with an interest in a prosperous retirement would concern us all.
Chris Leslie (Nottingham East) (Lab/Co-op): I am not entirely clear about the Government’s policy. I think that, once upon a time, the Chancellor said that he was in favour of the principle of a financial transaction tax. Is that no longer the case?
Greg Clark: In fact, we already have a financial transaction tax. It is called stamp duty, and it has existed for a long time.
Let me say something about the opinions of markets outside the European Union. Representatives of other jurisdictions are appalled by the plans, particularly our major trading partners. In the United States, the Investment Company Institute says that the tax would “crash across borders”, and that
“All investors would be hit.”
The US Government also have serious misgivings: the Treasury Secretary, Jack Lew, has said that, despite objections from financial and non-financial trade associations and Government officials in the United States, Canada, Australia, Japan, Korea and other countries regarding the global reach and negative impact of the proposal, their concerns remain unanswered.[Official Report, 20 June 2013, Vol. 564, c. 5MC.]
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): The Financial Secretary mentioned stamp duty. Stamp duty has an extra-territorial application, which he used as a reason for not introducing a financial transaction tax. Further to the point raised by my hon. Friend the Member for Nottingham East (Chris Leslie), may I ask why, following a G20 meeting in Pittsburgh back in 2009, the then shadow Chancellor supported the principle of a financial transaction tax, and why he is opposing it now while not coming up with an alternative?
Greg Clark: I shall say more about stamp duty shortly, but I am sure the hon. Lady, who I am sure is a student of these matters, will be aware that it was agreed at Pittsburgh in 2009 that the International Monetary Fund should conduct a study to establish whether there was an international basis for proceeding. It conducted that study, and found that there was no such basis.
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I hope that, given the international concern about the proposed tax, the House understands that we have no choice but to challenge it. Not only are there numerous problems with the design, but the proposal flagrantly disregards the position of those who choose not to participate.
The hon. Member for Nottingham East pointed out that the Chancellor had said that we had no objection to the principle of a financial transaction tax. Of course that is the case. How could we possibly have an objection to a financial transaction tax, given that we in the United Kingdom have had one since 1694? It is called stamp duty, and it is very different from the proposed design of this tax. It contains, for instance, an exemption for intermediaries to avoid the “cascade effect”, whereby at every stage of a transaction a tax racks up throughout the chain. That has a very negative impact on the costs faced by savers and companies. We have no objection to levelling the playing field with countries, including France, that have recently adopted stamp duty-type taxes of one sort or another, but other countries, particularly the United States, are far from being close to a consensus. If the hon. Gentleman has taken an interest in the matter, he will know that President Obama and his Administration have described this development as very troubling.
Of course Britain will play a leading role in promoting global standards when it comes to taxes, but I think the whole House would acknowledge that, in international negotiations, we should focus on what will give us a realistic chance of making a big difference to people, rather than choose to divert effort and negotiating capital into what, given the views of others, would be simply a gesture.
Andy Sawford (Corby) (Lab/Co-op): The right hon. Gentleman is a fair-minded Minister when it comes to most matters on which I have dealt with him. I think he is right to say that it would be in the interests of this country to pursue a financial transaction tax—indeed, he has acknowledged that his party views it as such. Can he tell us how many times Ministers from our Government have made representations to the American Government on this matter, given the importance of financial services to both our economies?
Greg Clark: I am grateful to the hon. Gentleman for his kind words, but when we have a chance to participate in and lead international gatherings, we must decide where our negotiating capital or authority can best be deployed. The Prime Minister decided, correctly in my view, to pursue tax transparency at international level, through our leadership of the G8 and in other forums. I think that the hon. Gentleman, who is as fair-minded as he considers me to be, would be churlish not to acknowledge the considerable breakthrough achieved by the Prime Minister in recent months, and by the Chancellor before him in Mexico, in respect of tax transparency. I believe that that is an example of the palpable progress that even the Opposition should applaud.
Andrea Leadsom (South Northamptonshire) (Con):
In the context of transparency, does the Financial Secretary agree that creating an unlevel playing field in which some countries participate and others do not, which is what this financial transaction tax will do, could fall foul of the second markets in financial instruments
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directive, which requires best execution in all transactions? In an essentially international if not global business like financial services, might not those wishing to conduct transactions on behalf of their customers struggle with the idea of using a jurisdiction that had imposed an unlevel financial transaction tax?
Greg Clark: My hon. Friend is right. This runs contrary to the whole direction of the reform that we have been promoting and think it essential for the EU to promote, namely movement towards a single market in which operating across borders becomes progressively easier and more transparent. I do not think it sensible to do what the hon. Member for Nottingham East would prefer to do, which is make a global financial transaction tax a greater priority than what we are achieving in terms of tax policy, at a time when we are making great progress.
Nor would it be right to leave out of the motion the reference to the UK’s legal challenge to the current proposed FTT, which it is widely acknowledged would hit British pensioners—we know the Opposition have them in their sights at the moment—and which is the whole basis of this Committee’s scrutiny of the proposal.
Bob Stewart (Beckenham) (Con): If an FTT were imposed on us, where would the money be sent? Would it be sent to the EU, a country or some quango? Where would the money go?
Greg Clark: It would go to the country which was liable for the transaction tax that fell due there, but it would not go to this country, despite the fact that we would incur the costs of enforcing it and collecting the money. There would be no benefit whatever to the UK taxpayer. It would be unfortunate if at a time when we should be enhancing Her Majesty’s Revenue and Customs’ ability to collect taxes, we were, in effect, requiring extra resources to be expended on something that was of no benefit whatever to UK taxpayers.
Neil Parish (Tiverton and Honiton) (Con): Does my hon. Friend agree that in the context of the City of London needing to be attractive for financial transactions, all this tax would do is add yet another burden? We want more people to come to the City of London and trade, not fewer, and I feel that this tax would drive people away.
Greg Clark: I agree. It is not only the London economy that would be damaged; the whole European economy would be damaged, too. That cannot be in the interests of EU members, but members are, of course, sovereign and can make their own decisions, provided that that does not interfere with our competences and rights.
Andrea Leadsom: The hon. Member for Nottingham East (Chris Leslie) says, “Ah, the Financial Secretary is against it all together!” However, the European Commission itself has done an assessment that shows how extraordinarily costly this will be in terms of jobs and revenues to the member states who introduce it.
Greg Clark:
That is absolutely right, although one of the unsatisfactory aspects of the FTT proposal is that it has been frustrating trying to obtain an accurate view of its impact from the Commission. Not enough analysis
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has been conducted. We know that the original estimate of the impact was a reduction in EU GDP of 1.76% and a loss of half a million jobs across the EU. Mysteriously, those figures have changed, but we have had no rigorous explanation for that.
In the limited time available to us today, I should address the other documents that are the subject of this debate, in particular the one on economic and monetary union. Late last year, the European Commission published its blueprint for a deeper EMU, and the President of the European Commission provided a report called “Towards a Genuine Economic and Monetary Union”. Those reports put forward ideas for possible steps to a more integrated euro area. They are of particular concern to the European Scrutiny Committee, chaired by my hon. Friend the Member for Stone (Mr Cash), and I am sure he will want to speak about the implications for the primacy of this House and this Parliament.
So far these are not formal proposals but contributions to a wider debate in Europe about what may be needed to bring long-term stability to the euro area. I am sure that further documents will be referred to the Committee and we will have the opportunity to debate them in this House, but I want to emphasise very clearly that the UK will not be part of these arrangements, and although leaders at the December 2012 European Council agreed on a more limited work programme than that set out in these reports, they do raise important questions that need to be addressed.
The European Council December 2012 conclusions were very clear that any new steps towards strengthening economic governance would need to be accompanied by further steps towards stronger legitimacy and accountability. The European Parliament has a role at the EU level as further integration of policy making and greater pooling of competences take place among the euro-area countries, but this does not mean the European Parliament has primacy over national Parliaments, whose role is absolutely essential and inviolate.
As my right hon. Friend the Prime Minister said in this House on 12 December in his post-Council statement —and in response to my hon. Friend the Member for Stone, I think—we believe that national Parliaments are closest to people across the EU and that is why they should be at the heart of providing democratic legitimacy within the EU.
Mr James Clappison (Hertsmere) (Con): I am pleased to hear my right hon. Friend make those comments, but the vision so clearly set out in the motion about where primacy in the EU should lie is completely different from the EU vision that the van Rompuy report sets out, which proposes a step change with the European Parliament having primacy over national institutions. Does my right hon. Friend agree that we need to face up to this, and decide whether or not we want to be part of that vision?
Greg Clark:
My hon. Friend is right, and that is why I was keen to have this debate and make sure the Committee’s concerns on this matter can be aired at an early stage. As I said a few moments ago, the proposals so far do not cohere into proposals that will come forward to be scrutinised, but this debate offers an opportunity for
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this House to send a clear message, as my hon. Friend may be able to do later, during this process of working-up ideas as to what this House’s clear expectations are with regard to the role of national Parliaments. That is very important.
Mr William Cash (Stone) (Con): I hear what my right hon. Friend says, but in the light of the assumption, based on what the Chancellor has said, about the remorseless logic of allowing the core member states to go ahead with proposals for monetary union—which are implicit in the 52 pages of the blueprint alone—does he accept that our policy is allowing this to happen, and although we may not, it appears, be directly involved, we will certainly be affected by it?
Greg Clark: We have taken the view that the problems in the euro area that require resolution should be resolved by its members, and it is in the interests of the international economy that that should be so. My hon. Friend is right to point out, however, that our interests are engaged in this, and we will make use of our powers and rights in the EU to insist that those interests are protected. An early example of that is in the single supervisory mechanism, where through repeated interventions and insistence by the Chancellor and me at ECOFIN meetings, the Prime Minister was ultimately able to secure agreement by way of a text in the regulation of that mechanism explicitly stating that there should be no discrimination against any country or currency as a result of these arrangements.
These matters will come up from time to time, and protecting our interests requires eternal vigilance. The work that the Committee does in scrutinising and bringing matters to our attention in advance of discussions at European level is crucial to that, which is why the importance of this Parliament needs to be underlined, and will be by this debate.
Mr John Redwood (Wokingham) (Con): Monetary union is like having a bank account with the neighbours, and now the neighbours who have put the money in are panicking about the other neighbours who are taking the money out. We see in these documents that EMU is going to progress with much tighter fiscal and banking controls. Is the Minister going to want to keep all British banks out of the extra controls, as we would then no longer be in charge of them, or does he think that the euro activities of our banks must be part of this new centralised scheme from Brussels?
Greg Clark: We have been very clear, and the single supervisory mechanism is a good example, as I have said. We have our arrangements for the supervision of our banks, which are centred around the Bank of England, and it is absolutely right that they should continue in that way, but as each of these proposals is made, we will need to look to our national interest and make sure that our rights are protected.
Michael Connarty (Linlithgow and East Falkirk) (Lab):
That was a specific point, but I want to say that it is not only Members of the right hon. Gentleman’s party who have serious questions about primacy. On the European Scrutiny Committee, there is a cross-party problem in particular with the President of the EU’s report “Towards a Genuine Economic and Monetary Union”, which talks
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about contracts written by the EU—by the Commission—that will be binding on the countries that sign them, and that will then have penalties if they do not carry them out, taking power away from those countries. There is also the question of what happens then with the impact—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Mr Connarty, you were late coming in, so then to make such a long intervention is not good for the Chair either, especially as you will want to speak, as will a lot of other hon. Members. Short interventions are required.
Greg Clark: The hon. Gentleman makes a powerful point, and I was wrong in seemingly indicating that it was only Government Members who share some of these concerns. He has a long and distinguished record of being not only concerned but an active force in drawing attention and suggesting remedies to some of these matters.
On the proposals before us, one suggestion that has been made is that there should be new mechanisms to increase the level of co-operation between national Parliaments and the European Parliament to contribute to this process—it certainly will not be the end of the matter. It has been stated that how it is done is a matter for the Parliaments to determine themselves. I understand that the Conference of Speakers of EU Parliaments agreed in April to set up such an inter-parliamentary conference to discuss EMU-related issues. The conclusions of that meeting state that the conference
“should consist of representatives from all the National Parliaments of Member countries of the European Union and the European Parliament”.
That reflects one of the recommendations in the Select Committee’s report.
The Government have consistently highlighted the importance of these issues since the December European Council. For example, it was highlighted by the Prime Minster in his Bloomberg speech in January, when he set out his agenda for EU reform. He was clear that the future European Union we need must entail a bigger and more significant role for national Parliaments. He said:
“It is national parliaments, which are, and will remain, the true source of real democratic legitimacy and accountability in the EU”.
My right hon. Friend the Foreign Secretary has said that
“if the European Parliament were the answer to the question of democratic legitimacy we wouldn’t still be asking it.”
He went on to outline a concrete set of ideas, including the proposal to have an EU “red card” system that would allow national Parliaments, working together, to block legislation that should not be agreed at the European level. Furthermore, we have said that we would support calls by this House to summon a European Commissioner to explain a proposal directly to this Parliament if the Committee demanded it.
Mr Jenkin:
I wholeheartedly support the principles set out on the primacy of national Parliaments in the Prime Minister’s Bloomberg speech, but neither of the proposals that the Minister has just mentioned—the red card and the summoning of an EU Commissioner—addresses the primacy issue. The red card just creates
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another opportunity for our national Parliament to be outvoted by other national Parliaments, and summoning an EU Commissioner has no legislative effect whatsoever. What are the Government going to table in concrete terms that will assert the primacy of national—
Mr Deputy Speaker: Order. Mr Jenkin, I have mentioned that we want short interventions. That was your second intervention and you are hoping to speak as well. If you want Members to get in, we are going to have to use the time well—it is going very quickly.
Greg Clark: Thank you, Mr Deputy Speaker, I will be brief. Of course these are not panaceas; they are not solutions to the problem. I have said that when these proposals come forward in a more coherent form than they exist in these discussion documents, we will need to ensure that this House—rather than the European Parliament—unambiguously is the body we look to for the endorsement and the legitimacy of these things.
These are important debates. We are at an early stage of the discussions of economic and monetary union, but I applaud the desire of my hon. Friend the Member for Stone, on the part of the Committee, to discuss them at an early stage. I am sure that we will come back to them time and again. We are not expecting major decisions to be made in the weeks ahead, but as with the financial transaction tax and as always, we are very aware of the national interest and will always staunchly pursue and promote it. We will very much have in mind the importance of safeguarding the primacy of this House. Mr Deputy Speaker, I see from your look that both the Chair of the Committee and many other hon. Members are keen to contribute to our discussion, and I look forward to hearing their advice and guidance on both these important issues.
2.44 pm
Chris Leslie (Nottingham East) (Lab/Co-op): I beg to move amendment (a), leave out
‘further notes that the proposals for the Financial Transaction Tax have been challenged by the Government in the European Court of Justice’;
‘calls on the Government to support the principle of an FTT and to learn lessons from the EU proposal and work with other global financial centres, especially the US, to reach a consensus on a design set at a modest rate without creating negative economic consequences and which minimises international tax arbitrage;’.
Before I discuss the amendment, let me briefly deal with the latter set of issues that the Minister raised—the general issues of national parliamentary sovereignty, the remit of EU policy, enhanced co-operation and so on. Clearly, the European Scrutiny Committee is right to monitor the relationship between EU decisions and the need for public engagement and accountability. Most Labour Members, however, take a more positive view of the role that Britain should be playing in Europe, because the European Union should be a force for good that increases the chances of greater prosperity, peace and the values we hold being asserted with greater impact across the world. We are comfortable, though, with a degree of flexibility and variance across member states; “enhanced co-operation” could be used to our advantage here in the UK for the future.
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Individual member states should have some latitude rather than follow a blind adherence to anything and everything emanating from Brussels. There is a danger that sometimes those who regard themselves as good Europeans—pro-Europeans—end up defending the poor decisions that the Commission and the European Parliament can sometimes come out with. There is nothing wrong at all with national Parliaments disagreeing with the European institutions; it is a healthy sign of an internal dialectic, a constructive challenge and a reality check for those who are more distant from public opinion. We should acknowledge that both the European Commission and the European Parliament need to be reformed to improve their accountability and transparency.
In the short time available to us today, let us not lose sight of what our electors sent us here to do. Our view is that the British people want us to focus right now relentlessly on getting jobs created, boosting prosperity, creating wealth, and helping to stimulate the economic recovery which is now three years overdue. Navel gazing into the constitutional niceties that fall between the gap of domestic or European institutions is slightly indulgent in that context; we should not lose sight of the most important priorities that our constituents want us to focus on. That is why we tabled this amendment.
Jacob Rees-Mogg: There seems a slight illogicality in what the hon. Gentleman has been saying. He says that he wants to create jobs but it has already been established that the financial transaction tax would destroy half a million jobs across Europe. How can he have it both ways?
Chris Leslie: The Minister was talking about the European variant of the FTT, but of course he was forced then to admit that we have already got a partial FTT of sorts—the stamp duty that is in place. I will discuss that in a moment, but it was very instructive that he was vehemently against the extra-territoriality aspects of the European version. Of course the EU version does need to change, and I am not saying in any way that it is perfect. His argument is, “They should stop extra-territoriality aspects in their financial transaction tax”, but our stamp duty contains many of those characteristics, and individuals—those trading UK shares and UK equities—are liable wherever that trade takes place in the world. So the Government clearly have not thought through their position on these things.
Greg Clark: The hon. Gentleman will know that stamp duty follows the issuance principle—in other words, the tax follows where the instrument is originated. The proposed FTT contains that and a residence principle, so it captures a far wider range of transactions, as well as this cascade point which stacks up and racks up the impact. So it is a very different FTT from, and a very much inferior FTT to, the stamp duty.
Chris Leslie: Why on earth then does the Minister not engage in the process, change people’s minds, get a better design, deal with this residence principle properly and let us have a financial transaction tax that is in all of our best interests, particularly across those global centres?
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The Minister talked about not having objections to an FTT on equities, but he did not say anything about bonds or derivatives in that context. So I challenge him again on the principle: is he absolutely against any sort of FTT on bonds or derivatives? It sounded as though he was, but I say to him that he has to start waking up and engaging with other jurisdictions on these particular points rather than trying to stop it.
Mr Jim Cunningham (Coventry South) (Lab): May I apologise to the Minister for coming in a little late? The same argument was used about the minimum wage. I recall that when this Government were in opposition, they were telling us that the minimum wage would cost a couple of million jobs.
Chris Leslie: The public are sick and tired of hearing more of the same from the Government—no solutions, just reasons for not doing anything differently. It should not need to be restated—although it clearly does for Government Members—that the global financial crisis and the collapse of many organisations in the financial services sector required an enormous bail-out from the public purse. That collapse in revenues led to an extra £300 billion on the national debt. As the Government have failed to turn things around, we can see that many of the consequences are still being felt today by our constituents and that we need to do something different.
Stephen Williams (Bristol West) (LD): I just want to clarify that my position and that of my party is that a financial transaction tax could make a useful contribution to world development if it were introduced across all the global financial sectors. Is it the Labour party’s position that if the EU proposal, which, as constituted, would affect Paris, Frankfurt and perhaps London, were to go ahead, Labour would support it despite it not also applying to New York, Zurich, Shanghai and everywhere else?
Chris Leslie: I shall set out our position clearly: we do not think that the EU variant of the FTT is optimal. Of course it should be improved. We think there are better ways to design these things and I shall come to many of the arguments in a moment. I am delighted that the Liberal Democrats—well, the one Liberal Democrat who is in the Chamber—support the principle of a financial transaction tax. That is exactly why we phrased the amendment in the way that we did.
Let me read the amendment out so that the hon. Member for Bristol West (Stephen Williams) can consider it carefully, because I am minded to test the House’s opinion on it. We are calling
“on the Government to support the principle of an FTT”—
“to learn lessons from the EU proposal”,
which, of course, we have to do, and to
“work with other global financial centres, especially the US”,
as clearly New York is central,
“to reach a consensus on a design set at a modest rate without creating negative economic consequences and which minimises international tax arbitrage”.
I am quite sure that in his heart of hearts the hon. Gentleman does not disagree with a single word of that.
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Stephen Williams: The shadow Minister is absolutely right: I did not disagree with a single word he read out. It was, however, a selective reading of the amendment, because he left out the first couple of lines, which would leave out the reference to the fact that the Government are challenging the European Parliament’s decision in the European Court of Justice precisely because it affects this country adversely while we do not have global agreement. That is the problem.
Chris Leslie: Oh dear, oh dear, oh dear! The hon. Gentleman cannot seriously be suggesting that he is going to vote against the amendment because we have to leave out the reference to further noting that there is a Court challenge. I would have been quite happy to have tabled an amendment that did not leave out that bit of terminology, but—I am sure that you can confirm this, Mr Deputy Speaker—we did not do so because the Clerks tell me that a motion can only have 250 words. Of course, the Government use up their 250 words in the motion, so we needed to find space to insert the reference to the principle of the financial transaction tax. The hon. Gentleman should trust me: I have been considering the point and I did not want to leave anything out of the motion, but we wanted to put that reference in. I hope that with that assurance, he will think again, because the amendment is eminently supportable.
Greg Clark: Well, of all the ingenious ways to concoct a rationale. It is very instructive that out of all the 250 words, he chose to leave out the reference to the challenge to the European version of the financial transaction tax. He could have chosen many others. It is revealing that that is the part of the motion that he thought should be removed.
Chris Leslie: It is a sentence that takes note of something self-evident. Of course there is a challenge—we all know that there is a challenge and that the Minister’s agenda is to try to throw a spanner in the works and do what he can to stop that European variant of the FTT. He should consider what is in the motion; we did not particularly want to remove any of those other aspects of it. Taking note of the challenge was quite a good bit to leave out. Let me restate the case on which we must focus.
Mr Jenkin: Will the hon. Gentleman give way?
Chris Leslie: I want to make some progress, as there is not much time.
For the longer term, we must recalibrate the contribution of financial services to society. Of course, we must nurture a revival and restoration of the City of London’s primacy as the most trusted and professional place for financial transactions, but we cannot ignore the fact that most other jurisdictions are revisiting how banking and finance pays into society and what sort of responsibility we seek.
We have heard already from my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) about the IMF report after the G20 in 2009, which sought to think through new ways for the financial services sector to make a fair and substantial contribution to meeting the costs associated with Government interventions to repair it. In this country the interventions, in one form or another, cost near £1 trillion.
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When in government, we started with the bank bonus tax, a payroll tax implemented by my right hon. Friend the Member for Edinburgh South West (Mr Darling), the former Chancellor. We thought that was a good idea then and we still think it is a good idea today. The Government then came along with the bank levy; we think that it is a good idea, but it has been poorly enforced. Ministers promised £2.5 billion in every year, but two years ago it raised just £1.8 billion and last year just £1.6 billion. Ministers keep coming back to the House and saying, “Don’t worry, we’ll deal with this shortfall.” The Minister has said that on numerous occasions, but we will believe it when we see it.
A bank levy and a bank bonus tax can only be part of the bigger picture. We must recognise that there is an ongoing systemic risk from financial services innovation and trading beyond the mainstream banks.
Mr Redwood: Do the Opposition think that a bank headquartered in London, with its group corporate structure in London and with international operations, should be regulated by the Bank of England to our standards or fully integrated into euro area regulation?
Chris Leslie: I think that any financial institution that could have a systemic impact on our economy and UK financial services needs to be regulated from within the Bank of England and by our regulatory structures. I hope that there will be a match between our arrangements and the European arrangements. That has been part of my anxiety about the Government’s design of the Prudential Regulation Authority and the Financial Conduct Authority in the context of the Bank of England and how they fit together with the supervisory structures in Europe. We have had that debate and I think it will continue to be played out over the longer term.
For the time being—for today—the time has come for the Government to get serious about a financial transaction tax. Doing whatever they can to put a spanner in the works and turning their back on the idea is just not good enough. At a time when deficits are persistently high because of rock-bottom growth, leading economies, including those of Britain and the United States, need alternative revenue measures from continuing financial market speculation to relieve pressures on lower and middle-income households and the public services they use.
There are many lessons from the banking crisis, the most obvious of which is that the sheer globalised might of financial trading can overpower the plans and defences of individual nation states. Governments should not just shrug and accept that fate, which is why the Opposition urge Conservatives and Liberal Democrats actively to champion a financial transaction tax and the reform agenda to harness international financial markets so that they serve our societies and our economies.
If ever there was a time to seek international consensus on a financial transaction tax it is now, as countries continue to deal with the aftermath of the global financial crisis and the large deficits it created. Deducting a tiny fraction of 1% of the value of trades in equities, bonds and derivatives could raise significant sums if introduced in a concerted way across the principal world financial centres.
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The House of Commons Library has considered what would happen if we applied the EU variant of the tax in the UK and says that it would yield some £10 billion annually. I do not stand by that figure—I do not think that it is necessarily convincing or viable—but it prompts the question of what could be achieved in the UK by a tax with a more modest and sensible design.
I do not decry the 11 EU countries for forging ahead on the issue—it is a brave decision for those EU countries to go it alone. Even with the participation of Germany, France and Italy, there are still risks involved, and although we are not participating at present we should not withdraw from the debate, not least given the size and importance of the City of London.
Greg Clark: I am intrigued by what the hon. Gentleman has just said. He cites the House of Commons Library, which has said that the tax could raise £10 billion, and says that that would be useful. Is he arguing that such a financial transaction tax would be in addition to stamp duty? Is he proposing such a tax?
Chris Leslie: I think that we need to have a financial transaction tax, ideally in concert with other international centres, in addition to stamp duty. That would be a sensible and modest reaction to the modern circumstances of the financial services sector. As I said to the Minister earlier, he has got to snap out of his “no can do” attitude and to wake up and realise that the public want alternatives. They want different ideas, and the financial transaction tax could offer a good way forward.
Opposition Members support the principle of a financial transaction tax with the widest global participation. London and New York City are the two largest global financial centres. Our view is that enforcement of the FTT needs both to move in concert. The Government ought to support our amendment, which is totally unobjectionable. We should not have to wait for a change of Government to move this agenda forward. We should be building those alliances, especially with the United States. That is a very important task.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): The health of the financial services industry is important not just to London and New York, but in my constituency and my city as well. Is not the crucial point that we need international negotiations and international agreement on a way forward? We are all concerned about the impact on jobs in our constituencies. I know that in my area the biggest damage to the financial services industry has been the vagaries of the market, and the uncertainty and instability. That is what we need to tackle.
Chris Leslie: There are others who make compelling arguments about the need for intervention on the volatility of the high frequency trades, which are clearly many steps removed from the real economy. Some of the potentially beneficial aspects of a financial transaction tax might have a part to play in that, though we must be careful about negative economic consequences. We do not want the impact that the European variant might have.
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Chris Heaton-Harris (Daventry) (Con): When did this change in Labour’s policy come about? I distinctly remember, when I was in the European Parliament from 1999 to 2009, Labour MEPs who supported a financial transaction tax being slapped down by their Chancellor, who became Prime Minister. Is it a change in policy that Labour supports a financial transaction tax at European or worldwide level?
Chris Leslie: I did not know that the hon. Gentleman was so close to Labour Members of the European Parliament. I am not familiar with what they were thinking at that time, but on the Labour Benches here we are keen on the principle of an FTT and I have no idea why he is not. I do not understand why Government Members are taking such a stick-in-the-mud view of the issue when it is clear that some of the obstacles that are in the EU variant could be overcome if we engaged and took a leadership role. We have dealt with the stamp duty issue. There are ways of dealing with the extraterritorial and residence issue.
Andrea Leadsom: What is the hon. Gentleman’s assessment of the impact on job losses and costs to savers and pensioners in this country if we were to adopt the financial transaction tax?
Chris Leslie: I do not think there would be any such impact if we designed the FTT correctly and implemented it in the best interests of the UK, and if we persuaded the Americans to do likewise. Not all financial transaction taxes are the same. Stamp duty is very different from the FTT proposed by the European Union. That is a very broad concept and we need to look at it in a proportionate and modest way. I know that the hon. Lady is familiar with what I am talking about. She should read the amendment. I do not understand why she objects to it.
Andrea Leadsom: Surely the hon. Gentleman must realise that if there is a financial transaction tax, that money has to come from somewhere. If it is not coming from savers and pensioners and from moving business overseas, where does he think that money is coming from?
Chris Leslie: The hon. Lady knows very well that millions and possibly billions of financial transactions take place every day of the week—almost every hour—and it is a question of whether there is a social benefit that we should look at as a recompense to society at large, which should not see those financial transactions as totally disconnected from our economy and our society. We know that excessive risk taking and many of the problems that arose from the attachment to the derivatives trade and others got us into the problems of the global financial crisis. Rather than turning its back on it and not engaging, as the Government are doing, the financial services industry should engage in that and think about the design. Let us get it right and do it on our terms, rather than waiting to play catch-up.
Mr Jim Cunningham: Is not the answer to the Minister that Government Members want to protect the bankers? They do not want to make the bankers pay for what they did to the British economy and the world economy.
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Chris Leslie: It sounds that way. The Government’s reticence to get involved and start engaging is telling. I still hold out some hope for the Liberal Democrats. The Lib Dem manifesto—who could forget that seminal political tract—promised that Lib Dems will
“work with other countries to establish new sources of development financing, including bringing forward urgent proposals for a financial transaction tax”.
I fully expect Liberal Democrat Members shortly to be in our Lobby—they can call it their Lobby, if they wish—in favour of the amendment.
Graham Stringer (Blackley and Broughton) (Lab): My hon. Friend is making a much more moderate speech than I expected. He has made some serious logical points, but can he give an unambiguous answer to the question of whether it is his policy to go ahead with the tax if New York and Tokyo do not?
Chris Leslie: I want to do what we can to persuade New York in particular that including London and its financial centre in this would be the best way forward. The Americans already have a very small security exchange commission fee on individual transactions. In terms of the American principle, the foot is already in the door. I was in Washington DC in February to talk not only to Members of Congress, but to others involved in the issue. Far from the impression that those on the Government Benches have, I think we could work on the principle across the Atlantic.
It is true that Jack Lew, the American Treasury Secretary, has concerns about some of the extraterritorial aspects, but let us work on a solution and find a design that might fit, if that is an issue of principle. However we do that, we should not turn our minds away from it. Similarly, the cascade risk issues could be dealt with. There are issues relating to the impact on the repo market and the funding that many companies depend on there, but again, there are exemptions and ways of dealing with that problem and others, such as at what point a levy would be applied, whether the sale and buy-back of a security would be treated as one transaction, whether the charge would be waived on overnight repos and closing repos, and closing any loopholes that might fall open in the treatment of longer-term maturities. There are ways of dealing with these issues, but any Treasury worth its salt would be engaging on the issue, weighing up the pros and cons, dealing with them and making sure that we had a design of a financial transaction tax that offered some hope for the future.
A one-size-fits-all blanket approach will not reflect the complexities of our economy or the unintended impact that an FTT could have if it was poorly designed, but learning and adapting those early experiences of the EU approach should inform us in good time to engage in a proper dialogue on the most sensible joint approach between America in particular and the United Kingdom, ideally before 2015, but presumably after a change of Administration here.
Radical action is needed and a financial transaction tax is an idea whose time has come. For all the aversion to reform emanating from Whitehall and from the Minister, the public and the business community know that we are at risk of a lost decade of economic progress in this country if we do not take bold steps and change
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the rules of the game. A whole generation has been indelibly affected by that global financial failure, and the twin financial centres of London and New York are at the centre of what was a world-changing phenomenon. There is therefore an urgency for the UK to lead the way forward. We must move on from discussion of banks as part of the problem and start to settle on how they will help to repair our public finances and solve the challenges of our economy and society.
It is not clear what the Government’s policy is. They still claim in part that they are in favour of some sort of financial transaction tax, maybe a stamp duty, but they intend to oppose the amendment. Now is the time for action and leadership on an FTT. The public are sick of the Chancellor’s blind refusal to change course and look at alternatives, and it is now clear that we need serious change and new ideas, not more of the same. I urge the House to support the principle of a financial transaction tax and to support the amendment.
Madam Deputy Speaker (Dawn Primarolo): Order. There is now a six-minute limit on contributions, which will leave a few minutes at the end for the Minister to reply.
3.9 pm
Mr William Cash (Stone) (Con): I thank the Financial Secretary for his extremely diligent approach to the debate. He has dealt with all the arguments on the financial transaction tax and I leave those on the record. It is extraordinary that the Opposition should promote the idea, but there is no need for me to go into that this afternoon. I am primarily concerned about the other aspect of the debate and the report, which is the question of primacy. Without primacy, there is no democracy in the House, and without going back to the financial transaction tax, that is a subset of the question of primacy, which is why the Scrutiny Committee insisted on having this debate. I do not think my right hon. Friend will mind my saying that there was a little uncertainty about having it, and I am indebted to him for the clarity with which he has understood this vitally important question.
Our democracy and legitimacy as a Parliament in this House is the basis on which we decide questions of taxation and spending. As my right hon. Friend the Prime Minister said, in the Bloomberg fourth principle, national Parliaments are at the root of our democracy. Therefore, it is absolutely fundamental that we stand by that. I veer away slightly from the trajectory of my right hon. Friend—which he takes for perfectly sensible reasons, but which I disagree with none the less—that somehow the blueprint, which is described as “launching a European debate” is somehow just a piece of blue- sky thinking. It is not. It is absolutely fundamental to the one question that lies at the heart of the Bloomberg speech, in the light of what is said in the Commission document and in the van Rompuy conclusions, both of which put the prime emphasis on the European Parliament, to all intents and purposes at the expense of national Parliaments. They use the word “commensurate”, but it is not commensurate. We cannot have two Governments dealing with the same subject matter. We cannot have two Parliaments dealing with the same subject matter. It is
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impossible, which is why we have to assert the primacy of this House, and, as the Prime Minister rightly said in the Bloomberg speech, it is at the root of our democracy.
Mr Redwood: I thank my hon. Friend for highlighting this crucial issue and bringing it to the attention of the House. Will he accept that those of us who will not have time to speak today are fully behind him in wanting to re-establish and re-assert the primacy of this House in all matters that are important to the British people, and we have a long way to go to do that?
Mr Cash: We have a long way to go, and in fact the journey is becoming longer. I am extremely glad that we are having a proposal for a referendum Bill, which will enable us to decide these questions, if it comes off. I also believe that there is an understanding among possibly 240 Government Members that there is a serious problem in relation to the EU. There are some who take a different view, but it is a tangential question for them. For us it is fundamental. The biggest demonstration of the problem is this fundamental relationship, which turns on primacy. That is what the Scrutiny Committee focused on, and that is what I will speak about, somewhat briefly.
Basically, the landscape involves a two-tier Europe. I am astonished that the shadow Minister should have said, in parenthesis, that he did not really want to go into—I paraphrase—the rather self-indulgent ruminations on institutional differences with monetary union and the like. I am certain that if the primacy question were properly explained to the hon. Gentleman and Opposition Members, they would appreciate that it is fundamental.
I pay tribute to the hon. Member for Linlithgow and East Falkirk (Michael Connarty) because he understands that. I am sure that he will not mind me referring to an interesting altercation the other day with Olli Rehn in a committee meeting that we had in Brussels. The hon. Gentleman made it crystal clear with regard to this idea of the centralisation, with the contracts that he referred to in an intervention, when he was rather abruptly caught short, The reality is that he understands that it is an infringement of our democratic relationship with the electorate. It is about the person in the polling booth voting and making a decision about the kind of Government that they want, and the kind of economy that they want. He and I may have a difference of view about whether there should be adjustments to the public purse. I would argue that if there is a black hole out there in the EU and the black hole prevents growth in the EU and we trade 50% with it, we cannot pay for the public services. The hon. Gentleman understands that.
This goes right to the heart of the issue of whether we are prepared to accept, at this fork in the road—which is what this document represents—this launching of the European debate, which we must carry forward to ensure that we retain primacy in this House over taxation and spending. The shadow Minister nods, so now he concedes that it is not a matter of self-indulgence, but a matter of significance. That is why the debate has to take place. I am afraid to say that the black hole, and the direction in which it is going—because of the two-tier arrangement that is being created, on which they are determined; I could quote from the documents, which talk about
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political integration that is needed within the hard core and they know what it means—will lead to a German Europe. They will control that hard core. The bottom line is that we cannot be part of it. That means that there is a change in the fundamental relationship, not merely for monetary union reasons, not merely for reasons of remorseless logic, but for political ones.
Madam Deputy Speaker (Dawn Primarolo): Order.
3.17 pm
Barry Gardiner (Brent North) (Lab): GDP is a measure of productivity, but it is not a measure of wealth, and it is not a measure of growth in the real economy. Derivative volumes have ballooned out of all proportion to the growth of the real economy. Some would say that that says much more about rent extraction by the financial services sector than a real world story of genuine and proportionate insurance.
When the global financial crisis hit in 2008, many banks were weakened precisely by their exposure to derivatives. In fact, Warren Buffett has described them as financial weapons of mass destruction. They have traded those derivatives at ever-increasing speeds. It is the institutions that are heavily involved in high value, high frequency derivative trading that would feel the biggest impact of the FTT, and whose riskier activities the rest of society has a vested interest in reining in. That is precisely the point that my hon. Friend the shadow Minister made. The public want to see these activities curtailed to reasonable levels such that they reflect the genuine risks of economic growth.
It was Avinash Persaud, the former J.P. Morgan and UBS executive, who in the Financial Times recently commented:
“this small tax on churning would limit some of these activities and help to refocus the financial system on to its purpose of the safe financing of real economic activity.”
That is a good thing and we should be open to the idea of exploring it with our colleagues across the water.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): My hon. Friend is making some strong points. Does he recall Lord Turner describing some of the activities to which he is referring as “socially useless capitalism”?
Barry Gardiner: My hon. Friend is absolutely right. The public want politicians to get back to focusing on the real productive economy. They are bewildered, frankly, by the spin-off of derivatives. I was on the floor of the New York stock exchange when it all went belly up on 24 September 2008, and I remember discussing what all the turmoil was about with members of the Senate Banking Committee in Washington a couple of days later. When I returned to the UK, it was clear that people could not understand how things had become so far divorced from reality.
The hon. Member for South Northamptonshire (Andrea Leadsom), who is unfortunately no longer in her place, made the point that an FTT on derivatives might hit pensioners. I do not think that is a convincing argument. Pension funds are obviously vital to our economy, and they buy derivatives to insure against the risk of poor performance by their portfolio, but those funds are
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much more likely to hold their derivatives until they reach maturity, which means that they would have to pay only a tiny amount under an FTT because their trades are far fewer—the very opposite of the type of short-term, superfast trading that grew in the run-up to the crisis. Most of the burden of paying the FTT would fall on superfast traders and speculative exchanges, which are very far removed from the real economy.
I want to introduce another note into the debate before sitting down. Our Government, along with many other participants in the United Nations framework convention on climate change, have stated that there will be a green climate fund. That fund will have to raise $100 billion each year by 2020—that is the minimum that the UK and our European negotiating partners think will be necessary to help developing countries increase their own economies, reduce poverty and offset the impact of dangerous climate change. The FTT would be an extraordinarily adept mechanism for raising those funds, which are vital to real growth in our economy. If we look at the UK economy, we will find that only 6% relates to the green economy, yet that 6% provided 30% of our economic growth in 2011. I would like to see the funds from the FTT predicated to use in the green climate fund.
3.22 pm
Jacob Rees-Mogg (North East Somerset) (Con): I begin by referring Members to my declaration of interests and by celebrating the 198th anniversary of the battle of Waterloo. We are debating Europe on Waterloo day, which commemorates an occasion when an alliance of nation states came together to defeat the ambition of a Frenchman to have a single European state, so it could not be a better day for debating these matters.
I will deal first with the financial transaction tax, because it is a rotten idea. The fact that we have stamp duty, a tax that has been around for centuries and is not paid on rapid transactions—it is paid only on long-term holdings—or by market makers, or for contracts for difference, or on American depositary receipts, is not an argument for saying that a financial transaction tax can work in the sophisticated financial system that the world operates today.
What the hon. Member for Nottingham East (Chris Leslie) consistently ignores is who the tax would ultimately fall on. In the wonderful world that he was creating, there was a tax that could be designed—not, of course, the one that the Europeans have designed, but another, imaginary tax—that would never seem to fall to anybody. It could take £10 billion out of the economy without anyone really having to pay for it, apart from some nasty, evil bankers who, when they take their hats off, can be seen to have horns underneath.
However, that is not the real world, because the transactions that take place in the City represent an underlying reality, be it the debt issued by the Government, mortgages sold on by banks, or pension funds being invested around the globe. Individuals would end up paying that tax because the costs of their doing business with banks would increase. We know that clearly from the mortgage market, complicated as it may be, because the ability to package mortgages and sell them reduces the cost of capital to banks and reduces the cost to people of buying their own homes. What the Opposition
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are saying is that they want to make mortgages more expensive. They want to put a tax on people who are least able to pay.
Chris Leslie: The hon. Gentleman was doing so well, but unfortunately the level of scaremongering undermines his whole argument. Is he really saying that there is absolutely no case for a tiny fraction, less than a tenth of one percentage point—[Interruption.] I am talking not about the EU variant but about the principle of a financial transaction tax. Is he saying that there is absolutely no case to be made for a financial transaction tax on derivatives or bonds when we have 50 basis points—half a percentage point—of stamp duty on UK equities, or is he also calling for repeal of UK stamp duty?
Jacob Rees-Mogg: There is no case for a financial transaction tax. It would be enormously destructive of this country’s financial system. The cascade effect to which the Minister referred is at the heart of this. When things are being traded dozens of times a day, what starts off as a little tax suddenly becomes a very big tax. The hon. Gentleman conjures £10 billion out of the air. We cannot withdraw £10 billion from the economy without it having an economic effect and without it being paid for by somebody.
Stephen Doughty: The hon. Gentleman is making a dramatic and scaremongering speech. If the FTT is such a terrible idea, I wonder why people such as Bill Gates, George Soros and, indeed, 1,000 of the world’s leading economists, backed the principle of such a tax.
Jacob Rees-Mogg: I seem to remember that 365 economists said that Margaret Thatcher had got it wrong in 1981, but one great and noble Prime Minister had got it right and 365 economists were flawed in their thinking. I would back the British politician against a collection of academic economists living in an ethereal world.
A financial transaction tax would ultimately be paid for by the British people through higher housing costs, lower pensions and possibly through higher Government borrowing costs leading to higher overall taxation. Of course the Labour party wants higher taxation, because that is what it has always been in favour of—more taxes, more spending and a worse economy.
I would now like to move on to the points made by my hon. Friend the Member for Stone (Mr Cash), because they, too, are extremely important. They relate to the European Union’s ambitions to become a superstate based on the euro. I accept that we are outside the euro, but that is not entirely a protection from the development of the EU along the lines of a single state with a single Government based in Brussels. Of the papers we are considering today, there is one from the European Commission showing that it wants within 18 months to have a eurozone seat on the International Monetary Fund’s board, that it wants within five years to co-ordinate eurozone tax and employment policies, and that it wants a political union with adequate pooling of sovereignty with central budgets as its own fiscal capacity and a means of imposing budgetary and economic decisions on its members. That means a single Treasury and a single fiscal union.
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The danger for us is that, as the European Union obtains more powers for the eurozone, our association with it will become very different from the present one, and one in which we have little influence over what happens because we are outside it. Alternatively, we could get dragged into the arrangements because, as our experience of the European Union shows, our opt-outs will ultimately expire. We have seen that happening with the social chapter, and we will see it again next year with the decision on title V of the Lisbon treaty. We should therefore be very careful about the ambitions of the European Commission in relation to this single government for the eurozone.
We should also be cautious about what the President of the European Union, Mr van Rompuy, has to say. He has published a paper lauding the success of the euro and all that it has done. It states:
“The euro area needs stronger mechanisms…so that Member States can reap the full benefits of the EMU.”
That is a fascinating way of phrasing it: “the full benefits”. After all the other benefits that they have so far received, there are further benefits to give the member states if only they will join a tighter system of governance. I wonder whether the unemployed Greek youths have noticed all the benefits that they have received from this wonderful beneficent eurozone.
Mr van Rompuy has also been kind enough to say:
“‘More Europe’ is not an end in itself, but rather a means for serving the citizens of Europe and increasing their prosperity.”
I am proud to say that I am a subject of Her Majesty, and not a citizen of Europe. The idea that we need more Europe to benefit the citizens of the member states is palpably false. The more Europe we have had, the worse the situation has become. The more powers that have accreted to Europe, the more bureaucratic, less democratic and worse run has become the whole system of the European Union. The economies of the European Union have suffered because of the euro.
Mr Cash: Will my hon. Friend give way?
Jacob Rees-Mogg: I apologise, but I will not, as I have only 45 seconds left, and counting. I have had two extra minutes already.
I want to finish on the point of democratic legitimacy and accountability. I am glad that my right hon. Friend the Minister for Europe is in the Chamber, because it was his Bill in 2011 that so wisely reminded us that United Kingdom powers are ceded to Europe only by Act of Parliament and can be withdrawn. However, van Rompuy says that
“the involvement of the European Parliament as regards accountability for decisions taken at the European level”
is key. I deny that. It is this House that is key, and it is this House that should maintain our democracy.
3.31 pm
Michael Connarty (Linlithgow and East Falkirk) (Lab):
I have news for the hon. Member for North East Somerset (Jacob Rees-Mogg). Bill Gates was not an academic. Indeed, the hon. Gentleman might want to make a comparison with his own career, which his declaration of interest shows to have been in banking.
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He has defended that business strongly. Bill Gates is now doing something that a financial transaction tax would achieve universally, across the world. It would raise money from the speculative, gambling casino economy that the world has become and give it to those who are often mineral rich or agriculture rich but massively exploited by those of us who live on the fat of that speculation.
For me, a financial transaction tax is suitable only if it is a worldwide arrangement. It is certainly not suitable for the money-raising powers of the European Commission, yet that is what the Commission is proposing: just another mechanism for a fat, gorged organisation to take money from yet another sector of the economy. If it got rid of the common agricultural policy failures, 40% of the EU budget would be available for positive use, so perhaps the Commission should look at that, rather than at trying to get more money in from a transaction tax.
I was glad to hear my hon. Friend the Member for Nottingham East (Chris Leslie) clarifying our position on this matter, because I was worried that the drafting of our amendment did not make it 100% clear that we opposed the introduction of a European transaction tax at any time. Only in the context of advancing development worldwide can we justify the imposition of such a tax. If it is not done on that basis, it will have an adverse effect.
The hon. Member for South Northamptonshire (Andrea Leadsom), who is no longer in her place, spoke against the introduction of any kind of financial transaction tax. She did not seem to realise that, according to her argument, stamp duty, which is basically a national levy for national spend, should theoretically also be abandoned. Her argument was that any kind of financial transaction tax prevents jobs from being created. However, as we use taxation for positive purposes in most cases, there are reasons why people should pay taxes—even those fat bankers with horns on their heads whom the hon. Member for North East Somerset described.
Mark Lazarowicz: Before my hon. Friend moves on, I want to ask a question related to an international financial transaction tax. It appears that progress has been made on getting the UK overseas territories to be more transparent on tax. Is this not a good opportunity to encourage them also to be part of an FTT system, because we all know that a lot of the dodgy transactions take place in bank speculation in some of the countries for which we have an indirect responsibility?
Michael Connarty: That is part of a separate debate, but I agree that all territories controlled by any of the world’s major economies should be not just transparent, but properly taxed. Just because someone sticks a name on a door in the Cayman Islands and pays a Cayman citizen theoretically to be the director, there is no reason why they should not pay taxation wherever they make their money in the world. That would certainly be helpful.
Turning to economic and monetary union, the hon. Member for Stone (Mr Cash) lauded me highly, but slightly falsely. My main concern with Olli Rehn’s paper on a blueprint for a deep and genuine EMU is that it strongly suggests that countries will have their primacy removed. That is even more the case with the van Rompuy paper, “Towards a Genuine Economic and Monetary
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Union”. It is clear that those documents take away, in the first place, from the weakest of the 17 any right to set their own budget or any budget that has not been agreed by the Commission, and the associated penalties would further damage the economies of those countries.
My great problem with the proposals is that they are a threat to the European Union. I believe that they have become obsessed with the euro. Their documents refer again and again not to the European Union, European citizens, European Governments or European projects, but to the euro. The countries that are not keeping in line with the stability and growth pact are a threat to the euro, which has become the raison d’être of the European project for many people at its centre. The hon. Member for North East Somerset has described it, correctly, as a token for them to control Europe through a single body, the European Commission, in partnership, as its documents keep saying, with the European Parliament. We have no real say in this. The European Parliament legitimises what is done by the European Union. The power of the Lisbon treaty has not just tipped over; it has fallen into the abyss of the Commission-controlled EMU.
There is a negation of primacy and countries are being forced to do things in their budgets that are bad for their citizens. We are supposed to be a co-operative European Union. I voted for it in 1975 and would do so again, but I would like more tools to fight against those centralising powers.
There is also a failing austerity plan in all these countries: Greece, Italy, Portugal and Spain will be weaker economically and more impoverished and indebted at the end of this than they were at the beginning, but for what reason? What contribution will that make to the stability of a new economy? It means that the powerful countries in the north will become more powerful over the rest. I believe that when they are finished with the weaker countries, they will come for the rest of the 17 and start to control their budgets. If they had their way and if we were not outside the euro, they would be telling us that we could not do what we are doing to try to deal with our economy—not that it is being done very well in this country, because the austerity measures here parallel those demanded by the European Commission of the failing economies in the south of Europe.
I am worried that we will not have the ability in the future to ameliorate what will happen in the general European economy. That is what I mean by primacy. Not only will the primacy of those countries be destroyed; our ability to effect and do something positive for the economies of the European Union—through growth and sharing burdens, rather than through penalising and punishing countries—will be weakened.
Finally, when did the stability and growth pact not have any teeth or do anything? It was when Germany broke it again and again as it built investments in its own economy to make it what it is now: a strong, growing economy. I am worried that, as a result of the primacy that will be lost all over Europe, countries will lose the ability to reflate and build a proper economy.
3.39 pm
Greg Clark:
In the couple of minutes available to me, I will attempt to respond to what has been a spirited debate on both sides. It has been so spirited that the speech of the hon. Member for Nottingham East (Chris Leslie)
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rather startled the hon. Member for Blackley and Broughton (Graham Stringer), who did not expect to hear anything so—
Greg Clark: It was fainter praise than good.
I am grateful to my hon. Friend the Member for Stone (Mr Cash) for his kind words. I am glad that we were able to accommodate the two debates that he was keen to have. I welcome the contribution of the hon. Member for Brent North (Barry Gardiner), the characteristic tour de force on Waterloo day from my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) and the flinty contribution of the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who shares many of the views of my hon. Friend the Member for Stone on the primacy of this place.
This has been a fascinating and enlightening debate. We have discovered that the policy of the Opposition in calling for a financial transaction tax turns out to be to call for an additional financial transaction tax. As has been clear from the exchanges across the House, we already have a financial transaction tax in this country; it is called stamp duty. The hon. Member for Nottingham East made it very clear that he proposes an additional tax on British savers, pensioners, mortgage holders and business of up to £10 billion. He said that that would come not from the magic—
Chris Leslie: Will the Minister give way?
Greg Clark: No, I only have a couple of minutes.
Chris Leslie: On a point of order, Madam Deputy Speaker. It is important that the Minister’s misinterpretation of what I said should not be allowed—
Madam Deputy Speaker (Dawn Primarolo): Order. That is not a point of order, but a point of debate. Resume your seat, Mr Leslie.
Greg Clark: I am grateful, Madam Deputy Speaker. It will be clear for people to see on the record that this is another proposed tax from the magic money tree that the hon. Gentleman frequently has recourse to.
We are not against a financial transaction tax in principle. We have one in stamp duty. The idea that we should not refer this matter to the ECJ is totally inappropriate. I commend the motion to the House.
Question put, That the amendment be made.
The House divided:
Ayes 215, Noes 311.
Division No. 29]
[
3.41 pm
AYES
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Bain, Mr William
Balls, rh Ed
Barron, rh Mr Kevin
Bayley, Hugh
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Ronnie
Caton, Martin
Champion, Sarah
Chapman, Jenny
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Donohoe, Mr Brian H.
Doughty, Stephen
Dowd, Jim
Dromey, Jack
Durkan, Mark
Eagle, Ms Angela
Edwards, Jonathan
Efford, Clive
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Fabian
Hanson, rh Mr David
Harman, rh Ms Harriet
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jowell, rh Dame Tessa
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Emma
Lewis, Mr Ivan
Llwyd, rh Mr Elfyn
Long, Naomi
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mactaggart, Fiona
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McDonagh, Siobhain
McDonald, Andy
McGovern, Alison
McGovern, Jim
McGuire, rh Mrs Anne
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Miliband, rh Edward
Miller, Andrew
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Steve
Reynolds, Emma
Reynolds, Jonathan
Ritchie, Ms Margaret
Robertson, Angus
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Nick
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Swales, Ian
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, rh Keith
Vaz, Valerie
Weir, Mr Mike
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodcock, John
Woodward, rh Mr Shaun
Wright, David
Tellers for the Ayes:
Susan Elan Jones
and
Mr David Hamilton
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, Alistair
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clappison, Mr James
Clark, rh Greg
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Crabb, Stephen
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan Smith, rh Mr Iain
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Farron, Tim
Featherstone, Lynne
Field, Mark
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Gale, Sir Roger
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Gove, rh Michael
Graham, Richard
Gray, Mr James
Grayling, rh Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Hague, rh Mr William
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hammond, Stephen
Hands, Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howell, John
Hughes, rh Simon
Hunt, rh Mr Jeremy
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lloyd, Stephen
Lord, Jonathan
Loughton, Tim
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McCrea, Dr William
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McVey, Esther
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Mitchell, rh Mr Andrew
Morris, Anne Marie
Morris, James
Mosley, Stephen
Mowat, David
Munt, Tessa
Murray, Sheryll
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
O'Brien, Mr Stephen
Ollerenshaw, Eric
Opperman, Guy
Ottaway, Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, rh Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Shepherd, Sir Richard
Simmonds, Mark
Simpson, David
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Soames, rh Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swayne, rh Mr Desmond
Syms, Mr Robert
Teather, Sarah
Thornton, Mike
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Truss, Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Watkinson, Dame Angela
Weatherley, Mike
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Wilson, Mr Rob
Wright, Jeremy
Wright, Simon
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Noes:
Jenny Willott
and
Anne Milton
Question accordingly negatived.
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Main Question put and agreed to.
That this House takes note of European Union Document No. 16988/1/12, a Commission Communication on a Blueprint for a Deep and Genuine EMU: Launching a European debate, an Un-numbered European Document dated 5 December 2012, a Report from the President of the European Council: Towards a Genuine Economic and Monetary Union, European Union Documents No. 15390/12, a draft Council Decision authorising enhanced co-operation in the area of financial transaction tax, and No. 6442/13 and Addenda 1 and 2, a draft Council Directive implementing enhanced co-operation in the area of financial transaction tax; observes that the European Scrutiny Committee has reported on these documents and concluded that they raise questions relating to parliamentary sovereignty and primacy as well as fiscal and monetary issues; notes that the European Commission Communication states that ‘Interparliamentary co-operation as such does not, however, ensure democratic legitimacy for EU decisions. That requires a parliamentary assembly representatively composed in which votes can be taken. The European Parliament, and only it, is that assembly for the EU and hence for the euro’, and that the report from the President of the European Council concludes that ‘further integration of policy making and a greater pooling of competences at the European level should first and foremost be accompanied with a commensurate involvement of the European Parliament in the
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integrated frameworks for a genuine EMU’; further notes that the proposals for the Financial Transaction Tax have been challenged by the Government in the European Court of Justice; notes that recent European Treaties and protocols have emphasised the role of national parliaments throughout the European Union as the foundation of democratic legitimacy and accountability; and believes that this role is the pivot upon which democracy in the United Kingdom must be based on behalf of the voters in every constituency.
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European Elections 2014
[Relevant document: First Report of the European Scrutiny Committee, HC 83-i, Chapter 3.]
3.56 pm
The Minister for Europe (Mr David Lidington): I beg to move,
That this House takes note of European Union Document No. 7648/13, a Commission Communication on preparing for the 2014 European elections and enhancing their democratic and efficient conduct, and No. 7650/13, a Commission Recommendation on enhancing the democratic and efficient conduct of the elections to the European Parliament; notes that whilst European political parties are free to support candidates for Commission President, this does not limit the European Council’s selection of a candidate; agrees with the Government that the suggestion for a common voting day across the EU is unhelpful and would achieve the opposite of the stated intention of increasing voter turnout; and further notes that there is currently no indication that these documents are going to be followed up by formal legislative proposals.
I welcome this opportunity to discuss these European Commission recommendations in the House. It is now less than 12 months until the 2014 European parliamentary elections due to be held from Thursday 22 May to Sunday 25 May. This debate is therefore timely. [Interruption.]
Madam Deputy Speaker (Dawn Primarolo): Order. I am sorry Minister. Members who wish to have private conversations would be well advised to leave the Chamber. There are those who wish to debate the European recommendations, and it is not very courteous to the Minister either.
Mr Lidington: On 12 March, the European Commission published a set of recommendations and a communication concerning the 2014 European parliamentary elections whose contents also touched on other areas of European political life. The proposals do not carry legal weight; they are non-binding suggestions to member states and national and European political parties. The Government always welcome contributions to the ongoing debate about democracy in the EU, but I believe that these specific proposals mistakenly assume that there is a single European political identity—a single European demos—and ignore the fact that the fundamental source of democratic legitimacy within the EU is derived from national Parliaments accountable to their national electorates. I believe that we need to work to strengthen the links between national democracies, their Parliaments and EU institutions.
We consider it unlikely that these recommendations will become formal legislative proposals from the Commission, but if they were to take that form, they would need to be decided by unanimity. The relevant treaty articles are articles 22(2) and 223(1) of the treaty on the functioning of the European Union. As you will recall, Madam Deputy Speaker, under the European Union Act 2011, any measure introduced by the Commission and agreed by the Council and Parliament under article 223(1) would also require an Act of Parliament for the United Kingdom to give it assent. The consequence of that is that the UK would have a veto over any such proposed change.
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I want briefly to set out the recommendations in more detail, addressing those that concern the conduct of European elections, before turning to the Commission recommendation that European political parties make known their candidate for the post of Commission President. The first and second recommendations put forward by the Commission are intended to promote connections between European political parties and national political parties. The proposals suggest that national political parties should explain their connection with European political parties and make clear that connection in their electoral documents. Political parties in this country are perfectly free to advertise their European affiliation if they so choose. Ballot papers in the United Kingdom will continue to be produced in accordance with UK law, as will party political literature. If a United Kingdom party wishes prominently to display its European political affiliation, it is free to do so, but there should be no question of compulsion.
Recommendation 4—the suggestion that member states ought to agree a common voting day for elections to the European Parliament—has attracted some attention in the media. At the moment, elections to the European Parliament take place over a four-day period, which in 2014 is set to fall between 22 and 25 May, as I mentioned earlier. I fear that a number of right hon. and hon. Members might have read reports that the EU intends to force the UK to hold elections on a Sunday. It is my happy duty to inform the House that this is not the case. The UK will continue to hold elections on a Thursday, as is our tradition, and I am sure that other member states will rest equally assured that they will be able to continue to hold elections on their day of choice. To mandate that a member state change its election day would achieve the very opposite of the declared aim of the proposals—namely, an increase in voter turnout—and would be detrimental to electoral diversity across the EU.
Kelvin Hopkins (Luton North) (Lab): I have much sympathy with what the Minister is saying, but he seems to be eliding two things: the choice of election day being a national matter, not a European Union matter, and whether it should be a Thursday or a Sunday, which is the other component. They are two different questions. Whatever day it is, does he agree that we should choose it? That is the important point.
Mr Lidington: I have no quarrel or disagreement with the hon. Gentleman on that count.
Mark Field (Cities of London and Westminster) (Con): Much as I think it would be quite wrong for anything to be mandated—the decision should be made locally—the so-called tradition of Thursday elections in the UK goes back only about 100 years. Perhaps it would be more sensible to consider a weekend election, for all the convenience factors that would come with that, but also because, in the case of these elections, it might allow us to hold elections on two weekend days some three or four weeks apart, rather than having to change our day for local elections, as we have, from the traditional first Thursday in May to 22 May, which is what is now envisaged for those elections and the European elections next year.
Mr Lidington:
My hon. Friend is right that it used to be the case that general elections in this country took place over a number of days. Indeed, it was not completely
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uncommon for candidates to put themselves forward for election in more than one constituency. If the House were to consider a change of the sort that he and the hon. Member for Luton North (Kelvin Hopkins) suggest, it ought to be debated in the context not solely of European parliamentary elections, but of our electoral practice more generally, covering general and local elections, as well as European elections. I am sure that my right hon. Friend the Deputy Prime Minister will be interested to hear any proposals that Members wish to make.
Jim Shannon (Strangford) (DUP): What consideration have the Government and the Minister given to the opinion of faith groups in relation to holding elections on any day other than a Thursday, and certainly not on a Sunday?
Mr Lidington: The hon. Gentleman puts his finger on one of the key problems with shifting away from our practice of voting on a Thursday—namely, that to pick any day over the weekend from Friday to Sunday would inevitably begin to trespass on the religious practices of faith groups in various parts of the United Kingdom. We would need to look at how the timing of a polling day might have an impact on people from such groups, and not just in respect of the voting day because a large number of constituencies and local authorities still count votes the day following polling day, so that has to be taken into consideration, too.
Andrew Percy (Brigg and Goole) (Con): I am reassured by what the Minister says. I can tell him that, whether it be held on a Sunday, a Thursday or any other day, the people of Brigg and Goole will be equally uninterested in the European parliamentary election. I agree with my right hon. Friend on what he says about maintaining our Thursday elections. Has he assessed how much the ridiculous situation of paying for security and the guarding of ballot boxes from Thursday to Sunday costs us? Plenty of other countries around the world, such as Canada, have results coming in for elections held on the same day, but the results from eastern Canada are known before the people in western Canada have finished voting. Why can we not just go back to counting on a Thursday and save the taxpayer some money?
Mr Lidington: That is an interesting view. I do not know whether the Cabinet Office has the figures for which my hon. Friend asks. I think that the agreement reached some years ago within the EU—that voting should take place over a number of days—was designed to accommodate both the fact that different countries had the habit of voting on different days of the week and the wish not to declare votes early in case the votes in one country affected how votes were cast in another country. I have to say that I rather agree with my hon. Friend, as the prospect of that happening is, in practice, pretty slim. I doubt whether he will be influenced in his campaigning by the outcome of elections in Greece or Malta. The arrangements we now have were incorporated into European law, and it is not likely to change in the foreseeable future.
Mr Lidington: I shall give way briefly, but then I want to make some progress.
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Kelvin Hopkins: We are proposing the alternatives of Sunday and Thursday, but there is also the alternative of Saturday, which would be convenient for many industrial workers. Saturday is a day of rest for many, perhaps not all, but this day would avoid the religious complications that the Minister mentions.
Mr Lidington: I hear what the hon. Gentleman says, but the problem with Saturday is, first, that a number of Jewish communities would find it difficult and, further, that we would still be left with the problem of asking people to count votes and declare results on the Sunday, which would present a difficulty for a number of Christian denominations. This is not a straightforward issue, but as I say it goes beyond the scope of the European Commission recommendations and it is probably best addressed in the context of a wider debate about the timing of elections in the UK.
The four technical recommendations from the Commission—recommendations 5 to 8—are directed at improving the conduct of European elections through EU directive 93/109/EC on information exchange. These four recommendations are not new proposals, but rather suggestions to member states on how to enhance their implementation of the existing requirements of the directive.
The Government are committed to fulfilling their obligations under this directive and we currently implement the legal requirements in full. We do, however, remain concerned about the practical demands of this process and about the burden of implementation being much greater than the prevalence of the problem it is designed to address—namely, double voting. The Government have noted the Commission’s recommendations in this area and we will take them into account in our preparations for the 2014 European parliamentary elections.
I should add, to reassure the House, that any move that the Commission might hypothetically make in the future to incorporate those four recommendations in a revised version of the directive would require unanimity under article 22(2) of the treaty on the functioning of the European Union.
The Commission’s third recommendation states that European and national political parties should make known their nominations for the post of President of the European Commission. Some European political parties are very likely to nominate particular individuals as their candidates for the post. They are free to do so if they wish, and I am sure that that will result in a lively debate among political parties. Indeed, I look forward to hearing from the hon. Member for Wolverhampton North East (Emma Reynolds) whether she and her party intend to campaign ardently in favour of Mr Martin Schulz, the President of the European Parliament, who is currently the only declared candidate on behalf of the Party of European Socialists as the proposed successor to President Barroso.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): On a point of order, Madam Deputy Speaker. Would it be relevant to our business if my hon. Friend the Member for Wolverhampton North East accepted the Minister’s invitation to discuss who might or might not be a candidate? Where does that feature on the Order Paper?