We will pay for Labour's surrender to the EU

Sold! Gordon Brown and Labour have

10 April 2012

In recent weeks, with this Labour administration running out of ideas and time with indecent alacrity, it has generated headlines full of bile and hatred on bankers' bonuses, cynically designed to capture the electorate's imagination to great effect for short-term political expediency.

I suppose it is fair to say that there never has been a government more adroit at "burying bad news". The bad news this time is far worse than that dreamt up by Jo Moore at the Department of Transport and Local Government in 2001. It is the abject surrender, despite protestations to the contrary, of the sovereignty of banking regulation for the UK to the EU.

Though the spiteful action taken by the government on the bankers' bonuses is reprehensible, as well as short-sighted in the extreme, it pales into insignificance in comparison to the damage that will be inevitably caused to the infrastructure of the City of London and more specifically to our banks, which will now have to compete on a level playing field with our European peers, when frankly they are better than that.

The banking sector has gargantuan influence internationally in comparison with its peers in Frankfurt, Paris, Madrid and Amsterdam. The 50 per cent levy on income tax to be introduced next year by this resentfully parsimonious government was marginal, though probably digestible. However, continued adverse legislation against the financial community, culminating in President Sarkozy rubbing our government's — and more importantly — the electorate's nose in the poop, over hailing the appointment of Michel Barnier as senior EU regulator, was the last straw.

Sarkozy described Barnier's appointment as "a French victory and a defeat for Anglo-Saxon capitalism". Even Charlie McCreevy, the affable retiring European Commissioner, has chucked his two cents' worth in, by warning that France will use Barnier as a tool to serve French interests.

Gordon Brown, Peter Mandelson, Alistair Darling and David Miliband, in so many words, have just given away the family silver to the EU without so much as a by-your-leave.

It can only be described as a public disgrace that radical banking regulation changes have taken such an inordinate length of time to be implemented.

Attempting to do so globally or on a European footing is crass stupidity. Nothing will ever be agreed. There is talk of regulatory arbitrage, but that can be avoided with decent consultation on fundamental issues such as capital requirements. The government and the Treasury have totally lost the plot over regulation.

Like it or not, the Treaty of Lisbon is law and we must face the fact that we are now drowning under the weight of bureaucratic rubble being accumulated in Brussels.

The Treasury has failed to take the initiative on any of the developing policy measures coming from Brussels over the past two years. This has to stop and we have to get on the front foot again. I believe that a Conservative government would appoint a Treasury minister based in Europe to take overall responsibility for the UK's negotiations on financial services directives. Hopefully David Cameron might consider this situation to be sufficiently important to warrant Cabinet status. In addition, George Osborne has made it clear he believes that defending the City in Europe should be a priority.

Standing up for the UK in Europe requires having a credible UK regulatory structure, off which the country can argue its position in Europe. Surely returning regulatory control to the Bank of England is a prerequisite.

George Osborne, the Shadow Chancellor, said so unequivocally in a recent newspaper article: "We Conservatives have published detailed plans to put the Bank of England in charge of financial regulation. In a dramatic moment this week Ben Bernanke, the chairman of the US Federal Reserve, criticised the system of financial regulation introduced by Brown 12 years ago for leaving the Bank of England in the dark'.

"He supported our argument that having the central bank regulate banks was very, very important' for maintaining financial stability."

The Conservative proposals have also been endorsed by Jacques de Larosière, architect of the new European regulatory approach, and have been echoed by more recent German and Belgian moves to bring financial regulation under their central banks.

Osborne said: "We have always been clear that while we welcome international cooperation on banking regulation, we cannot accept a European regulator or regulators that have executive powers which could conceivably have fiscal consequences for national governments." He also went on to say in the Tories' White Paper: "British taxpayers are ultimately liable for failures of financial services regulation and therefore the British authorities must retain regulatory sovereignty when taxpayers' money is at risk."

The way the Brown government has totally disregarded the importance and contribution that the Square Mile has made in the past dozen years flabbergasts me.

Great luminaries such as John Varley, Bob Diamond and Stephen Hester are on record warning the government of the ramifications of metaphorically spitting in the eye of the City of London. The die is cast and London may well surrender 30 per cent of its earning power, thanks to short-sighted political expediency, unless there is a radical reappraisal of the situation.

There is absolutely no case for Brown to be re-elected this year. The fact that Geoff Hoon and Patricia Hewitt have exposed an extremely divided administration is testament in itself. There is sufficient evidence that Brown, as Chancellor, contributed every bit as much as a few irresponsible bankers to the demise of the UK's economy and the resulting deep-seated recession, by encouraging banks to lend indiscriminately without adequate regulatory controls.

That message needs to come across in the press as well as on influential TV such as GMTV, and The Andrew Marr Show shown on Sunday and not in the House of Commons, where few are even bothering to listen. The sooner the Bank of England is restored as the lead regulator, the better for all concerned.

We will pay for Labour's surrender to the EU

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