Asked by Baroness Falkner of Margravine To ask Her Majesty’s
Government whether they still intend to publish a position paper
setting out their priorities and preferred trading relationship for
the financial services sector after the United Kingdom’s withdrawal
from the EU, and if so when. Baroness Falkner of Margravine
(LD) My Lords, I beg leave to ask a Question of which
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Asked by
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To ask Her Majesty’s Government whether they still intend to
publish a position paper setting out their priorities and
preferred trading relationship for the financial services
sector after the United Kingdom’s withdrawal from the EU, and
if so when.
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(LD)
My Lords, I beg leave to ask a Question of which I have given
private notice. In doing so, I declare an interest as
chairman of your Lordships’ EU Financial Affairs
Sub-Committee.
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(Con)
My Lords, the Government have set out their objectives for
financial services. The Secretary of State and the Chancellor
have each done so in recent speeches. We are engaging
extensively with both industry and EU partners to hear their
views and set out our arguments. In any negotiation there is
a careful judgment and a delicate balance about when and how
to set things out in public, and we will keep under review
the best way of doing this.
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The noble Baroness will be aware that I have been engaged in
correspondence with the Chancellor, on behalf of the
sub-committee, about the need for a transition period. The
Government have, indeed, set out their position in that
regard. What is lacking is a position paper telling the
financial services sector what it should expect to get at the
end of the transition period; in other words, what it should
implement and plan for when the transition period is over.
There are more than 1 million jobs at stake in this industry,
which has huge strategic importance for the United Kingdom.
Seven position papers have been published so far, but not the
long-promised one on the financial services sector. When do
the Government expect to do so?
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I have to correct a misapprehension on the part of the noble
Baroness. She will be aware of the reply that my honourable
friend the Minister, , gave to the other place
in November. He made it clear that there was extensive
engagement with a number of sectors. There had been numerous
round-table and bilateral meetings. In particular, he said
that, at that point, there was no position paper and that we
shall continue to review the situation to determine how best
to set out our position, which we will do as appropriate.
That continues to be the Government’s position.
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of Kentish Town
(Lab)
My Lords, at the weekend the noble Lord, , wrote that if we are
not careful and do not know where we are going, the
transition will be a gangplank leading to nowhere. It is over
a year since the noble Baroness’s report on the financial
services sector and Brexit was produced. We have no clear
view of what the Government think. Is it that they do not
know, that they dare not tell, or is it, as suggests, that they are
not up to the task?
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The noble Baroness’s criticism might have more authority if
it did not come from the Benches opposite, where the
’s position on Europe can
only be described as shambolic, and that is a euphemism. I
remind the noble Baroness of precisely what has been
happening. As I said, there has been extensive engagement and
consultation and we are seeking a bold and ambitious free
trade agreement between the UK and the EU. In so far as the
financial services industry is concerned, this will require
detailed technical talks, as she is no doubt well aware.
However, the UK is an existing EU member state so we have
regulatory frameworks on both sides and we have standards
that already match. As recently as last week, the Prime
Minister, the Chancellor and my honourable friend Mr
met senior representatives
of the financial services industry to engage on exit issues,
so there is an ongoing dialogue. This is a delicate and
sensitive time and the Government must be the arbiter of when
it is appropriate to declare their position in particular
areas.
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(Con)
My Lords, have the Government not repeatedly made it clear
that what they seek for the financial services sector is the
maximum possible access, similar to what we have now, whether
it is based on either equivalence instead of passporting or
third-party rights, as is allowed for under some of the
financial measures already enacted by the European Union? Is
it not utterly absurd in a negotiation to demand detail
beyond that and to ask a Government who are attempting to
negotiate a deal to say where they expect to end up? That is
not realistic.
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My noble friend articulates more succinctly and cogently than
I can exactly what the sensitivity of these negotiations is.
These sensitivities are well understood on the part of the
Government; I just wish they were better understood
elsewhere.
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(LD)
My Lords, I spent the summer working with a large number of
people in the financial services sector. Does the Minister
understand how outraged many people are who have held back on
their contingency planning in the expectation that there was
to be clarification through this paper, and the number of
people who practically pinioned me to the wall to pass her
the message that this confirms to them that the Government
are so internally riven that they do not have a negotiating
position on this key area, and they are on their own?
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The noble Baroness seems to imply that the Government are
operating in some kind of vacuum. They are not for two
reasons, as was made very clear in December when we moved on
to phase 2, the critical component of the negotiations when
the very issues that so concern the noble Baroness will be
the subject of discussion. It is not as though there is no
engagement with the financial services industry; there is
very close engagement. As my noble friend Lord Lamont made
clear, this is a sensitive time in the discussions. It would
be completely inappropriate to show hands and declare
positions. The financial services industry is aware of what
the Government seek in terms of their objectives. We take
comfort from the position of London in the global financial
world. The Z/Yen consultancy declared in September that
London is the leading financial centre, ahead of New York
which is second, Hong Kong, third and Singapore, fourth. Yes,
we know what people in the financial services industry feel.
Yes, we are cognisant of that and, yes, we are doing
everything we can to robustly represent the best interests of
the financial services industry.
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(Lab)
My Lords, I should not need to remind the noble Baroness that
financial services in this country go further than the City
of—
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(Con)
My Lords—
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The Minister of State, Ministry of Defence (Earl Howe)
(Con)
My Lords, we have time for both speakers who have been on
their feet. We shall start with the Conservative Benches and
then go over to the Labour Benches.
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My Lords, does my noble friend the Minister agree that the
range and diversity of markets and services in the City of
London, and the extent to which overseas institutions
participate in them, means that it would be very difficult to
produce a paper of the sort that the noble Baroness opposite
has demanded without going into a gross oversimplification,
and that it would be much better—as my noble friend Lord
Lamont said—to allow these negotiations to progress?
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Yes. I thank my noble friend for that intervention. As I have
already said, this will involve detailed technical
talks—there is nothing straightforward or simple about this.
I entirely agree with him that that it would be exceedingly
dangerous to yield to the temptation, to which some seem to
be in danger of yielding, that we can reduce this to
simplistic terms. These are challenging and complex issues
and they should be addressed appropriately.
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My Lords, is it not interesting that we have heard three
Conservative speakers, including the noble Baroness from the
Dispatch Box, obviously thinking that our negotiators are
amateurs and that they cannot conduct a negotiation when the
broad outlines are set out before them? I served under the
chairmanship of the noble Baroness, Lady Falkner of
Margravine, on the Select Committee, where it was made plain
to us by 40 witnesses, time and again, that they need
certainty. Ideally they wanted certainty by the end of 2017;
they are now begging for it before the end of the first
quarter in March. I should not need to remind the Minister
that the City of London is only a small part of the United
Kingdom’s financial services industry. A very large part of
it is in Scotland, Bristol and Leeds. These jobs are at risk,
and this is not the time to play games.
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I respect the noble Baroness and understand that she is a
significant contributor to the proceedings of this House, but
she is a little harsh in her terminology. There is no
question of the Government playing games, and that is
recognised in Brussels and by the EU. It is recognised that
these are complex, challenging negotiations and that by their
very nature a degree of sensitivity surrounds them, and that
involves also the need to observe a degree of
confidentiality. The financial services industry is aware of
the Government’s broad objectives in these negotiations; as I
said last week, senior representatives of the industry met
with the Prime Minister, the Chancellor and my honourable
friend . So there is clarity on
the part of the industry as to what the Government wish to
try to achieve. When the Government think it appropriate, as
my honourable friend said in the other place,
we can consider how to set out our position.
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of Dalston (CB)
My Lords, how can we possibly continue to enjoy a position
similar to that which we enjoy the moment, as the noble Lord,
Lord Lamont, suggested, when we are determined to withdraw
from the single market and the customs union?
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We have made it clear that we are determined to negotiate an
ambitious free trade agreement. We want to do everything we
can to facilitate access to the markets and to enjoy the
arrangements that currently obtain. However, the Government
have been clear that we cannot commit to being in the single
market or the customs union, because to do so per se is not
to leave the EU. On the financial services markets, this has
been explored, and it is clear that passporting is not the
only way to access EU financial services markets. That is why
these negotiations are so critical and why we have to leave
the negotiators in peace to get on with their important work.
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