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Financial Services Industry

Volume 624: debated on Thursday 27 April 2017

5. What steps the Government plan to take to help the financial services industry prepare for the UK leaving the EU. (909873)

We want to ensure that UK companies have the maximum freedom to trade with and operate in European markets, and to let European businesses do the same in the UK. Financial services is one area for which a bold and ambitious trade agreement will be sought, and we will continue to talk to the industry as we prepare for negotiations. The Government have made it clear that we believe implementation periods will be important to minimise disruption, and the industry has welcomed that. The great repeal Bill will prepare the ground for the UK’s exit so that on the day we leave there is as little disruption and as much certainty and continuity as possible. A strong, stable Conservative Government will be best placed to deliver that.

I am grateful for the confirmation that the Government intend to include financial services in the free trade agreement. Will the Minister confirm that we will negotiate to ensure maximum access for licensed firms on the basis of mutual recognition and an equivalence regime?

My hon. Friend absolutely right. As a priority, we are pursuing a bold and ambitious trade agreement with the European Union. That agreement should be of greater scope and ambition than any seen before it, so that it covers sectors that are crucial to our linked economies, such as financial services. We know that our European neighbours have a stake in this, too, because they do not want European firms to lose access to the City of London’s financial services. Financial stability is important, not only for the UK but for the whole of Europe, which is one reason why we want to reach a deal with the EU on financial services. We will seek to establish strong co-operative oversight arrangements with the EU and will continue to support and implement international standards to safely serve the UK, European and global economy.

Will the Minister stop reading his brief and speak from the heart? I have two sets of workers in Huddersfield. Many people work in financial services for Lloyds, and their jobs are in peril. I also have a large number of people who work in the national health service, and the Government are doing nothing to stop the cruel closure of the Huddersfield infirmary. Will the Minister do something about my financial sector workers and my health workers, with the EU catastrophe arriving soon?

I will follow your guidance, Mr Speaker.

I am delighted that the Government are standing up for every sector of our economy, including the financial services sector. The hon. Gentleman neatly points out that the financial services sector matters not only in the City of London but throughout the country, in constituencies such as his. We will fight for those jobs; unfortunately, every Labour Government in history has destroyed jobs.

Was my hon. Friend as impressed as I was by the new spirit of resolve and optimism witnessed yesterday among senior City figures at the Prosperity UK conference, at which the Secretary of State spoke so inspirationally?

I am grateful for my hon. Friend’s question. Of course we welcome the engagement of so many businesses from across different sectors, including the financial sector, in making this process the greatest success it can be.

20. I hope you will indulge me for a moment, Mr Speaker. When I took my oath, you told me that my voice would be heard in this Chamber, and you have kept your word. You have been a champion for Back Benchers and I thank you for that.At the start of the week, the EU 27 firmed up their Brexit negotiating guidelines and inserted a new paragraph that states:“Any future framework should safeguard financial stability in the Union and respect its regulatory and supervisory regime and standards and their application.” Following this major blow to the Prime Minister’s unworkable plans for a hard Tory Brexit, can we expect to see a change in the Conservative manifesto? (909891)

I welcome the hon. Lady’s question and her focus on financial stability, because, as I said in my answer to my hon. Friend the Member for Wimbledon (Stephen Hammond), we absolutely recognise the importance of financial stability for the whole of Europe, including the UK, and of reaching a deal with our European counterparts. When I met the financial services industry in Scotland to talk about these matters, it was clear on the importance of financial stability, and it was very clear on the vast importance of the United Kingdom market for Scottish financial services.

What assessment has my hon. Friend made of the French Government’s warnings that the City should continue to be overseen by EU regulators?

We recognise the importance of regulatory oversight and mutual regulatory understanding as we move towards a comprehensive trade agreement with the European Union. One thing I have learned while doing this job is the huge respect in which UK regulators are held around the whole of Europe. I think we have some of the best financial regulators in the world.

What assessment has the Minister been able to make of the loss of the European Banking Authority and the impact that it might have on the financial services sector?

The future of European agencies is of course a subject for the negotiations to come, but I have no doubt that the UK will continue to be a global centre both for financial services and for leading the conversation about the regulation of financial services in the years to come.

Financial services are important to the economy in my constituency, and I welcome all my hon. Friend’s comments. Does he agree that it is in Europe’s interests that it should have a good deal here, as it will need access to the City of London? It is not the UK that has a banking crisis at the moment.

My hon. Friend is absolutely right for drawing attention both to the importance of financial services across the whole of the UK and to the fact that this is about the mutual interests of the UK and the EU. We want a deal that works for both, and access to the global leading financial markets in London will be as important for the other side in these negotiations as it is for us.

Last month, the Secretary of State confirmed to the Brexit Select Committee that exiting the European Union on World Trade Organisation terms would mean an end to passporting rights. Does the Minister agree that that would be catastrophic for our financial services sector and all those who work in it? If so, does he agree that no deal is not a viable option for the financial services sector?

As a priority, we are pursuing the most ambitious trade agreement that has ever been achieved with the European Union. Its scope and ambition should be greater than that of any agreement before it. The financial services market access—access for European firms to the UK and access for UK firms to Europe—is hugely important. That is what we are focused on achieving. Let me say to the hon. Gentleman that the position of his party that any deal is better than no deal is an absurdity when it comes to defending the national interests of this country. We need to get the right deal and to be able to say to the other side that if they do not offer us the right deal the UK will manage and take the right steps to protect itself. Of course our focus should be on getting the best deal.

The latest draft EU negotiating guidelines discussed on Monday suggest that financial services will be separated from any agreement on our future trade deal. If the Government cannot secure the safety and certainty of the financial services sector as part of any future agreement, what is their back-up plan?

I say gently to the hon. Gentleman that we do not write the guidelines, but we recognise that financial services will be part of a comprehensive deal. We have talked about a comprehensive free trade agreement, and it certainly has not been ruled out. What the EU has said is that it does not want to do separate sectoral deals—well, actually, nor do we. We want the most comprehensive trade agreement available and we think that that should include services, including financial services.