My Lords, it is impossible to give a definitive estimation of the costs, either direct or indirect, of implementing the financial services action plan as a whole. All individual pieces of European legislation, however, are subjected to a full regulatory impact assessment prior to implementation in the United Kingdom.
My Lords, I am grateful to the Minister for that admission that the Government do not know what the cost will be of this huge financial services action plan. Do the Government accept that London is the biggest and most successful financial services centre, not only in Europe but in the world, which earns the Exchequer about £40 billion a year? Do they further accept that the 22 directives in the financial services action plan risk fatally undermining London’s competitive edge? If they do, will they seek a derogation from those directives to maintain London’s global supremacy in financial services?
My Lords, we will not seek a derogation because we are busy signing up to the directive. We are doing so for exactly the reason identified by the noble Lord. Of course the financial sector in the City is of great importance. It accounts for around 7 per cent of the UK economy and more than 1 million UK jobs. It is because of that strength that we think the City will benefit from the more open market in finance which will result from the action plan. We see the City as poised to reap success from it in due course.
My Lords, does the Minister accept that, while the City would agree that it stands to benefit from the move towards a single market in financial services across Europe, there is a widespread view that neither the Treasury nor, more important, Treasury Ministers have taken the matter sufficiently seriously? Will he, first, urge his colleagues in the Treasury to devote more resources to this area, which has huge implications for the success of the City, and, secondly, ensure that senior Ministers turn up on time and stay until the end of relevant meetings so that the City’s concerns are not underrepresented in Brussels by the Government?
My Lords, I was on the brink of agreeing wholeheartedly with the noble Lord in the first part of his question, when he asked us to take this issue very seriously against a background of how important it is for the City and the wider economy. He quotes one instance when, for very important reasons, a Minister was not able to stay the course at a meeting. That was several years ago, and I do not think the House benefits from raking over old history, which we indicated at the time would not be repeated.
My Lords, is the Minister not rather too sanguine about yet another imposition of regulation from Brussels? The Dutch Government did a survey of the total cost to the Netherlands of EU regulations over the past 20 years, and found that it came to 6 per cent of its GDP. If we take a much lesser figure and say that EU regulations have cost us 2 per cent of our GDP, the amount is around £20 billion a year, much of it on excessive and unnecessary regulation. Should we not be a little more careful about accepting some of these diktats from Brussels and put our own interests first on occasion?
My Lords, we certainly put our own interests first. I reassure the noble Lord that we are addressing strongly the necessity for better and more limited regulation from Brussels. We are aided by the fact that the Commissioner for the Internal Market and the Commissioner for Competition, both of whom are coming to London on 20 February to discuss these issues in the Treasury, are also convinced that an excessive number of directives harms European economies and the cause of Europe. They are fitting rather more into the British perspective on these issues.
My Lords, is my noble friend aware that the United Kingdom does not have just one successful financial centre and that Edinburgh is also a thriving financial centre and probably one of the only serious competitors to London? However, does he agree that the future of the city of Edinburgh, the Royal Bank of Scotland and all the other excellent developments taking place would be put in serious jeopardy if the Scottish National Party took over in the Scottish Parliament and broke up Britain, with all the consequences that would have, not just for Scotland but the whole United Kingdom?
My Lords, the Minister will recall that late last month we debated the Markets in Financial Instruments Directive, which is just one part of the financial services action plan but which cost probably £7 billion or thereabouts. We were told at that stage that only the United Kingdom and Romania would meet the transposition deadline of the end of January. What will the Government do to ensure that, if we go through the pain and cost of implementing these directives, our European colleagues do the same?
My Lords, there is every indication that the serious large economies in Europe intend to do the same, although they are moving more slowly than we are, but if the United Kingdom and the City of London cannot lead with confidence in this area, which financial sector could?
My Lords, when the Minister says that all EU regulations have an EU impact assessment attached to them, does he understand that some of us do not see the point if he cannot answer this Question? Could I help him by asking whether he is aware of the recently published Open Europe study, which finds that the transposition costs alone of these 22 directives will amount to £23 billion over the next three years and that the opportunity costs of the City migrating overseas are literally incalculable?
My Lords, I wondered where Open Europe originated from, and now I have an element of affinity with regard to cost. No one could answer the Question on the costs sustained in the development of the financial market. We do not know the rate of its development or the transfers that will occur. We are conscious that it puts the City of London at the centre of a much more open market. The City has proven itself to be supremely competitive under existing conditions; here is an opportunity for it to do even better.