European Union Bill

My Lords, the previous two speakers eloquently demonstrated the importance of these amendments. They made a passionate plea for a much more sensible and enlightened policy towards Europe. I will deal with one particular aspect: Amendment 23F and the banking crisis. There are two aspects to the current financial crisis in Europe: sovereign debt and bank liquidity. Many continental banks are undercapitalised. They need more rigorous stress tests as a basis for recapitalisation. National regulation and supervision have failed. We need a special EU-wide resolution regime. We need new, more effective European regulation. If we have that, it will of course give new powers to Brussels and that, as I understand it, would trigger a referendum. The question arises: what sort of question would be posed in a referendum dealing with bank regulation? Leaving that aside, it will mean that in the course of negotiations taking place in Europe, when negotiators are being very careful and thinking that they can achieve something without triggering a referendum in Denmark or Ireland, or an adverse ruling of the German constitutional court, our negotiators will have to have regard to the fact that there will have to be a referendum. They will be inhibited and looking over their shoulders: they will be negotiating with their hands behind their back. Since this will be an obstacle to reaching a very important area of agreement, the likelihood is that we will be bypassed. Already we are being bypassed in many important respects. While John Major wanted to be outside the eurozone in a multipolar Europe, it seems that Mr Cameron has more or less accepted that there will be a small but very powerful unit in Europe. We will find that being in the outside lane of a much less congenial Europe is not a particularly effective experience for very important aspects of our economy. I have heard Treasury officials saying that we are now in the same position as Latvia, asking what agreements are being reached in rooms where the important people are meeting. A story was told at a conference I went to about an occasion when Gordon Brown insisted on being present with eurozone Ministers. They said that they would meet him, but the press outside were speculating on how long he would last: would he be out in five minutes? In fact, that was precisely what happened: after hearing him for five minutes, they thanked him, said that they must now have their private meeting and asked him to leave. He could not face the press after five minutes, so he stayed in the lavatory for half an hour. It is not very dignified to be outside the corridors of power. This, however, will be much worse. Obviously there were problems about joining the eurozone, but the regulation of banks will affect the City profoundly, and it will be another case where we are likely to be bypassed.