Leaving the EU: Financial Services

Tom Tugendhat Excerpts

Thursday 3rd November 2016 Commons Chamber

[Tom Tugendhat (Tonbridge and Malling) (Con)]

The clock is back. The excitement! The hare is running!

I should briefly declare an interest. I have at times worked in the financial services industry. I draw Members’ attention to my entry in the Register of Members’ Financial Interests.

Like so many other hon. Members, I am here to talk about financial services outside the capital. I pay tribute to the hon. Member for Leicester West (Liz Kendall), who spoke very powerfully about that. In my constituency, I drive past the Fidelity asset management centre, which is based in Hildenborough and employs nearly 1,000 people. Financial services also support economies such as the legal economy, accountancy and various other innovators. As we have discovered from the success of start-ups in the United States, access to financial services is often a trigger for improvements in the tech sector.

[Robert Neill (Bromley and Chislehurst) (Con)]

I apologise for not being in the Chamber earlier because of Select Committee duties. Does my hon. Friend concede that it is important that we link access to financial services with access to other professional services including legal services, which are critical to building the infrastructure backing up the financial services sector?

[Tom Tugendhat]

My hon. Friend makes an extremely good point and I will let it rest there.

Access to financial services is not just about the financial services industry but about all industries. Finance greases the wheels of the whole economy. It is important that we maintain the access we have in the UK. I therefore urge hon. Members to see Brexit not just as a threat, which sadly so many people do, but also as an opportunity. The United Kingdom used to be extremely good at taking the opportunity to innovate. Too often we have limited ourselves. Many people will look at the potential loss from the eurobond clearing and various other elements, but we should also look at the potential openings in financial technology, where we have already seen such innovations in the UK, to which I hope we agree we can add.

Services here in the UK are built on the foundation of skills that support the current industry and that will support future growth. Tomorrow’s growth will be based on those same skills, which come from a highly educated, highly literate and highly open population of people across our islands, whose languages, ethnicity and cultural links tie them around the world. They are able not only to do deals but to finance and enable entrepreneurs and businesses around the world. That is why I am less concerned than some about the potential closing off in markets in the European Union. We must remember that the EU itself depends on the City of London and that the depth of asset pools in the City gives the industries of Germany, Italy and France a reach they would not get from their own domestic markets. It gives them an opening to other financial sources around the world, including east Asia, that they would not get from Milan, the Paris Bourse or the Frankfurt exchange. I know that the Minister, who is in his place, will see this as a good deal for both parties, as all good deals should be, because the EU and Britain have a common interest.

Having that common interest requires us to remember who we are. It requires us to remember that we, here in the United Kingdom, are in so many ways more than the sum of our parts. We define ourselves not by the nations we come from, but by what we give together. I mean this very seriously. In so many countries in the world, people define themselves as a “something-something”. In the United States, for example, people often define themselves as a Polish-American or an Irish-American. I, who am the son of a French woman, the grandson of an Austrian man and an Irishwoman, do not define myself by that. I define myself as British, as so many people here do. It is that openness and inclusivity that has made Britain the home for so many and the centre for so much.

That is why, when we look at the financial industry, we must not look at it alone, or indeed just consider the legal and accountancy aspect. We should not even consider its enablement of other industries. We should consider the ethos it requires. That ethos is the ethos that we have promoted on these islands for a thousand years. It is one that defines people by the breadth of their experience, skill and knowledge, and not in a narrow sectarian definition of origins or passports. It is much greater than that.

I will leave it there and urge the Minister, as he takes the negotiations forward and sits around the Government table, to see that the financial services around our whole country, particularly in the great kingdom of Kent, are not just a simple route to enrichment, but an avenue to openness, growth and the support of what the UK has always been: a beacon to other nations, an island of safety and in many ways an example to all to enrich all.

--- Later in debate ---

[Joanna Cherry]

That is not what I am actually talking about. I am talking about the way in which European Union law has enabled Scots lawyers, English lawyers and lawyers across these islands to practise across Europe not for their benefit but for the benefit of their clients. That is the point. It is also to the benefit, as earlier speakers pointed out, of the financial services sector and to the British economy in general. This is not naked self-interest on the part of the lawyers. Lawyers depend on their clients to make a living. If lawyers are not able to practise across Europe easily, they will not be able to provide such a good service to their clients. That does not just apply in the financial sector. It covers all sorts of areas, including, very importantly, child and family law.

In Scotland, the Law Society of Scotland will be urging the UK Government and the Scottish Government to argue in negotiations that the current arrangements for lawyers to be able to practise in the European Union should be retained. It would be very disappointing if the only route for lawyers to be able to practise in Europe in future would be to requalify in other EU jurisdictions and go through the cumbersome processes that we have done away with as one of the many benefits of being in the EU.

Clearly, the best way to protect the legal and financial services in my constituency and in the city of Edinburgh is to remain part of the single market. That would be the easiest way to give comfort to those sectors. Of course, we are not able to give any comfort to those sectors, because the Government “do not want to give a running commentary”. However, it appears, as the result of a legal decision today, that the Government may in due course be forced to come to this democratically elected Chamber and tell us a little bit more about what their plans are. It is worthy of comment that that is not as a result of European judges sitting in Brussels, Luxembourg or Strasbourg. It is the result of English judges sitting in London. As a Scots lawyer, I wish to pay tribute to those English judges for the decision they have reached.

[Tom Tugendhat]

Of course, a few judges sitting in Belfast came out with a slightly different decision, as the hon. and learned Lady may be aware.

[Joanna Cherry]

Ultimately, it will be for the Supreme Court of the United Kingdom to decide, and it includes, of course, two very senior Scottish judges. I believe that the Supreme Court has already allocated a few days in December. I read that the full Bench will sit, so the Scottish judges will be there as well. The Scottish Government have said that it is very likely that Scotland will intervene in that case, and I have every confidence that the Supreme Court will reach the right decision.