I was one of the five MEPs on the Parliament’s negotating team (see photo, right, of trialogue negotiations), my chief responsibility being for the creation of the new European Insurance and Occupational Pensions Authority. It was a hard slog. In the end we had around 25 trialogues, which is the technical term for the negotiations. I believe that must be quite near a record!

The reason why the negotiations were so ardeous was that the legislation is so important and far-reaching. The purpose is to prevent another breakdown of communications between national supervisory authorities, as occurred between the UK, Iceland and the Netherlands over Icesave, or between the Belgian and Dutch authorities over Fortis.

I won’t go into all the details on the powers of the new authorities here,  interested readers can find out more at – http://www.europarl.europa.eu/news/expert/infopress_page/042-80951-245-09-36-907-20100902IPR80950-02-09-2010-2010-false/default_en.htm

Suffice to say that all parties came out of the negotiations fairly happy with the outcome. The powers of the new supervisory authorities are concorrent with the roles bestowed upon them. National governments retain ultimate responsibility, as should be the case given that they are the ones responsible to tax-payers for bail-outs. However, the new bodies have enough teeth to help overcome some of the problems witnessed during the last crisis. I am very pleased with the result.

Among the many injustices of George Osborne’s first budget, a particular concern of mine is a proposal that will damage the competitiveness of employers in the South East, just as the region begins to recover from recession. Under the Tory chancellor’s plans, companies in the South East would not be exempt from £5,000 national insurance savings that competitors throughout the rest of the UK will benefit from.

Osborne is wrong to apply a one-size fits all approach to the entire South East region of Britain, which is vast and diverse. The South East is not London, it contains some poorer areas in need of further investment; Thanet for example has unemployment levels of around 9%. Osborne’s plans will damage the South East economy and make its companies less competitive.

The coalition has already begun to impose heavy burdens upon the South East. The suspension of £23m funding to the Kent Thameside Strategic Transport Programme will take away vital funding to the Thames Gateway and the national economy as a whole. The government has turned its back on jobs and growth in the economy and is already cutting vital services, as the Kent police force, which will have to make £20million worth of savings, has found out to the cost of the local community.

Budget not fair and not forward-looking!

More generally the Con-Dem Coalition’s Budget is unfair and relies on non-progressive means to get Britain out of recession. We all know that the debt needs to be cut, but the Chancellor’s plans will impose burdens on those least able to bear them. An increase in VAT will hit pensioners and the unemployed hardest. The huge cuts in public services as welfare will mean that we will soon feel the pinch of the coalition’s cuts.

Another Lib Dem let-down

What else is poignant in all of this is that Lib Dems have been willing participants, not just cheerleaders, to the Tory axeman. Clegg and Cable told us that under the Lib Dems there would be no return to Tory cuts; instead they’ve let down all those people who put their faith in them to deliver a fairer Britain.

Government showing no faith in young people

Depressingly the real losers from the budget will be children and young people; the sad fact is many of them have already lost, witness the swathes of school children now denied free school meals. As well as this the Future Jobs Fund, created with the aim of getting 150,000 young people into work, has been ditched along with child trust funds. For those of us who supported a government intent on eradicating child poverty this budget is depressing reading. The Chancellor has shown that this Government will wield the axe and hope for the best without regard for the future of our young people.

Last week MEPs voted in favour of ambitious reforms of the supervisory framework under which cross-border banks, insurers and fund managers operate in Europe. This included a vote on the establishment of a European insurance and pensions authority (known as EIOPA), for which I am the Parliament’s lead negotiator.

Members of ECON voted to give significant powers and responsibilities to EIOPA, more than I had recommended on the basis of my experience of the insurance industry. Nonetheless I support the Parliament’s ambition to ensure that real change to how we regulate financial services occurs following the financial crisis, and I am now in negotiations with representatives of national governments and the European Commission arguing this point.

Earlier this week MEPs voted on the highly controversial AIFM Directive to regulate hedge funds and private equity. All parties involved agreed that these important parts of the financial system need regulation. However, the poor drafting of the initial proposal and subsequent efforts from some quarters to impose additional measures restricting access to non-European funds or investors led to wide spread criticism of the legislation, particularly from the UK, which is home to the vast majority of such ‘alternative’ funds.

Despite my support for many aspects of the legislation, I was one such critic, particularly of the third country restrictions. I think these restrictions not only amount to a form of protectionism by Europe, but will also reduce investment options for our pension funds, which is ultimately negative for European citizens. As a result I voted in favour of a number of alternative amendments that better reflected my view, and abstained overall on support for the legislation.

As with the supervisory legislation mentioned above, negotiations on the AIFM Directive will now start between Parliament, national governments and the European Commission with the aim of beginning the introduction of the legislation in 2011.

My report was presented alongside similar reports to create authorities for the banking and securities and markets sectors, produced by rapporteurs from the European People’s Party and the Greens. In parallel the rapporteur from the European liberal group presented her draft report on the creation of a European Systemic Risk Board to monitor the potential for macro-economic risks in the European economy.

The four new bodies that will be created will be essential to help monitor the development of potential risks in the European financial system, and take action to prevent them from becoming full-blown crises. In the event that a crisis occurs, the new authorities – it is hoped – will allow for better communication and coordination of responses between national authorities.

While there was some divergence in the exact role and powers to be granted to the new authorities between the rapporteurs, the overall direction of what we want to see achieved is the same: a consolidated approach to the supervision of systemically important financial institutions within the European Union, and the adoption of a single rulebook for financial institutions in all EU Member States. This will allow for greater integration of financial services in the EU, and a more coherent regulatory approach.

Our draft reports will now be considered by other MEPs in the ECON Committee, who will be able to table their own amendments. We hope to have the reports agreed with the rest of Parliament and the Council of Ministers over the summer, so that the new authorities can be up and running by the start of 2011.

My amendments focused on four main areas: 1) ensuring that investment trusts, which have operated for over 100 years and do not present systemic risk, are not needlessly regulated out of existence by the new law; 2) that European fund managers are not prevented from providing services outside of the EU; 3) that there are extra protections for investors by clarifying the split between depositories and fund managers; and 4) developing the concept of proportionality so that smaller funds are not overly burdened by red-tape and restrictions.

The ECON committee will begin the debate over which amendments will be included in the final parliamentary report with the rapporteur Jean-Paul Gauzès (pictured above) on 23rd February. With so many amendments to discuss, it could be a long process.