European Union (Withdrawal) Bill - Committee (6th Day) (Continued)

– in the House of Lords at 7:34 pm on 12th March 2018.

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Amendment 90

Moved by Lord Hope of Craighead

90: Clause 7, page 6, line 25, at end insert—“( ) modify the Scotland Act 1998 without the consent of the Scottish Parliament, or( ) modify the Government of Wales Act 2006 without the consent of the National Assembly for Wales.”

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

My Lords, three amendments in this group are in my name: Amendment 90, which relates to Clause 7; Amendment 130, which relates to Clause 8; and Amendment 148, which relates to Clause 9. They all raise the same point about the extent of the delegated powers given to Ministers of the Crown by these three clauses. The context is the way in which exercise of these powers may affect the devolution settlements for Scotland, under the Scotland Act 1998, and for Wales, under the Government of Wales Act 2006 and the Wales Act 2017. I am obliged to the noble Baroness, Lady Suttie, for her amendments introducing the position of Northern Ireland in exactly the same terms as my amendments.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government)

Before the noble and learned Lord, Lord Hope, proceeds, it may be of benefit to the House if I now confirm that the Government will bring forward amendments on Report to apply the same protection for the Scotland Act and the Government of Wales Act to the Clause 7 correcting power that applies to the Northern Ireland Act. I will speak about that more at the end of the debate. It may also benefit the House to note that the Government have tabled an amendment to Clause 11 —as I am sure noble Lords are aware—that reflects the significant offer we have made on that issue to ensure that the House can debate the offer when we reach that clause, just as we promised to do in the other place.

Photo of Lord Adonis Lord Adonis Labour

Since he has started speaking, would it not be better for the noble and learned Lord, Lord Hope, to speak fully now and tell us what he was going to say? That would give us much more to respond to and might indeed shorten the debate.

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

I am very grateful to the Minister for his intervention and for the indication that he has given. My amendments extend to Clauses 8 and 9; what he has said is an indication of the way the Government are minded to go on Clause 7, but I must introduce my amendments in relation to Clauses 8 and 9 as well.

The provision relating to Northern Ireland, to which the Minister referred, is what we find in Clause 7(7)(f), which indicates that,

“regulations under subsection (1) may not … amend or repeal the Northern Ireland Act 1998”.

That provision is then substantially qualified in a way one can only understand by reading through the schedules. I am not clear whether the Minister is proposing that the Scotland Act and the Government of Wales Act should be qualified in the same way, but if he intends to qualify them, my amendments are unqualified. It is therefore appropriate for me to explain why my amendments are in the terms they are. Perhaps the noble Lord, Lord Adonis, will appreciate why I need to set this matter out in a little bit of detail and explain why I have brought the amendments forward.

As we have seen, these three clauses confer a very wide power on a Minister of the Crown to make provisions by regulations. That includes a provision to which attention has not been drawn until now, but which is certainly relevant to the amendments in this group: a Minister of the Crown may make a regulation of the same kind that could be made by an Act of Parliament. We find that in Clause 7(5), Clause 8(2) and Clause 9(2). I need not go over what these clauses deal with but, broadly speaking, in Clause 7 the power is to enable a Minister to deal with,

“any other deficiency in retained EU law, arising from the withdrawal of the United Kingdom from the EU”.

In Clause 8, the power is to enable a Minister to,

“prevent or remedy any breach, arising from the withdrawal of the United Kingdom from the EU, of the international obligations of the United Kingdom”.

In Clause 9, it is a wider power to enable the Minister to,

“make such provision as the Minister considers appropriate for the purposes of implementing the withdrawal agreement if the Minister considers that such provision should be in force on or before exit day”.

Each of these clauses is limited in some respects by saying that regulations made under them may not do certain things. The Committee has heard about that in earlier debates today, such as in relation to sentencing, the creation of criminal offences and so on. These amendments seek to add two further limitations. One is that the power under these three clauses may not be used to modify the Scotland Acts and the government of Wales Acts without the consent of the Scottish Parliament or the National Assembly for Wales, as the case may be. As I mentioned earlier, the noble Baroness, Lady Suttie, is seeking to make similar provision in relation to Northern Ireland. Amendment 148 goes a little further than that: it builds in an additional provision relating to the Ministers of the devolved institutions. These are the subject of the group after next, which we will come to later this evening. I will not develop that aspect until we get to that group.

The scale of the transfer of legislative competence to Ministers of the Crown, provided for by these clauses, raises concerns of a fundamental nature. This is not only about the balance of power between Parliament and the Executive, as the Constitution Committee pointed out in paragraph 158 of its report, it also raises concerns about the balance of power within the union and the future of the devolution settlements themselves, referred to in the same report at paragraph 243. Some of what I will be saying in a moment will be directed only to the Scotland Act, but it should be understood as applying equally to the Government of Wales Act and the Wales Act, which are referred to in my amendments.

As I understand the wording of these clauses, if they are left as they are the powers could be used to change the constitutional balance of powers between the UK Government and the devolved institutions which the relevant devolution statutes set out. An aspect worth stressing is the width given to the meaning of the word “deficiencies” in Clause 7. We see it set out at length in subsection (2), supplemented by subsection (3). It is extremely wide and can be widened still, as we can see, given the power in subsection (3). The provisions in Clause 7(6) are about the transfer of functions from EU entities or public authorities in member states to public authorities in the United Kingdom, which would, of course, include public authorities in the devolved areas of Scotland and Wales.

The Committee needs to bear in mind the points made by the noble Lord, Lord Wilson of Dinton, in his speech last Wednesday morning about the width of Clause 7; the meaning to be given to the expression “Minister of the Crown”; and the numbers of people who could be embraced by that expression. The point which was of particular concern to me in the amendments in this group is that the power includes a power to make any provision that can be made by an Act of Parliament. I appreciate that the provision in Clause 7 is time limited. This is also true in the case of Clause 8. In Clause 9, the power is not exercisable after exit day. Nevertheless, as these clauses stand, and while they continue to have effect, it would be open to a Minister of the Crown to modify the Scotland Acts and government of Wales Acts in a way that, as I mentioned earlier, could shift the constitutional balance, and to do so without even consulting the Scottish Parliament and the National Assembly for Wales, let alone obtaining their consent.

A particular part of the Scotland Act which is quite vulnerable to an inadvertent amendment without that process of obtaining consent is the detailed wording of Schedule 5. I was involved, as was the noble and learned Lord, Lord Mackay of Clashfern, in considering the Bill which gave rise to the Scotland Act 1998. We sat until late in the night—indeed, early in the morning—dealing with that Bill and went over Schedule 5 in some detail. It has survived very well over the years since devolution, but it contains considerable detail which could be adjusted a little. That would alter the balance between the UK Government and the Scottish Government in a way that should not be done without the consent of the Scottish Government.

I appreciate that Ministers may say that it is not their intention to modify the Acts in this way, but it is well known that there is a high degree of mistrust between the devolved institutions and the UK Government about where this legislation is going. Personally, I regret that but, from a Scottish point of view, the reason is not hard to find. As one reads through these clauses, and looks at them from the approach of the Scottish Minister, or the Scottish Parliament or, indeed, a lawyer who has dealt with the devolution system since it first came in, it is striking that—apart from Northern Ireland—there is simply no mention in these three clauses of the fact that there are devolved Governments in Wales and Scotland that need to be considered. That aspect causes one some alarm as soon as one begins to read through the Act. It would be desirable to do something about it, if one possibly can. That is why I welcome what the Minister said when I began my speech.

Coming back to the power to provide by regulation something that could be done by an Act of Parliament, one is immediately drawn to thinking about the Sewel convention. If the modification which is being proposed were to be the subject of a Bill coming through both Houses in this Parliament, that convention would come into play and, in accordance with it, a question would be asked about whether the consent of the Scottish or Welsh legislatures should be obtained. The convention does not apply to delegated legislation, only to primary legislation. The power which is being given by these clauses enables Ministers to bypass the Sewel convention. No doubt that is not their intention, but that is the way it may seem to be from the standpoint of the devolved institutions. That is a reason for regarding these clauses with some concern and suggesting to the noble Lord that Ministers ought to consider very carefully how they can deal with the principle of the Sewel convention in a way that gives comfort to those who are concerned that the convention and the principle behind it might be breached.

The noble Lord has said enough about Clause 7 for me not to have to go into any further detail about it, except to draw his attention to the need for clarification about how he proposes to word the provisions in relation to Scotland and Wales, given the way Northern Ireland is dealt with in Clause 7(7). Clause 8 deals with the possibility that something may need to be done to prevent, or remedy, any breach of the UK’s international obligations arising from the withdrawal. At first sight it might seem that, since international relations are reserved by paragraph 7 of Schedule 5, there is no need to make any provision in Clause 8 for the devolved institutions. However, so far as Scotland is concerned, paragraph 7 is qualified by a sub-paragraph that I will read out in full. Sub-paragraph (1) having provided that international relations are reserved matters, sub-paragraph (2) goes on to say:

“Sub-paragraph (1) does not reserve—(a) observing and implementing international obligations, obligations under the Human Rights Convention and obligations under EU law”.

The effect of that provision is that observing and implementing international obligations are not reserved and are, therefore, matters for the devolved institutions to deal with as needed.

It is a curious feature of the Bill that there is no attempt to amend the reference to EU law in paragraph 7(2)(a). I may be unduly suspicious but it looks to me as though that provision has been overlooked by those who have drafted the Bill because throughout the Bill, so far as I can see, every other reference to EU law is the subject of a reference to retained EU law, but I cannot find any attempt to amend paragraph 7(2)(a) to the same effect. That suggests to me that whoever drafted Clause 8 has not really appreciated that there is that qualification in paragraph 7(2) of Schedule 5, and has certainly not assessed its effect on the balance of responsibilities between the UK Government and the devolved institutions.

The point is that in a case where there is this division of responsibility between the UK Parliament and the devolved legislatures, it would be sensible, to say the least, to make some provision to recognise the possibility that we are dealing in a given case with a question of observing and implementing the international obligations, not just entering into and giving effect to the relations with the international and foreign bodies. It is the fact that these provisions are related to each other in this carefully constructed balance of settlement that requires attention and is the justification for the amendment I seek to make to Clause 8.

I appreciate that Clause 9 deals with the need to make provisions for the purpose of implementing the withdrawal agreement before exit date. But here again, given that so much of what it may be necessary to look at is devolved, it would be appropriate, if one is to respect the constitutional balance, to make provision in the same way, so that any amendment of the Scotland Act should not be done without the consent of the Scottish Parliament.

I hope I have said enough to indicate to the noble Lord that there is more to this than Clause 7, and there is more to this, particularly with regard to Clause 8, than might have appeared at first because of the provision which I suspect may have been overlooked in paragraph 7(2) of Schedule 5 to the Scotland Act 1998.

Without developing the point further at this stage, for these reasons I beg to move Amendment 90.

Amendment 91 (to Amendment 90)

Moved by Baroness Suttie

91: Clause 7, at end insert—“( ) modify the Northern Ireland Act 1998 without the consent of the Northern Ireland Assembly.”

Photo of Baroness Suttie Baroness Suttie Liberal Democrat Lords Spokesperson (Northern Ireland)

My Lords, in moving Amendment 91, I shall speak to Amendments 131 and 149 in my name. The noble and learned Lord, Lord Hope, has set out in great detail what his Amendments 90, 130 and 148 in this group seek to do, so I shall be extremely brief. My Amendments 91, 131 and 149 seek to achieve the same aims as those amendments but for Northern Ireland.

Sadly, despite several false dawns, well over a year has now passed since there was a functioning power-sharing Executive in place in Northern Ireland. This means that it is now well over a year since the formal mechanisms have been in place to ensure that the voice of the Northern Irish people is heard through the Executive and the Assembly. It should be recalled that the majority of people in Northern Ireland did not vote the same way in the referendum as the Government’s partners in the DUP. Whereas the Scottish and Welsh Governments have been able to make clear their very deep concerns about the EU (Withdrawal) Bill, there has been no joint position on matters relating to Brexit since the joint letter from Arlene Foster and Martin McGuinness back in August 2016.

If the Minister agrees with the proposition from the noble and learned Lord, Lord Hope, that it is inappropriate for regulations under Clauses 7, 8 and 9 to make changes to the Scotland Act 1998 or the Government of Wales Act 2006 without the consent of the Scottish Parliament and the Welsh Assembly, he must also agree that it would be inappropriate to make changes to the Northern Ireland Act 1998 without the consent of the Northern Irish Assembly. Does the Minister acknowledge the principle that Ministers in Westminster must not encroach on the devolution settlements without the consent of the appropriate devolved Parliament or Assembly? In previous debates, the noble Lord, Lord Duncan, has made much of “not ruling anything out”. There are elected Members in the Northern Ireland Assembly and in the continued absence of an Executive, is thought now being given to how these MLAs might be effectively involved in this process?

Finally, can the Minister say how the Government intend to deal with Northern Ireland in the context of the Bill, in the possible continued absence of an Executive and Assembly, how they would make the Bill fit for purpose were an Executive to be formed, and how they would ensure that the powers provided for in the Bill are appropriate for the very specific circumstances in Northern Ireland? I beg to move.

Photo of Lord Adonis Lord Adonis Labour

My Lords, the Minister unusually intervened at the beginning of the speech of the noble and learned Lord, Lord Hope, to say that he had some significant announcements to make in respect of Scotland and Wales and Clause 7. I assume he also meant Clause 8, but it was not clear. Given that this debate will be precisely on what the terms of Clauses 7 and 8 should be in respect of the devolution settlements, may I suggest that it would be fitting if the Minister made his announcements on the Government’s intentions now, and then noble Lords can respond afterwards? He has already told us that he intends to make such announcements and it would be ridiculous to have a big debate only for us to learn of the Government’s intentions after we have spoken.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government)

My Lords, I am most grateful to the noble Lord for giving way. I thought I was explicit that my remarks concerned only Clause 7, but I thought that was still significant because, clearly, that is a large part of the debate. I wanted to make it clear at this stage that we have moved significantly on Clause 7, but there is still an issue to be addressed in relation to Clause 8, and, I believe, Clause 9.

Photo of Lord Adonis Lord Adonis Labour

My Lords, what does the noble Lord mean by “moved significantly”? For those of us not initiated into the intricacies of this, what does he intend to do?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government)

I seek to indicate that I can confirm that the Government will bring forward amendments on Report to apply the same protection to the Northern Ireland Act as to the Scotland Act and the Government of Wales Act. This means that all the changes we are proposing—bar one, I think, in relation to technical standards, but even that we will be able to spell out in relation to the Bill—and all the powers in relation to corrections will be in the legislation when we get to Report. We will table amendments on Report so that the correction power in Clause 7 will not be necessary. It will be in relation only to international obligations in Clause 8 and complying with the exit in relation to Clause 9.

Photo of Lord Judd Lord Judd Labour

On that point, could the noble Lord confirm that the amendments to be brought forward by the Government will make absolutely sacrosanct the principle of the preservation of the Good Friday agreement?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government)

My Lords, I certainly can confirm that but I was going to confirm it, as it were, right at the end of the debate. Clearly, this is fundamental. We are very much wedded to it, as was indicated in December, when there was a meeting with the EU on this issue and as we have stated again and again. I appreciate the point the noble Lord makes. It is important and I can confirm that we will do that.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I wish to speak to Amendments 92 and 93 standing in the name of the noble Lord, Lord Foulkes, and myself. I am sorry that he cannot be here to speak to these amendments, but I understand that it is in order for me to do so.

These amendments would restrict Ministers of the Crown from being able to amend or repeal the Wales Act 2017 and the corresponding Scotland Act using regulatory powers. The fact that these amendments are necessary underlines a perceived disregard the UK Government have for the sovereignty of the two devolved parliaments. If the Northern Ireland parliament were in existence, I am sure there would be feelings along similar lines.

The Bill gives sweeping powers to Ministers of the Crown, with which they can do what they like, including amending and/or repealing the devolution settlements. This was exemplified last Friday 9 March, when, despite no agreement being reached at the JMC (EN) meeting on the status of powers being repatriated from Brussels, the UK Government pushed ahead and published their framework analysis. This was essentially a list of devolved areas of policy that the UK Government will take over themselves—I will not list them or go into that, because they will mainly come under Clause 8, as the noble Lord, Lord Bourne, mentioned a moment ago.

Under the EU (Withdrawal) Bill, the UK Government will have the right to take control of any of the items on the three lists that have been published which I have seen. The publication of the categories demonstrates that the threat is most immediate in key devolved areas such as agriculture, GM crops, fishing, environmental policy, public procurement, food standards and a range of other areas. Unless the Bill is changed drastically, Westminster could soon be in control of these policy areas, which would confirm many of the worst fears felt in the National Assembly for Wales and in the Scottish Parliament. It has been described as a “major power grab”, and it is feared that it is rewriting the devolution settlement that the people of Wales voted for quite decisively in 2011. I am further alarmed to see the powers included in the second category, which the Government say are reserved and would therefore in their view not even require consultation with the Welsh Government. These include geographic food indicators and state aid, which, I have no doubt, the Economics Minister in the National Assembly will have opinions about.

What happens to any devolved power relating to Wales must be a matter for the National Assembly for Wales. There may well be certain policy areas where it makes perfectly good sense to have a UK-wide framework—for example, on the environment, on which I proposed an amendment myself only last Wednesday, and which was welcomed by the Opposition Front Bench. The Government themselves saw the sense of having framework agreements that are agreements, so that the three or four Governments come together and agree a matter, the solution not being imposed on them by Westminster. This must be a matter for the Welsh Assembly to decide in conjunction with the UK Government, not the UK Government laying down entirely what is essentially a central diktat on such matters. Parties in the National Assembly, including my own, Plaid Cymru, are not opposed to working together on joint frameworks in some areas, but they have been given no assurance at all on how the frameworks will operate, who will make the decisions about them and how AMs will be able to ensure that Wales’s interests are properly protected.

Incidentally, aspects of this list contradict what the noble Lord, Lord Callanan, said in response to my intervention last week on agriculture. Agriculture is one of the most prominent policy areas on this framework analysis, yet the Minister told me that the agricultural Bill, which will be forthcoming, will be England-only, and that,

“Scotland, Wales and Northern Ireland will be able to pursue their own policies in this regard—which is another benefit of Brexit”.—[Official Report, 7/3/18; col. 1156.]

That benefit of Brexit did not survive more than five days, as agriculture clearly is not being left to the Scottish and Welsh Governments in the way that was implied by the Minister last Wednesday evening.

We have something approaching an utter shambles in these matters. The Government should never have got themselves into such a tangle, and it must be the duty of Parliament to save the National Assembly for Wales, the Scottish Parliament, and, I hope, the Northern Ireland Assembly, from the folly of the Government’s approach. There are possible solutions, without having the sort of diktats which the amendment moved by the noble and learned Lord, Lord Hope, and my amendment address, and which we will come on to in Clause 8. However, the Government have not reached out in a way that carries people with them and which enables there to be agreement by willing partners rather than to have solutions imposed upon them.

Photo of Lord Morris of Aberavon Lord Morris of Aberavon Labour 8:00 pm, 12th March 2018

My Lords, I support the amendments in the name of the noble and learned Lord, Lord Hope, and I am grateful to him for the careful way in which he has gone through each of them. I do not propose to do that myself, but I will address the broad issue that the Bill as it stands alters the balance on devolution.

Once granted, devolution cannot be taken away. We had a royal commission and two Acts, and for more than 30 years I played a small part in ensuring that eventually we got there. We have got there, and there is no going back. However, the Bill alters the balance, and finance is involved as well. I mention that in passing. The Barnett formula now is based on population. The grants that agriculture and the environment get from Brussels are based not on population but on need, so that will be the fundamental change if the Bill stands unamended. It goes to the very heart of the matter. I was grateful to the noble Lord, Lord Bourne, for indicating to me today that he was minded to bring forward some amendments, but are they of very great importance? We cannot say until we have seen them. However, something more important is at issue.

There have been conversations between the Westminster Minister—the Chancellor of the Duchy of Lancaster, as I understand it—the Welsh Assembly and the Scottish Parliament. There has been no agreement. I understand that they are getting closer to each other, but this should have been done a long time ago. The promise was made in the other place—the Scottish Secretary made a commitment on behalf of the Government that it would be amended by Report in the Commons. We are now almost on Report in the Lords, but still we have had no agreement from either of the devolved Governments or any indication of what kind of amendment will be forthcoming.

I dealt with the issue of legislative consent in some detail in my short speech on Second Reading. Legislative consent had to be dragged out of the Government. The Whitehall departments have yet to take devolution seriously. I still have the bruises of many years’ campaigning to persuade each one of them that devolution, following the royal commission, was inevitable. Eventually, after a long time, we won. However, I still believe that there is an inherent objection in the Westminster departments to devolution at all. We had an indication from Stephen Crabb MP, the former Welsh Secretary, when he addressed the Welsh Conservative Party conference, saying that,

“we still have to get the cabinet secretary to put pressure on departmental permanent secretaries to take devolution seriously”.

That is why there has been this foot-dragging, why there has not been an agreement, and why there has been this resistance to bringing forward a proposal that would ensure to all of us that we will not go back on devolution.

On 21 June last year, on the issue of legislative consent, the Prime Minister said: “There is a possibility” —those were her words—that,

“a legislative consent motion may be required by the Scottish Parliament”.—[Official Report, Commons, 21/6/17; col. 62.]

The next day, the Leader of the Commons kicked it to touch, and a few days later, the noble Lord, Lord Bourne, kindly affirmed in this House that they would seek legislative consent. That is an indication of the way in which the Westminster departments have not been able to take devolution seriously. That is why the joint letter from the two First Ministers of the Assembly and of the Parliament says that they would not give legislative consent to the Bill in its present form. That is an alarming position, and we are still not clear whether legislative consent, which is now politically necessary, will be given at all.

On 14 September, the Minister, Mr Skidmore, wrote to the noble Lord, Lord Boswell, of this House:

“We will continue to engage the devolved administrations as we seek to deliver an EU Exit approach that takes proper account”,

of the devolved and interested parties. We still await that agreement. It had not been reached last Thursday, when I discussed the matter with the counsel for the Assembly, or this morning, when I discussed it with the person I speak to in the Welsh Assembly in Cardiff. We still await it—although there is more confidence now that there is hope on the horizon.

Perhaps I may set out briefly my objections to the present proposals in the Bill. First, it freezes existing law at the point of exit, and only UK Ministers appear to be allowed to unfreeze it, even in areas clearly within the competence of the Assemblies and the Parliament, such as agriculture and the environment. I hark back to what I said earlier about the Barnett formula and the finances. Is that the reason?

Secondly, UK Ministers will be able to amend legislation within the competence of the Assembly without being answerable to the Assembly, explaining what they are doing and why. That does not seem democratic to me.

Thirdly, the clauses would allow Ministers of the Crown to amend legislation within the legislative competence of the Assembly and Parliament and to amend legislation in respect of which Welsh Ministers may also exercise functions under Schedule 2 or under existing powers. This could extend to amending legislation passed by the Assembly. That is the legal position which has not been faced. It is what this Committee should now consider and get some kind of response on from the Minister. I know that there were many speeches to be answered at Second Reading but there was no response at all to some of the fears that I expressed then and repeat now. I hope that at the end of this debate there will be an answer to each of these points.

Any regulations made by a Minister of the Crown would be scrutinised by the UK Parliament rather than by the Welsh Assembly, even if the law in question contained provisions relating to devolved subjects. That is a horrific scenario and goes well back on the devolution settlement.

One specific piece of advice that I received astonished me and I hope it is wrong. If it is not, I enjoin the Minister to correct it. I am told that these powers could also be used to amend the Government of Wales Act without any requirement for the Assembly’s consent. If my advice is right and that is correct, we are certainly going back on the settlement. We are going back on 30 or 40 years of campaigning; we are going back on the recommendations of the royal commission; and we are going back on what was agreed in two Acts of Parliament—one in 1998 and one in 2006—and by referenda in each country.

Therefore, I hope that on this occasion, unlike at Second Reading, we will have some reply and some indication of where we are going, and that the balance of devolution, which many of us have fought for all our lives, will not be reversed.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I have added my name to Amendments 90, 130 and 148. I am most grateful to my noble and learned friend Lord Hope for introducing the amendments in meticulous detail.

I heard the Minister speak about a correcting power in relation to Clause 9 but unfortunately I did not hear the words “legislative consent”. In the Government of Wales Act there is a principle of legislative consent from the Assembly, and that is important when powers change and when legislation comes from Westminster with a direct effect on Wales. I am no lawyer and I hesitate to speak following two such knowledgeable lawyers as my noble and learned friend Lord Hope and the noble and learned Lord, Lord Morris, and the very informed opinion of the noble Lord, Lord Wigley, but I believe that the volume of amendments tabled on this issue and the strength of feeling show both the deficiencies in the Bill as drafted and the deep unease that the Government’s efforts to appease the concerns appear to have been left until the 11th hour. That is a tremendous shame for the operation of the whole of the UK going forward.

As it stands, it seems that the passing of this Bill could mean that Brexit becomes a conduit through which legislative competence is repatriated slowly— as the thaw occurs, after time—from the devolved Governments in Wales and Scotland back to Westminster. In the words of the First Minister of Wales and the First Minister of Scotland, this Bill appears to be a “naked power grab”. It does not return powers from the EU back to the devolved Administrations, as promised; it returns them solely to the Government and Parliament, and freezes them, and it imposes new restrictions on the Scottish Parliament and the National Assembly for Wales.

I am most grateful to the Minister for the time he spent with me recently in a one-to-one meeting at which he allowed me to express my concerns. I would have hoped that the Clause 7 changes would allay those concerns but I remain to be convinced by what he says in reply. Clause 7 provides Ministers with the power to use statutory instruments where they consider it appropriate to amend legislation in which deficiencies are apparent. These powers extend to legislation which is within the competence of the devolved Administrations and even legislation which has not been passed by the devolved legislatures, yet with no involvement from anyone within those institutions.

As the Parliamentary Under-Secretary of State for Exiting the European Union stated in the House of Commons on 6 December, a number of references in the provisions of the devolution statutes will not make sense once we leave the EU and will need correcting to ensure that our statute book continues to function. Therefore, I ask the Minister to define what the Government view as a deficiency or how far an appropriate measure would extend beyond reassurances that such powers would be used only to correct technical changes. Given the wide interpretability of the Bill’s terminology and the exclusive unchecked right to amend legislation promised by the powers that the Bill appears to embed within it, there are real fears that the Government could exploit these powers to amend policies rather than merely to correct technicalities as promised.

I note that a similar provision already exists for Northern Ireland, and the omission of the other devolved Administrations is therefore all the more confusing. If the Government are sincere in their assertion that they intend to use the powers in the Bill merely to correct technicalities, why would they restrict such a proposal or consider it unnecessary? Amendment 90 seeks to ensure that the Government act in line with the terms of the Scotland Act 1998 and the Government of Wales Act 2006. This would mean that if they attempted to amend powers, they would have to seek the consent of the respective devolved Administrations before being able to proceed. The Government’s reluctance to date on this principle has unfortunately fuelled fears that they are not being transparent in their stated intentions for the powers supplied by Clause 7, even when it has corrections inserted. To correct deficiencies, the Government should start with legislation over which they have retained powers.

I turn to Clause 8, where the same problem is evident in relation to international obligations arising from the Bill. As things stand, the Government could amend legislation which underpins the settlements in Scotland and Wales or interfere in areas of devolved competence. Amendment 130 would oblige the Government to follow the consent procedure that we proposed in relation to Clause 7. I am afraid that the assurances we have had to date—that the Government will pursue powers only to correct technicalities rather than substantively to alter devolved policy—are inadequate. We need concrete examples of the kinds of breaches of our international obligations that could be prevented or remedied by UK legislation without the consent of the devolved Administrations. Although it is true that there are existing powers to ensure that the devolved Administrations cannot obstruct the implementation of international agreements, it is quite a different thing for UK Ministers to make changes to devolved law to achieve their aims. It almost feels like the difference between making sure a driver understands the Highway Code and seizing the steering wheel from the passenger seat.

The final amendment in this group that I will speak to is Amendment 148 in Clause 9, which covers the implementation of any withdrawal agreement with the EU. Clause 9 as currently drafted gives Ministers unchecked powers to amend devolved legislation. Both the Welsh and Scottish Governments published legislative consent memoranda in September expressing profound concerns about this part of the Bill. The Welsh legislative consent memorandum stated:

“Those powers could … be used to amend the Government of Wales Act 2006, without any requirement for the Assembly’s approval”.

The Scottish equivalent said that,

“UK Ministers would have the sole power to make corrections to law in devolved areas”.

Unfortunately, the Government’s reassurances have not allayed these concerns to date.

We have been told that the Bill will freeze in UK law EU legislation to date and that the devolved competencies will remain unchanged. But what happens when the freeze begins to thaw and a range of conflicts arise over where responsibility lies because things have moved on? Let me remind the Committee that we have already seen such difficulties. Who, for example, is responsible for dealing with asbestos in schools? That remains unresolved. The plastic bag levy in Wales was implemented with imaginative thinking by the Welsh Government. We cannot pretend that devolution has been free of constitutional conflict. It will re-emerge.

I know the deep dives that have taken place in, if I recall correctly, 27 areas, and the Minister said that in 23 areas these have been completed and are revealing some details, which may be very small, that need resolution. The current round of meetings to discuss and agree frameworks, together with the existing intergovernmental Joint Ministerial Committee process, is important but not sufficient to overcome such hurdles. As the Lords Constitution Committee argued,

“executive assurances about how statutory powers will be exercised are no firm basis on which to legislate. Constitutionally speaking, they are no proper substitute for clarity in the statutory provision”.

It is to achieve clarity for the future that these amendments are crucial. I fail to understand why the framework we already have—of legislative consent—cannot simply be carried over and applied across the piece.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 8:15 pm, 12th March 2018

My Lords, I support Amendment 130, to which I have added my name, and will satisfy the Committee’s curiosity as to why I have done so. I am a non-practising member of the Faculty of Advocates and have the lesser distinction than the noble and learned Lord of serving as a Bar apprentice with the firm of Simpson & Marwick as part of my training. I also made my maiden speech in the other place on the Scotland Bill as it was going through its various stages. I simply want to support everything that the noble and learned Lord, Lord Hope, has said in speaking to this amendment. This is of course a cause of great concern to the Scottish Parliament, which I understand debated this very issue with a number of practitioners, including a leading practitioner from the Law Society of Scotland, and a number of academics last Wednesday in its Finance and Constitution Committee.

I listened very carefully to what my noble friend the Minister said in seeking to satisfy the Committee this evening that we should desist from supporting this little group of amendments because the Government are coming forward with an amendment at Report. If that is the case, I urge my noble friend the Minister to share with the Committee this evening the full contents of that amendment. The noble and learned Lord, Lord Hope, has accurately identified the issues at stake, and anything that might jeopardise the fine balance achieved under the devolution agreement and the Scotland Act—I wish to speak only to Amendment 130 —would be regrettable.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My understanding is that the government amendment to Clause 11, which we will come to in due course and which was promised for Report stage, has in fact been tabled today and is public property. It is a nine-page amendment—I have seen a copy of it. Therefore, I think the Committee should have that information available to it.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

I am most grateful to the noble Lord. Perhaps it is my fault but I have not been able to access a copy of the amendment; as we conclude this debate, it would be very helpful to have the contents of it. For now, I support the amendment standing in the name of the noble and learned Lord, Lord Hope, and others. I hope that the Committee will persist with this little group of amendments.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, this Bill gives UK Ministers powers to make statutory instruments that would include the power to amend the founding Acts of devolution without requiring the consent of the Welsh Assembly, the Northern Ireland Assembly or the Scottish Parliament. These powers could be used in relation to policy areas, as noble Lords have said, that are the responsibility already of Welsh Ministers, Northern Ireland Ministers and Scottish Ministers. The assumption is that the UK Parliament would legislate to alter their powers. Obviously, there may be times when this is pragmatically acceptable, but what is not acceptable or reasonable is that, under the provision as drafted, the Welsh Assembly, the Scottish Parliament and the Northern Ireland Assembly are not required to give their consent.

I wish to speak simply and briefly, referring specifically to my experience as a Wales Office Minister, as a Member of the Welsh Assembly for 12 years, as a Minister in Wales and as a Minister for Northern Ireland in this House. It is safe to say that I have seen it from both ends of the telescope. It has been unthinkable from the start of devolution that UK Ministers would progress in these circumstances without the consent of the devolved Assemblies and Parliament. It has been an early-established principle of devolution that that did not happen. There has on occasion been sabre-rattling but it has not happened because that principle was established.

I am pleased to see the amendments of my noble friend Lady Suttie in relation to Northern Ireland because we are in danger of behaving as if the phase of devolution in Northern Ireland has passed. It is important that the Bill caters for the resumption of devolution in Northern Ireland.

I am pleased to hear from the Minister that the Government are planning changes. However, I know that he has too much respect for devolution to be happy with the situation in which he finds himself today. It is a muddle, a mess, and almost provocative. I certainly would not for one second lay this at the Minister’s door, but it is almost provocative to leave it to the last minute so that, effectively, the opportunity for government amendments in Committee has been lost. I am sad that we are in this situation because it is becoming increasingly negative, when we could go forward in a positive manner. I have tremendous respect for the Minister, his experience and his belief in devolution; I hope his replies will reassure us.

Photo of Viscount Hailsham Viscount Hailsham Conservative

My Lords, my intervention will be extremely brief. I was entirely persuaded by what the noble and learned Lord, Lord Hope, said. To allow the Westminster Parliament to interfere with the constitutional settlements already agreed without the consent of those constitutional Parliaments or Assemblies is a recipe for disaster. It will stir up nationalist opinion in a way that we would be very well advised to avoid.

The only other point I will make is that the mechanisms for making these changes are unamendable. The Scots Nats in the House of Commons would be active in arguing that it was profoundly wrong to have a regulation before the House—if it was ever before the House, and that is extremely questionable, as we know well— which they could not amend. I can think of few things more calculated to fracture consent and fragment the union.

Photo of Lord Empey Lord Empey UUP 8:30 pm, 12th March 2018

My Lords, before we whip ourselves into a lather of outrage at the prospect of doing something without the consent of the devolved Administrations, perhaps I may remind the House that we have a short memory. The devolution settlement in Northern Ireland represented by the 1998 Act was butchered—a term I used some weeks ago—by this Parliament without a by your leave, without the consent of the Northern Ireland Assembly and without the consent of the parties that negotiated the agreement. That was done in the Northern Ireland (St Andrews Agreement) Act 2006, where dramatic changes were made to the methods we had negotiated with the noble Lord, Lord Trimble, and others over many years. So this Parliament can do what it likes, when it likes. That is the nature of having a devolved institution versus a sovereign Parliament. There is a hierarchy.

The Good Friday agreement, for which the noble Lord, Lord Judd—who is not in his place—and others indicated strong support, which I welcome, was dramatically changed without a by your leave. It was done as a result of a back-stairs deal and this Parliament implemented it. There was no requirement for the Northern Ireland Assembly to agree—it was just done. So let us look back at the actions that have already been taken.

In these challenging circumstances, and from what was said by the noble and learned Lord, Lord Hope of Craighead, among others, in his forensic examination of the amendments that he introduced, I understand that there is genuine reason to be concerned. But we have to keep this in proportion. When powers are repatriated to the United Kingdom, the European Union deals with the member state—that is the way in which it works—so the only place it can come to is the member state. The question then is: what happens when it gets there? That is of significant concern to Members. But I am not as concerned as some because I believe that it is perfectly possible to arrive at an appropriate accommodation.

The word “balance” has been used, and that is an important point. But let us look at legislative consent. I have to say to noble Lords that we have got to be extremely careful about what we are doing here. If there is a Northern Ireland Assembly, do we know what legislative consent means? It means that Sinn Fein will decide whether there is legislative consent. If we build that into an Act of this Parliament dealing with such an important matter as the consequences of the EU decision, we will be handing a veto to that single party. Under our devolution settlement, it will be about Sinn Fein’s consent as a party. Whether it has a majority or a minority in the Assembly is irrelevant; it has sufficient power to block consent. What are we doing in considering that?

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

I am most grateful to the noble Lord. In Clause 7(7), which deals with Northern Ireland, there is no mention of the need for consent at all. It states simply that the power to amend or repeal the Northern Ireland Act by statutory instrument is excluded. I can see the sense in that. Does the noble Lord agree that that is a sensible way of dealing with the matter, and that perhaps the same provision should be made for Scotland and Wales?

Photo of Lord Empey Lord Empey UUP

I think that we have to be careful because this is complicated. It is obvious that the devolution settlements are not uniform; they are at different levels. My concern with the whole point of having consent is that, while it is obviously highly desirable to have it, although we are talking about the institutions, in practice we are talking about the people who at any point in time are controlling those institutions. In our particular case, there is a veto. I take the point made by the noble and learned Lord, but in the Scottish case a similar situation arises because there is a political party which has a particular objective in mind. It is not simply about the institutions but about those who are controlling them at a point in time when these matters come forward. In fact the noble and learned Lord, Lord Morris, said in his passionate contribution—I know that he is a lifelong devolutionary —that devolution, once granted, cannot be taken away. That is a contradiction in terms, because by definition devolution is something that is given—and of course our experience is that what has been given can be taken away. That is the danger in all of this.

Obviously we are waiting to see what the Government’s proposals will be. I do not believe that what the Minister indicated at the start of this debate will be the only contribution they will be making on these clauses, because it is clear that other matters need to be dealt with in Clauses 8 and 9, and I am sure that we will hear more from the Government. But I would urge colleagues to be careful about what this may mean in practice—because it is not as straightforward as it seems.

Photo of Lord Adonis Lord Adonis Labour

We will be debating Northern Ireland at greater length later. The Minister said in response to my noble friend Lord Judd that the Government would be bringing forward on Report amendments in respect of the Good Friday agreement—or at least that is what I took him to be saying; no doubt he will clarify his remarks when he rises to speak. Will he tell the Committee more about what those amendments will contain?

Photo of Lord Wallace of Tankerness Lord Wallace of Tankerness Liberal Democrat

My Lords, I speak in support of the amendments tabled by the noble and learned Lord, Lord Hope of Craighead, to which I have added my name. I shall try to confine myself to the actual amendments to Clauses 7, 8 and 9. Like the noble Baroness, Lady McIntosh of Pickering, I have not yet had an opportunity to see the amendments to Clause 11 which were laid today, but I suspect that we will consider them in great detail before we come to debate them in Committee next week. Suffice it to say that it is helpful that some information has been forthcoming. I may not necessarily agree with it all but it will shed a helpful light by giving us an indication of the frameworks where the UK Government at least think that there should be a United Kingdom dimension, and hopefully some polish from outside stakeholders may help to inform our discussions when we come to them.

On the amendments moved by the noble and learned Lord, Lord Hope, to Clauses 7, 8 and 9, I shall certainly consider with care what the Minister said at the outset of the debate and then again in response to the noble Lord, Lord Adonis. I thought that perhaps he went slightly further when he responded to the noble Lord, but I shall read carefully what he has said just to see whether this particular part concession has substance. That is because, as the noble and learned Lord, Lord Hope, pointed out, the position with regard to Northern Ireland in Clause 7(7) is not absolute. There are qualifications to it and it will be interesting to see whether there are similar qualifications with regard to Scotland and Wales.

The noble and learned Lord, Lord Hope, also intervened on the noble Lord, Lord Empey, and said that the difference between what is there as regards Northern Ireland in Clause 7(7) as it stands and what we have proposed in our amendment is that Clause 7(7) does not make any provision for the consent of the relevant Scottish, Welsh—or in the case of my noble friend’s amendment—or Northern Irish devolved Assemblies or Parliaments. I do not know enough, and I know that it is dangerous to go into Northern Ireland politics without deep knowledge. However, I will say why our amendment, which gives the opportunity for consent, would be preferable, certainly with regard to Scotland and Wales. Ministers talk generally, and one of the concerns we have is with the breadth of the powers given to Ministers under these clauses, but we do not know whether there might be a genuine cause or reason for an amendment to be made to these founding pieces of legislation. It would therefore be helpful if there was a provision for consent so that it is not done unilaterally.

It might also be helpful looking forward. The noble and learned Lord, Lord Hope, mentioned distrust. That cuts two ways. There is distrust among the Scottish and Welsh Governments as to what United Kingdom Ministers might get up to in using these very broad powers, and there is distrust—I can speak only for Scotland—among UK Ministers that the Scottish Government might well seek to veto something that they might otherwise think is perfectly reasonable. That is holding back quite a lot of the development of a pragmatic and reasonable solution to a lot of these issues. It might be that there will be something akin to the so-called Edinburgh agreement, which paved the way for the amendments to the Scotland Act that allowed the EU and independence referendums to take place, so that we can get some understanding between the Governments that consent would not unreasonably be withheld where a compelling case could be made for it.

The problem we have at the moment is that there is no scope for that at all. It is imposition. It could be a unilateral imposition in a change to the Scotland Act or the government of Wales Acts without any form of consultation or consent at all. As the noble and learned Lord pointed out, Clause 8, certainly in terms of Scotland, and Schedule 5 allow some limited powers for the Scottish Parliament relating to international obligations. Again, we think some provision should be made in Clause 9 for putting a brake on any amendment to, or modification of, the Scotland Act or the Government of Wales Act unless there is the consent of the Scottish Parliament or the Welsh Assembly.

Photo of Lord Empey Lord Empey UUP

Will the noble and learned Lord elaborate on his suggestion for how a middle way could be established? We would all want to see consent if that is achievable, but the problem is that it is very difficult to design a situation in the legislation to say we will seek consent but we do not really need it. The second problem that we have in Northern Ireland is the absence of the Assembly. That creates an even more dramatic situation.

Photo of Lord Wallace of Tankerness Lord Wallace of Tankerness Liberal Democrat

My Lords, taking that second point, as I indicated earlier, the absence of the Northern Ireland Assembly raises far more questions than those specific to these amendments. My noble friend Lady Suttie touched on that when she moved her amendment. It goes far further than these particular amendments.

I will say more about consent. If it is, in fact, fear that consent will be unreasonably withheld, surely it is not beyond the wit of those negotiating to come up with some kind of agreement that the various parties can sign up to, indicating that that consent would not be unreasonably withheld. I accept that the downside is that they could go back on their agreement. There would be a political consequence to that. Ultimately, we are dealing with issues that have a practical effect on people’s livelihoods and businesses. It is far more important to get some practical solution based on good faith, if it can be restored, rather than standing in corners, not wishing to engage.

If the Government accepted these amendments it might well be a step forward to trying to establish some of that atmosphere where trust can be created. What we currently have would not, as has already been said, trigger a legislative consent Motion in circumstances where, if it was primary legislation, it would have a legislative consent Motion.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Chair, Economic Affairs Committee 8:45 pm, 12th March 2018

On the subject of trust, the noble and learned Lord mentioned the Edinburgh agreement, which the Scottish nationalists signed up to. No sooner was the ink dry on the paper than they were repudiating it. Does he remember the assertion that it would be a “once in a generation” referendum on independence? Surely we are dealing in Scotland with a nationalist Government determined to destroy the United Kingdom. Why on earth would one want to give them a veto over decisions taken by the United Kingdom Parliament?

Photo of Lord Wallace of Tankerness Lord Wallace of Tankerness Liberal Democrat

My Lords, I accept that, with regard to “once in a generation”, the Scottish National Party is guilty of not living up to what it said, but it is not right to say that, once the ink was dry on the paper, it totally forgot it. What was in that agreement informed both the Section 30 order that was passed and the legislation then passed by the Scottish Parliament in conformity with the agreement. A substantial part of that agreement was carried through in good faith by both parties.

The detailed wording of Schedule 5 to the Scotland Act was important in getting the right balance in the devolution settlement. If in the normal course of events that were to change, it would require an order under Section 30 of the Scotland Act, which requires an affirmative vote not only by both Houses of this Parliament but by the Scottish Parliament. What we are proposing is consistent with what would happen in the normal course of events when the balance of the devolution settlement was changed. That is why I strongly encourage the Minister at least to show willingness to think about this matter and reassure us that the Government are sensitive to it. That could go some way towards establishing a better basis for trust as we look forward to our debates on Clause 11.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, the amendments introduced by the noble and learned Lord, Lord Hope, might be perfectly okay from the point of view of the UK Government. The only change likely under Clause 7 is to something where it says “EU law”; it would have to be changed to something else. The powers in Clause 7 are intended to enable the knitting together of existing UK law and existing EU law which is not already part of it. That is a difficult job. These descriptions are meant to cater for that. I do not see it as likely that much will be required in relation to Scotland in that respect.

The main question is what happens under Clause 11. The Government promised that it would be brought before the House of Commons and hoped that it would be agreed. Your Lordships may or may not remember that I was keen at Second Reading to stress the need for agreement, because it is the only answer. Intense negotiations have gone on at official level over the last while. It now appears sadly possible—I do not make it any stronger than that—that the Governments may not be able to reach agreement. Therefore, it is important before anything further happens that your Lordships get a chance to apply your great experience to the problems separating the two parties. I greatly regret that there is no proper representation for Northern Ireland. I had the responsibility of being a Minister in Northern Ireland for 10 years; I feel very sad that the present situation has been reached and only wish that it could be resolved. From what I hear, I fear that it may not be very easy until after Brexit. In any case, agreement is essential if it is possible. I do not want to say or do anything that would impede the reaching of such agreement.

As for Clause 7, to retain a power to amend the Scotland Act seems unimportant in this situation, although I think the number of amendments generated by a proposal of this kind would be very small and the Government may feel it worth while to forgo such a power in the interest of making peace and progress.

The Clause 11 procedure is much more difficult. It is important to bear in mind that the Scotland Act—this goes for the Wales Act as well—was set up and legislated within the European Union. Therefore, the only powers that were dealt with were the powers that existed in the Parliament of the United Kingdom when these Bills became law. That did not involve the powers that the EU had and therefore I think it is not determinative of how these powers should be distributed on return to look at what was decided in the original Acts setting up the devolved Administrations, because the powers are now wider. It is therefore very much a matter of trying to resolve the issues between the parties by agreement. If we can help in that respect, so be it: I very much hope that we can. Certainly, I hope we do not do anything to hinder it. So far as I am concerned, I am prepared to trust all the parties to do their best to reach an amicable solution.

Photo of Lord Elystan-Morgan Lord Elystan-Morgan Crossbench

The contributions already made make it perfectly clear how fragile and in many respects how insubstantial is the basis of devolution as we know it. The sovereign Parliament of Westminster has created a sub-Parliament in respect of Scotland and Wales. The sovereign authority that created that Parliament can undo that Parliament any day that it wishes to do so. If it did so I have no doubt that the noble Lord, Lord Wigley, would agree with me that it would be the best recruiting sergeant that Plaid Cymru ever had. Be that as it may, the power is there to do exactly that. It is, of course, utterly understandable that nobody expects that power to be used. In fact, in Clause 1 of both the Scotland Act and the Wales Act of last year there is written in what is intended to guarantee the permanence of the Scottish Parliament and the Welsh Assembly. In terms of law, it has no restriction whatever; it is purely cosmetic but well intentioned. I do not think that, in so far as any legal interpretation is concerned, there is a different view held, but I will be corrected on that point.

Nevertheless, those two Parliaments exist at the mercy, as it were, of this sovereign Parliament. I do not know whether one can change the situation, because the concept of sovereignty means that it can be withdrawn at any time. Unless, of course, one has some self-abnegative discipline—for example, to say that there is a convention. In the Miller case that came before the Supreme Court some time ago, the argument was raised that there was a basic authority that related to each of the Parliaments. No, said the Supreme Court, it is a convention. However, nobody had defined a convention. If Parliament went out of its way to define a convention and said, “In this context a convention means a, b, c and d”, that might get us somewhere. It is a suggestion.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Chair, Economic Affairs Committee

The noble Lord may recall that during the passage of the last Scotland Act there was great debate on Clause 2 about whether the convention of seeking legislative consent could be enshrined in law. We ended up with a rather unsatisfactory clause that said that this Parliament,

“will not normally legislate with regard to devolved matters”.

As some of us argued at the time, what on earth does “normally” mean? It came from trying to enshrine the convention in statute. On the subject of people respecting conventions, the noble Lord may not be aware that the Scottish Parliament wishes to charge on with its own legislation on the basis that there is no legislative consent Motion agreed to this legislation, despite the fact that the Presiding Officer has declared that legislation illegal. If we are to have a Parliament acting illegally, led by nationalists who wish to break up the United Kingdom, I think that, as the noble Lord, Lord Empey, has suggested, we should go cannily.

Photo of Lord Elystan-Morgan Lord Elystan-Morgan Crossbench

One is greatly tempted to look at this situation beyond the Tweed, as it were—but I will abjure that temptation now and, I hope, for ever. I have scars on my back already in relation to what has happened in Wales over the last few decades.

I believe that in relation to these situations, one can draw a distinction between a convention and something else. A convention can be defined by Parliament in such a way as to have a semi-sovereign authority. That is my point. It is not the same thing as saying that it is regarded as the ordinary way of doing things—that is a totally different argument. In that way, it seems that one might achieve a reasonable and honourable settlement.

Photo of Lord Griffiths of Burry Port Lord Griffiths of Burry Port Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Wales)

My Lords, I am at a loss to know quite how we have got where we have. The labyrinthine discussions we have been involved in have not helped me to clarify any sense of where I am, either.

The noble Lord, Lord Forsyth, has just talked about a Bill proposed in Scotland that has been judged by the Presiding Officer to be illegal; I think he said it was beyond competence. The law will no doubt run its course and somebody will make a judgment as to whether it is legal or illegal at that stage. For all that, in Wales it has been judged to be competent and it is well under way. So the concern in both cases, however we define the words, is that when all is said and done we will be left with a mess—and continuity has to be guaranteed because that is the basis on which this debate and the Bill are posited. We simply must have a snapshot moment on that date so that continuity in law can continue.

If we are not to reach the agreements that the noble and learned Lord, Lord Mackay, is so desirous of—indeed, who can be for anything else?— there has to be some modus agendi to take us through the impasse, because it will be an impasse. Why could we not have thought of adding the words of the amendment about exempting the need to modify the Scotland and Wales Acts? Why could we not have put in, understood, assumed or intuited that consulting the devolved Governments was a natural, normal, everyday breathing kind of thing to do? I cannot really understand why we are in this mess. You cannot judge for two devolved Governments without having agreements or consents from them.

I have made the case already in debate, and the last thing I am going to do is add to the time taken to resolve this matter this evening, but what worries me are the parallel narratives coming out of the discussions that have taken place so far. The press has been full of articles suggesting that the Chancellor of the Duchy of Lancaster has pulled off some kind of a coup—that there have been magnificent and radical developments. But just this morning I got an email from Wales, from people who have been discussing the amendments. It says quite clearly that the basis on which such amendments have been prepared, “while representing a move in the right direction”—we rejoice at that—“was not sufficient to secure our support”. They made suggestions as to alternative ways that their outstanding concerns could be addressed. The conclusion of the communication I am looking at is: “We must keep on talking”. They say that the Government gave a promise that they would not press to a vote the amendments that are to be put before them—in other words, the amendments will be available for discussion. I hope that the Minister will be prepared this evening to repeat the assertion contained here, which was given to the parties in the discussions with the devolved Governments.

So here we are. When I last spoke on these matters, the following day there were to be key discussions and it was very frustrating to have to speak when the outcome of the next day’s discussions had not yet been revealed and might take the basis from anything I wanted to say. Now I am facing Armageddon in the form of the Minister, because who knows what he is going to say in a moment? Why would any of us have bothered to speak if we had known what he was going to say? It might have been that that could have been the basis of a discussion that would have lasted half an hour and we could have had longer for dinner. Instead, we thrash around and still do not know whether something of substance will be coming our way that could have saved us so much travail.

I cannot add to the discussion. We have had such extraordinary speeches by people who are far more competent than me. I am Joe Public. For goodness’ sake, what are we thrashing around for? There are devolved Governments in Wales and Scotland and there is a significant moment coming in terms of their relationship with this Parliament and with Europe. If we cannot solve that one, why did we bother to have our earlier discussion about what we have to do to deal with Russia?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government) 9:00 pm, 12th March 2018

My Lords, I am very grateful to noble Lords who have participated in this very wide-ranging debate, particularly to the noble and learned Lord, Lord Hope, for moving his amendment and the noble Baroness, Lady Suttie, for moving her amendment to the amendment. I shall first try to deal with a couple of very basic points before turning to the substance of the debate and I shall then try to pick up some of the points made by noble Lords. I gently say to the noble Lord, Lord Griffiths, that if my aim was to cut short this debate, I failed fairly spectacularly. I regret that. I had sought to clarify where we were—but I will go through the basic principles again.

I shall deal with a couple of very basic points. First, I do not know where the idea came from that there is some possibility of the Government fundamentally amending or repealing the Government of Wales Act without consent. That is not remotely on our agenda. It is certainly not something that I would tolerate. I suppose it is just about within the scope of Austinian sovereignty, but I do not know where the idea came from that that is a possibility—so let me put that to bed absolutely right away. We are totally committed to devolution—the Government of Wales Act, the Scotland Act and the Northern Ireland Act—and I think that noble Lords will appreciate that point.

Secondly, I think that there has been some confusion. We are not principally dealing with Clause 11 today. There might be some confusion because we have just published the amendments in relation to Clause 11, following an undertaking we gave in another place—but that will be the subject of much broader discussion later. No doubt we will go through that in some substance, so I do not intend to deal with it and pre-empt what is going to happen later in our consideration of the Bill.

I thank noble Lords for this valuable debate. We will consider the main clauses relating to devolution in coming days, but the question of how the powers conferred by the Bill interact with our devolution settlements and the responsibilities of our devolved institutions is no less important and deserves no less robust scrutiny. I shall first speak to the protection for the devolution statutes in relation to the Clause 7(1) correcting power and by extension its Schedule 2 counterpart. There are many amendments in Schedule 3 for those who want some idea of what will be brought forward on Report. It is not a question of them coming forward now. My noble friend Lady McIntosh raised this, but we are not in a position to come up with all the amendments that may be necessary. They will be debated on Report. We are talking about every correction that is necessary being brought forward on Report for Scotland, Northern Ireland and Wales. It is as simple as that. I hope that clarifies what I hoped to clarify right at the start.

I must start by emphasising that the Government recognise the importance of our devolution settlements and the Acts through which they have effect. I think noble Lords who know my history will know that that is my starting point. That is why we have sought to make as many corrections to the Acts as possible in the Bill already. Those, as I say, can be found in Part 2 of Schedule 3. We want to be open and transparent in demonstrating that these are, as noble Lords will discover when they look at them, simply technical fixes to remedy deficiencies created by leaving the EU. For instance, much like in other pieces of legislation, we must remove or replace redundant references to member states or EU institutions.

The noble Baroness, Lady Suttie, is absolutely right to raise the unique importance of the Northern Ireland Act as the statutory manifestation of the Belfast agreement. In response to the noble Lord, Lord Adonis—I hope the record will show this—I do not think I said that we were bringing forward amendments in relation to the Good Friday agreement on Report. What we are doing is bringing forward some amendments in relation to Northern Ireland to make sure that all the amendments that relate to Northern Ireland are in the Bill. I cannot stress often enough or strongly enough our total, steadfast commitment to the Belfast agreement. That is precisely why we have, in this Bill, already generally restricted the correcting power from making corrections to the Northern Ireland Act. As I am sure the noble Baroness, Lady Suttie, is aware, references to Northern Ireland amendments are minimal, and we will seek to make sure that all of them those are on the face of the Bill when it comes back on Report.

Noble Lords must recognise that there remain outstanding corrections to the Acts that must be made in order to ensure that they function properly on exit day. Corrections to the Scotland Act and the Government of Wales Act are being discussed with the Scottish and Welsh Governments, and progress is being made. It is a mistake to think that people are at daggers drawn. This is not how things are operating, as many noble Lords are well aware. Day to day, negotiations go on very constructively and effectively—that is what is happening. We have not made all of the corrections on the face of the Bill so far, as we must rightly agree the forms of the corrections to those Acts with the Scottish and Welsh Governments. Indeed, some fall within devolved competence to address. In some cases, alternative mechanisms may exist to deal with them.

I can provide further reassurance, because these are not matters of substantive policy. This is about correcting provisions that will not function correctly once we have left the EU. For example, there is provision in the Government of Wales Act requiring the Auditor-General for Wales to make certain arrangements for bodies established by the European Union. This will need to be updated so that the provision continues to work in a post-exit world. There is one correction that must be made to the Northern Ireland Act, as I have referred to, which relates to technical standards—the quality of goods and safety marks. This, again, is fairly routine and will be brought forward on Report.

It would be irresponsible for us to place these limits on the correcting power if we could not also provide the answers to the questions—which I am now providing —and the assurance that we will deal with these issues on Report. I can confirm that we will bring forward amendments on Report to apply the same protection for the Scotland Act and the Government of Wales Act as for the Northern Ireland Act, so that all the necessary amendments will appear on the face of the Bill on Report. Contrary to what some noble Lords seem to think, we have made substantial progress in discussions, but we were not in a position to remedy the remaining deficiencies for consideration in Committee. I regret that, but I am very pleased that we have made the progress we have.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Chair, Economic Affairs Committee

I do not know whether my noble friend reads the Scottish papers. If he does, he will have seen that there has been headline after headline about the Scottish Government claiming that this is a great power grab by Westminster—attacking the Government and attacking the whole concept of leaving the European Union with scare stories about the impact of it. I am a little puzzled that he can say that there is a gentlemanly discussion going on when that is the perception north of the border.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government)

My Lords, I do not recognise the power-grab allegation as being anywhere near reality. We are making progress. Of course there are differences, but I think in fairness all parties concerned have indicated, as the noble Lord, Lord Griffiths, did, that progress is being made. These are complex issues and it is a great mistake to see this, in some Animal Farm way as all black and white. It is not like that. Progress is being made. There is still territory to cover and progress to be made, but we are making that progress.

Photo of Lord Wigley Lord Wigley Plaid Cymru

Before the Minister moves on, we are aware of his good intentions in this, his experience and his wish to get a coming together of minds. However, if the Government’s intention is always to get agreement for the changes—and, from the tone of what he has said, that is their objective—why should they be building provisions into the clause now under discussion to have a veto for Westminster that overrules either Cardiff or Edinburgh?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government)

My Lords, I am grateful to the noble Lord. It certainly is my view that we want to get agreement—I have no doubt about that—but I shy away from his idea that one party should have a veto on things where there is no substantive reason why it should do so. I shall come to this, but if something relates to a devolved area, of course we will need the relevant consent of the devolved Administration. However, we are not seeking to add powers in this legislation that do not already exist to give bodies vetoes over Westminster legislation.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

It is my understanding that the concept behind the phrase “Westminster will not normally legislate without the consent of the devolved Administrations” depends on what you mean by “normally”. It was explained to me that it meant there was a recognition that very occasionally one would need emergency legislation, perhaps in a situation of terrorism, where it was impossible, possibly because the other body was in recess, to get agreement in a reasonable timescale—that sort of exceptional situation. That is how the meaning of “normally” was explained to me from a legal perspective. Is that accurate? Is that the Government’s understanding of what that word means? If so, would it be possible to reach an agreement with the devolved Administrations on that definition?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government)

My Lords, the noble Baroness, with her normal quicksilver mind, has darted ahead to the bit of the speech that I have not yet got to, relating to where we are on Clauses 8 and 9. She makes a fair point and I intend to deal with it. I hope I have reassured noble Lords over the correction power, and I thank noble Lords who contributed to that part of the debate.

Amendments 130, 131, 132, 148, 149 and 159, tabled by the noble and learned Lord, Lord Hope, the noble Baroness, Lady Suttie, and the noble Lord, Lord Adonis, seek to extend such a restriction to the international obligations and withdrawal agreement powers. I have listened carefully to what has been said. To avoid any shadow of a doubt, I am very happy to sit down with the noble Lord on what he says about the points raised on international agreements to look at the point on international obligations; I think it related to Schedule 5 to the Scotland Act. I am happy to look at that point with officials. However, I think he must accept, as noble Lords would, that the overriding ability in relation to international agreements must rest with the UK Government as the member state and the body able to conclude international treaties. I do not think there can be any question about that. However, I am happy to look at the valid issue he has raised on that point.

The position on international obligations and the withdrawal agreement powers must necessarily be more nuanced because we do not yet know what changes may be required, as we are not yet sure what the precise shape of the withdrawal agreement will be. However, I can confirm that this power will not be used to unpick the devolution settlements, nor to undermine or amend the Belfast agreement. As I have indicated, we are adhered to both the devolution settlements that we have and to the Belfast agreement that was reached in April 1998 and must be protected in all its parts.

Photo of Lord Beith Lord Beith Liberal Democrat

The Minister speaks as though the Clause 8 and Clause 9 powers are basically the same. They are not, of course. The Clause 9 powers can be exercised only if a further piece of legislation, a withdrawal Bill, is passed. It is not clear to me why the Minister is letting himself be cornered over this when the powers do not need to be in the Bill at all.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government) 9:15 pm, 12th March 2018

My Lords, I accept that they are not the same thing. Perhaps by definition, Clause 9 relates to the withdrawal agreement, but that will be made by the United Kingdom Government. As the member state, it will be the United Kingdom Government who will sign the withdrawal agreement. There may—indeed, I am sure there will—be issues about ensuring that our law is compliant with the withdrawal agreement in all parts of the United Kingdom, in both the Westminster Parliament and the devolved Administrations. That is why we need it.

Noble Lords will be aware that it is quite normal to use delegated powers in such ways, including Section 2(2) of the European Communities Act 1972, which amends the devolution statutes to ensure that our legislation reflects the most accurate position in law and ultimately to ensure that we fulfil our international obligations. To give an example, the Treaty of Lisbon (Changes in Terminology) Order 2011 was made under Section 2(2) of the European Communities Act. It amended the Scotland Act, the Northern Ireland Act and the Government of Wales Act to give effect to new terminology relating to the EU. This is not the stuff of power grabs, believe me; it is the stuff of ensuring that day-to-day business can continue. Leaving the EU requires changes of a similar technical nature across the settlements, and we will need the flexibility to ensure that these important Acts operate effectively once we have left the EU. That is precisely what these powers enable.

Amendments 148 and 149 also speak to the concurrent powers for United Kingdom Ministers and would apply a requirement for devolved Ministers to consent to their use. We will consider this matter fully in the next group, but I am very willing to engage with noble Lords on the subject that the noble Baroness, Lady Randerson, raised when she talked about the use of the word “normally”. “Normally” is not subject to definition by government, it is subject to definition in law, but of course we would normally expect the consent of devolved Administrations in conducting discussions on these matters. A lot of this, believe me, is down to ensuring good housekeeping and common sense. If we have the prospect, by agreement, of dealing with this just once in one United Kingdom Parliament rather than repeating it in all the different legislatures of the country, that makes sense.

I shall try to deal quickly with the points raised by noble Lords, I hope in more or less the order in which they were raised. Forgive me if I miss points; I will try to pick them up by letter and will place a copy in the Library for those who did not participate in the debate.

First, I restate my thanks to the noble and learned Lord, Lord Hope, for tabling the amendment and ably and cogently setting out what it was about. I followed precisely what said and sympathise with a lot of it. I suspect we may disagree on some of the detail and emphasis, but I am certainly willing to engage with the issues he has raised. I also thank the noble Baroness, Lady Suttie, for bringing forward the Northern Ireland dimension. She asked who we will engage with. Sadly, we cannot engage with an Executive at the moment, but we continue to put all our energies into ensuring that we have an Executive in place to engage with. Whatever our differences with them will be, that is far a more desirable form of government and governance of Northern Ireland.

I think the noble Lord, Lord Wigley, spoke next, and spoke also on behalf of the noble Lord, Lord Foulkes. As I said, we will look at Clause 11 later. If I am not mistaken, we sought and obtained agreement from both Scotland and Wales to publish that. There are deep dives, as the parlance has it, going on in all framework areas—I think we are now down to 24 from 27. Full and active engagement on that is the way forward, and significant work is being done.

The noble and learned Lord, Lord Morris, spoke next. He has massive experience and knowledge of this area, so I listened very carefully to what he was saying. I appreciated our earlier chat. I can confirm that these framework areas are frozen, as it were, until we can get down to the substance in the deep dives of the things that need to be devolved and the things that need to be held in the centre. I think there is common agreement, including in Scotland, on the principle that some things will have to be retained in the centre. If we are seeking to pull something back—I do not see that that will happen, but if we were, through some of these other Acts—of course we would need LCMs just as we are seeking an LCM on this legislation. That is, again, a reassurance that I am able to give.

I thank the noble Baroness, Lady Finlay, for the engagement that we have had on this. I can confirm that we are seeking an LCM, as I believe she knows, on this legislation in both Scotland and Wales, and on the other legislation—on agriculture and so on—insofar as this involves potentially encroaching on devolved areas. Of course, once again we would seek to have long and deep discussions, as we are doing. If it were to impinge on devolved areas, we would fairly clearly need that LCM.

I hope I have answered on deficiencies; all of those will be covered in the Bill. An example of an international obligation would be something perhaps not mundane, but, for example, complying with a new law of the sea if there was a new law of the sea convention. That may be something we would seek to amend. It would be that sort of issue.

My noble friend Lady McIntosh asked for full details of the amendments. She will see that we have published the Clause 11 amendments. The amendments to Clause 7 will be tabled on Report. I have given that undertaking. They are not yet ready for reasons I have sought to explain but they will be there for Report stage. I hope she will take some comfort from that.

The noble Baroness, Lady Randerson, spoke with great experience of the devolved areas, and I thank her for her contribution about how things have moved and how there are still rough edges. I share some of the frustration of the noble Baroness, Lady Finlay, because we tried to solve some of this together on asbestos. This is not a power grab. Nobody knows where that power lies. Indeed, there is perhaps a little bit of, “You do it”, “No, you do it”. It is just lack of clarity rather than a power grab, but I hope we will be able to solve and settle it before too long.

I think I have dealt with the point made by the noble Lord, Lord Adonis, who is not in his place at the moment, on the Good Friday agreement. It will not involve any amendments in relation to that agreement, to which we are totally wedded, but there will be some amendments on Report in relation to Northern Ireland and some of the deficiencies that need correcting, in just the same way as in relation to Scotland and Wales. I thank the noble and learned Lord, Lord Wallace, once again for the clarity of what he said. I agree that we should look, perhaps through conversation and discussion, to move this forward. Like my noble friend Lord Forsyth, I have grave doubts. We will not be moving to a position of consent but I would certainly like to see us talking and consulting, and I am very happy to engage with that. To move to a position of consent in non-devolved areas would be dangerous to the union.

I thank my noble and learned friend Lord Mackay of Clashfern once again for what he said. I totally agree: if we think this is difficult, just wait until we get to Clause 11. I think this is relatively straightforward and I can see a way through this where we would have broad agreement. As the noble Lord, Lord Griffiths, indicated, Clause 11 will be a much more difficult area.

The noble Lord, Lord Elystan-Morgan, knows so much about this area, through both his political and legal experience. I agree with him that it is important to move to a position where, for things related to devolved areas, there is a convention that has grown up and is widely accepted about consent. I thank the noble Lord, Lord Griffiths, for his clarity. I agree with him about the importance of transparency and coming up with some common sense; I think that is essentially what he was saying and I do not disagree at all.

We have probably reached agreement on Clause 7. In relation to Clauses 8 and 9, I am very happy to look at the points that were made and discuss them further ahead of Report stage. In the meantime, I ask the noble and learned Lord and the noble Baroness to withdraw their amendments.

Photo of Baroness Suttie Baroness Suttie Liberal Democrat Lords Spokesperson (Northern Ireland)

I thank the Minister for his characteristically detailed and courteous response. We look forward to examining these amendments in greater detail ahead of Report stage, when we will probably have many longer discussions about them. In the meantime, I beg leave to withdraw the amendment.

Amendment 91 (to Amendment 90) withdrawn.

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

My Lords, I moved my amendment some time ago—at least I believe I did. I am very grateful to all noble Lords who have spoken in the debate and to the Minister for his very constructive response.

To sum up briefly, it seems that a theme ran through various contributions, which I want to bring to a point. I picked up from the noble Lord, Lord Wigley, the point that the Government have not really carried the people with them in the way they have responded to devolution, at least in Wales. Then, the noble and learned Lord, Lord Morris of Aberavon, said that devolution had yet to be taken seriously. Then, the noble Baroness, Lady Randerson, said that the atmosphere is becoming increasingly negative. These are very unfortunate phrases to be using in a situation where we seek agreement. However, the noble and learned Lord, Lord Wallace of Tankerness, said that accepting these amendments would be a step forward and the noble and learned Lord, Lord Mackay of Clashfern, said—if I understood him correctly—that accepting the amendments would not cause the Government much trouble, given what they have been saying about their intentions for the use of the powers that will be given to Ministers of State by these three clauses.

If the Minister searches his conscience very thoroughly, it does not look as though the Government have much to lose, if anything, in accepting these amendments. At the same time, there is a lot to be gained because they would help to change the atmosphere, which is so negative at the moment. He has made a step forward in Clause 7, which I appreciate, but he has done so because he says that he does not need to bother with the Scotland Act because he will have it all there on Report. I applaud that, but surely he might take the same step with Clauses 8 and 9. He may say that there is no question of amending the Scotland Act or the Government of Wales Act under those clauses—if so, why not just say so? Why not put these measures in the Bill and get this all over with, as a background to when we come to the real difficulty of Clause 11? There is that to take away from the debate.

I want to mention one other point. If we put a provision of this kind in Clause 7, people will look at Clauses 8 and 9 and say, “Oh, it’s not there. The situation is different as far as Clauses 8 and 9 are concerned”. There is a Latin phrase for this: inclusio unius est exclusio alterius, which means that putting one thing in excludes the other. We need to look rather carefully at the wisdom of adding a very sensible amendment to Clause 7 but not reproducing it in Clauses 8 and 9 as well.

I hope we can take these thoughts into the discussions which I would like to have with the Minister if we can find time. I look forward to Report when he will bring forward his other amendments. That is as far as we can take the matter this evening. We will come back to it on Report, but for the time being I beg leave to withdraw the amendment.

Amendment 90 withdrawn.

Amendments 92 to 101A not moved.

Amendment 101B had been withdrawn from the Marshalled List.

Amendment 102

Moved by Lord Hope of Craighead

102: Clause 7, page 6, line 25, at end insert—“( ) The consent of the Scottish Ministers is required before any provision is made in regulations under this section so far as the provision would be within the devolved competence of the Scottish Ministers within the meaning given to those words by paragraph 18 of Schedule 2.( ) The consent of the Welsh Ministers is required before any provision is made in regulations under this section so far as the provision would be within the devolved competence of the Welsh Ministers within the meaning given to those words by paragraph 19 of Schedule 2.”

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

My Lords, I am afraid that I have to introduce this group, and I hope to be able to do so fairly concisely. There are two amendments in this group in my name. Amendment 102 relates to Clause 7 and Amendment 124 to Clause 8. They seek to qualify the extent of the power given to Ministers of the Crown to make provision by regulations to deal with the matters to which these clauses refer, asking that these powers be not exercised without the consent of the Scottish or Welsh Ministers, so far as the provision that is sought to be made would be within “devolved competence” within the meaning given to that expression in paragraph 18 of Schedule 2.

Once again, at the heart of these amendments is the need to respect the constitutional importance and integrity of the devolution settlements. How the areas of government within devolved competence should be administered is seen—certainly in Cardiff and Edinburgh—as the responsibility of the devolved authorities. They have that responsibility by virtue of the democratic vote under which Members of these legislatures were elected. Their quite correct position is that it should not be for UK Ministers to enter into the area that is devolved to them without their consent, especially in the exercise of the power, to which I referred in the previous group, to make any provision under these two clauses that could be made by an Act of Parliament. I mention the Sewel convention in that connection. In practice, the Sewel principle has been operated for a considerable time in the way that the devolution system has been working since the two fundamental statutes were passed in 1998. The problem is that these clauses fail to give effect to that practice, and that needs to be corrected.

To set this point in its statutory context, so far as Ministers are concerned, Section 53(1) of the Scotland Act 1998 sets out the basic rule that, in so far as they are exercisable within devolved competence, they are to be exercisable by the Scottish Ministers instead of by a Minister of the Crown. That section expresses the devolutionary principle, but the rule is qualified by Section 57(1) in the case of functions in relation to observing and implementing obligations under EU law. A member of the Scottish Government has no power to make any subordinate legislation, or to do any other act, which is incompatible with EU law. Section 57(1) provides that any function of a Minister of the Crown in relation to such matters shall continue to be exercisable by him in relation to Scotland for the purposes set out in Section 2(2) of the European Communities Act 1972. No mention is made in the statute of any need to consult with, or obtain consent from, the Scottish Ministers before that power is exercised in relation to EU law.

Coming on to the way that the matter is worked out in practice, these provisions are operated in practice under successive memoranda of understanding on devolution between the UK Government and the devolved Administrations. I think they have operated almost since the start of devolution. One must recall that, to begin with, the Government in Edinburgh and the Government in Westminster were of the same persuasion: Labour Government here, Labour Government there. That, of course, assisted very much in the setting up of memoranda and a common understanding of how these matters were to be operated. The latest of these memoranda was published in October 2013. In a concordat on the co-ordination of EU policy issues, the memorandum states that the UK Government wishes to involve the devolved Administrations,

“as directly and fully as possible in decision making on EU matters which touch on devolved areas”.

It then sets out a series of underlying principles with which I think all those who are responsible for implementing EU obligations in devolved areas will be familiar. Among other things, they state that,

“it is for the devolved administrations to consider, in … consultation with the lead Whitehall Department”,

how the EU obligations should be implemented and enforced, including whether they should be implemented by the devolved Administrations themselves separately or by the UK in UK legislation. As I understand it from those I have spoken to, ever since devolution, this has been a matter of routine intergovernmental working between Scotland and Whitehall ever since the institutions were set up. This is important as it enables the Scottish Government to fulfil the responsibilities that have been devolved to them without their being cut across by measures taken in Whitehall without their agreement. That is where we are now. It is important to say that this system has worked remarkably well, with co-operation particularly between the civil servants on both sides of the border and, initially at least, with political agreement, as I indicated, on both sides of the border too.

The context in which the powers are given to a Minister of the Crown by Clauses 7 and 8 are, of course, different because we are leaving the EU behind, and this Bill is all about the withdrawal process. In the Bill as it stands, Section 57(1) of the Scotland Act is to be omitted: that is the provision that deals with UK Ministers dealing with EU obligations. Section 57(2) is to be amended by removing the reference to EU law and putting in provisions which are to be found in paragraph 1 of Schedule 3. Their effect is that the power of the Scottish Ministers will be under a restriction in relation to retained EU law which is similar to that in relation to EU law at present. However, when we look at Clauses 7, 8 and 9, we see that the Ministers of the Crown will have power under those provisions to modify retained EU law in areas of policy which are within devolved competence without any prior notice to the devolved Governments, let alone their consent. Therefore, the amendments I am putting forward in this group seek to deal with a problem which runs right through the Bill.

Provisions in Schedules 2, 3 and 8 to the Bill provide that retained EU law is to be treated in the same way as EU law as regards devolved competence, and I have later amendments which seek to deal with that. However, the problem is that they fail to recognise that much of what will become retained EU law will relate to matters within the devolved competence of the Scottish and Welsh Governments. To deprive them of their primacy, which is established under the memoranda of understanding to which I referred, would be very unfortunate and would create a situation which in both Cardiff and Holyrood is regarded as quite unacceptable. It would mean that while policy areas within devolved competence which raise no issues of retained EU law at all would be for the devolved Administrations to deal with themselves under the ordinary rule, you have policy areas within the same devolved areas which are subject to the provisions in the Bill without the need to obtain the consent of the devolved Governments.

The point I am really trying to make, as briefly as I can, is that there is here a recipe for confusion and mismanagement which would be in nobody’s best interests, and which we should, if possible, try to avoid. The remarks I have been making are directed largely to the Clause 7 situation, about which the Minister may wish to say something more, but they apply also to Clause 8, without elaborating further on the point I drew out of paragraph Schedule 5 to the Scotland Act and paragraph 7. My point is therefore common to these two clauses, and seeks to try to avoid the risk of confusion and mismanagement, which at present is avoided by the common understanding in the memoranda, which works so well.

I hope that the Minister might be willing to accept these amendments. I think the noble and learned Lord, Lord Mackay of Clashfern, is seeking to intervene. So that we can get into discussion, I beg to move.

Amendment 103 (to Amendment 102)

Moved by Baroness Suttie

103: Clause 7, at end insert—“( ) The consent of the Northern Ireland Ministers is required before any provision is made in regulations under this section so far as the provision would be within the devolved competence of the Northern Ireland Ministers within the meaning given to those words by paragraph 20 of Schedule 2.”

Photo of Baroness Suttie Baroness Suttie Liberal Democrat Lords Spokesperson (Northern Ireland)

My Lords, I will speak to Amendments 103 and 125, which are tabled in my name. I shall be extremely brief, because many of the arguments have already been rehearsed in the previous group of amendments. Again, these amendments raise issues of fundamental importance. Their aim is to amend the amendments in the name of the noble and learned Lord, Lord Hope, to include Northern Ireland.

The initial devolution settlement in Northern Ireland was carefully constructed and delicately balanced. The settlement gave the Assembly real power to make decisions in the best interests of the people of Northern Ireland. Since 1998, the powers of been enhanced, most notably with the transfer of policing and justice powers in 2010 to the Assembly, and with an Act going through this Parliament in 2015 to allow for the devolution of corporation tax to the Assembly at a future date.

Given the delicate and careful negotiations that took place over many years to reach the settlement, and the particular nature of identity politics in Northern Ireland, I hope the Minister agrees that it is only right that Northern Ireland Ministers—once there is, as we all hope, an Executive back in place—should have to give their consent to any move to make regulations under Clauses 7 and 8 which would encroach on the devolved competences of the Northern Ireland Assembly. I beg to move.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

Does the noble and learned Lord, Lord Hope, think that it would be possible to deal with his point by amending the memorandum of understanding so that it meets a new situation?

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

My Lords, I can see the force of that, but I do not know whether that option is available in the present climate. As regards reassuring the parties in Cardiff and Edinburgh, something in the Bill is looked for. Again, it is a matter of trying to find a way to soften the atmosphere, which is highly unfortunate at the moment. I deliberately have not discussed Clause 11, because that is quite a different debate. However, the more we can do to clear the air by getting these points out of the way before we get into Clause 11, the better, and that is the basis on which I have moved this amendment.

Photo of Lord Thomas of Gresford Lord Thomas of Gresford Liberal Democrat Shadow Attorney General

My Lords, late at night on 21 July 1998, I was sitting where the noble and learned Lord, Lord Morris of Aberavon, is sitting at the moment, when Lord Sewel responded to an amendment moved by Lord Mackay of Drumadoon to this effect during the passage of the Scotland Act:

“This Act does not affect the power of the Parliament of the United Kingdom to make laws for Scotland, which may not be amended or repealed by the Scottish parliament”.

In resisting that amendment, Lord Sewel said:

Clause 27 makes it clear that the devolution of legislative competence to the Scottish parliament does not affect the ability of Westminster to legislate for Scotland even in relation to devolved matters. Indeed, as paragraph 4.4 of the White Paper explained, we envisage that there could be instances where it would be more convenient for legislation on devolved matters to be passed by the United Kingdom Parliament. However, as happened in Northern Ireland earlier in the century, we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish parliament.

If problems do arise the solution is for the Scottish executive and the United Kingdom Government to resolve the matter through political dialogue. That is what differences between mature parliaments and executives will be concerned with. That is what happens in other political systems. I cannot believe that it is beyond our wit to develop such a convention”.—[Official Report, 21/7/98; cols. 790-91.]

So the use of the word “normally” was off the cuff, and I imagine that Lord Sewel would be as surprised as I am to find that it has become subject to such intense examination in subsequent years.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Chair, Economic Affairs Committee

The word “normally” was certainly not off the cuff. If the noble Lord looks back at the lengthy debates we had during the passage of the last Scotland Bill, he will find that there was considerable debate about the use of the word “normally” and the wisdom of including in statute what Lord Sewel said was a convention.

Photo of Lord Thomas of Gresford Lord Thomas of Gresford Liberal Democrat Shadow Attorney General 9:45 pm, 12th March 2018

I think that the noble Lord misses the point. I am saying that that was where the word “normally” first originated in 1998. No doubt it has received considerable debate since, and indeed I have listened to debates on that topic.

The problem is a lack of trust—as has been mentioned by a number of noble Lords today and as has been illustrated by the noble Lord, Lord Forsyth, in a number of interventions—between the United Kingdom Government and the Scottish Government, and no doubt a lack of trust between the Labour Government in Wales and the Government in Westminster. It seems to me that it derives from the suggestion that there should be an imposition by the Westminster Government on areas currently devolved to the Parliament and the Assembly.

I looked at the leave campaign’s open letter of 14 June 2016, a week before the referendum. It said:

“There is more than enough money to ensure that those who now get funding from the EU—including universities, scientists, family farmers, regional funds, cultural organisations and others—will continue to do so while also ensuring that we save money that can be spent on our priorities”.

That letter was signed by Mr Johnson, Mr Gove, Ms Priti Patel, Mr Grayling, Mr Duncan Smith and many others. The leader of the Conservatives in Wales, Mr Andrew Davies, said:

“Today’s announcement is hugely welcome and is further evidence that Wales would be better off out of the European Union ... we now know that funding for each and every part of the UK, including Wales, would be safe if we vote to leave”.

Carwyn Jones, the First Minister of Wales, said:

“Those who signed this letter have no more power to deliver on it than my children’s pet cat”.

However, the referendum was won by the leave faction, and there was a proposal in the 2017 Conservative manifesto to set up a UK shared prosperity fund. The manifesto said:

“We will use the structural fund money that comes back to the UK following Brexit to create a United Kingdom Shared Prosperity Fund, specifically designed to reduce inequalities between communities across our four nations ... We will consult widely on the design of the fund, including with the devolved administrations, local authorities, businesses and public bodies”.

The word used in that manifesto was “consult”, not “agree”. Certainly, there was no suggestion that they would look for consent. Similarly, the paper published in June 2017 on the agreement with the DUP, UK Government Financial Support for Northern Ireland, said that Northern Ireland’s needs would be “properly reflected” in the fund,

“which will benefit all parts of the UK”.

So it seems that the intention, as expressed in that manifesto, was for the United Kingdom Government at Westminster to hold the money bags—the structural funds—and dole out the money as they thought fit without any requirement for agreement. The mistrust probably began before then, but that is where it was intensified.

The position is this. The noble and learned Lord, Lord Morris of Aberavon, mentioned earlier the Barnett formula. If, in taking over the rules and regulations relating to regional development, the money were to be distributed under the Barnett formula, Wales would be significantly worse off. The Bevan Foundation, in its report published in conjunction with the Welsh Local Government Association last October, said that using the Barnett formula the estimated allocation of funds for Wales between 2014 and 2020 would be not the actual €2.2 billion but just €562 million. In other words, if the Barnett formula was applied to the structural funds, Wales would get one-quarter of what it was promised up until 2020. And we really do not know what will happen after that: no commitments have been made.

If this clause remains unamended, the United Kingdom Government will have the power to take over all the rules and regulations relating to regional development, agriculture, fisheries and many other areas and to change them and develop other structures as they think fit. Maybe that is a good thing, but only provided that the devolved Administrations consent to it. I cannot understand why the Government resist the concept of consent and agreement—surely, that is the way forward. I think the only reason they resist it is that they do not trust the people they are negotiating with. But they are negotiating with members of a unionist party in the United Kingdom: it does not say much for a United Kingdom if you cannot trust the other partners to that kingdom to reach a sensible agreement. That is what the fuss is about and why I support these amendments.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Chair, Economic Affairs Committee

My Lords, I want to follow on from what the noble Lord said. I am not going to talk about Wales, but one of the arguments often put forward by Scottish nationalists is that we must not leave the European Union because we are so dependent on the single market that is the European Union. I think we should focus tonight on the single market that is the United Kingdom. I listened to the noble Lord and I take his point about the Barnett formula. He is absolutely right that it is extremely generous to Scotland and very unfair to Wales. In my opinion, resources should be distributed according to need and not on the basis of a formula that has been amended according to population. But if it is to be the case that the Welsh Assembly and the Scottish Parliament are to have a veto on these matters, what is the prospect of Wales being able to get a fairer share without that being vetoed by Scotland? It is a matter for the United Kingdom Government to decide for the United Kingdom as a whole, and for the single market that is the United Kingdom as a whole.

I have to say that I think the amendments from the noble and learned Lord, Lord Hope, are naive. We are faced with an Administration in Scotland who are absolutely determined to break up the United Kingdom —that is their purpose. We can have all the talks we want with the political Administration, until the crack of doom, but hey ho, we will find that they are saying something completely different from the civil servants. The civil servants will take exactly the kind of sensible, pragmatic, legalistic approach that the noble and learned Lord, Lord Hope, has. But the politicians have another agenda—an agenda which has been set back by the courage of the Prime Minister—which is to destroy the United Kingdom. As a unionist, I have an agenda to make sure that every part of the United Kingdom is treated fairly and that there is no veto for any part of it. We have four parliaments in the United Kingdom, but we have only one United Kingdom Parliament, and that is this.

When Lord Sewel produced his convention, it was greeted with great enthusiasm by the Scottish Parliament. If the noble and learned Lord looks at the record, he will find that this Parliament has legislated for the Scottish Parliament to a very considerable degree—mainly because, until recently, it sat for only one and a half days a week on legislation and so did not have enough time. Now we are in the absurd position where, when a perfectly sensible accommodation has been offered to them by the United Kingdom Parliament, the posturing of Ministers in the Scottish Government—which is about trying to create division and turn everything into a constitutional crisis—is against the interests of having a single market, which they say is essential to the Scottish economy in the case of Europe. Their position is that they do not want any of these powers to come to Wales, Scotland or the United Kingdom; they wish them to remain in Brussels. It is an utterly hypocritical stance. They would rather these matters were decided in Brussels, where even the Scottish Nationals elected as Members of Parliament down the Corridor would have no say. It is political gamesmanship and we would be foolish to accede to it.

We should proceed with the Bill, unamended, and ensure that the United Kingdom Government can work with the Parliaments of the various parts of the United Kingdom to preserve that single market—which, incidentally, is worth four times as much to the people of Scotland in income, jobs and everything else than the single market they purport to defend, which is that of the European Union.

This is a great deal of heat and waffle perpetrated by people who do not like the result of the referendum. They are terribly keen on referenda but find it difficult to accept the results. They argue that we have to have another referendum on independence and we have to have another referendum on Europe. I say to the noble Lord, who is normally very courteous, that to describe in such pejorative terms the 17.4 million people in the United Kingdom who voted to leave—400,000 of whom were Scottish nationalists—is following the course of his leader, who used disgraceful language to insult the 17.4 million people only this week.

I hope that the House will reject these amendments so we can get on with the task of making a success of the United Kingdom, which at last has the powers and authority to ensure that all parts of our country benefit from being able to determine our own affairs.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My noble friend has given an interesting speech but it does not appear to bear any relation to the amendments before the House this evening. The amendments go to the heart of obtaining the consent of the Scottish people as expressed through the Scottish Parliament. He is a democrat, I am a democrat. Does he not agree that the amendments go to the heart of devolution and that that is what we are trying to maintain, particularly in the amendments that the noble and learned Lord, Lord Hope, introduced this evening?

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Chair, Economic Affairs Committee

If the noble Baroness would like me to repeat my speech when she is listening, I will happily do so. However, I do not think the House would like me to. Perhaps she will read what I have said. She says that this goes to the heart of democracy: well, these are matters for the United Kingdom Parliament. There is no veto for any of the devolved Administrations. We have debated this endlessly. This amendment would give a veto; it would mean that the tail was wagging the dog; it would mean that the Scottish Parliament could prevent what was in the interests of the rest of the United Kingdom. That is not democracy.

The noble Baroness needs to address the words on the Order Paper—the words of the amendment—and listen to the arguments, instead of pursuing her ideological determination to reverse the decision of the British people.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I hope that the speech made by the noble Lord, Lord Forsyth, will be reported loudly and clearly in Scotland, because I have no doubt that only one set of winners will be coming from that. The whole of the previous debate and this debate have centred on the question of trust. I am not sure whether the comments we have just heard will help create that trust in future.

The noble Lord, Lord Forsyth, said that my friends in Scotland were ignoring the English single market while building up the European single market—but the European single market includes the UK single market. It is one single market—a bigger one. Those who are looking to that single market are looking outward, not inward and restricting their boundaries to around the coasts of these islands.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Chair, Economic Affairs Committee 10:00 pm, 12th March 2018

I said no such thing. I said that the single market, which is the European market, is a quarter of the size of the single market that is the United Kingdom for Scotland.

Photo of Lord Wigley Lord Wigley Plaid Cymru

It may well be, but the European single market includes England at this point in time. In other words, they are not losing anything.

The main point I want to come back to is that made by the noble Lord, Lord Thomas of Gresford, with regard to resources. If we are being asked to trust giving a veto to Westminster and to the UK Government —that is essentially is what is coming through in a number of these clauses, whether or not that veto will be used in any way—that is a power to impose policies in areas that have been devolved. That is clearly going to rankle with people who have become used to using those powers.

We have had experience of this. The noble Lord mentioned regional policy. The noble Baroness, Lady Randerson, will remember the problems we had in the early days of the National Assembly for Wales. There were problems in getting Westminster and Whitehall to pass over money that was for Wales and not holding it in the Treasury in London. That was what was happening, and it was not until Mr Barnier intervened with the then Chancellor, Gordon Brown, that £442 million was passed over to Wales. It was being held back by Whitehall and the Treasury. That is the background to the lack of trust we have. If we are to build up a future of trust, which is what I want to see between the nations of these islands, it has to be recognised that in some areas the leadership is coming from the devolved regimes. In other areas such as international affairs and defence, it is fair enough that the responsibility should lie here, and there will be grey areas. However, we have to make sure that we have a mechanism whereby we respect each other to sort out the grey areas, but attention has not been paid to that side of the argument. We should concentrate on that, and the amendment moved by the noble and learned Lord, Lord Hope, is a step in that direction.

If the Minister will consider the request made by the noble and learned Lord, Lord Hope, and respond to his proposals in this context as a way of showing good will towards reaching some understanding in the other contexts we shall come to, perhaps we will then start to make progress. May I ask the Minister to consider inviting those interested in these matters to meet to try to agree on a proposal from here that would go at least some way towards answering the problems being felt in Cardiff and Edinburgh? This is not insoluble, but it needs good will. However, good will is not always in evidence here.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I am a signatory to two of the amendments in the name of my noble and learned friend Lord Hope of Craighead. I should declare first that I am a member of the Bevan commission, which has been quoted, and I should also say that funding for Wales has indeed been a concern over time.

To return to these amendments and the core issue of trust, a wise saying comes to mind: trust arrives on foot and leaves on horseback. It seems as if we have had a few galloping horses through the Chamber this evening, but we have to move forwards. In the new world we will face after Brexit, which will not be easy—no one is now pretending that it will be—we need to be a United Kingdom and we need to pull together. Given the Minister’s remarks in response to the previous group of amendments—he indicated that he sincerely wants to bring the parties together to restore trust and find a resolution that helps us to move forward—I hope he will be able to work with others to achieve that, and that he will give serious consideration to these amendments. They have not been tabled to divide; rather they seek to establish a degree of reconciliation, restore trust and find a working way forward.

Photo of Lord Deben Lord Deben Conservative

I wonder if I can be my usual emollient self at this point. I admit to being of Welsh extraction with a Welsh-speaking father. My noble friend Lord Forsyth spoke entirely from the point of view of someone who has been bruised—I would be on his side in this—by the activities, and sometimes more than that, of the Scottish nationalists. But the debate here is not about vetoes, although the amendment would confer them; rather it is a debate about trust. My noble friend says we can all work it out: this Government, the coalition Government and the Labour Government continued the utterly unfair system of the Barnett formula, which has done such damage to Wales, and, as the noble Lord, Lord Wigley, said, the Labour Government retained large sums of money, rather than pass it on in the system we previously had.

My noble friend knows very well that I believe in a single market. I do not have a view that narrows that single market to the United Kingdom. I look to a single market that continues through the whole of Europe, which is, of course, of great benefit to all of us and I am sad that he should try to remove us from it. But I do not think that it helps in this debate not to face the very considerable lack of trust in both Scotland and Wales, where there is a history of not getting a fair share except almost by force.

Scotland has managed to get itself into what many of us feel is the opposite position. That is how the Barnett formula works. It would be good for the Government of Scotland occasionally to recognise into what a favourable position history has put it. However, I should not like the Committee to fail to recognise, because of the way these amendments are drawn and have been put together, the specific position of Wales, not least because of the special position in which the north of Ireland has managed to get itself, for political reasons, and the historical position Scotland has been in. This is not to sow discord between the parts of the United Kingdom; it is merely to say to my noble friend the Minister, for whom I have enormous respect—his last speech summing up was an exemplary one to show how the Government can deal with issues in a way that at least makes the Committee feel that it is listened to; I thank him for that, because it was a very different touch—that there is a real feeling among people in Wales that the history does not help people believe that the United Kingdom Government will be entirely even-handed on this issue. Therefore, if, in the withdrawal Bill, Wales has its membership of the European Union, from which it has benefited very significantly, taken away, is there a way the Government can at least give greater confidence to Wales? If they do not, I fear the ability to come to a compromise will be made very considerably more difficult.

I feel my noble friend Lord Forsyth was partisan in the way he concentrated only on Scotland. He was kind enough to say that he did not know about Wales, but I do, so in these circumstances, will the Minister please give us a little more confidence? I should very much like my noble friend, whose own name reminds us of Aberystwyth, to give us a feeling that Government will, in some way, find a manner to give confidence in the Bill, since this is not appropriate.

Photo of Lord Wallace of Tankerness Lord Wallace of Tankerness Liberal Democrat

My Lords, as a co-signatory to the amendment, I shall briefly make three points. My first is to correct something said by the noble and learned Lord, Lord Hope of Craighead. He said that the smooth running of the early years of devolution was because we had a Labour Government in Westminster and a Labour Government in the Scottish Parliament. In fact, it was a Labour-Liberal Democrat coalition in the Scottish Parliament. That is an important difference.

Secondly, I endorse what the noble and learned Lord said when he gave the example of orders under the European Communities Act 1972 and the memorandum of understanding between the Scottish Government and United Kingdom Government on consultation, and how these might be taken forward. My experience in the Scottish Executive at the time was that it worked. I can say that because I cannot remember an issue over which there was any major dispute. It is also fair to say that I cannot think of any major dispute on that kind of area, some of which was very technical, while the Scottish National Party was in either minority government after 2007 or majority government after 2011. It is possible on a whole range of technical issues to get some common- sense agreement. That is why we should persevere.

Thirdly, the noble Baroness, Lady Finlay, said that underlying the amendments is an effort to have building blocks for trust. I shall not repeat the arguments I made in the previous debate other than to say to the noble Lord, Lord Bourne, that, like the noble Lord, Lord Deben, I appreciated his comprehensive response to it. He seemed to suggest that I had spoken about allowing a veto over areas that were non-devolved. Given that the previous amendments were about modifications to the Scotland Act, I do not think anything I said could have given that implication. Here, where we are talking explicitly about matters within the devolved competence of Scottish Ministers, that cannot be said either. I think there is something we can build on there.

Photo of Lord Kerr of Kinlochard Lord Kerr of Kinlochard Crossbench

I share the admiration of the noble Lord, Lord Deben, for the way in which the Minister summed up the previous debate. He was a rather brilliant performer of the work of the fire extinguisher. Foam was spread over all of us and calm ensued. It was a brilliant performance.

I am sorry that, this time, the Minister has to deal with pyrotechnics from a pyromaniac, in his colleague, the noble Lord, Lord Forsyth of Drumlean. It is rather a pity that the attacks of the noble Lord, Lord Forsyth, on the party now governing in Scotland are responded to only by a Welshman, the noble Lord, Lord Wigley. He responds very well, but, as a Scotsman who does not support the Scottish National Party, it seems to me rather an easy trick to score pyrotechnical victories against an opponent who is not in the room.

Trust is what this is all about. I can see nothing wrong with this amendment; I cannot see any reason why Ministers should not buy it now. If they cannot, a discussion needs to start. It does not help to insult the party in office in Edinburgh by implying motives. It may well have such motives, but they were not those it explained when it published a perfectly reasonable economic analysis at the end of last year which established clearly the damage that will accrue to Scotland from leaving the single market. The scale of the damage was almost exactly the same as what we have now seen in the Treasury analysis for the United Kingdom as a whole—eight, five, two: the same numbers pop up in both studies. The Scots are not being unreasonable or necessarily malicious when they say that they would prefer to remain in the single market. Of course, the market of the United Kingdom is more important to Scotland than the market of the rest of Europe, but that is not the point; they do not want to have to choose. That seems a perfectly reasonable position to adopt. It does not help establish trust to insult them.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I had no intention to speak, but having added my name to Amendment 124, I want entirely to endorse what was said by the noble and learned Lord, Lord Hope of Craighead, in introducing it. I want also to refute any allegation that I am an ideologue; I have always considered myself a pragmatist. It is unfair to impute a position to a party that is not represented in this House and cannot answer back to any of the allegations made previously.

I believe that this amendment goes to the heart of the consent and trust that has been debated here at great length. I declare a vested interest in that I am doing some work and I visited the offices that my noble friend Lord Forsyth opened: the Water Industry Commission for Scotland is doing some great work across the European Union, as indeed is Scottish Water, providing technical assistance. Obviously, one hopes that that work will continue after Brexit day. I do not see this amendment, spoken to by the noble and learned Lord, Lord Hope, or the amendment of the noble Baroness, Lady Suttie, as the tail wagging the dog: this is simply an effort to bring the Scottish, the Welsh and the Northern Irish people with the Government of the day.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Wales, Parliamentary Under-Secretary (Housing, Communities and Local Government) 10:15 pm, 12th March 2018

I thank noble Lords who have participated in the debate on this group of amendments, particularly the noble and learned Lord, Lord Hope, and the noble Baroness, Lady Suttie, for tabling their amendments. I will seek to deal with the substance and then very briefly pick up some of the points that were made in debate. Amendments 102, 124, 103 and 125 seek to place a requirement on UK Ministers to have the consent of devolved Ministers when using Clause 7(1)—I think that issue will not arise now but I am happy to discuss it further; however, I think we will have exhausted that by bringing proposals forward on Report—Clause 8 and Clause 9, where it is appropriate, in areas of devolved competence.

I stress that the concurrent powers in this Bill do not in any way undermine the devolution settlements. Rather, they give the UK Government and the devolved Administrations the tools required to respond to what is a shared challenge of ensuring the functioning of our statute book in a pragmatic and collaborative manner which reflects current practice, and I stress has been the norm for some time. I made this point on the last group of amendments and an example can be found in new Schedule 3A to the Government of Wales Act 2006, which lists no fewer than 34 laws containing concurrent functions for United Kingdom and Welsh Ministers, including powers to make subordinate legislation.

I also highlight Section 2(2) of the European Communities Act 1972 itself, which is concurrent and has routinely been used to make a single set of regulations to implement directives relating to devolved matters. Take, for example, the Marine Works (Environmental Impact Assessments) Regulations 2007—enacted, therefore, under the last Labour Government. If a deficiency arises within that statutory instrument and we all agree on the best way to correct it, it makes little sense for four Administrations to make four sets of regulations to make the same amendment. This is of course compounded by the volume of legislation that will be needed in this House and in the devolved legislatures to ensure the proper functioning of our laws after exit day.

Our approach in this Bill is to mirror that effect: to continue working collaboratively with devolved Administrations, which is certainly the norm, to ensure that our statute book is fully functioning on exit. This has not been a cause of conflict in the past—there have certainly been differences but they have been few and far between—and we do believe that it should be a cause of conflict in the future. We cannot compromise the flexibility provided for by the concurrent power that allows us and the devolved Administrations to benefit from shared working. This is crucial for us to meet the considerable task that lies ahead in order to have a complete, functioning statute book on exit day. I remind noble Lords of the clear commitment the Government have made that we will not normally use the powers in this way without the agreement of the devolved Administrations. I am happy to restate that: it is there in black and white in the delegated powers memorandum and in written evidence to the Constitution Committee. It was stated in the other place and I have repeated it here today.

However, I take very serious note of what my noble and learned friend Lord Mackay suggested about the possibility of a memorandum of understanding. I shall take that away and look at it. Noble Lords have asked why such a commitment is not included in the Bill and I would be happy to look at this with them and to hear their views, taking seriously what my noble and learned friend has said. There can be no doubt about the commitment this Government have made to “normally” seek the agreement of the devolved Administrations on these matters. I hope that that offers some reassurance.

Let me pick up some points made by noble Lords during the debate, first thanking the noble and learned Lord, Lord Hope, for the constructive way he has introduced this set of amendments: I am very happy to talk about this further, ahead of research, as I have suggested. I also thank the noble Baroness, Lady Suttie, and quite understand her seeking the best interests of Northern Ireland, which must be treated in precisely the same way. As I have indicated, I am grateful to my noble and learned friend Lord Mackay of Clashfern for his suggestion about a memorandum of understanding, which I would like to take away and look at further.

The noble Lord, Lord Thomas of Gresford, made far-reaching points on Barnett. We certainly made some headway on that when I was in the Assembly—not because I was in the Assembly, but I remember some headway being made on it. That issue is of course still there but it is far beyond the Bill, let alone this amendment. He made a point, as did others, about the importance of trust, which I take very seriously. I thank the noble Baroness, Lady Finlay, very much; trust is important and we need to build it.

My noble friend Lord Deben is at his most deadly when he seeks to praise me. He was being so constructive that I am bound to agree with him, and I thank him very much for his kind comments. I know that he speaks with authority and understanding, particularly on Wales, and once again on the importance of trust. Again, I take the point made by the noble Lord, Lord Kerr, on the importance of that in our discussions. We can of course discuss this further. I thank the noble and learned Lord, Lord Wallace, for clarifying the point and I am sorry if I misrepresented him. It was certainly unintended so I take that point, too.

My noble friend Lord Forsyth made some serious points about the dangers of the unintended consequences of legislation. We have to be careful of that and I take his point but that said, there is the serious and important issue of building up trust, as my noble friend Lady McIntosh reminded us. She also reminded us of how we all have interests in different parts of the country; it is not as if we are talking about a union that does not mean something. When we all have relations, friends and interests in different parts of our country, we have a shared interest in getting this right.

On the suggestion about engaging made by the noble Lord, Lord Wigley, I am very happy between now and Report to meet with officials to see whether we might move in the direction of a memorandum of understanding. My noble and learned friend Lord Mackay, who has vast experience not just of Scottish issues but of legal issues, made a very valid point as to how we might achieve that. In the meantime, I ask the noble and learned Lord and the noble Baroness if they could perhaps withdraw their amendments.

Photo of Baroness Suttie Baroness Suttie Liberal Democrat Lords Spokesperson (Northern Ireland)

My Lords, I join in the general compliments to the Minister and thank him very much for his courteous and detailed replies this evening, and for his commitment to engage further with noble Lords before Report. We will no doubt return to many of these issues on Clause 11 in Committee, and again during Report. But in the meantime, I beg leave to withdraw my amendment.

Amendment 103 (to Amendment 102) withdrawn.

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

My Lords, since that amendment has been withdrawn I am now in a position to withdraw Amendment 102 but I wish to make a few remarks. First, I must thank all noble Lords who have spoken in this rather briefer debate, and particularly the Minister for his helpful response to it.

I have to apologise to the noble and learned Lord, Lord Wallace of Tankerness, for my lapse of memory as to the nature of the Government at the beginning of devolution. He was of course absolutely right on that. I reject the criticism of the noble Lord, Lord Forsyth, that I am being naïve. I believe that my amendment had cross-party support in Edinburgh and, as the noble Lord, Lord Deben, said, it is really all about a question of trust.

If I understood the Minister correctly, we are really in the same position on Clause 7 as we were on the previous group. In effect, he will say that the Clause 7 problem is going to be exhausted. There is therefore nothing to be lost by putting in the same thing that he is prepared to put in about the Parliament; he might as well put in something about the Ministers, too. There is a serious issue with Clause 8, which would benefit from further discussion, but perhaps that is for another day. On the basis that we can still talk about it, the proper thing for me to do is to withdraw the amendment.

Amendment 102 withdrawn.

Amendment 104

Moved by Lord Berkeley

104: Clause 7, page 6, line 25, at end insert—“( ) No regulations affecting or amending the frontier control procedures for freight transport at borders between the United Kingdom and the EU may be made unless a Minister of the Crown has laid before both Houses of Parliament a report demonstrating that the new or amended procedures will not increase delays to freight transport.”

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, I shall speak also to Amendment 231. This group of amendments is completely different from the previous one. It is about frontier controls between the UK and the EU after Brexit. The amendment would require Ministers to report to Parliament on how any new procedures can be implemented without increasing delays and cost. This is a very serious issue. I regret that there is no separate Bill, so far, on this. We have already been discussing the Haulage Permits and Trailer Registration Bill, which has been a very useful forum, but we are tonight discussing this issue.

Ministers have stated time and again that there will be no border control between the Republic of Ireland and Northern Ireland. They might rightly say that but they have also told the Commission that they do not want to remain in the single market and the Commission has taken that into account in its draft withdrawal agreement dated 28 February. To a simple mind like mine, since the Republic will stay in the EU and the UK will not, and since the Government insist we cannot remain in the single market, there has to be some kind of frontier between the Republic and the United Kingdom. Whether it is between the north and the south of Ireland or down the Irish Sea, we have debated many times, but I cannot see how it can be fudged or cherry-picked.

The volume of traffic between the UK and the EU is huge. In 2016, about 67 million tonnes of unitised freight were imported or exported, of which 14 million tonnes were temperature controlled. In 2015, there were 55 million UK customs declarations, and that number is due to multiply by five after Brexit. They have all got to be checked and controlled somewhere. Can that be done electronically at frontiers? The British Ports Association has said that one of the biggest challenges the ports face is accommodating the new environmental health standards inspections at the borders, which will obviously cost a lot of money and time if they go wrong. It is estimated that 3,000 trucks a day carrying temperature-controlled traffic might need checking for environmental health standards.

I have a couple of interesting examples which have come from the Irish Exporters Association, which seems to be more open with its ideas than people on this side of the frontier. A lot of people have talked about the benefits of the EU-Canada free trade agreement. An issue found there was the need to check the compliance of pallets used to carry the product within the container with the ISCN standard. If a load is found to have one non-certified pallet or one non-certified repair to a pallet, the whole lot is sent back to the sender. That will cause chaos. One has to question what proportion of trucks would need checking. The UK will not say. I have not heard any information from the Government, but the Irish News states that 6% to 8% would need their paperwork checked and some visual inspections at the frontier, which looks to me like roughly 1,000 trucks a day in addition to the temperature-controlled traffic, and the Government say there will be no queues. They have to do something about this.

There is a real problem. If the UK is not in the single market, and the Republic is, there have to be some controls somewhere. It is a great shame that we do not have a representative of Sinn Féin in your Lordships’ House to give a wider view of the problems in Northern Ireland. The noble Baroness, Lady McIntosh, regretted the lack of SNP members here to have a good debate about it.

What are the Government doing about this in terms of IT systems? The tax commentator Richard Murphy reports that there are 85 IT systems at UK borders, of which 30 will need to be replaced or changed. I do not think I need to go into the disasters of some previous UK IT systems, but there is little evidence that the Home Office or Customs will be able to have a system up and running for when we need it. It may take many years.

I will say a word or two about rail freight. I declare an interest as the chairman of the Rail Freight Group. The problems are much the same, but there is an easier solution, which is to do the controls at the inland terminals that exist at the moment from a security point of view. That would be fine, and discussions are continuing, but the authorities seem to be trying to make it as difficult as possible. They will do security but they will not do anything else. I hope that the Minister may be able to encourage this along, because it is an obvious solution to avoiding queues at the frontiers.

However, there is a ray of light. The Chartered Institute of Logistics and Transport—I declare an interest as a vice-president—has been working hard with the industry and parts of government to develop something called authorised economic operator status. This could work very well, if only they could get some real buy-in from all the different departments that will be involved in it. It means that there may be a way of getting through frontiers without stopping, for those cargoes that qualify. Another issue the CILT raises is that of self-certification. HMRC accepts self-certification for VAT but appears to reject the same principle when applied to tariffs and import duty payments. Perhaps the Minister could look at that one too, because it is pretty important.

Another issue is to do with taxation. The Taxation (Cross-border Trade) Bill, which has not come to your Lordships’ House yet, is very long—it has 156 pages, I think, and rather more in other documents—but the CILT has raised two points. One is the value of chargeable goods and the other is something called preferential origin. Your Lordships will be glad to hear I will not go into those tonight, but I am worried about the delay in this taxation Bill and the consequent inability of the industry to plan for these really important tax issues. They may come next year—if we have longer to do it, so much the better, but we have to be prepared.

There are a number of reasons for this amendment. Clearly, it is a probing amendment, but I hope that the Government can accept the need to produce a detailed and comprehensive report of how these frontier control procedures can be implemented and keep to the costs and the programme. There is very little information at the moment. It is the Government’s problem, and they have to sort it out, but I hope that they will integrate and work closely with the industry and maybe even arrange some more meetings before Report so that this can be discussed further. I beg to move.

Photo of Lord Bradshaw Lord Bradshaw Liberal Democrat 10:30 pm, 12th March 2018

My Lords, the logistics industry permeates all our lives. It dominates retailing and allows most sophisticated industries, such as the motor industry, to organise themselves on a multisite basis. When we buy something in most shops, we start a process which means that our purchase will trigger the order for a replacement, stretching back to the manufacturer or supplier. This arrangement has become very much more sophisticated since we joined the EU 44 years ago. Supplies of parts flow through a network as complicated as a spider’s web, throughout the community and beyond. This is what makes your orange appear at breakfast or your new car come off the production line.

We are told in ever shriller tones by the logistics industry and its customers that the survival of that system depends upon frictionless trade: no stops at borders, no need to provide documentation and no tariffs—they are the words of the Freight Transport Association. The industry was lured into a state of complacency by the assurances of Ministers that this “frictionless” trade would continue after March 2019, which is less than a year away. However, that complacency is swiftly turning to panic as it becomes evident that the assurances offered concerning frictionless trade are becoming less likely to be realised. Trade deals, even if these could be negotiated, seem a very distant prospect. Your orange at breakfast has to come from Spain, and the parts to make and deliver your Mini need to arrive at Cowley every 20 minutes or the production line stops. The prospect of empty shelves in the shops, as witnessed recently due to the weather, becomes almost a certainty.

If there is any interruption at ports or similar points of entry and exit, I suggest that people’s anger with those politicians who have sold them a false prospectus will be deep and severe. If people are unable to obtain the supplies of groceries to which they have become accustomed, or workers in factories that cannot get a time-critical supply of spare parts are laid off, there will be trouble. The chance of protests in the streets as these shortages become apparent should be taken far more seriously than the suggestion of a popular uprising if the concept of Brexit is eventually frustrated. The mantra “Europe needs us more than we need them” is perhaps best not put to the test, as there will be those doing business here who decide to seek the certainty of closer union with the EU by moving their operations within its borders. The future of the aircraft construction industry is an example.

The logistics problem is very serious in respect of Ireland, to which the noble Lord, Lord Berkeley, has referred. A very large amount of perishable material has to transit via Great Britain on its way to and from Europe. If any border checks are necessary to secure passage at either Holyhead and Dover—probably both, as things stand—there will be serious implications for that trade, and it will surely lead to the establishment of direct ferry links between the Republic and Europe to avoid using those at Dover or other crossing points. At this moment the Government of the Republic are giving serious consideration to that possibility.

Maybe those in the logistics industries—notably the ports industry, the Freight Transport Association and the Road Haulage Association—have kept quiet until now because they have always trusted and supported the party opposite and have trusted the assurances of David Davis and Liam Fox. That misplaced loyalty is about to be tested, possibly to the point where these businesses suffer permanent damage. The purpose of the amendments is to seek from the Government, at this late stage, the humility to accept that the promises about frictionless trade cannot be delivered and to bring back on Report a plan to keep Britain working and supplied in the present just-in-time way, or they face a defeat in this House on Report. As the Freight Transport Association said, the trailer registration Bill, to which the noble Lord, Lord Berkeley, referred, which is coming back to your Lordships’ House in Committee, is not a viable solution.

As the Prime Minister said only last week, we need certainty. I submit to your Lordships that we are as far from that as ever.

Photo of Lord Bilimoria Lord Bilimoria Crossbench

My Lords, I put my name to both the amendments and I would like to build on what the noble Lords, Lord Berkeley and Lord Bradshaw, said. Some 70% of the UK’s food imports by value are from the EU, and 60% to 65% of the UK’s agricultural exports are to other member states. Any risk of delays would put a strain on our supply chains and would probably raise food prices.

The Channel Tunnel illustrates how important timing is: 1.4 million trucks and 2,900 rail freight trains went through in 2014, transporting approaching £100 billion-worth of goods between the UK and the continent, including almost £200 million-worth of iron, steel and metal products from Yorkshire and the Humber. The time saved by using the Channel Tunnel was equivalent to 120,000 days in 2014, saving a lot of money on each crossing. So any delays and any more customs checks would up-end such financial projections and have downstream consequences.

One whole aspect of Brexit is the huge complexity caused. The amendments highlight the impact that it will have not just on our freight industry but on as us a public. The list of border operations includes revenue collection, safety and security, environment and health, consumer protection and trade policy. Modern customs systems have to balance providing security with facilitating the free flow of goods. Some 37 million tonnes of trade a year pass through Southampton alone, including more than 1 million containers. How could you possibly inspect every container? It would just create delays and blockages.

Of the freight transport that goes in and out of the UK, 69% of that going to the EU is lorry traffic, whereas 99% of non-EU is containers. Of the EU share, between 75% and 100% of lorry traffic goes through Dover, the Channel Tunnel, Harwich and Holyhead. We cannot possibly have any delays that will make life more difficult for our businesses. I just mentioned the requirement for food products. Ireland and the British land bridge have also been mentioned. We will be talking about air transport later, and rail in more detail.

The UK will not be deemed a third country until the end of any transition period, if one exists. Even if the UK were to remain in the customs union with the EU, it would still be a third country and goods would be subject to checks. Freight using the UK land bridge will effectively be subject to non-tariff barriers—people always miss the non-tariff barriers.

Brexit will cause one disaster after another in this area. Customs’ rule of thumb is that 2% of cargo coming from third countries is subject to physical exam, while 4% to 6% of such cargo is subject to documentary checks. However, the Department of Agriculture is obliged to check up to 50% of food and other products that contain an element of food, such as cosmetics, pharma or medical devices. There is a 100% check on animals, including pets. This is how complicated this whole area is. Revenue will prepare a list of approved customs courses for use by traders. Traders should apply for customs registration numbers. This will be absolutely disastrous; I do not think people have comprehended how difficult it will be.

As the noble Lord, Lord Bradshaw, mentioned, 50% of FTA members operate more than 200,000 lorries: almost half the UK fleet. FTA members represent 90% of freight moved by rail. FTA members consign 70% of UK visible exports by sea and 70% of UK visible exports by air. They speak for this industry. If we do not listen to them, we are not listening to the people who do this. How UK companies get goods to and from the continent in the future will be a matter for EU negotiations, but the changes to border controls and customs will impact our transport efficiency. There is no denying that. At the moment there is frictionless movement of goods to and from the UK. Unless a solution can be agreed as a free-trade agreement when the UK moves outside the single market and the customs union, that will change.

We need to listen to the FTA. On top of that, there will possibly be immigration checks. Those combined with all the other checks will constitute a disaster. Some members of the FTA say that they cross the border four or five times a day—and of course there is the Irish land bridge, which I shall come to. Red tape is likely to increase. Brexiteers talk about EU red tape, but this will create red tape that we cannot even dream of. British manufacturers from all over the country will have to list the geographical origin of each component or ingredient of their finished products and specify how many imported products were modified in the UK. Can we even try to start to imagine all this?

The FTA warns of 15-mile queues at the port of Calais if border checks are introduced after Brexit. This should be a wake-up call. Checks at Calais could result in traffic queues of up to 50 miles at the French port. British logistics companies are some of the best in the world at the moment. The FTA is so concerned that it has created its own 10-point manifesto; it is so worried about the situation. The gridlock that could be created at Dover could have queues of 30 miles going towards London as 2.6 million trucks pass through that port every year—and, as I said, the Eurotunnel takes 1.6 million. On one side of the Eurotunnel we have an area of outstanding beauty, so how will we create the infrastructure to be able to deal with all these blockages? The problem for business is not just the prospect of tariffs but the disruption of the free flow of goods.

We need only to look back to 2015 when a French ferry workers strike led to more than 7,000 trucks backed up on the motorway as far as Maidstone. With as many as 16,000 trucks using Dover, a potential repeat of that would be absolutely alarming. We are looking at stopping the economy. Business lost £21 million of stock because of the traffic chaos in 2015. Live shellfish meant for Paris had to be dumped. This is the sort of problem that we could be facing. Asked if the EU would be ready for a reintroduction of customs in two years, experts have said, “You make me laugh. You will need at least double the number of customs officials than you have now. They will need to be recruited and trained and that takes time”.

If trucks coming from the EU are treated like non-EU, the ports will be in permanent gridlock, according to local customs experts. With Brexit—this is the irony of it all—we are coming full circle, returning to the pre-1993 system. That is going backwards, not forwards. What about the staff that freight agents and customs will need to recruit? What about the documentation? There is a possibility that there could be 50 transit documents per transaction.

This is absolutely awful. If the Government were able to implement a viable system of checks, it would cost traders another £45, and businesses even more. Currently, non-EU trucks take up to 20 minutes to go through Dover. If we start doing that for all our trucks, can you imagine the disruption that that will cause? On top of this, lorry traffic in Dover has increased by a third in the past five years. If it has increased, and is projected to do so, how will we manage to deal with all those increases? So these amendments are really serious and should be a top priority for the Government. I have two quick examples. Honda UK relies on 350 trucks a day arriving from Europe to keep its Swindon factory operating, with just one hour’s worth of parts held on the production line.

I conclude with Ireland’s British bridge to European markets. Many Irish farmers and food producers use Britain as a time-saving flyover to get to Europe. Dublin is seriously worried, because a journey from Dublin to the continent takes 10 hours but without going through Britain would take 40 hours. Ireland would not be able to manage; the Dublin port would not be able to cope with that. The revenue chairman in Ireland told a committee in Ireland’s Parliament that customs and the impact on truck freight would be,

“one of the biggest challenges post Brexit”.

I conclude with another Irish quote.

Oh!

Photo of Lord Bilimoria Lord Bilimoria Crossbench

If noble Lords do not like facing reality, they can cheer, but I am talking about this reality as a businessman who imports from and exports to Europe. I will be affected, my consumers will be affected and our citizens will be affected. Noble Lords can laugh as much as they want, but this is the reality.

Aidan Flynn wanted the prospect of a deal. This is the quote:

“We’re all looking for transition, in terms of whatever changes are going to be required … but effectively, if there’s no likelihood of a plan by October 2018 in terms of UK-EU negotiations you’re going to be without a doubt going into … a cliff-edge situation”.

Photo of Lord Robathan Lord Robathan Conservative

My Lords, the noble Lord, Lord Berkeley, raised a very important point about freight transport crossing the border between the Republic of Ireland and Northern Ireland. It is a very legitimate issue to raise and I hope the Government will listen. He also identified that, of course, this can be solved with modern IT.

I want to bring the House’s attention to the reality of the border in Northern Ireland. I was working in the Northern Ireland Office just over three years ago. I said to my office, “I’d like to go to South Armagh”. They said, “Well, Minister, that’s a frightfully bad thing to do”, but I went. Noble Lords may know that South Armagh used to be referred to as “bandit country”. Let me tell you, three and a half years ago, it certainly still was. I was with a lot of police, with a helicopter going overhead; the police still fear for their lives there because there are booby traps and things laid for them.

I particularly want to focus on smuggling. We followed a lorry on one of the little lanes from the Republic into the north. We did not stop, but the police said, “That’ll be smuggling”. We saw the impact of smuggling diesel, because there are different duties in the south and the north; huge amounts of diesel are imported from the south to the north, including a lot of red diesel that is then cleaned—sorry, has the red taken out of it—and has a huge environmental impact. There are still different subsidies there. Cattle get smuggled back and forth across the border because a lot of money can be made through smuggling across the border. There are two different customs so, of course, there are customs officers on the border; not sitting in posts, as they used to be, but still down there. They do not do much, it has to be said; there is less to do because we are part of a single market. There are, I believe, 275 different crossing points between the south and the north of Ireland, on a border of some 305 miles. Between 1922 and 1972, it was never possible to police everyone. During the Troubles—I served out there for a bit—it was not possible to stop terrorists crossing the border. We used to put concrete blocks and everything at the border, but it did not work; people came across the border.

I also remind noble Lords that there are different currency units: Ireland uses the euro but we use the pound. People manage to get past this quite easily and they will manage to do so in future as well. People say that the border in Ireland is a huge problem; it will only be a problem when we leave the European Union if people wish it to be so. It does not have to be so; good will and common sense on both sides will show that it is not beyond the wit of man for Northern Ireland and the Republic of Ireland to co-exist quite happily and trade with each other—as they did before 1922, between 1922 and 1972, and since.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

I have not spoken on this Bill at all yet. I have made a point of not speaking because I understand the pressure on the Government, but I want to raise one issue—trusted trader status. The Government have told us that they intend to establish such a system on the border of Northern Ireland and southern Ireland. We are told that an exemption will apply to small and medium-sized enterprises involved in cross-border trade. The Government say that it is possible to manage the allegation that there will be substantial fraud under such a system. First, where can we find a definition of what constitutes a small or medium-sized enterprise? It is very important that we know that in advance. Secondly, do we know what percentage of trade will fall under that description? Thirdly, when they talk about “managing” a system, what kind of management arrangements do they intend to set in place to ensure that fraud does not take place? Finally, what will happen when it comes to customs entries for those firms that are not covered by trusted trader status? Will the clearance and entry arrangements for their goods going over actually be on the border posts? I presume that if some businesses are exempt then there must be some actual control on the border itself. These issues need to be answered at a very early stage in the procedure. I have truncated much of what I wanted to say, but I want to get this on the record this evening.

Photo of Viscount Hailsham Viscount Hailsham Conservative

My intervention at this stage will be extraordinarily brief. What I say about Amendment 104 also applies to Amendments 105 and 106, which are in the two subsequent groups. There is a great deal of merit in requiring these reports, but there is no reason at all why they should be linked to the initiation of the regulations: that is slightly misconceived. The noble Lords, and my noble friend, who put their names to the amendments are lacking ambition. They should require these reports to be published, in any event, before Brexit day. As the Committee knows, later on in this debate we will come to the issue of parliamentary control. Parliament can only exercise full control if it is in possession of facts, and the facts will be furnished by these reports. Those noble Lords, and my noble friend, are right, thus far, in linking it to the institution of regulations, but they should be ambitious and, on Report, require these reports before Brexit day. If my noble friend does that she will find me with her.

Photo of Baroness Altmann Baroness Altmann Conservative

My Lords, given transport’s essential role in supporting the UK economy, transport issues should be given high priority by the Government in this Bill and other legislation relating to Brexit. It does not seem to have had that level of importance attached to it. Amendment 104 requires that no regulations should be laid that would amend UK-EU border transport procedures unless Ministers can demonstrate that the new procedures will not increase delays to freight transport. I appreciate the sentiments of my noble friend Lord Hailsham. I will take his comments under advisement on Report because, as he said, this is such an important issue.

The time sensitivity in modern logistics and UK supply chains means that retaining a seamless supply-chain process is of significant economic importance. Customs clearance, as well as passenger entry mechanisms to the UK from the EU, including on the island of Ireland, should be as seamless as possible. If the UK leaves the EU, the current system whereby all trucks can operate through the EU on the basis of a one-page document, and without requiring specific permits, may well not continue. UK-based road haulage businesses have benefited considerably from the EU principles of free movement, which has meant that UK lorries and their drivers can cross borders and operate within other parts of the EU. The Government’s own statistics suggest that 85% of the lorries operating between Britain and the other 27 EU countries are owned by businesses in the other EU 27 countries rather than the UK. In order for these international commercial arrangements to continue if we leave the EU, specific arrangements will be required that have not yet been negotiated. As far as I am aware, this cannot be achieved through our domestic legal system. It is a separate issue to the customs union and depends on access in some form to the single market. If we leave the EU without proper agreements in place or if we fail to maintain full regulatory alignment, road haulage, especially from the UK and Northern Ireland to Ireland, will face barriers. This does not fit with the aim of frictionless trade and our commitments under the Good Friday agreement, notwithstanding the comments of my noble friend Lord Robathan.

Photo of Lord Robathan Lord Robathan Conservative 11:00 pm, 12th March 2018

I am grateful to my noble friend for mentioning me, but why do they have to face barriers?

Photo of Baroness Altmann Baroness Altmann Conservative

If we are not in the single market as well as the customs union, there must be checks at the border between Northern Ireland and Ireland. It is not good enough for us to somehow assume that some magical solution will appear. There is no IT solution that will work for the border. The Smart Border 2.0 paper that was released does not solve the issue. If you read it carefully, you will see that it is not a solution. There is no solution, so either both sides need to turn a blind eye to the fact that there is no checking at the border even though there is supposed to be, or there has to be some checking.

In the last year, 4.4 million driver-accompanied freight vehicles moved between the UK and continental Europe. Four million of these movements took place on ferries through Dover or on the shuttle through the Channel Tunnel; around 99% of these required no customs clearance processes at the ports. As road movement is free of customs controls now, it has allowed UK industry to build up the fully integrated supply chains that we are in danger of losing. If we were to remain in the EEA or EFTA and elements of the single market, such problems could be minimised. I am very disappointed that the current red lines have ruled this out. It is hard to see how traffic and goods can flow freely and without further delays on the island of Ireland without regulatory alignment that mirrors the single market and customs union arrangements we have now.

This amendment aims to ensure that Ministers do not jeopardise the UK’s economic activity, industrial success and the arrangements for the Irish border. We should perhaps demand that this provision be included in the Bill rather than just in future regulations. Can my noble friend the Minister explain how the Government can contemplate introducing a Bill that could cause such significant damage to our country without providing adequate safeguards? I support these amendments.

Photo of Lord Liddle Lord Liddle Labour

My Lords, I had not intended to speak in this debate and I have sat patiently all day listening to excellent discussions, but what brought me to my feet was when noble Lords opposite started laughing at the noble Lord, Lord Bilimoria. The issue that he raises is extremely serious and it does not justify the Chief Whip, who I think is an excellent chap, laughing at him.

Photo of Lord Taylor of Holbeach Lord Taylor of Holbeach Captain of the Honourable Corps of Gentlemen-at-Arms (HM Household) (Chief Whip, House of Lords), Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I take debates in this House seriously. I felt that the arguments presented by the noble Lord, Lord Bilimoria, were duplications of arguments that had been admirably presented by the noble Lord, Lord Berkeley, and I felt that he should not have indulged in the way he did by speaking for 11 minutes and repeating arguments that had already been stated.

Photo of Lord Liddle Lord Liddle Labour

I understand the noble Lord’s explanation, and I will not speak for 11 minutes. However, I will say something and ask the Minister serious questions. The facts have been explained by the noble Lord, Lord Bilimoria, and the noble Baroness, Lady Altmann, and the Government are perfectly well aware of these facts. They produced a paper on customs arrangements, I think last July or August. What work has been done on developing the proposals in those papers? If the Government were serious about developing what the noble Lord, Lord Robathan, wants, they would have presented a proposal to Brussels in the last couple of months. In December, in the agreement that the Prime Minister is so proud of—I was delighted that it occurred —it was said that joint work would be done on the Irish border and the other issues to draw up a draft withdrawal agreement in the coming months. What work has happened? How many meetings were there between British and Commission officials before the Commission produced its draft withdrawal agreement? If the Government had a clear view of how the problems set out by the noble Lord, Lord Bilimoria, could be addressed, they would have come forward with a compelling alternative proposal to what the Commission has come forward with. Can we therefore please have a balanced, sensible explanation of what the Government are doing and why they refuse to face facts and produce objective reports on how they will deal with very serious economic issues?

Photo of Lord Wigley Lord Wigley Plaid Cymru

Not on this amendment, because these points have not been covered. This is Committee, and we have a right to put our points.

Photo of Lord Tunnicliffe Lord Tunnicliffe Opposition Deputy Chief Whip (Lords), Shadow Spokesperson (Defence), Shadow Spokesperson (Treasury)

Those who are familiar with the rules will know that as many Lords as they like can speak after me. They cannot speak after the Minister.

I think it will be useful if I simply set out the position of the Opposition. The seriousness of the situation, as described by a number of speakers, is entirely accepted. Those of us who have slogged through the road haulage and trailers Bill know that the extant law that a no-deal would fall back on is totally unfit for purpose and would give us perhaps only 4% of the capacity we need. I think there is a consensus on that. The fear of customs friction, which, once again, we raised at Second Reading, is acknowledged. It was neatly summed up by the chief executive of the Road Haulage Association:

“Simply using current customs practices and applying them to UK/EU traffic risks delays of biblical proportions which would strangle growth and hurt the entire economy”.

Basically, these amendments say, “Sort this mess out before you start executing change through Clause 7”, and, “Don’t misuse the regulations to do it”. We broadly agree, and we hope everybody agrees. We hope everybody recognises that we need these problems solved in road haulage—I will not repeat myself later; it is the same in railways and in aviation—before we can contemplate leaving the Union. They are not related to soft or hard Brexit, although each means different problems; they are related to transport problems. No deal means no transport, and that has to be sorted out.

Are these amendments the best way of doing that? I am not sure. At the moment we have an open mind on that. Perhaps this is an opportunity for the Government to propose a series of meetings for interested Peers off the Floor of the House with senior Ministers—no doubt with the noble Baroness, and perhaps the Secretary of State should intervene because this is so important—so that we can get to the bottom of the progress that the Government are making and find out how they propose to tackle what is a real problem. We have a common interest in it being tackled, and the Government have a duty to put a lot of effort into convincing sceptical Peers. They should tell us what they plan to do, respond to ideas and come back with amendments to assure the House that we are not going to drift into a disaster of biblical proportions.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I am sorry but I intend to speak.

Photo of Lord Wigley Lord Wigley Plaid Cymru

I have not intervened at any stage in this debate.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

I have spoken for a total of three minutes on this Bill. I think we have a right to be heard.

Photo of Lord Wigley Lord Wigley Plaid Cymru

The point I wish to make, if I may, is that Amendment 104 is very significant for Wales because of the implications that it has for the ports of Holyhead, Fishguard and Pembroke Dock—an angle that has not yet been covered in this debate. These are vital trading links between Wales and the Republic of Ireland. Holyhead is the UK’s second-largest port. In excess of 400,000 trucks pass through it each year, and a hard maritime border between Wales and the Republic of Ireland will inevitably hit it hard.

I ask noble Lords to read the excellent article by Professor Richard Wyn Jones in the Irish Times on the specific issues facing Holyhead and his native Ynys Môn, or Anglesey. Almost 80% of the Irish-registered HGVs heading for the continent pass through these Welsh ports, the vast majority via Holyhead. There is simply no space in or around the port for the kind of infrastructure that will be required to process the number of lorries and trailers that currently pass through it. A hard border in Holyhead will yield only chaos, and the same problems apply to Pembroke Dock and Fishguard on a lesser level.

The inevitable consequence of physical constraints in and around the ports is that freight will need to find ways to bypass Holyhead and Wales, especially if there is a soft border between the British state and the European Union in Northern Ireland. Without trade arrangements that mirror the outcome of what we already have, Welsh ports will be in danger of becoming uncompetitive. In practice, the border for freight at the Welsh ports must be as frictionless as it will be between the north and south of Ireland. That is why I support the amendment.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, these amendments are designed to concentrate the Government’s mind and to get some answers. I share the concerns of the noble Lord, Lord Wigley, about Holyhead. The situation is very similar to that at Dover. When the Government try to close down the debate, I remind them that the areas expressing extreme concern to us about the lack of preparedness are the ones that have loyally voted Conservative over a long period, and they will be particularly worried that their concerns are not being heard with due seriousness in this Chamber.

The sort of Brexit that we get will of course have a major impact on our ports. They might have to change the way that they process goods twice: once possibly for the transition period and once for the end game, whatever that is.

Noble Lords expressed concern about the speech by the noble Lord, Lord Bilimoria, but they need to be told that the information he gave us was based on specific statistics and calculations by the port authorities and the haulage business in general. These are not scare tactics by any campaign group; they are the conclusions of the industry itself. Indeed, I would say that it is an industry in which there were, at the beginning, a lot of supporters for the concept of voting to leave the EU. However, the reality of the situation and the lack of preparation for what is coming has changed their minds. The words of the representatives of the Port of Dover suggest that any delays at the port—and there are bound to be delays—are likely to make Operation Stack look like a minor queue at the traffic lights. For the modern way of doing business—such as just-in-time deliveries and the crossing of the border by things such as car parts, which cross it many times —this makes the whole situation much more critical.

For 30 years, we have had minimal customs checks based mainly on an intelligence-based system of doing business. Basically, the French customs told us in advance when, for example, lorries were coming through that needed to be checked and vice versa. That will no longer be possible after Brexit, unless we remain part of the customs union. People and goods were stopped by exception. News emerged last week that the UK is being pursued because of our failure to control Chinese imports, which have been coming into this country for years at an artificially low rate and then being immediately re-exported to Europe. That we cannot control what we are doing already bodes very badly for the future, when things will get much more complex. There is little or no evidence of progress so far, and HMRC has stated that it will take years rather than months—possibly up to five years—to install a new system.

I want to finish by talking about something that has hardly been mentioned here: the cost to companies. Companies are horrified by the systems that they will have to put in place. Remember, if you are a small or medium-sized company that trades only with Europe, you have not had to worry about the customs process. Now, such companies will have to put in place, or prepare to put in place in the future, a whole new system, which will cost them dear and is causing them a great deal of concern. The Government need to provide some answers for these companies quickly.

Photo of Lord Rooker Lord Rooker Labour 11:15 pm, 12th March 2018

Before the Minister responds, I want to spend a couple of minutes on a highly relevant issue that has not been raised on this Bill at all.

Following the BSE crisis, which was very damaging to the economy, an all-island animal feed arrangement was created in Ireland. It is not generally appreciated that there are a disproportionate number of animals for food production on the island of Ireland, hence its exports to the rest of the world: 15% of the world’s infant formula market is controlled by the dairy industry on the island of Ireland. The animal feed situation, which is crucial, is controlled by the ports around the island of Ireland. After Brexit, the EU will be ultra-sensitive—do not forget that we are the country that gave the world BSE—about the imports of animal feed. Given that there already exists an all-Ireland animal feed arrangement, and all-Ireland control mechanisms at the ports and the mills, how will this work after Brexit for the transport between the north and the south from the feed mills and ports? It simply will not be possible to drive a lorry full of feed across the border into Europe without it being checked. I cannot understand why this issue never gets raised. A third of what we grow feeds animals—it is a huge amount of business. We are what we eat, of course, and the animals are produced that way. What will happen in the island of Ireland to the existing animal feed arrangements? It is highly relevant to this debate.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I thank the noble Lord, Lord Berkeley, for this debate on Amendments 104 and 231, which raise the important matter of frontier control procedures and freight transport in relation to the Clause 7(1) power. I am particularly grateful to the noble Lord for his helpful technical and operational suggestions. I would have passed them on to my colleagues in the Department for Transport but my noble friend Lady Sugg has already taken careful note of them and I am sure she would like to take them forward with him personally.

I am pleased to reassure the noble Lord that discussions in this field continue with all those involved in the running of our roads and railways and the freight services that use them. How these services and the procedures involved continue to operate after our exit is, however, a matter to be negotiated with the EU. In the event that there is no negotiated outcome, Her Majesty’s Revenue and Customs will treat EU trade as it currently treats third country trade, which means that businesses trading with the EU will need to comply with additional customs requirements. The Government recognise that this represents a change to how UK businesses currently trade with EU firms and so we will model new customs processes and procedures on the existing Union customs code.

The noble Lord’s amendment would prevent the making of regulations in certain scenarios but it does not, and cannot, do anything to prevent those scenarios arising. This will be determined purely by what happens in the negotiations. All it would do in the unhappy situation that we did not secure a satisfactory agreement with the EU is to leave us unable to reflect that situation in domestic law, which of course would only make the position worse. Furthermore, any report that was carried out before the outcome of the negotiations would necessarily be speculative and so would lack a certain utility.

Happily, I can tell the noble Lord that the transport of goods is incredibly important to both the UK and the EU, as many noble Lords have pointed out, and there is a strong mutual interest in reaching an ambitious agreement which maximises the benefits for all businesses and individuals. As such, the Government aim to negotiate for the most tariff and barrier-free trade with our European neighbours, as the Prime Minister said in her speech last week. The Government will ensure that appropriate measures are taken when implementing whatever may be agreed. It will be done in a phased process, thereby providing businesses with enough time to plan and prepare for the new arrangements, minimising disruption.

Whatever the outcome of the negotiations, the Government believe that it is in the interests of both the UK and the EU to have efficient and effective frontier control procedures to achieve one of the strategic objectives of ensuring that UK-EU trade is as frictionless as possible. We will continue to meet our commitment to keeping Parliament fully informed on these negotiations and allow for proper scrutiny, including through regular statements and in our support for the work of committees in this House and the other place. I hope I have reassured the noble Lord that the Government will work hard on securing an agreement with the EU that works well for all in the road and rail freight sectors and I therefore ask that he will withdraw his amendment.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

I asked four questions on trusted trader status. When will I get my answers?

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I will read Hansard and respond to the noble Lord in writing.

Photo of Lord Liddle Lord Liddle Labour

The Minister did not answer any of the points that I made about what level of contact the Government have had in Brussels discussing these issues, and why in the interval between the September agreement and March, when the Commission produced its own proposals, Britain appears to have done nothing. Will he please tell us what is going on?

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

We are having extensive discussions with our partners in Europe. We are also having extensive discussions with representatives of the rail freight industry and other players in the sector, but as the noble Lord well knows, the arrangements are a matter for negotiation.

Photo of Lord Liddle Lord Liddle Labour

If Brussels can produce a proposal, why cannot the British Government produce an alternative proposal?

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

As the noble Lord pointed out, we did produce a customs paper last year. In her speech last week, the Prime Minister referred to two alternative customs arrangements and those matters are being taken forward in the discussions. If the noble Lord reads the Prime Minister’s speech of last Friday, he will see that she referred to them specifically.

Photo of Lord Liddle Lord Liddle Labour

Of course I have read the Prime Minister’s speech. What do you take me for? I follow these things very closely, but the Minister still has not explained how it is that the Prime Minister simply referred to the principles that were put out last summer. This is a situation of real urgency for the economic actors, so why are the Government not producing proposals? Would the Minister be willing to write to me on this point?

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, I am grateful to all noble Lords who have spoken in this interesting debate. It has been really well informed and I am amazed that the Government have nothing better to respond with other than answers that I think I heard six months ago. As my noble friend has said, time is running out. This is a probing amendment and I am grateful to the noble Viscount, Lord Hailsham, for suggesting that we should have gone harder, and indeed the noble Baroness, Lady Altmann, said the same thing. We have time to have discussions before Report, but it is a sad reflection for all of industry, not only the transport sector. The noble Baroness referred to the manufacturing sector and said that we are no further on. The Commission has produced papers but we just get motherhood and apple pie. I do not think I can take this any further tonight, so I beg leave to withdraw the amendment.

Amendment 104 withdrawn.

Amendment 105

Moved by Lord Berkeley

105: Clause 7, page 6, line 25, at end insert—“( ) No regulations altering the roles and responsibilities of the European Union Agency for Rail relating to rail transport and the application of legislation relating to it may come into force until a Minister of the Crown has laid before both Houses of Parliament a report setting out the benefits and costs of any such alteration for the passenger and freight rail sectors and the impact of the alterations on rail infrastructure managers in the United Kingdom in terms of capital and operation costs.”

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, I shall be brief on this amendment because the Minister has almost answered some of the questions. However, it is worth reminding the Committee that the Prime Minister has talked about how she is keen that the various agencies should continue to exist after Brexit. I have not seen anything about the European Union Agency for Railways, as it is now called. It is vital that we have this agency.

We have only one link across the Channel at the moment. Last week DG MOVE at the Commission produced a paper which goes into great detail about what we cannot have after we have left. It is a pity that we do not have a response to it. That includes our UK-registered train drivers who will not able to operate in France or anywhere else unless they pass the test in France. The same applies to approvals for equipment that is manufactured over here if it is not produced to the same standard. This could be a complete disaster, and it will be a great shame if we cannot maintain our involvement with the European railways agency because some of us have spent the past 10 years trying to have one technical agency that covers all the railways in Europe rather than having 25 different ones, which is what we had before.

I hope that when the noble Lord comes to respond, he will be able to give us some warm words about how we can retain our involvement with the European railways agency and sort out all the different issues around standards, drivers’ approvals, rolling stock approvals and everything else. I declare an interest as the chairman of the Rail Freight Group, and we do want to see rail freight and Eurostar continuing their services after March next year. I beg to move.

Photo of Lord Bilimoria Lord Bilimoria Crossbench

My Lords, I added my name to the amendment to note that rail contributes £85 billion of extra economic benefit to the British economy. About 41,000 of the 240,000 people who work in the rail industry are EU nationals. To make this point, the amendments basically say that we have to adhere to the European Union Agency for Railways, which has EU-wide responsibility for implementing the technical aspects of railway legislation. This cannot be under- estimated because it encompasses safety, specifications of interoperability—TSIs—and a common verification process for infrastructure and rolling stock. Most railway industry manufacturers have standard products designed for supply across the whole of the EU, in line with these requirements.

If we try to replicate these EU laws, the variations might result in UK-specific standards. We hear that we will adhere to international and European standards in this area, but it will not be as easy as the current arrangement. There is an assumption that the UK will maintain existing standards. What about the implications for infrastructure and services? There are doubts as to whether the UK’s continued involvement will work at all. The main point I want to make is that in a global industry such as rail, many benefits of international or supranational standards development will be lost if the UK ceases to participate. If UK standards were different there would be a loss of economies of scale. Costs might increase and some manufacturers might choose not to compete or supply the UK market at all.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union) 11:30 pm, 12th March 2018

My Lords, I am again grateful to the noble Lord, Lord Berkeley, for bringing this important matter before the Committee. The Government are considering carefully all the potential implications arising from the UK’s exit from the EU, including the implications for the UK’s future relationship with the European Union Agency for Railways. The UK’s continued participation in the agency as a third country and its continued co-operation in the fields of rail safety and standards, as well as the implications for the UK’s technical standards regime, is, of course, a matter for the negotiations.

Our domestic railway and the cross-border services that link us with the EU serve an incredibly important function in the transport of goods and people across the UK and between the UK and the EU. In 2016, there were some 1.7 billion passenger journeys facilitated by rail in the UK, while the rail freight industry transports goods that would otherwise require 7.6 million more lorry journeys each year. Equally, the Channel Tunnel was responsible for 25% by value of all trade in goods between the UK and continental Europe in 2014, facilitating an estimated £91.4 billion of trade in total. Passenger services through the tunnel, including Eurostar and Le Shuttle, and international rail freight services, transported an estimated 20.8 million passengers and 22.5 million tonnes of goods in 2016.

As the Prime Minister made clear in her Mansion House speech last week, we want to maintain the continuity of rail services that link us with the EU, which provide important economic benefits to both the UK and the EU. However, our participation in the European Union Agency for Railways is not something that the Bill can legislate for. For decades, we have worked closely with our European partners to develop a regime in the field of rail safety and standards that reflects UK practice. We strongly believe it is in both our and the EU’s interests to ensure continued productive co-operation on safety and standards in the future, regardless of the outcome of negotiations. As I have said, this will be a matter for negotiations. In considering all relevant factors relating to the future rail safety and standards framework, the Government remain committed to our railways continuing to have the highest standards and remaining steadfastly amongst the safest in the EU.

We will continue to take on board the views of industry. The Government have a number of established mechanisms for engaging regularly with the rail sector. These include, for example, the Rail Delivery Group and the Rail Supply Group, whose members include the supply chain, passenger and freight operators, and Network Rail. As we prepare for the UK’s withdrawal from the EU, the Government will continue this engagement with a wide range of stakeholders from across the UK’s rail industry to seek views, which the UK has taken, and will continue to take, into consideration.

In the light of that, I hope I have satisfied the noble Lord that we understand the importance of maintaining the continuity of our important EU rail links, as well as maintaining a safe and effective railway. This will continue to be an important factor as we approach the negotiations. I therefore hope he feels able to withdraw his amendment.

Photo of Lord Berkeley Lord Berkeley Labour

I am grateful to the Minister for that reply. It is not news to me, because, obviously, I am aware of what is going on. Could he possibly write to me quite soon about some information that I have which states that the Department for Transport is looking at which regulations from Europe could be torn up as soon as we leave? It is apparently highly confidential, which probably means that we will end up retaining a mishmash of half European and half British regulations, with a divergence which will be incredibly bad for both our manufacturing industry and operators.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

My noble friend Lady Sugg will be happy to discuss that with the noble Lord.

Photo of Lord Berkeley Lord Berkeley Labour

I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment 105 withdrawn.

Amendment 106

Moved by Lord Berkeley

106: Clause 7, page 6, line 25, at end insert—“( ) No regulations may be made under this section altering the roles and responsibilities of the European Aviation Safety Agency until a Minister of the Crown has laid before both Houses of Parliament a report setting out the benefits and costs of any such alteration to the United Kingdom’s aviation sector, including airlines, airports, aircraft manufacturers, aircraft maintenance and air navigation services providers, in terms of capital costs, operational costs and the impact on market access and safety.”

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, this the last of my three amendments and it is to do with aviation. Aviation has so far come out better from the various statements from the Prime Minister and others because of the noise from the aviation industry, be it airlines, which were rightly frightened about being unable to fly one day after Brexit day unless some changes were made, or the manufacturing industry, which is reliant on a massive amount of approvals for all components. Some 2 million components manufactured in this country go into an Airbus. They are all approved centrally by the European agency. If we do not retain membership of this agency, those approvals will be null and void and we will not be able to carry on.

There are many other consumer interests as well. The airline sector benefits dramatically from being part of a European group of airlines. Leaving EADS and having to negotiate directly with goodness knows how many other member states for particular routes does not bear thinking about. The noise from the airlines has been great; I hope it continues and that Ministers take notice of it. Let us not forget the manufacturing industry. It is not just aircraft wings for Airbus, which I think are made in north Wales, but many other components. We need a thriving industry and we need to stay part of it. I hope that the Minister will be able to give us some comfort on that. I beg to move.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, I first raised this issue in the autumn of 2016 and have done so repeatedly since then, even in a Private Member’s Bill on the Single European Sky. It is important because there is no fallback position for aviation; there are no WTO rules that we can rely on. If things do not go right, there is simply a blank in which planes will be grounded. Along with them will be the passengers and very high-value freight which goes by air.

I do not mention these concerns on my own initiative; they have been put to me by people in the aviation industry from across the world, because our whole economy stands on the shoulders of our air transport industry.

All along, the Government have expressed confidence that this will all work out fine on the night, but there has not been any official commitment either to remaining in EASA or the Single European Sky. Despite the commitment made by the Prime Minister last week there has been no official commitment, so these amendments give the opportunity to provide that. With the best of intentions, we could find ourselves at an impasse, and this is not just a little local difficulty between the UK and the EU; it is also very much about the US. We rely on the EU/US open skies agreement as a member of the EU, and we will cease to be a member of it when we cease to be a member of the EU. It cannot just slot into place later because airlines sell tickets a year in advance. Indeed, they are already selling tickets for a period of time when they cannot be absolutely sure that the planes are going to fly. There will be an awful lot of airline tickets on sale from next month for a year hence—some have already been sold, as I say.

There are already stories—for example, in the Financial Times last week—that early talks have not gone well. The Minister denied that and I am very pleased to hear those words, but in the past the United States has not been easy to make aviation agreements with. Opening up US aviation to both EU and UK flights has been a problem in the past. There are potential issues over the continuation of anti-trust exemptions, which allow airline alliances to set fares and share revenue. Any new deal has to allow for the pattern of ownership of our own major airlines, which have very big foreign shareholdings, especially IAG, of course. In the short term it is important that we remain in the open skies agreement during transition, or at least that we are treated as if we are within that agreement. In the longer term it is clearly best if this continues beyond transition.

Briefly on EASA, at any one time half the aircraft in the skies above Britain are not UK registered, so we need to remain the dominant influence over aviation security and safety in the EU and beyond. We have been a major force so the Prime Minister’s words, as I said earlier, were welcome last week. We need full, official government commitment here in legislation: not just to being associate members of the EASA or observers, but to being full members because there is consensus in the sector that it makes no sense to create a national regulator. It is essential that we remain fully integrated with EU rules and systems. The EU has brought huge benefits to passengers—lower fares, more destinations and greater passenger rights and compensation. We must remain part of that scheme. We must also maintain the environmental benefits it has brought.

Photo of Lord Balfe Lord Balfe Conservative

My Lords, I shall make a brief intervention and ask a couple of questions. I realise that it is the Minister for DExEU replying to the debate rather than the Minister for Aviation and I declare my interest as vice-president of BALPA, the pilots’ union. There is a lot of concern and it is felt that it would be helpful if we could have a clear commitment to retain membership of the single sky agreement and the aviation safety agency. I ask the Minister, possibly through his colleague, to write to those of us who are taking part in this debate to tell us whether it is government policy to continue with this membership. If it is, what steps have they taken up to now and can they arrange some way of keeping those of us who are interested abreast of the issue, other than by intervening on Bills? I know that this issue moves ahead. We have had very good relations with the Minister. This is in no way a criticism but rather a request for dialogue to be opened, possibly in writing and possibly with the letters to be deposited in the Library for anyone else who is interested.

Photo of Lord Bilimoria Lord Bilimoria Crossbench 11:45 pm, 12th March 2018

My Lords, I have put my name to these amendments. It should be emphasised that the European common aviation area, or what we refer to as the single European sky, should not be taken for granted. Any British airline can fly anywhere it likes in the EU—not just to but within another member state—and sell tickets to anyone in the 28 member states, without restriction. The aviation industry contributes £52 billion to our economy and, as we have heard from the noble Baroness, Lady Randerson, it leads to cheaper fares, better consumer protection and compensation, and a greater variety of destinations. There is of course the environmental aspect as well.

Does the Minister accept that, if we retain access to the single skies, it would require accepting the jurisdiction of the European Court of Justice, which is one of the Government’s red lines? Does he also realise that there is no fallback on the WTO in the aviation sector? In fact, Tim Alderslade, the chief executive of Airlines UK, has said:

“The Government is fully aware that aviation sits outside”,

the WTO system. He continued:

“The principle of ‘no deal is better than a bad deal’ does not apply to us”.

So whatever happens, the airline industry needs a deal. It cannot have any limits to capacity. Already, easyJet has said that it has applied for a licence in Austria to set up easyJet Europe. As we have also heard, airlines plan their schedules up to a year in advance. Can you imagine if the situation with Ryanair was happening today? How will we cope with that across the sector if we do not come to an agreement?

This whole aspect really keeps us connected to these countries; the administration and infrastructure run like clockwork. However, I have looked at a table of the Brexit impacts under different scenarios. It lists eight scenarios, five of which would not be allowed any more. An EEA airline flying from a third EEA country to the UK, for example Air France flying from Berlin to London, would no longer be allowed. A non-UK airline flying from the UK to a third EEA country, such as Ryanair flying to France, would no longer be allowed, and nor would a UK airline flying between two EEA countries. A UK airline flying within an EEA country or an EEA airline flying within the UK, such as Ryanair flying from London to Glasgow, would no longer be allowed; nor would a US or EEA airline using the UK as a hub to fly from Europe to the USA, such as American Airlines flying from New York to Heathrow and continuing on to Rome. We take this all completely for granted but it will no longer be available to us.

According to Ministers, 35 separate pieces of EU legislation work together to make the EU’s aviation single market. This is separate from the single market in goods and services and continued membership for the UK, or alternative arrangements, will be needed. What can we do? As a result of its membership, UK airlines benefit from 42 air services agreements entered into by the EU with countries outside the European Union, including the United States and China. This is what open skies is all about: it has allowed European majority-owned airlines to fly between places within any EU country, not only between the home country and another EU country.

We have also heard about the common regulator, the European Aviation Safety Agency. The UK has been a really proactive member of that organisation. It has been a leading member of it because it has brought benefits to the UK and to Europe. Security is also going to be really important and difficult—as will future border and visa arrangements.

In the longer term, unhindered access to EU aviation is absolutely essential. Benefits have been derived from open skies and a more restricted market would be disastrous. The transport regulations are most comprehensive. They provide for compensation, reimbursement and protection from overbooking. A large part of this is European Court of Justice law. Passengers are protected when they take off from an EU airport or land at one, provided that the carrier is an EU carrier. These are all issues that we take for granted, but if we do not look at these amendments it will be another way in which the whole economy and all our citizens and businesses will be damaged.

I shall conclude by quoting Andrew Haines, chief executive of the UK Civil Aviation Authority:

“Let’s just imagine the UK was to withdraw from EASA altogether and adopt our own framework–although I’m yet to meet anyone of substance that supports that approach. It is, of course, theoretically possible and let’s just suppose we established the best aviation safety regimes in the world. It would mean a major increase in UK regulatory regime, potentially represent a major barrier to track increased costs and yet we would also risk becoming a backwater in terms of wider impact”.

A backwater—that is where we are heading.

Photo of Lord Liddle Lord Liddle Labour

I congratulate the noble Lord, Lord Bilimoria, once again on an excellent speech raising many serious issues which we have to deal with. I shall draw particular attention to Amendment 233, which asks that any amendments to the roles and responsibilities of the European Aviation Safety Agency should be subject to the affirmative procedure. I would like a response from the Minister. I see no reason why the Government cannot just agree to that now to assure the Committee that there will be full accountability on these questions. Why not just say, “Yes, we agree to that”?

Photo of Lord Whitty Lord Whitty Chair, EU Internal Market Sub-Committee

My Lords, I shall make a brief broader point. For all the reasons we heard from the noble Baroness, Lady Randerson, and the noble Lord, Lord Bilimoria, I strongly support the objectives of these amendments. So, apparently, does the Prime Minister, judging from her speech last week. Is the reality not that it is also in the interests of all the airlines, the aerospace industry and the airfreight industry across the whole of Europe to retain the present situation? Was that not obvious from day one of Brexit discussions? Why did the Government’s negotiating strategy not recognise that this was one deal which we could have done very quickly and very clearly which would not have interfered with any of the rest of the negotiations and one which almost the rest of Europe would have greatly welcomed? There would have been no cries of “kein Rosinenpickerei”—“no cherry-picking” —from Europe on this one. A bit of common sense at the beginning of these negotiations would have parked aviation. We would have agreed aviation.

Photo of Lord Hamilton of Epsom Lord Hamilton of Epsom Conservative

Was it not the EU that said that nothing was agreed until everything was agreed?

Photo of Lord Whitty Lord Whitty Chair, EU Internal Market Sub-Committee

It was both the EU and Mr Davis and they were both wrong because in all negotiations whenever you enter negotiations you agree some things and you then park them. We could have agreed this. It is ridiculous that airlines are now faced with selling tickets in three weeks’ time not knowing whether they can deliver on them. I just make that more general point because the Minister keeps saying it is all down to the negotiations, but the negotiations went wrong from day one, and this is one example where we could have delivered something, albeit it would need to be part of a total package at the end of the day.

Photo of Lord Tunnicliffe Lord Tunnicliffe Opposition Deputy Chief Whip (Lords), Shadow Spokesperson (Defence), Shadow Spokesperson (Treasury)

My Lords, I shall be brief. I spent 22 years in the airline industry from the mid-1960s onwards as everything from co-pilot to number two in the marketing department. I learned two things from that. One was that aeroplanes are very dangerous. When I first joined the industry, we would crash a jet aircraft about every two years in the United Kingdom, and it has been a long, hard slog. That slog has not been all UK—it was the UK, the US, Canada and France, working together through international co-operation, producing the safety we take for granted today. It is crucial that those mechanisms stay in place to achieve that.

The other thing I remember is what air services agreements are. They are treaties, and if you are not part of one of these more modern situations, such as the European one, there are country-by-country treaties between pairs of countries—all of which would have to be renegotiated. Falling out of the present situation would create enormous problems. I am very sorry that the Minister did not like my suggestion of contact between interested Peers and senior transport people on these three groups. I hope that perhaps that could be reconsidered—I am glad they are nodding now on the Front Bench, but the Minister said nothing in either of his two speeches to suggest that. Obviously in all parts of the House there is a genuine concern that progress is not being made in these very important areas. I do not want to have that concern; I want to share the Government’s optimism. At the moment, given the responses we have had, I do not.

Photo of Baroness Altmann Baroness Altmann Conservative

I rise briefly to explain why I have added my name to these important amendments. One thing that has not been mentioned in Committee so far is the idea that the arrangements we have with Europe also protect the safety, maintenance and repair facilities around our country for our aviation and aerospace industries. We must maintain alignment of regulation. We have 100 airports and 172 maintenance and repair facilities, and if we jeopardise the standards of safety, if we are not in the open skies agreement and not in EASA, then the US apparently is already planning to send its own inspectors to make sure that our standards are up to scratch. If we cannot reassure people that we will maintain those standards, we will not have a functioning aerospace and aviation industry.

Another important element that must not be forgotten is that if we do not maintain our membership of the open skies agreement and EASA, the flights taken by ordinary citizens will increase in price. One estimate from the consultancy Oxera is that if all flights operated by third country airlines were removed, air fares for UK passengers would rise by between 15% and 30%—a Brexit surcharge which people were never told to expect to pay when they voted to leave the EU. These restrictions cannot be overcome simply by airlines setting up subsidiaries in Europe, because ownership restrictions do not allow non-EU investors to own a controlling interest in EU airlines.

I urge my noble friend the Minister to make a commitment to the Committee that we intend to maintain membership of EASA and the open skies agreement, notwithstanding the jurisdiction of the European Court of Justice.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

My Lords, to start with, I apologise to the noble Lord, Lord Tunnicliffe, as we are more than happy engage in discussions with interested parties. Before I had this job, I was Aviation Minister and had regular meetings with all the concerned parties in the industry, and my noble friend Lady Sugg has told me she is very happy to continue those discussions. I am sorry if I did not make that clear to him earlier. We are of course carefully considering all the potential implications arising from the UK’s exit from the EU, including the implications for the UK’s future relationship with the European Aviation Safety Agency and the Single European Sky agreement. I thank the noble Lords, Lord Berkeley and Lord Adonis—surprisingly, I see that the latter is not in his place—for their amendment.

Aviation is crucial to the UK’s economy. The UK has the largest aviation network in Europe and the third largest in the world. I say directly in reply to my noble friend Lord Balfe that in her speech at Mansion House on Friday 2 March, the Prime Minister confirmed the Government’s ambition to see continued participation in the EASA system. There are provisions in EU legislation that allow non-EU countries to participate in the EASA system, as Norway, Switzerland and Iceland currently do. The Prime Minister also acknowledged that an appropriate financial contribution would be necessary and that there will be a role for the Court of Justice of the European Union. Again, I am signing up my noble friend Lady Sugg for a lot of work, but she is happy to keep my noble friend, BALPA, other stakeholders and noble Lords fully updated on the progress of negotiations.

The UK has been and is influential within EASA. UK expertise has contributed significantly to the high standards of aviation safety in Europe. The harmonised aviation safety regime has raised standards across Europe, as the noble Lord, Lord Tunnicliffe, has pointed out: facilitated the development of integrated cross-border supply chains and supported the growth of the European aerospace industry. The UK’s continued participation in the EASA system is beneficial not just for us but for the rest of the EU. The UK, with the second largest aerospace sector in the world, supplies vital components to aerospace exporters within the EU, and EASA itself benefits from the UK’s expertise and technical input, with roughly 40% of the expertise in the EASA system coming from the UK. The UK is committed to maintaining high standards of aviation safety, and the Government want to avoid disrupting trade or imposing additional regulatory burdens on industry in the UK or the EU. The precise form and nature of the UK’s future relationship—

Photo of Lord Bilimoria Lord Bilimoria Crossbench 12:00 am, 12th March 2018

I thank the Minister for giving way. I just want to clarify that he is accepting that by remaining in EASA we will have to submit to the European Court of Justice, and therefore the red line does not exist any more.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I will repeat the words that I used, for the noble Lord’s benefit:

“The Prime Minister … acknowledged that an appropriate financial contribution would be necessary and that there will be a role for the Court of Justice of the European Union”.

As I was saying, the precise form and nature of the UK’s future relationship with EASA, as well as continued co-operation with the EU in the field of aviation safety more generally, will of course be a matter for the negotiations. The UK’s geographical position means that, with Ireland, the UK services over 80% of traffic entering or leaving EU airspace from the North Atlantic. Given that, the level of interaction between the UK and the EU demands close co-operation. The Government recognise the need for UK air traffic management arrangements to remain interoperable with the rest of Europe once the UK has left the EU. Safe and efficient air traffic management is a priority for us. The UK’s air traffic management system will remain closely bound to that of our European partners. We seek a close and collaborative relationship in this area, just as in many others. However, NATS will continue to provide the same high-quality service to airspace users that it does today.

The Government also want to avoid disadvantaging industry by imposing additional regulatory burdens. The Bill is part of that: it allows the Government to be clear that we are committed to maintaining a harmonised safety system that benefits both the UK and EU aviation networks and maintains the high safety standards that we all wish to see. I hope what I have said has been reassuring for noble Lords and that they feel able to withdraw the amendment.

Photo of Lord Liddle Lord Liddle Labour

My Lords, what about the point about the affirmative procedure?

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I took on board the noble Lord’s question but I am unable to give him those reassurances at the moment.

Photo of Lord Berkeley Lord Berkeley Labour

I am grateful to the Minister for his reply and to all noble Lords who have spoken in this excellent debate. The Prime Minister has made more progress here than in the logistics, customs and railway sectors. My final question to the Minister is: has the European Union agreed this? Until it is agreed, it is not a lot of good. We need to revisit this and, we hope, have regular updates. I hope the Government will push very hard for it to be a priority—as my noble friend Lord Whitty said, to have this signed, sealed and delivered at as early a stage as possible. On that basis, I beg leave to withdraw the amendment.

Amendment 106 withdrawn.

Amendment 107 had been withdrawn from the Marshalled List.

Amendment 108 not moved.

Amendment 109

Moved by Viscount Hailsham

109: Clause 7, page 6, line 27, at end insert “or which have effect after the end of the period of two years beginning with exit day”

Photo of Viscount Hailsham Viscount Hailsham Conservative

My Lords, I shall speak briefly to the three amendments in my name, Amendments 109, 134 and 188. These are intended as sunset clauses but, as I do not want them to be sunrise clauses, I intend to be extraordinarily brief.

Those of your Lordships who have been in Committee during debates on Clauses 7 to 9 will know that I am very unhappy about the process those clauses attract. For example, the powers within those clauses are very widely drawn, the scope is considerable, the regulations are made by secondary legislation with very limited scrutiny, both parliamentary and ministerial, and they are triggered by a test—the test of appropriateness—which I regard as wholly unsatisfactory. For all those reasons, my view is that the regulations made under the regulation-making powers should die two years after Brexit and should, if necessary, be replaced by primary legislation. That is my suggestion to the Committee, and I hope it commends itself to your Lordships. I beg to move.

Photo of Baroness Hamwee Baroness Hamwee Liberal Democrat Lords Spokesperson (Immigration)

My Lords, I have Amendments 111, 137 and 192 in this group and share the unhappiness that has just been described. Mine is a narrow but, I think, important point.

The thrust of most of the amendments in the group —not the noble Viscount’s—is about consultation and transparency. You do not have to spend long working in Parliament to realise that scrutiny very much depends on the input of stakeholders—I hate the term but I cannot think of a better one at this time of night. They assist us to understand how things work in practice, both with technicalities and wider issues. That is not to say that I do not have great admiration for parliamentary counsel and the lawyers working in the departments, who are most concerned with statutory instruments, but my amendments would require consultation on the regulations provided for by Clauses 7 to 9. This should all be a co-operative venture, with stakeholders contributing at an early stage, not least for the reason that the regulations are statutory instruments and not open to amendment, so you have to get it right from the very start.

I was a member for some time of the Secondary Legislation Scrutiny Committee, which received a lot of very valuable representations—lobbying, if you like. I suspect we will not hear comments in support of Amendment 228 in the name of the noble Lord, Lord Adonis, about the Cabinet Office code, but I support the application of the code to the regulations. We may well be told that of course the code will apply. I have to say that in my time on the committee, we undertook quite a lot of work on the application of the code in practice and were quite critical of the responses we received from the Cabinet Office. One of our criticisms was that when consultation was undertaken—which it was not always—on the statutory instruments we were considering, the Government did not publish the responses to the consultation before they published the statutory instrument, so the work was not as helpful as it should have been.

Other amendments in this group are more detailed. Mine is not very elegant. I am not proprietorial about it but I wanted to raise the subject because some provision is necessary and, if I may say so, appropriate. It is a step that is very easy to miss out and I hope we will not be told that all the regulations in question are simply about technicalities and that stakeholders would have nothing to add to the exercise. Practitioners in almost every area may see what is workable in proposals being put forward, as well as substantive points.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour

My Lords, I shall speak to Amendment 227A in my name, which is also supported by the noble Lords, Lord Lisvane, Lord Tyler and Lord Judd. The amendment is intended to be helpful to the Minister, although it is unlikely that he will regard anything as helpful at this time of night. Nevertheless, it is intended in the spirit of helpfulness to ensure that the statutory instruments that the Government are proposing turn out to be correct and effective. Many of the changes made by the statutory instruments will be technical and potentially uncontroversial but some will involve policy choices. The aim of my amendment is to ensure wider consultation on statutory instruments before they are formally laid.

The nature of the challenge is quite severe. There will be an awful lot of them—potentially 1,000. I have been looking primarily in the last year at the number that will be required in Defra alone—over 100—on environmental issues. They will need to come thick and fast, and in many cases they are being dealt with in departments by staff who have only recently been recruited. Having seen these departments shrink in times of austerity, lots of people are now being recruited, some of whom are old faithfuls but some of whom are rather new and probably not as well acquainted with the policy area as we would like.

So there is a risk of two things: one is cock-up, if noble Lords will pardon the unparliamentary language—things just going wrong because of the sheer volume and pace; and the other is conspiracy. A large number of the Defra SIs will be roll-ups of a whole variety of issues. I am being ignoble in suggesting that the Government might hide under a pile of harmless stuff the odd thing with a slight curveball in it, but increased transparency and consultation would help reassure people that no fast ones were being tried.

The noble Baroness, Lady Hamwee, pointed out—and it is inalienable—that the process of both the affirmative and the negative procedures means that once measures are formally laid there is very little room for manoeuvre, so it is important that this consultation happens in advance. I thank the noble Lord, Lord Callanan, for his letter of 20 February, following Second Reading. It provided more information but offered only that the Government would make efforts to publish a sample of statutory instruments in draft where appropriate. That rather misses the point, which is to let loose on these drafts expert eyes from across a variety of sectors of stakeholders to help the Government with that checking process to make sure that nothing has been missed, there has not been a cock-up and the policy intentions have not been perverted in any way. I hope the Minister will consider this and see it as a genuinely helpful proposal.

Photo of Lord Lisvane Lord Lisvane Crossbench 12:15 pm, 12th March 2018

My Lords, I am delighted to follow the noble Baroness, Lady Young, whose name stands at the head of Amendment 227A. I will add just two points in addition to endorsing the unhappiness of the noble Viscount, Lord Hailsham, partly conveyed through his lead amendment and other amendments in this group.

So far, the practicalities of Brexit have been a conversation primarily between government and Parliament. If the use of the sweeping ministerial powers in the Bill will carry credibility with our fellow citizens, that conversation needs to be joined by the huge army of those who will be directly affected. However—and I think we could all draft the reply of the Minister, just after the headnote that says, “resist”—the possibility of consultation throws into sharp relief the extraordinary pressures of time under which the EU-related parts of the statute book will have to be repatriated and adjusted. Even if there is a two-year period of transition—or implementation; I do not think the two are the same, by any means—a three-month consultation period would be luxurious indeed. Yet effective consultation—that is, beyond the usual suspects—cannot be done quickly.

My second point relates to the relationship between the Lords and the Commons. I cannot help but remark that if Ministers agreed to be bound by the test of necessity rather than appropriateness, their problems in this area might be very much fewer. It seems pretty clear that there will be heavyweight regulations—probably quite a lot of them—for both Houses to consider. As the Bill is drafted at present, there may be too many that are subject to the negative procedure and not enough that are subject to the affirmative procedure, but in any event we will have to focus minds on what will happen if the two Houses disagree.

So far as affirmatives are concerned, I have put my name to an amendment in the name of the noble Lord, Lord Sharkey—Amendment 239A—which explores a possible dispute resolution procedure. However, if major regulations come forward on which there manifestly has been insufficient consultation, the possibility of disagreement between Lords and Commons would increase. Given the inevitable degree of political contention and unyielding pressures on time, this might become a matter of serious concern. I suggest that systematic consultation offers a possible way of reducing that hazard.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Conservative

I rise to speak to Amendments 249, 250 and 251. Several noble Lords will know of my lifelong concern for good-quality regulation. The Bill will, by its very nature, lead to the creation of a vast number of SIs of exceptional importance, so proper scrutiny is more important than ever, as the noble Lord, Lord Lisvane, just said.

I am concerned about content, scheduling, consultation and time for debate. On content, I want the Government to follow the good practice of the Nuclear Safeguards Bill, where making the draft implementing regulations available has helped to reassure people and made its passage easier. I have suggested five areas where specimen regulations might be made available: agriculture, customs, financial services, immigration and intellectual property. My amendment says that specimen regulations should be made available within a month of Royal Assent—which is what the Public Bill Office felt able to approve—but my suggestion to the Minister is to make specimen SIs available for our consideration before Report.

I understand and fully support the objective of putting extant EU laws onto the UK statute book from day one; anything else would lead to the utmost confusion. However, there is still much to ponder and much scope for mistakes. All these problems will be lessened by allowing all interests to see and comment on what is envisaged, as has been said. We need to know which enforcement body will take over what are now EU duties, as we discussed at length in relation to the new environment body. For example, in financial services it could be the FCA, the PRA or even the Treasury. In agriculture, the situation is equally complicated, not least because of the extra dimension of devolution. We need to know the criminal and civil penalty regime for each area and, as debated earlier, the approach to fees and charges—especially for SMEs, which I know will be a concern in relation to intellectual property and immigration. We need to understand the future arrangements for standard setting and the sharing of intelligence. Exemplar SIs could—and probably would—cast reassuring light on all of this.

On scheduling and consultation, I start by thanking the Minister, as he kindly arranged for me to meet one of his officials and those responsible in the Treasury for the SI work on financial services. This was very reassuring. The numbers on financial services are fewer than I feared—80 to 100 SIs—and I understand that they will take account of existing UK regulations. Hopefully, this will mean that practitioners will be able to find their way round the law more easily than they can do now. I believe there is some sympathy for my suggestion that it would be wise to publish SIs for consultation, which is the subject of my amendment and of others. The process of SI sifting and review in Parliament will, unfortunately, only allow an SI to be debated and agreed or rejected by either House. There is no scope for amendment so SIs need to be right first time. Will the Minister provide some commitment to publication of and/or consultation on draft SIs, at least in the five areas I have identified?

In practice, if—as I hope—a transition period is agreed, and thus for relevant purposes we effectively remain in the EU during transition, there is a fair amount of time to do this properly. But if the negotiations go badly and we have to rush for the line, it may be as well to have done as much consultation as possible early. Finally, and Amendment 251 relates to this, we need time to debate the more important SIs in a planned way. There is a substantial issue here which has not yet been fully acknowledged by the Government. One solution could be to group related SIs and to set aside significant time—perhaps one day a week—when they could be considered on the Floor of the House. These SIs will be mini-Bills, important future statutes as we leave the EU, and our existing arrangements for EU scrutiny are inadequate if this new need is to be met satisfactorily.

I believe that all noble Lords will want to know, before they agree to the significant delegated powers in the Bill, that the scrutiny system envisaged can meet the needs of the moment and hence attract confidence across the House.

Photo of The Earl of Kinnoull The Earl of Kinnoull Crossbench

Noble Lords will be glad to hear that I will be brief. The European Union Select Committee and EU Justice Sub-Committee have been given estimates of the number of SIs concerned. Our estimate was 5,000; I was interested to hear the noble Baroness, Lady Young, say that it was only 1,000. My point is the same either way. In my language, the Bill essentially amounts to a gigantic pink ticket where we are asked to trust the Government. In the commercial world, one tries to trust and verify. You give out your trust, but you retain the ability to verify it, so that if something goes wrong you can sort it out later on.

This group of amendments tries to deal with three problems. The first is the mistakes, as the noble Baroness pointed out. The second is wrongnesses. We had a good example of these from the noble Lord, Lord Patel, earlier on. If we carried through a particular piece of EU legislation without thinking then a wrongness would be done. Third is the necessity for the scrutiny of Parliament; the verification process that follows on from the trust. As I look at the three sets of proposals on how to deal with these three problems, I have some sympathy for the noble Lord, Lord Lisvane, who said that there is not really time to do the consultation suggested by the noble Baroness, Lady Hamwee. I regret that, but there certainly is not time, whether it is 5,000 or 1,000. The ever-canny and thoughtful noble Baroness, Lady Neville-Rolfe, has come up with an ingenious way of trying to cater for that. Turning to the noble Viscount’s idea of a two-year life span, I am only concerned that if we are going to have to do 1,000 pieces of legislation then two years is probably not enough. The number I wrote down was five. However, that is a very useful way of doing it and my favourite route tonight would be the one he has taken.

All that being said, what is important in parliamentary terms is a mechanism for trusting and verifying. We will have failed if we do not get some kind of verification procedure in there. I look forward to the Minister’s comments.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords, Shadow Spokesperson (Northern Ireland)

When I speak at this time of night, I often recall the words of a friend who said to me shortly after I became a Member of the House of Lords, “You’re in the House of Lords now—you must be semi-retired”. As we are debating issues at almost half-past midnight, I do not feel semi-retired at all.

This is a very useful group of amendments for the Minister and the Government. As my noble friend Lady Young of Old Scone said, they are designed to be helpful, and I think their content makes that clear. It is only in your Lordships’ House that technical issues around SIs cause any excitement or great interest for noble Lords who have expertise in them. I hope that when the Minister responds she will accept these amendments or take them away and come back with something similar as a way forward on the Bill.

First, I wish to make some general comments. Issues around SIs and accuracy have been foremost in my mind since we first heard about the number of SIs that would flow from this Bill. Indeed, when I, the noble Lord, Lord Newby, and the noble and learned Lord, Lord Hope, gave evidence to the Commons Select Committee and to our Constitution Committee, we specifically raised the issue of accuracy and the number of SIs we would have. The noble Baroness the Leader of the House can confirm that I discussed these issues with her. I welcome the fact that so far eight draft statutory instruments have been published on the Government’s website—perhaps the sample to which the Minister referred in his letter to my noble friend Lady Young. However, I am not sure what the purpose of a sample is other than to show how we can look at SIs and the issues that can be addressed in so doing. I think the noble Lord, Lord Lisvane, and the noble Baronesses, Lady Hamwee and Lady Neville-Rolfe, said that we need guidance on accuracy and getting SIs right. As my noble friend Lady Young said, we have one opportunity to get these measures right. They cannot be amended and making a mistake could have serious consequences. As more SIs appear on the website in draft, as I hope they will, I suggest to the Government that there should be a separate link and some kind of classification process as we want stakeholders and others with expertise and interest in this area to be able to identify them and find them instantly without first having to search through pages and pages to get to them.

On that basis, I welcome the agreement the Procedure Committee has reached with regard to the sifting and consideration of statutory instruments, as we have seen in this legislation. As in the House of Commons, we have 10 days in which to conduct a sifting process on the Bill and in which the committee will consider whether there should be an affirmative Motion, and then, in the normal way we conduct business in your Lordships’ House, we consider the merits of the order. We should be under no illusions: this is a huge task to be undertaken. Even the setting up of in effect a separate committee by having two sub-committees will not mean that all the work is undertaken that it is necessary to do. Given the scale of the work ahead, I welcome the suggestions we have had today on how we can draw on the experience and expertise of stakeholders, as the noble Baroness, Lady Hamwee, said, to deal with the issue of accuracy. It is not an issue of policy or change but of accuracy.

As the noble Baroness, Lady Neville-Rolfe, said, we have one opportunity to get this right. Given the nature of the consultation, it is a good idea to provide an explanatory document. That is extremely important. The principle of her amendments is sound. My only disagreement is that I do not think they go far enough in that she selects certain areas to be addressed. I am sure she understands the need to have the opportunity to debate all the SIs. I think the noble Lord, Lord Lisvane, made the point in a slightly different way but if there is a draft of all SIs and consultations on all of them, the formal consideration can be speeded up at that point rather than have problems arise later.

The amendment of my noble friend Lady Young is important. I raised it in the Procedure Committee as her amendment rightly goes beyond the Bill to address Brexit-related orders from other legislation. Our committees would be able to examine any secondary legislation, whether related to Brexit or not—most will be although that is difficult to define—but the sifting power currently applies only to the withdrawal Bill. Negative SIs relating to other legislation will not be included in that process. That point was made by our Constitution Committee in its report on the road haulage Bill.

The amendments in the name of the noble Baroness, Lady Hamwee, reflect the concern that has featured in other debates: for example, the issues around what is “appropriate” or “necessary”, and ministerial discretion. Therefore, given the avalanche of orders we may face, it will be helpful to consult on all SIs, not just leave it to the discretion of Ministers.

On the amendments in the name of the noble Viscount, Lord Hailsham, who opened the debate, the concept of a sunset clause is interesting. I listened carefully to what he said, and the orders in relation to which he mentions a sunset clause are only those that have been brought in to address what the Minister deems are deficiencies, which should be a limited area. I am interested to hear the Minister’s response on this, because that could be a sensible approach to ensure accuracy, and that it is not just on a ministerial whim. I am concerned about the ministerial discretion in this area. I hope the Minister will take on board the comments made by the noble Viscount, Lord Hailsham, in this regard.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip) 12:30 pm, 12th March 2018

My Lords, this is a wide-ranging group of amendments. I will begin with my noble friend Lord Hailsham’s Amendments 109, 134 and 188 on the effect of regulations made under the main powers of the Bill. My noble friend was commendably brief and very clear—very blunt—about what he seeks. My difficulty is that these amendments would end up running counter to the fundamental aims of the Bill. We have heard from my noble friend himself that these amendments are intended to cause any regulations made under Clauses 7, 8 and 9 to lapse two years after exit day. Quite simply, this would prescribe a rigid legislative timeframe for the Government to replace them and would risk unnecessary disruption. If we could not find an alternative vehicle to write these regulations into law by the two-year deadline, it would create holes in the statute book. However, it is surely illogical to force the Government to make these regulations again in an identical form when they have already legitimately made them once.

The powers themselves, quite rightly, already have their own sunsets: for Clauses 7 and 8 it is two years after exit day, and for Clause 9 it is exit day itself. That is a sensible way in which the Executive have constrained these delegated powers to avoid their being available in perpetuity. But surely the regulations made under these powers should not necessarily be so transient. They will, of course, be doing vital work to ensure that we have a fully functioning statute book for when we leave the EU. We do not want our functioning statute book, or bits of it, to lapse after two years. I sympathise with the intention behind the amendments, but it is too rigid a fetter on the Government and Parliament’s ability to manage legislative priorities and workload between now and 2021, and it certainly would exacerbate the very uncertainty that the Bill is seeking to reduce.

Amendments 111, 137 and 192, all tabled by the noble Baroness, Lady Hamwee, deal with stakeholder consultation. It is my pleasure to tell the Committee that departments are very keen to engage with stakeholders on current matters and progress of the negotiations, and will continue to do so where this is possible and does not negatively impact the negotiations in any way.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour

I am not sure that the evidence stacks up on that. I have been seeking clarification from Defra for over a year now on just a simple list of the issues that might be subject to statutory instrument, and I have been unable to get that from the department. Perhaps the Minister might like to prod departments to reflect the terms she just stated.

Photo of Baroness Hamwee Baroness Hamwee Liberal Democrat Lords Spokesperson (Immigration)

My Lords, I too asked for a list of necessary statutory instruments from the Home Office, and the Parliamentary Answer was that the work had not been done to calculate the number.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

I say to the noble Baroness, Lady Young of Old Scone, that it is a pleasure to be asked to do the prodding rather than be the recipient of the prodding, which has certainly been my sensory experience standing at this Dispatch Box. I understand her concerns and will certainly relay them to my noble friend Lord Gardiner.

Similarly, I will refer the point raised by the noble Baroness, Lady Hamwee, to my noble friend Lady Williams. I understand the concerns; there must be a degree of frustration. It may of course simply underpin the enormity of the challenge confronting departments, in that at this stage it is extremely difficult to try to map exactly what lies ahead. Some of it might be predictable but some of it is unknown and will depend on the negotiations. However, I undertake to do what I can to seek some assistance.

The requirement in the amendment of the noble Baroness, Lady Hamwee, for relevant stakeholders to be consulted on all the provisions contained within all statutory instruments made under Clauses 7, 8 and 9 goes, I believe, beyond what is reasonable in this instance and belies the nature of those instruments. I appreciate the concerns that we have heard throughout this debate about the potential breadth of the power—something that clearly concerns my noble friend Lord Hailsham—but I hope that the Committee will accept at the least that a great many instruments will be technical and minor, and will merely ensure flexibility, swiftness in dealing with identified defects and, of course, continuity of our legal framework.

A specific legal requirement to consult could also impact on our negotiations with the EU. It could inadvertently expose our position at an inappropriate moment if we were engaged in sensitive discussions about particular issues. Compulsory consultations would also impact on the tight timeline for Parliament to scrutinise instruments. The consultation process requires resources and time from government and stakeholders, and we want to focus the energies of those inside and outside government on the most important measures rather than have them occluded by the sheer volume of consultations on what might, at the end of the day, be very minor technical matters. That is the challenge that could arise under these amendments. I hope that the noble Baroness understands why the Government cannot accept her amendment, and I urge her not to press it.

Photo of Baroness Hamwee Baroness Hamwee Liberal Democrat Lords Spokesperson (Immigration)

Before the noble Baroness moves on to the other amendments, is she able to expand a little on the point about upsetting negotiations? We are talking about moving existing legislation over the break point into the future. I am quite puzzled by that part of her response.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

That may be part of what is involved but the other part might, as emerged in earlier discussions today, impact on subsequent matters that are germane to the negotiations and will therefore have to be taken into account in whatever legislative framework is proposed. It is not just a simple question of the bridge; there may be other aspects to be considered.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords, Shadow Spokesperson (Northern Ireland)

Can the noble Baroness give us an example of where that might conflict with the negotiations? Some of us are struggling to understand the rationale behind that.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

Given the breadth of activity already referred to by both the noble Baronesses, Lady Young of Old Scone and Lady Hamwee—a huge breadth of activity involving a multiplicity of issues—it is inevitable that some of these matters will be caught up in the negotiations. I cannot be drawn on specific examples because we may be talking about generic issues. However, the Government are very anxious to avoid in any way hog-tying their freedom to conduct the negotiations with a degree of confidentiality and privacy.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour

I share my noble friend’s perplexity. We are talking about a government commitment, in my field of expertise, to take existing European environment law and bring it safely across to preserve the same standards. It will not be a great surprise to the European Union and those with whom we are negotiating if what we propose is exactly the same in intent as what currently exists—if the Government are indeed genuinely committed to making sure that we enjoy the same standards post Brexit as we did previously. Therefore, I find it difficult to believe—I have not been able to think of an example—that there will be something monumentally important as regards the negotiating process.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

I merely observe that the breadth of activity implicit within the negotiations could anticipate issues arising that we are unable at this moment to specify. The Government have been sensible in retaining the flexibility in the negotiations to deal with these if they do arise. It is important in that event—

Photo of Lord Newby Lord Newby Liberal Democrat Leader in the House of Lords

My Lords, the whole House is perplexed. Maybe we are perplexed because we are very tired, but might I suggest that the noble Baroness write to noble Lords with at least one or two examples of the problem she is describing? It is clearly the case that, for most of us, it sounds like a Sir Humphrey excuse and not a substantive point.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

It is not meant to be a Sir Humphrey excuse; it is meant to be an attempt to anticipate what is for most of us a very challenging scenario. However, I will of course take back the noble Lord’s suggestion and I will be very happy to try to produce some examples.

I shall return, if I may, to the amendment in the name of the noble Baroness, Lady Young of Old Scone. I hope I am pronouncing her title correctly; those who come from Basildon may be interested to learn the pronunciation.

Oh!

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

We do not do “scohnes” in Scotland.

The difficulty with the noble Baroness’s amendment is that the scope of future legislation that is caught by it has the potential to be enormous. I have no doubt that the amendment is well intended—that is beyond question—but it is not necessarily as helpful as the noble Baroness thought it might be. The additional scrutiny provisions of this amendment are not confined to the powers in this Bill but, as drafted, would apply to any regulations which replicate EU legislation, with or without modification, or any regulations which amend or modify legislation that was made to implement our EU obligations.

To add an additional scrutiny provision to such a large body of future legislation is simply not feasible. The parameters set out in this amendment are so vast that this would not only represent a significant burden of additional procedure for government departments now but could also mean that Governments decades into the future would be bound to this three-month consultation period for every single amendment made to retained EU law. This is very undesirable, given that many of these regulations are likely to be uncontroversial and technical in nature. Indeed, there are times when it is widely agreed that speed is of the essence.

The noble Baroness is rightly concerned about a range of important issues, so let me try to reassure her. Her amendment focuses particularly on environmental and social issues, so I will repeat what the Government have said on this. We were elected on a pledge to be the first generation to leave the environment of England in a better state than we inherited it.

On social issues, I am proud to say that the UK has a long-standing tradition of ensuring that our rights and liberties are protected domestically and of fulfilling our international rights obligations. The decision to leave the European Union does not change this. Indeed, the Government have made clear their firm commitment to protecting these rights throughout our exit. Additionally, of course, Clause 9 is already explicitly prohibited, like Clauses 7(1) and 8, from being used to amend, repeal or revoke the Human Rights Act or any subordinate legislation made under it.

On employment issues, also of concern to the noble Baroness, we have made a clear commitment to protect workers’ rights and to ensure that they keep pace with the changing labour market. We do not need to be part of the EU to have strong protections for workers, and in many areas the UK goes beyond the minimum standards set by the EU. For example, the rights of workers to annual leave, paid maternity leave and parental leave all go beyond the EU standards.

This amendment, like several others that have sought to protect environmental protections and social matters, fails to refer to specific rights and protections. As there are a vast number of laws on our statute book that relate to these matters in some way, the risk of judicial review of any statutory instrument made under this amendment would be inappropriately high.

The noble Lord, Lord Adonis, is not in his place, but the noble Baroness, Lady Hamwee, raised the issue of public consultation. I do not know whether she was embracing the issues raised in the noble Lord’s amendment, but let me say briefly that the Cabinet Office code of practice which the noble Lord suggests must be followed has already been in use by all departments for some years. Indeed, departments are already held to account by the Secondary Legislation Scrutiny Committee.

Photo of Baroness Hamwee Baroness Hamwee Liberal Democrat Lords Spokesperson (Immigration) 12:45 pm, 12th March 2018

My Lords, on the code of practice that is the subject of the amendment of the noble Lord, Lord Adonis, my experience from the Secondary Legislation Scrutiny Committee is that it is honoured in the breach as well as in the observance.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

There was a universal welcome for the Government adopting as their principles much of what was proposed by the Secondary Legislation Scrutiny Committee. The committee has a locus if it considers that consultation has been inadequate.

I turn to the amendments tabled by my noble friend Lady Neville-Rolfe, starting with Amendment 249. She has an exceptional, perhaps encyclopaedic, understanding of the statutory instrument processes and is clearly aware of the historical issues that led to concerns regarding the quality of documents laid as part of this procedure. While I understand the concern that underpins her request to place in statute the responsibility to provide sample statutory instruments before both Houses, the Government do not believe that such a responsibility is proportionate. Wherever possible, and where negotiations will not be affected, we would hope to provide details of draft SIs from all sectors.

The noble Baroness’s proposed new paragraph in Amendment 250 seeks to address the procedures for conducting consultations. She makes a number of sensible suggestions as to what should be considered and included when conducting consultations—in fact, many of these are already being conducted or are currently being incorporated—but to require that a draft instrument should be published not less than 60 days before it is laid would place an undeliverable duty on departments, given the limited timeframe that is available and the need at times not to reveal expectations as to the outcome of negotiations while they are ongoing.

Similarly, Amendment 251 would place an impossible burden on the House and its time and does not allow for flexibility in the management of business. The new proposals for laying draft negative SIs with a sifting committee would mean that the Minister would not be able to give any indication as to when it was expected that the instrument would be debated. In these cases, if, as I hope, the Committee accepts the recommendation of the Government that the negative procedure is proportionate, the SI would proceed as a negative statutory instrument. This House has a well-established process for considering affirmative and, where desired, negative SIs, and we want to see this continue.

None of this is to refute that my noble friend has set out some very good suggestions for practice, but practice should not be placed in the Bill. Indeed, the noble Baroness, Lady Smith, had an interesting suggestion about listing SIs once known.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

People are bellowing “End!” in my right ear and I know which side my bread is buttered on.

I have spoken at length but I hope I have addressed noble Lords’ concerns. I urge the noble Viscount to withdraw his amendment.

Photo of Viscount Hailsham Viscount Hailsham Conservative

My Lords, this group of amendments has enabled the Committee to identify matters of considerable importance. I think that the Committee will say to my noble friend that she has tried to be helpful. We do not always agree with her but we are grateful to her for the way in which she has responded. Important issues have been raised with regard to statutory instruments and consultation with stakeholders. These matters will be addressed later on in future sessions of this Committee. The hour is late and, with the consent of the House, I would like to withdraw my amendment.

Amendment 109 withdrawn.

Amendment 110

Moved by Lord Lisvane

110: Clause 7, page 6, line 27, at end insert—“( ) Where regulations under subsection (1) confer power to legislate by subordinate instrument, the instrument is subject to the same parliamentary control and the same time limit in subsection (8) as are the regulations.”

Photo of Lord Lisvane Lord Lisvane Crossbench

My Lords, in moving Amendment 110 I shall speak also to Amendment 135, both of which are also tabled in the names of my noble and learned friend Lord Judge, my noble friend Lord Pannick and the noble Lord, Lord Tyler, who like me is a member of the Delegated Powers Committee. The amendments seek to place controls upon the use of sub-delegation and the creation of tertiary legislation. We have had something of a preview to this in the debate on Amendment 71 held last Wednesday, and earlier today the horror story about the Bar Standards Board told by the noble Lord, Lord Thomas of Gresford, which I think would have greatly alarmed my nervous maiden aunts.

I was extremely grateful to my noble friend Lord Wilson of Dinton for moving Amendment 71 last Wednesday and to the Committee for its understanding of why I could not do so myself. My noble friend made a magisterial and compelling speech in which he pointed out that the powers in Clauses 7, 8 and 9 could be used to sub-delegate. Indeed, so compelling was his speech that the only person who disagreed with him in the debate was the Minister. That reminded me of the story of Benjamin Jowett: when he was the Master of Balliol and was outvoted 20 to one at a college meeting, he said, “Gentlemen, we appear to have reached deadlock”.

This Bill is riddled with provisions which have serious constitutional implications, and the unrestricted power of sub-delegation is one of them. It allows Ministers to authorise bodies and even individual persons to make law without the approval of Parliament. As the Delegated Powers Committee pointed out, there is no requirement for this legislation to be made by statutory instrument. If it is not made by SI, the Statutory Instruments Act 1946 does not apply to it and the legislation does not have to be laid before Parliament or even published. The possibility that law which the citizen must obey might not be published offends against the first of the late Lord Bingham’s eight principles of the rule of the law: that the law must be accessible as well as clear and predictable.

The Government memorandum submitted to the Delegated Powers Committee suggested that the power to make tertiary legislation is intended to be used sparingly. Once again we come back to the fact that what matters is what is on the face of the Act. If the power of sub-delegation is there, you can bet that it will be used whenever convenient to the Government of the day. Moreover, it will go on being used. In addition to these amendments, I have tabled Amendment 365 to paragraph 28 of Schedule 8 which would complete the removal of the exemption for tertiary legislation from the two-year sunset provision for secondary legislation-making powers. Slightly oddly, it has not been grouped with these amendments, but when we reach it, it will provide us with a further opportunity to consider the Government’s response to the amendments in this group.

As the Delegated Powers Committee points out, the power to make tertiary legislation could be given to new bodies to control and regulate, by legislation and without any parliamentary control, areas that are currently governed by EU law. These include aviation, banking, investment services, chemicals, agriculture, fisheries and medicines. They would all become in effect judges in their own cause. Amendments 110 and 135 would subject sub-delegation to the same parliamentary control and time limits as regulations in the first tier of delegation. I beg to move.

Photo of Lord Judge Lord Judge Judge

My Lords, if we reflect on the words used by my noble friend Lord Lisvane, it is really rather chilling. There will be power in a Minister to create laws by giving him or her a blank sheet of paper so that he or she can write out whatever he or she thinks is appropriate. It will be uncontrolled and unscrutinised.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Exiting the European Union), Shadow Deputy Leader of the House of Lords

My Lords, I have little to add but I have tabled Amendments 350 and 351 in this group. I should like to mention the importance of ensuring parliamentary scrutiny, in particular of tertiary legislation which was mentioned by the noble Lord, Lord Lisvane. We will deal with that issue later in a different group. The issue he raises is covered in paragraph 15 of the report of the Delegated Powers Committee. There is to be no time limit on the ability to pass tertiary legislation.

As has been made clear both last Wednesday and today, in seeking to bring into UK law the provisions that are currently effected in the UK by virtue of the 1972 Act and our EU membership, the Government have simply slipped into a belief that they should take control of all of this and have drafted for themselves powers and possibilities that rightly belong in Parliament, not with the Executive. As has been said, these amendments are to ensure that use of the powers will be properly scrutinised, and that they will be used by Parliament, rather than Ministers. I hope that the Minister has heard this often and strongly enough to be able to indicate, even at this late hour of the night, that it should be the Government who bring forward amendments on this on Report, because the arguments have been so well made. We should expect them to take the next step.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

My Lords, I know that concerns regarding the delegation of legislative power, particularly where that delegation permits sub-delegation or allows for tertiary legislation, are shared by many in the Committee. I know that this debate has been brief because the hour is late, but I am aware of the concerns. I say up front in response to the noble Baroness, Lady Hayter, that the Government understand these concerns. We have listened carefully to this debate and to other representations that we have received, so for Report we will look to see how we can provide additional reassurances and transparency around sub-delegation and additional scrutiny of any fees and charges made under Schedule 4.

I will go into this in a little more detail, if noble Lords will forgive me. I know that it is late, but these are serious amendments on an aspect of the Bill that is of legitimate concern, unlike some of the amendments we discussed earlier. I hope I can do something to put some concerns to rest. I shall first take a moment to clarify that, where a legislative function is being sub-delegated under Clause 7 or any of the other powers in the Bill, that power will also be constrained by the policy restrictions that apply to the delegating power. In the case of Clause 7(1), that includes all the restrictions in Clause 7(7).

Although, beyond Ministers, there are indeed a great number of public authorities in the UK, there are only a very small number to which it would be appropriate for Ministers to sub-delegate legislative functions as an appropriate correction for a deficiency in retained EU law. Again, these will all be subject to the affirmative procedure.

I also restate that any SI providing for legislative sub-delegation will be subject to the affirmative scrutiny procedure and will have to set out what conditions apply to the exercise of that power. Whether scrutinising the sub-delegation of any of the powers in this Bill, the creation of a new, specific and targeted legislative function, or the transfer of any legislative power from the EU, I would expect this House in particular to take a keen interest in these instruments and to have vigorous debates on the appropriateness of the conditions proposed for the exercise of the power before voting on the instrument.

While the Government are listening to the Committee’s concerns about the form that this sub-delegation will take, they believe that conferring powers on public authorities, including Ministers, to allow them to make provisions of a legislative character or other legislation can be an appropriate course of action, either to make corrections to retained EU law or to maintain a regime in the future. This is particularly true where there is a need for specialised, technical rules to be developed, introduced and maintained by a body that has the necessary dedicated resource and expertise.

I will give noble Lords an example. The EU binding technical standards—the detailed technical rules developed by EU regulators for financial services—demonstrate where it might be appropriate to sub-delegate the responsibility for correcting. These standards, which run to almost 10,000 pages, fill out the detail of how firms need to comply with requirements of policy set in higher legislation. The PRA and FCA have already been given the responsibility by Parliament of developing and making the domestic detailed rules needed to ensure that financial services firms are stable, well managed and meet the needs of consumers. These UK public bodies have played a leading role in the EU to develop these standards, so they already have the necessary resources and expertise to review and correct them to operate effectively in the UK from day one of exit.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy) 1:00 am, 12th March 2018

Perhaps the Minister could help me with a clarification. As I understand it, the FCA and others have the powers he just described as a consequence of a cascade that comes, as he said, from higher levels of legislation that originated in a democratic process. They therefore have safeguards, frameworks, constraints, mitigations and appeals processes—all kinds of characteristics sitting around them. How do the powers of sub-delegation which the Minister described relate to any of those structures of cascade or framework, since we are supposedly leaving the EU?

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I am not sure that the powers originated in a democratic framework; a lot of them came from EU legislation introduced by regulation which takes automatic effect through the European Communities Act. We could have an argument about whether that is a democratic framework, but perhaps now is not the time.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

Let me make some further progress and see whether it responds to the noble Baroness’s questions.

Some of the powers to make legislation that will be transferred under the powers in the Bill are integral parts of regimes currently managed at the EU level; for example, where the European Commission currently legislates to add to or remove active compounds from lists of biocidal products. Where sub-delegated or transferred legislative powers are crucial to the functioning of a regime, it would not be appropriate for those powers to be subject to a sunset. That would only postpone rather than remove the requirement in the limited time available before exit for either a regular flow of primary legislation to keep regimes up to date or a suite of primary legislation to design equivalent powers to those which the Government intend to transfer under this Bill.

Perhaps I may address the three elements of Amendments 350 and 351 tabled by the noble Baroness, Lady Hayter. First, I turn to the scrutiny of the exercise of the powers by Ministers of the Crown in Schedule 4. We have laid out in Schedule 7, which I know we will debate at length another day, provisions for the scrutiny of those powers. Our position is that the powers should indeed be subject to the affirmative procedure where Ministers are creating new fees and charges regimes, or where we seek to grant an authority the power to set its own fees and charges. It is the sort of framework being established in which this House rightly takes a great interest. All this is of course possible under Schedule 4 only in relation to new functions that we are transferring from the EU or setting up on exit under the powers in the Bill. We have not provided for the adjustment of these, or for existing fees or charges, to be subject to the affirmative procedure. In years to come, there will be many such adjustments as technology cuts costs and inflation raises them. This ebb and flow can make a real difference to businesses, but does not normally represent a matter requiring debate and division within this House.

Nevertheless, I accept the point made by the Delegated Powers and Regulatory Reform Committee that the raising of a fee not by 1% or 2% but by, let us say, 13,000% would be a substantial matter. I trust, however, in the expertise of the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments to draw this House’s attention to such matters. I remind noble Lords that the negative procedure for statutory instruments does not mean no scrutiny at all, nor does it prevent debate. Nevertheless, if I have not addressed sufficiently the noble Baroness’s concerns on this point, I would be more than happy to discuss further how we might do so. As I said at the start, we are looking closely at this issue and expect to come back to it on Report.

Secondly, these powers are vested also in the devolved Ministers—we do not have the noble Lord, Lord Wigley, with us to make his regular point about devolved matters. While the scrutiny of the powers is important and, as I have just set out, the Government have tried to ensure that the most important of the regulations made under them will be affirmative, it is not for this House to dictate scrutiny to the devolved legislatures. The Bill contains a starting base of procedures for the devolved exercise of powers. While the devolved Administrations are competent to change these following Royal Assent, discussions continue with them about any alterations they may think it appropriate to make in the Bill. It would also not be appropriate for us to require the devolved Ministers to seek our approval for their statutory instruments—I am sure the noble Baroness did not intend this to happen.

My third point regards the sub-delegation of the power to provide for fees and charges. It bears repeating that any instrument providing for this will have to be affirmative, can delegate this power only to a body being given a new function under this Bill, and will have to set out the conditions for the exercise of that power.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Exiting the European Union), Shadow Deputy Leader of the House of Lords

It sounds as though what the Minster is reading out dates from before today’s debate on fees and charges. I had hoped that, in light of that, this continued idea of setting these by secondary legislation had gone from his mind.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

We said that we would return to this matter on Report, but we are now talking about the sub-delegation of those fees and charges.

Moving on to Amendment 352 in the name of my noble friend Lord Hailsham, I am in total agreement with the principle that the Government should not raise fees or charges from the public, whether businesses or individuals, without considering the impact on those who will pay or the impact on both the payers and the wider economy. I may be wrong but I doubt that many in this Committee, other than the noble Lord, Lord Macpherson, who is sadly not in his place and is of course intimately familiar with it, will have read Managing Public Money. This weighty tome is easily available online and serves as the sacred text of Her Majesty’s Treasury regarding many things, including the setting of new fees and charges. It sets out that charges on the public must be subject to the general practices on consultation and economic and financial analysis. Without this, the consent of Her Majesty’s Treasury to establishing a new fee or charge, required by paragraph 3 of Schedule 4 for all new fees or charges under the Bill, cannot be obtained.

I hope that this long explanation, for which I apologise at this late hour, and my other points have gone some way to reassuring noble Lords. I am happy to continue discussing these important issues, but in the meantime I hope noble Lords will not press their amendments today.

Photo of Lord Lisvane Lord Lisvane Crossbench

My Lords, I am extremely grateful to the Minister for the detail he went into in his reply, particularly at this late hour. I also pay tribute to him for his customary generosity in being prepared to discuss these matters outside the Chamber. He recommended one weighty tome with which, as a former accounting officer, I am moderately familiar. Perhaps I may recommend to him another weighty tome, Craies On Legislation, edited in masterly fashion by Daniel Greenberg, former parliamentary counsel. I think it is at chapter 3.5.1 that he will find a very good treatment of the dos and don’ts of sub-delegation. That might be something we discuss before we come back to these matters on Report.

Of course, he is absolutely right to say that the consigning of these powers to a body or a person will require the affirmative procedure, and that is fine up to a point, but the exercise of the powers, once sub-delegated, will be free of the trammels of the accepted processes, so it becomes even more important that, in the consigning of the powers, the constraints on how they can be used by the consignee, if I can use that rather unlegislative term, are made absolutely clear. That is something, perhaps, on which we can have further conversations between now and Report. On that basis, I beg leave to withdraw Amendment 110.

Amendment 110 withdrawn.

Amendment 111 not moved.

Clause 7 agreed.

Amendments 112 to 114 not moved.

Amendment 115

Moved by Lord Whitty

115: After Clause 7, insert the following new Clause—“Chemicals (1) The Secretary of State must ensure that the standards established by and under the Regulation for the Registration, Evaluation, Authorisation and Restriction of Chemicals (EC 2006/1907) ('REACH') continue to apply on and after exit day.(2) The standards referred to in this section include, but are not limited to, the restriction of chemical substances and the identification and control of substances of very high concern.(3) The Secretary of State must by regulations establish a procedure for the registration of chemical substances with a domestic agency previously registered under REACH, with particular attention paid to companies whose market is limited to the territory of the United Kingdom.(4) Chemical substances that have not been registered by under REACH before exit day or under domestic legislation procedure established pursuant to subsection (3) must not have access to the United Kingdom market after exit day.(5) The Secretary of State must by regulations establish a procedure for issuing authorisations for the use of substances of very high concern.(6) The procedures referred to in subsections (3) and (5) must retain as far as possible the rules applied, principles underlying and processes followed under REACH.(7) The Secretary of the State must, within one month of the passing of this Act, produce and publish a review analysing the options for the regulation of chemical substances in the United Kingdom after exit day and this review must consider at least the following—(a) the potential for future participation in REACH processes;(b) the functions currently exercised by the European Chemicals Agency or shared with other member States that are not currently carried out by an equivalent UK body;(c) the compatibility of new chemicals regulations with achieving a high level of environmental protection;(d) the future validity of registrations of United Kingdom chemical companies in the EU; and(e) access to the REACH database.”

Photo of Lord Whitty Lord Whitty Chair, EU Internal Market Sub-Committee

My Lords, in moving Amendment 115 I will also support Amendment 172, which is about the European Chemicals Agency. Noble Lords may have noticed that, while I normally speak to amendments as a Back-Bencher, I am also representing the Front Bench tonight. I hope the noble Lord, Lord Taylor, the Chief Whip, will recognise that this reduces the number of speeches by one—and possibly two if the Minister agrees with me.

Amendment 115 sets out in some detail a fallback position to deal with the important issue of the management of chemicals. Essentially, it is also a probing amendment in that it asks the Government to clarify their future relationship with REACH, the regime for registering, authorising and controlling the use of chemicals in industry and in everyday life. I note that, since we tabled this amendment, the Prime Minister is at least in part in support of its objective, in that she wishes to maintain some degree of UK participation in the European Chemicals Agency—which I applaud.

This is a very important area of protection for workers, consumers and the environment, and for ensuring that there is a level playing field in the trade in chemicals across Europe. It deals with more than 20,000 chemicals in an industry which, in British terms, exports 60% of its export produce to the EU, while 75% of our own imports are also from the EU. Having equivalent arrangements is therefore very important: for the industry and the trade; for the protection of people as workers, consumers and the general public; and for the environment and the associated ecosystems of air, water and soil.

The REACH system goes well beyond the point which the Prime Minister made in relation to the agency. It is a very complex interrelationship between regulating the way that companies operate and market, and the way in which products are handled, traded and transported. It is dependent on a lot of highly intricate, multiple interactions between UK actors and actors within the EU at various levels, and between the institutions of the EU. It is essentially based on a precautionary principle and is a backstop to prevent dangerous chemicals entering the UK. This is a further backstop, were no agreement to be reached along the lines which I hope the Prime Minister is moving towards—in other words, to maintain the present system. Clearly, maintaining the present system is the preferable option. It is one which the chemical industry itself and environmentalists are advocating, and which those who have to deal with the chemicals trade, its products and their incorporation within other products also strongly support.

The Government have been looking at various options and it is right that they should do so. We are given to understand that Michael Gove, or rather the Permanent Secretary of his department, has suggested that we should be paying £6 million at the moment to create the capability to enable registration on a UK basis. Amendment 115 attempts to move on from that and to ensure that we have a clear legislative basis for the UK to operate on, which would come as close as possible to maintaining engagement with the REACH process.

We would, however, much prefer it if the REACH process were incorporated in the UK and that we effectively continued in the status quo. If we do not do so, it will not only engage the Government in considerable expenditure but disadvantage UK industry. It will also potentially disadvantage the UK public, in that they will not have the same protections as they had within the EU because we will not have access to the complex database on which the REACH procedure is based.

Incidentally—but to many people quite importantly—it would also increase the number of testing arrangements that would have to be made within the UK, which would be expensive and complex, and would also, among other things, increase the number of animal tests. Therefore, the issue of animal suffering and opposition to animal testing would be duplicated between the EU and the UK.

So a whole range of issues is involved. An amendment along our lines gives the ability to create an alternative that more or less replicates the REACH provisions, but it is a second-best solution. If the Minister can indicate today that, in the Prime Minister’s words last week, the Government will be seeking full continuing involvement in the REACH process, it would be the best outcome for all of us. It would be the best outcome for those who are potentially exposed to chemical hazards, it would be the best outcome for industry and its operations within Europe and it would also be the best outcome for the Government not to be faced with multiple pressures arising from differential processes and differential regulation.

I therefore hope to hear from the Government not only a clarification but an indication that the maximum interpretation of the Prime Minister’s speech would mean that we would continue to involve ourselves not only in the European Chemicals Agency but in the totality of the REACH process. I hope that the Minister can give me that clarity tonight and share it with the rest of the Committee tonight, in which case we will all be on the same page. If not, it is of such importance to industry, consumers and others that we would need to return if there is a lack of clarity tonight. For the moment, I am encouraged by the Prime Minister’s speech and therefore encourage the Minister to spell out exactly what it means so that we can all go home at some point in the next few hours with at least one advance in the process this evening. I beg to move.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy) 1:15 am, 12th March 2018

Just when noble Lords thought it could not get any better, they have double chemistry to look forward to. I shall speak to Amendment 115, which bears my name, and in support of Amendment 171. I 100% endorse the words of the noble Lord, Lord Whitty, so I will try not to repeat them and earn the ire of the Government Chief Whip.

As the noble Lord set out, REACH is a very complex system and not just chemical companies are affected by it. All manner of manufacturing employs chemicals, and those chemicals currently fall under the REACH process. That REACH process came through the co-operation and participation of many of those companies. I know from experience that companies have put a lot of time and effort into committees working to create this system. I know very well that they do not want to have to repeat that process. Above all, maintaining REACH or something as parallel as possible is a priority in this process.

The noble Lord, Lord Whitty, mentioned that the Prime Minister seemed to endorse that process. When the noble Lord, Lord Callanan, was speaking to Amendment 66, I thought I heard him endorse continued involvement in REACH, and that was heartening. This amendment seeks to achieve some sense of how the Government feel that is going to happen and unfold. It is not straightforward. Once we have left the European Union, how does the system continue to remain in parallel, or do the Government intend that we remain at the heart of REACH? If so, how do they expect to negotiate that process? Is it through associate membership, full membership or some other way? We need to understand not just how we remain at the point of exit but how we remain on a continuing basis, because this is a living thing. As new chemicals come into use and the ways of using them change, so REACH changes. Even by staying close to REACH, if the United Kingdom does not have full access to all the data, it is going to come up against legal problems if it starts to try to rule on chemicals without all the data behind it.

There is one issue I am very interested in which the noble Lord, Lord Whitty, did not mention. Recently, the Cabinet Office Minister David Lidington was talking about the possible necessity for Westminster to take back responsibility in previously devolved areas—this perhaps reflects on some of the debates we had earlier—in order to maintain,

“the integrity of the United Kingdom market”.

These are David Lidington’s words, not mine. In my words, he would be seeking to “undevolve” some issues. He took a specific example, saying that,

“if you’re a paint manufacturer in Wales you’ve got to stick to some chemical standards … but you want those to be the same as the paint standards in Scotland or Northern Ireland”.

He said it “makes sense” to have unity within a single market, by which he meant the United Kingdom. There is an element of irony in that. I was surprised by that, so perhaps the Minister can help us understand whether David Lidington was off piste on that occasion. It would be very helpful it the Minister could rule that out.

However, strangely enough, the point he was making about the need for a single set of rules within the United Kingdom is of course the whole point of REACH in the first place. The reason the REACH system was created is that manufacturing spans the whole of Europe. We need a chemicals management system that spans Europe, and we want to hear from the Government how that will happen.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour

My Lords, I will speak briefly to support the amendments. As chief executive of the Environment Agency, I lived through the process of designing and delivering REACH, and it was a joy to work as closely as we did with British industry and industry across Europe in devising a system that was shared between government, regulators and business. It is a bit of an object lesson in how to go about it, and much admired globally. I welcome the Prime Minister’s expression of support, but would just take issue with one thing the noble Lord, Lord Fox, said. I do not think we should be aiming at a parallel system in any way—we should be a full and absolute member of the REACH process. It works, it is elegant and I hope we can get an assurance from the Minister tonight that we will move rapidly to find a way to give industry clarity about how the REACH process will operate post Brexit.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

My Lords, I thank the noble Lord, Lord Whitty, and, in his absence, the noble Lord, Lord Adonis, for their amendments concerning the very significant issue of chemicals regulation.

The Bill will incorporate current EU law into domestic law and allow it to be corrected in order to operate properly, giving consumers and businesses as much certainty as possible. This includes regulations relating to chemicals. The Bill will convert the REACH regulation into domestic law, meaning that the obligations on duty holders and the environmental standards and principles that underpin REACH will continue to apply in the UK, including in the devolved areas. These include the specific measures included in the amendment in the name of the noble Lord, Lord Whitty.

We are working to ensure that we have a functioning chemicals regulatory and enforcement system in the UK for day one. For example, the Environment Secretary has given the go-ahead for the development of six new systems, including one for chemicals. Work has started on delivering the new IT system that will enable registrations and the regulation of chemical substances placed on the UK market. This will provide continuity for businesses after EU exit.

Let me be clear: our priorities are to maintain the effective and safe management of chemicals to safeguard human health and the environment, to respond to emerging risks and to allow trade with the EU that is as frictionless as possible. We have been engaging with a range of stakeholders to understand the detailed impacts of Brexit and are grateful for the pragmatic approach that the chemicals industry is taking to Brexit and for its positive approach to working with the Government to understand the impacts and deliver the best possible outcome for the industry after exit. We are committed to continuing this engagement throughout the process.

With regard to chemicals, REACH is underpinned—this is explicit in Article 1—by the precautionary principle. So, once REACH is translated into UK law through the withdrawal Bill, the precautionary principle will continue to exist directly in UK law in relation to REACH. The precautionary principle is also embedded in international conventions relevant to the regulation of chemicals, such as the Stockholm convention on persistent organic pollutants, and the UK is and will continue to be a signatory to the convention in its own right.

Further, our 25-year environment plan sets out our intention to publish a chemicals strategy that will set out our approach as we leave the EU. It will set out our priorities for action and detail how we will achieve our goals, building on existing regulatory approaches and tackling chemicals of national concern. The Government will discuss with the EU as part of the exit negotiations how best to continue co-operation on chemicals regulation in the interests of both the UK and the EU. As the noble Lord, Lord Whitty, acknowledged, in her Mansion House speech the Prime Minister has said we will want to explore with the EU the terms on which we could continue to co-operate with the European Chemicals Agency and participate in certain processes, the point that the noble Lord, Lord Fox, sought clarification on. As for the specifics, I think your Lordships will understand that I cannot go into more detail because this is the subject of live negotiation in the negotiation process.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

That is very clear, and I thank the Minister for what she has said so far. What is not clear to me is whether the overall idea is to avoid divergence from EU REACH. It does not sound as if the UK is inside REACH in the way that the noble Baroness, Lady Young, pointed out; it sounds as if the aim is to run a parallel system. Have I misunderstood?

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

I can only repeat the Prime Minister’s stated intention in her speech, and that is specifically to explore with the EU the terms on which we would continue to co-operate with ECHA and participate in certain processes. I say to the noble Lord, Lord Fox, that clearly, EU REACH is an EU organisation and to be a member of it you have to be an EU member state. After Brexit we shall not be that, but it is in the interests of the UK and certainly of industry that we work, in so far as we possibly can, in tandem with what is happening within the EU. That is certainly what the Government’s objective will be. The precise detail of that will be the subject of the negotiations.

The UK is strongly committed to the effective and safe management of chemicals and pesticides, and that will not change when we leave the EU. I hope this provides the noble Lords with sufficient reassurance that they will not pursue their amendments.

Photo of Lord Whitty Lord Whitty Chair, EU Internal Market Sub-Committee

I thank the Minister for that reply, and I thank my noble friend Lady Young and the noble Lord, Lord Fox, for supporting the amendments. I am afraid the Minister’s speech was not as forthcoming as I was hoping due to the way that I had been led, in my usual spirit of optimism, to interpret the Prime Minister’s speech. I am therefore going to have to say slightly more than I promised the Chief Whip.

It seems that the Minister is saying that we will be outside the REACH process but will develop our own parallel process and might, if we can negotiate it, still in some way be party to the agency. I had hoped that being party to the agency as part of the Prime Minister’s aim meant that she had been convinced by the industry and others that it would be sensible to be part of the process. The Minister’s reply today narrows that hope somewhat.

It will be a difficult negotiating objective even to engage ourselves with the agencies when the European Union has said that once we are out in a year’s time, we may well be bound by the rules set or administered by that agency but will no longer be part of the process, even in the transition period. Getting ourselves back in the agency is an important objective. If we are not committing ourselves to be part of the broader process and engaging with industry and the regulators within Europe, that is more difficult.

We must bear in mind that if the negotiations are not going well, there are substantial vested interests in Europe which might want to exclude British companies from some of these chemical markets. I therefore think that a more positive approach by the Government —engaging in the whole process, rather than trying to parallel it—would meet with a better response from European industry and therefore European Governments.

I thank the Minister for going as far as she was able to go. I hope that as negotiations proceed further, I will receive greater reassurance. I am slightly dispirited by the response I have so far received, but I beg leave to withdraw the amendment.

Amendment 115 withdrawn.

Amendment 115A

Moved by Lord Carrington of Fulham

115A: After Clause 7, insert the following new Clause—“Market access for financial services(1) Before exit day, a Minister of the Crown must lay before Parliament a report setting out how access to markets by persons carrying on business in financial services in the EU and the United Kingdom will be maintained after exit day.(2) The report must include—(a) the method of assessing the degree of alignment necessary between the regulatory provisions applying to persons carrying on business in financial services in the EU and the United Kingdom;(b) the arrangements to be made to enable continuing alignment between those provisions;(c) the process to be followed to provide continuing co-operation between the bodies responsible for supervising the application of those provisions;(d) the legal framework required to enable co-ordination of supervision of persons carrying on business in financial services by the bodies responsible for supervising those persons;(e) proposals for the establishment of a forum for regulatory alignment in respect of financial services in the EU and the United Kingdom.(3) The forum referred to in subsection (2)(e) is to exercise the following functions—(a) to encourage continuing alignment through information sharing and co-operation in the development of provisions applying to persons carrying on business in financial services;(b) to assess the extent of divergence between such provisions as they apply in the EU and the United Kingdom and to make recommendations in respect of it;(c) to promote co-operation in respect of the general principles applicable to supervision and enforcement.(4) In this section “business in financial services” means business which—(a) if carried on in the United Kingdom, is a regulated activity within the meaning of section 22 of the Financial Services and Markets Act 2000; or(b) if carried on in the EU, is an activity which, if it were carried on in the United Kingdom, would be an activity to which that section would apply.”

Photo of Lord Carrington of Fulham Lord Carrington of Fulham Conservative

My Lords, I am conscious of the hour and shall try to be as brief as I can with what I am sorry to tell your Lordships is a rather technical proposed new clause. Therefore, what I have to say may be slightly tedious, but the new clause is intended to be helpful to the Government.

The new clause suggests a way in which the UK and the EU 27 working together—however improbable that may appear at times—could resolve some of the issues around the provision of financial services from the UK to the EU 27 and, perhaps as importantly, from the EU 27 into the UK. It is not a fully worked out scheme and could not be at this stage. To be capable of adoption, it would require agreement in the Brexit negotiations. It is, however, pretty much in line with the Prime Minister’s proposals in her speech at Mansion House on 2 March and the Chancellor’s in his speech on 7 March, so it might just be an acceptable way forward.

The importance of the financial services sector to the UK economy and the significance of the Brexit process to the sector are well understood by your Lordships. What is often called the City is not just London, with its leading position as a financial centre; it is important to the UK as a whole. Of the 2.2 million people who work in financial and related professional services in the UK, 1.5 million work outside London.

My new clause proposes a mechanism by which this very important sector might operate to best advantage in the UK and in the EU 27 after the UK’s withdrawal from the EU. I would like to be able to claim that this proposal is all my own work but, in reality, it is based on work undertaken by the International Regulatory Strategy Group, a practitioner-led group drawn from across the UK-based financial services sector, co-sponsored by the City of London Corporation and TheCityUK.

The new clause is based on the principle of mutual market access rather than the EU’s third country equivalence regime. To quote the Chancellor in his speech last Wednesday,

“that regime would be wholly inadequate for the scale and complexity of UK-EU financial services trade”.

The basis of the proposed new clause is the requirement to produce a report on market access set out in subsection (1). Currently, cross-border access for firms is given by passporting, as it is known, under the single market directives. A supplier of financial services obtains authorisation in the form of a licence from the regulator in its home country and that will then allow it to operate in any other member state without needing to obtain a separate licence from the regulator in that state.

Inevitably, passporting will disappear when the UK leaves the EU. The proposed new clause requires a report to be produced detailing the arrangement which might take its place, to enable trade to continue without the need for local licensing. Essentially, the arrangement seeks to confer mutual market access between the EU 27 and the UK without local licensing based on the terms of a free trade agreement.

This is, admittedly, ambitious, but needs to be seen in the context of the current arrangement of complete alignment and passporting. If a licence-free arrangement cannot be fully agreed, the requirement for a licence for international trading should be applied only where strictly necessary. The overarching objective to allow this arrangement to work would be, to quote the Prime Minister’s Mansion House speech, based on,

“the ability to access each other’s markets, based on … maintaining the same regulatory outcomes over time”.

Proposed subsection (2) sets out what needs to be achieved to make this aspiration reality.

I should make it clear that these paragraphs do not require that the regulatory requirements are the same. Rather, the objective is to frame the criteria for mutual market access as being that the UK’s and EU 27’s requirements are sufficiently aligned to enable the desired regulatory outcomes to be achieved. Of course, the financial regulations in both the UK and the EU 27 will change over time—and at times, quite dramatically. Resolving this problem is covered in subsection (2)(e), which covers the need to set up a forum for regulatory alignment, a joint UK-EU 27 body whose functions are set out in subsection (3). This forum would have a big role in sorting out the problems arising from regulatory divergence. The joint UK-EU 27 forum would facilitate proactive and co-operative engagement between the UK and EU 27 to resolve the problems.

I could expand further on the detail and, of course, I have not attempted to cover in this proposed new clause the consequential issues, such as arbitration and enforcement mechanisms. That alone is a subject on its own and bears on the arrangements for the independent institutional structure which replaces the ECJ’s oversight. I hope, however, that what I have set out would provide a collaborative, objective framework that is reciprocal and mutually agreed, and could be relied on by business. Indeed, it may be a framework which could also be adapted to business sectors beyond financial services. I beg to move.

Photo of Baroness Falkner of Margravine Baroness Falkner of Margravine Chair, EU Financial Affairs Sub-Committee

My Lords, my name is attached to the amendment but I will, indeed, be brief. The noble Lord, Lord Carrington of Fulham, said that he tabled the proposed new clause to be helpful to the Government. That may well be his motivation; it is not entirely mine. I attached my name to the amendment to bring severely needed clarity to a few of the really important aspects of financial services regulation and supervision that we need now, rather than waiting until the end of the transition period.

In doing so, I declare that I chair the EU Financial Affairs Sub-Committee. I am also a member of the EU Select Committee, so I speak in a personal capacity. My committee recently wrote a report on financial regulation and supervision. It came home to us, in a very stark fashion, how little of the architecture of financial regulation and supervision will be clear to enable firms and businesses to do the planning they need to do. This essentially touches on two or three areas. The first is the continuity of the legal position of contracts and the legal position that affects businesses in terms of laws passed during the transition period, when the UK would be in full regulatory alignment with EU law.

Another aspect of concern to us was the extent of supervisory co-operation between the EU and the UK. The noble Lord, Lord Carrington, said he believes that the proposed new clause will reflect the views of the Prime Minister and the Chancellor in his recent HSBC speech. I agree that it will probably reflect those views, but I do not think it recognises that, in the European Commission’s draft negotiating guidelines or the European Parliament’s new paper, the idea of having provisions for financial services is dealt with either extremely skimpily or not at all. The amendment is perhaps somewhat optimistic, but nevertheless I want to hear from the Government; in that sense, my attachment of my name to the amendment is just to probe them.

Coming back to continuity of contracts, our inquiry was told by Stephen Jones from UK Finance that there were approximately,

“10,000 pages of EU originated financial services rules”.

The City of London Corporation told us that it sought, as a matter of urgency “clarity, stability and certainty”. I notice that the Chancellor raised those issues and said that he thought we could get that. However, the challenge of the technical detail of EU regulation has not been addressed by what the Government have told us as yet. One example of that is the Lamfalussy framework, which we looked at. We were told by the then Minister, Stephen Barclay—it is a sign of some concern that we do not get a Treasury Minister who deals with financial services in post long enough to have any continuity in the relationship; Mr Barclay is now gone and I think Mr Glen, who has other things going on at the moment with Salisbury and so on, has replaced him—that it would by a straightforward process. Levels 1 and 2 would be dealt with by primary legislation and levels 3 and 4 would be handed over to the regulators as part as the rulebook.

However, as we looked into this more closely, we did not think that it reflected what will happen in reality. I quote Simon Gleeson of Clifford Chance; he did not see even level 1 as straightforward. In our report, he said:

“When we translate that into UK law, if we simply copy Europe … we will be moving into our primary legislation stuff that properly belongs in regulators’ rulebooks … If we take a bunch of regulatory material that, almost by its nature, should be reasonably dynamic, and hard-bake it into statutory instruments, we are creating a monstrous procedural problem for ourselves in how we regulate the market”.

Inoperables are another issue. One of those is “in-flight” legislation, which I just referred to and is partly transposed—let us assume—during the transition period. However, much of EU financial services regulation takes four or five years to come into effect. Noble Lords may recall that MiFID II started in 2012 but came into effect only in January 2018. It seemed clear to us that we needed guidance and further direction on how the remaining parts of that in-flight legislation would come into EU law once we had actually left. My final example of that concerns the position of EU businesses in the UK. The Chancellor has said again that the Government will bring forward legislation to enable EEA firms and firms in the UK to obtain temporary permission, for a limited period. We need greater clarity on that.

It is a late hour so I will not labour this point, but there is a great deal of uncertainty on how the legal application of financial services regulations would work. On a recent visit to Brussels, the European Union Select Committee had the privilege of a discussion with Mr Barnier and Mr Verhofstadt. I notice that there is a great deal of emphasis in this clause on the IRSG’s proposals for a joint EU-UK alignment in respect of financial services that would take the form of a forum. I probed both of those people about the level of regulatory co-operation we could expect in the future, post withdrawal. We were not encouraged by their response, which was rather lukewarm. I do not think this proposal will get very far, but that does not mean that the Government can avoid setting out their intentions and how they envisage the strong regulatory alignment that they seek playing out in practice.

In his recent speech, the Chancellor acknowledged concerns about the legal framework for the regulation and supervision of financial services. The Commission’s draft guidelines on the withdrawal agreement foresee a large and continuing role for the European Court of Justice in adjudicating, in some cases for the whole of the foreseeable future. Although this may just be an opening shot in the negotiation, the defining of the EU positions makes it even more important that we force the Government’s rather reluctant hand, to make them spell out their thoughts on the conduct of business for financial services at the time of exit and beyond.

Photo of Viscount Trenchard Viscount Trenchard Conservative 1:45 am, 12th March 2018

My Lords, I listened with interest to the amendment proposed by my noble friend Lord Carrington of Fulham and supported by the noble Baroness, Lady Falkner. I accept that my noble friend is trying to be helpful to the Government, but for various reasons I nevertheless feel unable to fully support his amendment. I understand well that the amendment reflects the proposals put forward by the IRSG in its paper published last September, prepared in collaboration with Hogan Lovells. That report has been endorsed by TheCityUK and the City of London Corporation, which support IRSG.

The reasons why I cannot support the amendment are, first, that it is not appropriate or helpful to put into legislation, at this stage, the detail of any future regulatory collaboration with the EU, let alone on financial services. Secondly, the report which the amendment would require the Government to prepare, like other reports which other amendments discussed today have called for, would be quite onerous and time-consuming. Thirdly, it is not helpful for our negotiators if we argue against ourselves, and especially unhelpful to incorporate amendments into law which appear to accept that it is desirable, even necessary, to treat continuing alignment with EU regulations as being a greater priority than aligning our regulations with those of the SEC in the United States, the FSA in Japan, or other regulators in other countries with significant financial markets. Fourthly, the Government have already stated their intention to negotiate an implementation period following exit day when things would be largely the same, including, as I understand it, for the financial services sector. This amendment appears to assume that everything changes on exit day.

In his excellent recent speech at the Mansion House, the Chancellor referred to a framework to supervise,

“separate evolution of rules to deliver the same results”,

and to resolve disputes. I believe there is a danger that this would place too much pressure on UK regulators to continue to align completely the UK’s rule book with that of the EU 27. This would make it more difficult to agree any kind of mutual recognition of standards with other financial regulatory regimes around the world. For example, the City Corporation and Tokyo Metropolitan Government have recently entered into a memorandum of understanding to collaborate more closely on financial services, and this could be developed in future to include some kind of mutual regulatory recognition of standards.

Of course, the City will survive if there is not a deal which covers financial services. The EU regulators have forced upon us Solvency II, AIFMD and MiFID II, to name but three directives which have cost the City dear in terms of higher costs, fewer jobs and fewer revenues than would otherwise have been the case. We should not agree to align more closely to EU rules than to US rules, Japanese rules or the rules of any other major financial centre in the world. Once our regulators recover their independence from the EU regulators, their influence in shaping best practice rules at the global level will be enhanced, not diminished. Of course, while the inclusion of financial services in our FTA would be better than its exclusion, our negotiators need to be very aware of the significant upside for the City in recovering our regulatory independence.

The amendment, in proposed new subsection (2)(a), refers to the degree of alignment “necessary” between the regulatory provisions of the EU and UK. I submit that this is a rather subjective concept. What is important is that our regulators will establish the best regulatory regime for our markets, retaining the highest standards for which London is rightly held in high regard and participating fully in discussions with regulators of the other major financial markets, within IOSCO and other bodies, with a voice commensurate with the size and scope of our markets.

As my noble friend Lord Hill of Oareford said in his interesting speech at Second Reading, our withdrawal from the EU is allowing Europe already to move in directions that we have traditionally resisted, whether that is a financial transactions tax, more screening of overseas investment or more centralisation of supervision of financial services. As we now have to choose between effectively remaining in the single market and being free to make our own rules where we want to, we must surely place a greater priority on being able to shape our own future than on preserving the status quo.

Mark Hoban, chairman of IRSG, has proposed a forum for regulatory alignment, referred to by my noble friend, whereby the UK and the EU can work together to implement new global and international standards. That is fair enough, although I do not think it is in the City’s interests to do this with the EU exclusively. Furthermore, my noble friend’s amendment is silent on the proposed forum’s relevance to new global and international standards and relates only to a perceived need to maintain regulatory alignment with the EU alone. If I were a banker in the EU 27 or the finance director of a major EU 27 company wishing to raise money in the capital markets, I would certainly not want the EU to impede my access to the UK’s financial markets, but I have not yet heard of any proposed EU regulation or directive requiring the Commission to continue to align closely to UK regulations.

My noble friend’s amendment indicates a frame of mind which I believe casts us too much in the role of supplicant, where we do not need to be. Does the Minister recognise that the City would worry less about the downside and show more confidence in the upside of Brexit if the Government showed more leadership and enthusiasm for the City’s role as the leading international financial centre, unfettered by the EU’s cumbersome and somewhat dirigiste regulatory framework, while maintaining the high standards and proportionate regulations that provide the necessary protections and financial stability for investors and borrowers, but without burdening market participants with unnecessary costs or with measures that inhibit the innovation that has helped to make London the great success it is?

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy)

My Lords, the noble Viscount, Lord Trenchard, speaks a commonly held Brexiteer view. I take a very different view—that if we were to follow the course he just recommended, in 10 years’ time the UK would no longer be the premier centre for financial services in Europe, and certainly not for those generated within the EU, which is one of the largest economic and trading blocs in the world, and perhaps the most important as regards feeding financial services.

I understand the amendment in the name of the noble Lord, Lord Carrington, but I cannot support it because, as I think he would say, it is quite limited. Financial services depend not just on passporting: for the asset managers it is delegation, for the fintechs it is the e-commerce directive, and for the insurance and trading world it is the mutual recognition of contracts. There are so many complex features at so many different levels that create the ecosystem that has enabled London to thrive, essentially on the basis that it has sitting behind it the resource of a 28-country 510 million population who turn to it as their primary financial centre. However, the way in which the Government respond to Lord Carrington will be critical. It is a matter of timing.

The industry, as the Minister well knows, has been in some despair to try to persuade the Government that how they structure the relationship, should Brexit take place, is absolutely critical. The large companies in the industry have been going ahead with contingency planning that, so far, has been in a relatively preliminary phase. They have identified new real estate, taken out leases, and negotiated licences and other authorisations that they need to be able to expand either their field of business or to be able to expand business. However, almost every one of them has said, I think to many noble Lords in this House, that by the end of March—we are now talking about a matter of days—they will have to push the button on the next phase. That is the fitting out and purchasing of the very extensive and expensive equipment that has to go in, and the setting up of the recruitment process to staff out those new operations. From that there is no return. We therefore reach a point of no return for a significant portion of financial services which will be transferred to continental Europe with, frankly, no possibility of reversal, in a very brief period of time.

The industry has coalesced around the idea of mutual recognition as the one possible route. If we leave the single market—that is key; if we stay in the single market, it is not an issue, although the Government say that we will not—mutual recognition is the only possible route to limit the damage. It is nowhere near equivalent to the access that we have today, but it could perhaps be negotiated so that the damage is to some degree limited. Every major company I have talked to says that it does not understand how this new form of mutual recognition will work. It seems highly problematic. I have said in this House before that when the EU first began to bring together and create aspects of the single market in financial services, it began by using mutual recognition. However, it turned out to be completely inadequate to deal with the complexity of so many different kinds of issues, so much competition, so much size and so much depth.

So mutual recognition is seen not as a successful strategy but as the failed strategy for these arrangements that is now being revived in a new form. Because the industry is listening, it is important that we get from the Government something that provides some meat and bone on how this mutual recognition could function. If we do not hear that today, we will in many ways be accepting that we will not have any kind of significant arrangement around financial services, and the consequences for this country, which is essentially a service economy in which financial services are the most significant part and the largest exporter, will be highly significant. We need to understand today whether we are looking at something that is real and has the prospect of achieving success or whether we are simply tossing around an idea that has PR attractions but, frankly, offers no meaningful route to keeping access to the European market for our financial services industry.

Photo of Lord Hunt of Wirral Lord Hunt of Wirral Conservative 2:00 am, 12th March 2018

My Lords, we are very grateful to my noble friend for raising a very important issue. I know that the hour is late but I declare my interests as a partner in the law firm DAC Beachcroft in the financial services industry and as chairman of the British Insurance Brokers’ Association, known as BIBA. In the light of those interests, it will come as no surprise to the Committee to know that I spend a great deal of time talking to insurers and brokers, and many of them share the anxieties that have prompted my noble friend and the noble Baroness to put forward this amendment.

I think that all those who have spoken have welcomed the speech made by the excellent Chancellor of the Exchequer, with his determination to ensure that financial services lie at the heart of any new free trade deal with the European Union post Brexit. However, as the noble Baroness has just pointed out, some of the larger insurers have already begun to make provision for Brexit by relocating elements of their activities out of the UK to ensure that they remain in the jurisdiction of the EU—although I am still finding a strong desire and commitment to continuing the remarkable success story of the insurance sector in the UK post Brexit.

I have no time at all but I urge the Minister to give us assurances that committed engagement and genuine consultation with those affected will take place in a timely, orderly and constructive fashion. Insurers and their customers will be looking for reassurances that their legitimate interests will be protected during any changes in policy that are made or even considered during the transposition process. Obviously there is much more to say, particularly about the role of regulators, as my noble friend Lord Trenchard mentioned, but these are very important issues and I hope that the Minister will respond in a very positive way.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Exiting the European Union), Shadow Deputy Leader of the House of Lords

My Lords, I do not think that anyone who has read the excellent December 2016 report Brexit: Financial Services from our EU Committee chaired by the noble Baroness, Lady Falkner, will be under any illusion about the challenge that Brexit poses to this economically crucial sector of our economy. This evening we have heard of the needs both of those in the financial sector and of those who depend on it, and we have heard of one possible way forward, but the most important point is that something is needed urgently.

The British Insurance Brokers’ Association, to which we have just heard reference, the Alternative Investment Management Association, the ABI and TheCityUK have all come to me, and I am sure to other Members of this House, to raise their concerns about Brexit and particularly the wider implications for the legal sector and the insolvency sector and what that means for investors as well as for the more traditional City firms. Along the lines outlined by the noble Lord, Lord Carrington, TheCityUK has called for a bespoke market access agreement based on mutual recognition, regulatory supervision and co-operation, with, as we have heard, particular emphasis on mutual recognition and the enforcement of judgments.

In long-term contracts, legal continuity and certainty are vital for business, as we have heard, but also for consumers, as the ABI has stressed. Retired British citizens in nice warm areas such as the south of Spain need to know whether their annuities and pensions from London-based providers will continue after March next year, and indeed after December 2020.

The AIMA wants to see regulatory frameworks that enable managers to deal with any type of fund vehicle or account, as they now do, as they manage the savings and investments of pension funds and insurance companies. The British Insurance Brokers’ Association—100,000 people are employed in that industry, and they arrange 70% of all general insurance—says that it is “critical” to reach a transition agreement quickly and, following that, a mutual free-trade agreement.

The one word that I want to leave the Minister with is “urgency”, because insurance renewals are already being issued for annual policies renewable on 30 March next year, a date that I know is uppermost in his mind. Any policies running after 30 March next year would result in uncertainty over the legitimacy of that part of the policy that is effective after we leave. So we need these brokers to be able to ensure that there are no interruptions in customers’ cover, and that extends to whether we can be insured when we travel and when we drive our cars abroad, and to travel insurance if the EHIC ends—these are real things that people rely on day by day.

As we know, the UK is the world’s largest exporter of financial services to the EU, which is where I have to disagree with the noble Viscount, Lord Trenchard. He thinks that there is great hope somewhere else, but actually, for us to earn money in the EU and maintain all the customers we serve there, we must first prioritise establishing that we can continue with what we do so well there. Shoring up that business certainty through a formal agreement on regulatory equivalence or something similar is becoming ever more urgent.

We first started debating this report in the House in December 2016. We are now in March 2018, and I fear we are no clearer in knowing what the Government are doing. I hope that at this late hour, not just of the clock but of the calendar in moving towards when we leave, the Government will be able to provide a little more assurance than they have done thus far.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

My Lords, I first thank my noble friend Lord Carrington for his amendment, which has enabled us to have this excellent short discussion. I also thank the noble Baroness, Lady Falkner, for her contribution. Of course, I know the report of her committee extremely well, as I was a member of the committee when it was produced and I participated in many of the discussions to which she referred, and which she very ably chaired. I thank my noble friend Lord Trenchard for his comments. He made some excellent points and pointed out the global nature of many of the financial services regulations that we are talking about.

The noble Lord, Lord Hunt, made some good points about the insurance industry. I can assure him that we will continue the work that we are doing in consultation and discussions with the industry as we take the negotiations forward.

However, although I thanked the noble Lord, Lord Carrington, for his amendment, I am afraid that we cannot accept it for reasons that I will explain. It would not be practical given that the negotiations on the UK’s future relationship and the eventual arrangements for market access in financial services post Brexit have yet to begin. It will be important that in entering negotiations the UK retains a degree of flexibility as to what the precise arrangements for market access for financial services firms may be. It is imperative that both sides come to the negotiating table with a constructive mind set. That was the essence of the Chancellor’s contribution last week. Agreeing now to set out a report according to the specific and detailed criteria set out in the proposed new clause would prejudge a great deal of the substance that has yet to be discussed by both ourselves and the EU.

I emphasise that the Government share the aims of the noble Lord’s amendment. We are seeking an ambitious relationship that takes account of the fact that the UK and the EU start from a position of total alignment, with unprecedented experience in working with one another’s regulators and institutions. As the Chancellor outlined last week, the UK is a global financial services hub—an engine that powers the real economy and the UK—and it is a real asset for Europe too.

In his speech—this refers to the point made by the noble Baroness, Lady Kramer—the Chancellor set out three key elements for a possible approach to a future partnership: a binding dialogue for establishing regulatory requirements for cross-border trade; supervisory co-operation arrangements that are reciprocal, reliable and prioritise financial stability; and an independent arbitration mechanism that has the confidence of both parties to provide durable dispute resolution. We hope that we would agree that the UK cannot be a rule taker in financial services but, by working together as the Government have proposed, the UK and the EU can preserve market access and strengthen stability and prosperity in the UK as well as the rest of Europe.

Underpinning this is our commitment to upholding the robust standards which are, as the noble Viscount, Lord Trenchard, pointed out, often based on international standards that we have developed since the financial crisis. These aims have consistently been emphasised in government messaging—more recently by the Secretary of State for Exiting the European Union and by the Chancellor. These align with what we have been hearing from the financial services sector in terms of a desirable end state deal. However, the details have to be worked through via the negotiations and the process will require imagination on both sides. This proposed new clause would set out a prescriptive template for the Government to follow. Negotiations are by their nature fluid and we cannot agree to provide a report based on a set of potential end state arrangements, which are predefined and outlined specifically here, that prejudges the outcome of negotiations before those talks have even started.

These issues are extremely important and I hope that the Government’s conduct in negotiations, as well as the clear public stance of Ministers on the significance of financial services to our future relationship will help to provide reassurance over our commitment to securing agreement on these issues. Once the negotiations conclude, the Government will need to make clear the substance of what has been agreed. This is particularly so in order to enable the industry to understand the provisions for market access and how they sit within the UK’s agreed relationship with the EU on financial services going forward. We will of course, as always, be happy to update Parliament when the appropriate time comes. However, in light of the need to preserve UK flexibility in the negotiations, I hope that the noble Lord will feel able to withdraw his amendment.

Photo of Lord Carrington of Fulham Lord Carrington of Fulham Conservative 2:15 am, 12th March 2018

My Lords, I am most grateful to all noble Lords who have participated in this debate. We have had an interesting short debate which has highlighted some of the problems which the City of London is going to face. I will pick up on one point. I rather agree with my noble friend Lord Trenchard that the City will survive whatever happens and that there are workarounds for most of the problems that the City will face when operating inside Europe. What we are actually talking about is how to make those problems less difficult to resolve rather than attempting to find a solution to an intractable problem.

Having said that, I am grateful to my noble friend the Minister for his comments. He understands fully the issues that the City will face and I look forward to him having successful negotiations with the EU Commission. If its representatives have any sense at all, they will accept that they have as much to gain from a successful result to these negotiations as does the UK. On that note, I shall withdraw the amendment.

Photo of Baroness Falkner of Margravine Baroness Falkner of Margravine Chair, EU Financial Affairs Sub-Committee

Before we dispense with the amendment I have a brief question for the Minister. If I have understood him correctly, he has just said that when the negotiations are complete, the Government would set out and clarify their position. Can he tell me what he means by “when the negotiations are complete”? Is he talking about the negotiations on the withdrawal agreement—in other words, by the end of this year—or the agreement on the FTA, in which case we will not know the parameters of the Government’s thinking until very much later when we are into the transition agreement itself? There I would have to agree with my noble friend Lady Kramer that essentially, businesses will have made up their mind and taken the necessary actions, not least because the regulators require them to carry out their contingency planning.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I think I mean both. We will update the House on the position at the end of the negotiations on the withdrawal agreement, on the agreement on the future FTA, and if I can add a third criterion to that, of course on the negotiations for the implementation period, for which we hope to be able to provide an update in the very near future. All those factors are important in the provision of financial services. If we get the implementation period agreed in the near future, which we hope and expect, that will provide a slightly longer period for businesses to establish the appropriate stability, but it is hoped that as we get to the end of the year we will have the withdrawal agreement. We expect that to provide the details of the framework for future co-operation. I will be very happy to update noble Lords at all of these stages.

Photo of Lord Carrington of Fulham Lord Carrington of Fulham Conservative

My Lords, I beg leave to withdraw the amendment.

Amendment 115A withdrawn.

Clause 8: Complying with international obligations

Amendments 116 to 120 not moved.

Amendment 121

Moved by Lord Collins of Highbury

121: Clause 8, page 6, line 37, at end insert “, subject to the requirement in subsection (1A).(1A) Within one month of the passing of this Act, a Minister of the Crown must publish an assessment of each of the international treaties, agreements and obligations that will require amendment or renegotiation as a result of the withdrawal of the United Kingdom from the EU. (1B) The report required under subsection (1A) must include an assessment of how the powers under this section may need to be used.(1C) A Minister of the Crown must lay the report under subsection (1A) before both Houses of Parliament.”

Photo of Lord Collins of Highbury Lord Collins of Highbury Opposition Whip (Lords), Shadow Spokesperson (Foreign and Commonwealth Affairs), Shadow Spokesperson (International Development)

My Lords, I start by thanking the Chief Whip for ensuring that so many noble Lords are in their places to hear my contribution. At one point I was slightly anxious that I would be speaking to an empty Chamber, so it cheers me up to see so many noble Lords here at this time. I am not worried about my own side; it is noble Lords opposite whom I want to hear and understand the issues.

I was going to say that I will be very brief, but I will not do so because I need to apologise for not speaking at Second Reading. However, this is not the first Brexit Bill. The Sanctions and Anti-Money Laundering Bill, which has passed through this House and is now in its Commons Committee stage, was the first, and it was that Bill which prompted me to consider this amendment to the European Union (Withdrawal) Bill. What we have heard in previous groups is that we are potentially seeing, rather than enhanced parliamentary sovereignty, what appears to be the biggest Executive power grab since the days of Henry VIII. That is why so many noble Lords are very concerned about the powers suggested to deal with the difficulties that Brexit will bring about.

The sanctions Bill was very important because most of its powers related to the 1972 Act. It was important that we ensured that we had a domestic legal framework in place to meet very important international obligations, particularly as a member of the United Nations. We made a number of improvements to that Bill, which are being considered by the other place. The noble and learned Lord, Lord Judge, described the sanctions Bill as a “bonanza of regulations”. While acknowledging that some of this was justifiable—I acknowledge that even in this Bill the regulations are required—it places on us an important obligation to ensure that there are sufficient safeguards and adequate parliamentary scrutiny to make the delegated powers constitutionally acceptable.

That is why I have tabled this amendment to Clause 8, which gives Ministers extensive delegated powers to introduce regulations that they consider appropriate to prevent, remedy or mitigate any breach of the UK’s international obligations as a result of Brexit. But that power is not restricted to modifying retained EU law, as it would not require Ministers to demonstrate why any changes are necessary. This is the important element of my amendment: while we heard from the noble Viscount, Lord Hailsham, that his amendments deal directly with delegated powers, mine focuses on the need for increased transparency on treaties and international obligations that may require changing post Brexit. When using such powers, Ministers should proceed with the fullest parliamentary scrutiny. We must be able to do our job effectively, and with proper transparency on the Government’s part we can ensure that this can be done.

I hope the Minister will not offer up the suggestion that the requirements and measures I am proposing will somehow be a barrier to negotiations. Of course they will not. They are about helping us do our job of scrutinising. They do not affect the negotiations; they affect how we do our job in our House.

In his group of amendments, the noble Viscount, Lord Hailsham, mentioned the risks of some of these powers being used. I recall in the sanctions Bill my noble and learned friend Lord Falconer saying that we would have to be extremely careful because, whatever Ministers tell us now, in either the Commons or the Lords, ultimately the Executive always reach for the Act of Parliament and sees what that Act of Parliament allows—what is on the face of the Bill. That is why this added element of transparency will ensure that, in the future, we can do the job of scrutiny well and properly. I beg to move.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, Amendment 138 is in my name. I will concentrate simply on the international treaties and agreements that relate to transport as an illustration of the complexity of the situation that we face. We are party to many hundreds of agreements as members of the EU that we will have to renegotiate as part of leaving the EU. There are other agreements that we will have to join because we cannot rely on EU arrangements.

To illustrate the complexity of the situation, in the field of transport it is estimated that the UK will have to renegotiate and replace 65 international transport agreements following Brexit. The Government’s preparedness for this is perhaps rather doubtful—the signs are not good so far. I give as an illustration the last-minute appearance of the Haulage Permits and Trailer Registration Bill, which was not in the Queen’s Speech as an EU Bill, which was sprung on us at very short notice and which is being rushed through with great speed because the Government have discovered that, in future, we will have to rely on the 1968 Vienna convention to transport goods abroad and to take trailers abroad. We will have to rely also on the 1949 Geneva convention to get international driving permits.

We are going back a very long time in history, so it is not surprising that it took the Government a while to wake up to this situation. As a result of the rush in which we are having to deal with this issue—we signed the Vienna convention but never ratified it; we have to give a year’s notice of ratification and are running out of time to do that—we are faced with a Bill which is not so much skeletal as almost a ghost. It is so insubstantial that it fades in front of our eyes. There is perhaps a slight chill surrounding it as well, because the Government give no indication of what they want to do with powers which they admit they would rather not have to seek—and all of this is in preparation for the possibility of a no deal Brexit.

This is no way to make legislation. However well prepared the Government are, there will be dozens of agreements to reconsider. I have raised in this House many times the issue of the single European sky, which was mentioned earlier this evening. It is not just an EU issue; it is crucial to our arrangements with the US as well. Transport-related agreements are only one corner of the problem and are simply an illustration of the complexity that the Government face.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, it is quite important that the number of occasions on which this power will be used will be considerably lower than the number of adjustments for EU law. Therefore, it would probably be easier to make adjustments to what is required in the way of precautions when these powers are exercised than is the case with the huge number required in the other field. One thing I feel strongly about is that we want to find a way of doing it that is practical in the time and with the number of these other regulations that require to be put in place. This one is easier from that point of view, which perhaps makes it more suitable for the Government to consider further precautions.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip) 2:30 am, 12th March 2018

My Lords, I thank the noble Lord, Lord Collins, and the noble Baroness, Lady Randerson, for their amendments, which are effectively seeking transparency. The Department for Exiting the European Union is leading cross-government work, including with the Foreign and Commonwealth Office treaty section, to assess and act on the international agreements for which, as a result of the UK’s withdrawal from the EU, there will need to be arrangements to ensure continuity for business and individuals. Alongside this, we are also working with our international partners—the EU 27, the Commission and third countries—to identify the full range of agreements which may be impacted by our exit from the EU, and we will be taking their views into account.

I might observe to your Lordships that it is not common practice to publish assessments on treaties that have expired, ended or been superseded. However, I assure noble Lords that any treaties which require new or amended implementing legislation and/or parliamentary scrutiny before ratification will go through the appropriate well-established procedures. Where the powers in subsection (1) are used, these will be subject to the scrutiny procedures set out in this Bill. To set all this in context, my noble and learned friend Lord Mackay of Clashfern rightly identified that the instances where these provisions may be used are not likely to be plentiful. As I have explained, given that the Government’s approach to international agreements is to achieve continuity, I believe this renders unnecessary the impact assessment that the amendment would require.

I can confirm that we will, of course, continue publishing impact assessments to accompany legislation, in line with existing practice. I take this opportunity to remind the Committee of the Government’s overarching policy approach to international agreements after we leave the EU. As set out in the technical note recently published on this issue, we are seeking to ensure that our existing international agreements continue to apply to the UK during the proposed time-limited implementation period. Our officials are working with the Commission on the precise mechanics of this. The focus, both during the implementation period and beyond, is on seeking, wherever possible, to continue our current arrangements with third countries and international organisations. We recognise the need to promote stability for businesses and individuals and we will aim to transition agreements as seamlessly as possible to ensure an orderly withdrawal.

I hope that that background and this explanation provide the necessary clarity and with this insight, I respectfully ask the noble Lord to withdraw his amendment.

Photo of Lord Collins of Highbury Lord Collins of Highbury Opposition Whip (Lords), Shadow Spokesperson (Foreign and Commonwealth Affairs), Shadow Spokesperson (International Development)

I thank the Minister for that explanation, but I fear that we will need to return to this issue. The noble and learned Lord may be right that there is limited scope, although I think we have heard in the debate that there are lots of examples. There are lots of conventions and agreements that, since our membership of the EU, we have had exemptions from because we are complying with EU law. But when we are outside the EU, we will find that we will need to ensure that we have the mechanism, so that those agreements and conventions are properly implemented. That is the issue.

Regarding the process we are going through on the Bill, at the end of the day—I hear what the noble Baroness, Lady Randerson, says—I do not really think that the people of this country understand exactly what will be required to ensure that Brexit is effective, or the sorts of agreements and international conventions that might affect them. I hope that the issue of transparency will be one not just of implementation but of ensuring that we all know and understand better the full implications of the decision that has been made. But in the light of the comments made, I beg leave to withdraw the amendment.

Amendment 121 withdrawn.

Amendments 122 to 124 not moved.

Photo of Baroness Andrews Baroness Andrews Deputy Chairman of Committees, Deputy Speaker (Lords)

I cannot call Amendment 125, as it is an amendment to Amendment 124.

Amendments 126 to 130 not moved.

Photo of Baroness Andrews Baroness Andrews Deputy Chairman of Committees, Deputy Speaker (Lords)

I cannot call Amendment 131, as it is an amendment to Amendment 130.

Amendments 132 to 137 not moved.

Clause 8 agreed.

Amendment 138 not moved.

Clause 9: Implementing the withdrawal agreement

Amendments 139 to 141 not moved.

House resumed.

House adjourned at 2.36 am.