European Union (Withdrawal) Bill - Committee (10th Day) (Continued)

– in the House of Lords at 8:17 pm on 26th March 2018.

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Amendment 337

Moved by Lord Jay of Ewelme

337: Clause 14, page 10, line 41, at end insert—““final terms of withdrawal” means the same as “withdrawal agreement”;”

Photo of Lord Jay of Ewelme Lord Jay of Ewelme Chair, EU Home Affairs Sub-Committee

My Lords, Amendments 337 and 341 are in my name. They have a simple aim: to ensure that if there is a breakdown in the negotiations leading to a no-deal Brexit, the position should be fully and properly considered by Parliament before any final decision is taken.

I am encouraged by all that the Government have said about their intention to ensure that there should not be a breakdown in the negotiations. The noble Baroness the Leader of the House has just reiterated that position to us this evening and I noted in particular that David Davis said, over the weekend, that it was “incredibly probable” that a deal would be reached—an odd formulation, but we get the general drift. As I say, I have absolutely no doubt about the Government’s intention to seek a deal which is in the interests of the United Kingdom. But a breakdown of the negotiations cannot be excluded, whether because the Government toughen their position to the stage where the European Union breaks off the negotiations or the European Union toughens its stance to the point where the Government break them off, or because both sides simply run out of time.

The implications of no deal are potentially extremely serious, as the EU Committee of your Lordships’ House recognised in its recent report, Brexit: Deal or No Deal. Much attention has rightly been given to the implications of no deal for our trading relations, for the impact on cross-border supply chains and on specific sectors, including financial services, agri-foods and aviation. Just as serious would be the impact of a breakdown in negotiations and a no-deal scenario on UK-EU co-operation on issues which are vital to our national interest and national security: counterterrorism, police, justice and security matters; nuclear safeguards; and aviation. The noble Baroness, Lady Ludford, has set out clearly this evening the potential implications of no deal for Gibraltar. Even more immediate and perhaps more serious would be the effect on British citizens living in the EU and EU citizens living in the UK. With no deal, the agreements reached so far, which are so enormously important to British citizens living in the EU and EU citizens living in Britain, would, as I understand it, fall away.

The implications of no deal, however slight such a prospect is, would therefore be extremely serious. It is surely inconceivable that an outcome of such gravity would not be put to Parliament before it becomes a reality. This is not least because when reality begins to dawn on people, one of the first questions they will surely ask is: “What was Parliament’s view and to what extent has Parliament taken responsibility?” Taking back responsibility seems to me to be as important, and more difficult, than taking back control. I simply cannot see that the argument that the electorate had, or should have had, all this in mind when the referendum took place would carry any weight at all when the consequences of no deal became apparent. These amendments therefore seem essential and I very much hope that the Government will be able to accept them. I beg to move Amendment 337.

Photo of Baroness Ludford Baroness Ludford Liberal Democrat Lords Spokesperson (Exiting the European Union)

My Lords, I strongly support this amendment, to which I have added my name. I fully agree with everything said by the noble Lord, Lord Jay of Ewelme. Perhaps being a mere politician, I am a little more cynical than he is. The February 2017 White Paper on leaving the EU contained statements that gave considerable comfort, including an assurance of the Government’s strong intentions to get a deal. They said, for instance:

“Our fundamental responsibility to the people of the UK is to ensure that we secure the very best deal possible from the negotiations … The Government will then put the final deal that is agreed between the UK and the EU to a vote in both Houses of Parliament”.

When the Government gave their assurance in the other place in February last year, at about the same time as the White Paper, the Minister of State for Exiting the EU said,

“the vote will cover not only the withdrawal arrangements but also the future relationship with the European Union’.—[Official Report, Commons, 7/2/17; col. 264.]

As we know, there is an issue about what that actually means. It will not be any more than a political declaration.

All this sounded quite reassuring. The trouble is that in the year since then, we have heard too many threats of no deal—not that, as the Brexit Secretary David Davis said over the weekend, it is like an insurance policy, in that you have to be aware that it could happen, but the overwhelming likelihood is a deal. That sounded quite benign, but I am afraid that we have had a rather more celebratory approach to the prospect of no deal from other personalities in the Government. They think that threatening it is good negotiating tactic. Many of us think that that is not the expression of a committed partner. I do not recall that when the United States was negotiating a possible TTIP agreement with the EU, it kept stressing that it might instead have no deal. It might have made all kinds of comments about the adequacy or otherwise of the EU offer, but we did not hear that sort of rhetoric, and we are not used to it in a trade or political negotiation. These statements have come too often. They are perhaps fewer now, but they still come sometimes and with too great a frequency for there to be total trust in the Government. As the noble Lord, Lord Tugendhat, said earlier in another context, there is a fundamental issue of trust as to what the Government’s intentions might be. Therefore, it is necessary to try to dot the “I”s and cross the “T”s on this matter.

The first amendment in this group might have been inspired by my noticing that in one context, the phrase used was “final terms of withdrawal” but in another it was “withdrawal agreement”, which raises the question of whether the Government mean exactly the same thing with those two phrases. That accounts for Amendment 337, in which we say yes, they mean the same thing.

Amendment 341 says that “withdrawal agreement” also means the absence of a withdrawal agreement. It is necessary to spell that out because I am afraid the Government have not always given full grounds for total confidence and trust in their intentions. We need to close off any nefarious options that might still be floating around and make absolutely sure that we pin down the Government on what Parliament will supervise, and that there are no nooks and crannies through which they can duck and weave. That is what the amendments are about: total clarity in order to ensure that the Government act with total trust and in good faith.

Photo of Baroness Wheatcroft Baroness Wheatcroft Conservative

My Lords, I put my name to these amendments because I believe it is essential that Parliament should have a chance to consider a “no deal” scenario. As others have said, that is not the likely outcome; there is every reason to believe that the Government are doing their best to pursue a deal. However, we have to be prepared for all eventualities. We have heard that no deal is better than a bad deal and that no deal has to be considered, so it is important that we avoid any ambiguities. As the noble Baroness, Lady Ludford, has just spelled out, there are sufficient vagaries about the terminology for it to be important that we now try to clarify that Parliament should have a role in considering a “no deal” scenario. As the noble Lord, Lord Jay, said, it is time for Parliament to reclaim its responsibilities, and looking after the country is surely the responsibility of Parliament.

The noble Lord referred to the problems that will be faced by those companies with cross-EU supply chains. Privately those companies are voicing their fears, but it is not surprising that publicly they are loath to speak out about the horrors that lie before them should there be no deal. Their supply chains will be in tatters, but they are not going to go public right now shouting that it may be the case in a year’s time that their supply chains will break down and they will not be able to fulfil orders,. That would not really do wonders for their business at the moment; the orders would just not be put. So at the moment they are making their fears known privately, and I hope the Government are listening to them. For them, it is essential that a good trade deal is established, and quickly. That is why I support the amendments. I do not think there is anything more to be said, but I wish them well.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 8:30 pm, 26th March 2018

My Lords, I am in favour of the amendment. I shall also add a bit of history that has not been mentioned so far. This time last year we were considering the Article 50 triggering Bill. An amendment was moved by a number of us that was designed both to produce a meaningful process for the end of the negotiations and to include within it the circumstances in which there was no deal. That amendment was passed by a very large majority in this House. It was sent to the other place where it was rejected in a pretty perfunctory way by, of course, the Parliament that was sitting before the general election, and in which the Conservative Party had an overall majority. So it is no good saying the Government are not opposed to a parliamentary statutory decision-making process if there is no deal. They are opposed to it; they opposed it only a year ago. So if this amendment is being brought forward now, it is because the Government have form on this matter.

I would like the Government to recognise that, having lost the vote on the meaningful process in the other place to Mr Dominic Grieve’s excellent amendment, it is more sensible to accept the statutory process for dealing with any outcome to the negotiations, whether that be a deal or no deal or whether it is the case, as I rather suspect now, that the Government have stood their mantra on its head and are now saying a bad deal is better than no deal. But whichever way we look at it, let us be quite sure that Parliament has its say. That is why I support the amendment.

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 think the noble Lord, Lord Jay, was a little modest, because it was he who was chairing the European Union Committee at the time when it produced its excellent analysis of what it would mean for there to be no deal and for us to leave on WTO terms. We would have to rapidly set up customs posts around our market. Indeed, as he said, it would also mean no protection or continuation of residence, work or health rights for UK citizens living in the EU or, indeed, for EU citizens resident here. In the latter case, of course, we could pass domestic legislation to safeguard their position but we could not do the same to help UK nationals abroad because no deal would also mean no transition period.

I am sure that for business, as the noble Baroness, Lady Wheatcroft, has just spelled out, that would be a catastrophic outcome. It would mean that in addition to what it would mean for their order books—a rush to set up customs, VAT and all the other stuff that goes with that—I maintain that it would entail a jolt to our economy that would make 2008 look like a kiddies’ party. So a decision to depart from the EU in those circumstances is one to be taken by Parliament, not by the Prime Minister nor even by her Cabinet. The amendment is aimed to ensure that any such decision—coming out without a deal—would be made by Parliament, and bring the no deal scenario within the ambit of the amended Clause 9(1).

We accept that the Government are working very hard to ensure that we do not depart without a deal, and I trust that in those circumstances, they will accept the amendment.

Photo of Viscount Waverley Viscount Waverley Crossbench

Does the noble Baroness share a concern regarding UK citizens on the continent? She mentions transition. Does she recognise that there may be a problem for Parliament? The Dutch Government have appealed against a ruling by a Dutch court on 7 February to refer a case regarding a UK citizen to the ECJ. The ECJ agreed to take the case, the Dutch Government then appealed and the ECJ is waiting for confirmation whether it will be put back to them. The problem is that if the ECJ takes its fast-track route on adjudication, it will be a four-month process; if it takes the normal time for the ECJ to consider the issue, it will be 15 months, which potentially plays havoc with the issue of UK and EU citizens and their acquired rights within the European Union. Does she recognise that problem?

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 absolutely recognise that. There are a number of issues which we hope will be part of the agreement. In business, there are what are called goods already on the market, which I believe the transition agreement will cover. There is the arrest warrant. A number of countries forbid any of their nationals being extradited to a non-EU member state, so we could find that if someone who commits murder here hops off to a member state, unless we have this all agreed in the transition deal, they would be free. I understand that the negotiations will say that where a case has started on its track towards the ECJ, let it finish.

There is a raft of things where, if we come out with a bump in the night, and wake up on 30 March with no deal, it will not just be a fall from the bed, it will be a substantial disadvantage. That is why I am confident that we will have a deal, but therefore I am confident that the Minister will accept the amendment.

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

My Lords, I thank the noble Baroness for her contribution.

I have presumed for the purposes of this response that the amendments tabled by the noble Lord, Lord Jay, are intended to ensure that a statute, specifically that provided for in Clause 9(1), is required to approve a situation in which the UK fails to negotiate a deal with the EU.

With the greatest respect, the amendments do not achieve the desired outcome. The statute specified in Clause 9(1) is intrinsically linked to the exercise of the Clause 9 power, which is itself dependent on the existence of a withdrawal agreement. Therefore, in a no-deal scenario, the Clause 9 power and all provisions within it would be unavailable, because there would be no withdrawal agreement.

The amendments would also leave other areas of the Bill inoperable. For example, Clause 7(7)(d) sets out that the power cannot be used to implement the withdrawal agreement. Changing the definition of withdrawal agreement to include the absence of an agreement would therefore leave us unable to use Clause 7 in a no-deal scenario. Vital corrections could not be made in that case and we would be left with many inoperabilities on our statute book.

Of course, I remind the House that, as the noble Baroness, Lady Hayter, and others have said, we are confident that the UK and EU can reach a positive deal on our future partnership—

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

If the Minister is saying that the amendment does not technically achieve what they want, if we can word it in a way that they want, will the Government then accept it?

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

I cannot give the noble Baroness that commitment. I am explaining the amendment and will come to the other implications in a second.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench

Perhaps the Minister can give an easier commitment, which is that the Government will use the period between now and Report to draft a provision which has that effect and catches a no-deal situation. I am sure we should be delighted. He has a whole team of draftsmen at his beck and call, so perhaps he could make good use of their Easter recess.

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

I am delighted to hear that I have all these people at my beck and call; it seems to have escaped my notice.

I remind the Committee that we are confident that the UK and the EU can reach a positive deal on our future partnership, as we believe that this is in our mutual interest. However, a responsible Government must be prepared for all possible outcomes. To invalidate the Clause 7 power in the absence of an agreement would eradicate a crucial part of our preparations. Putting the issue to one side, I respectfully disagree with the intention of the amendment—that parliamentary approval should be required to leave the EU without a deal. There should be one fundamental fact sitting behind all these debates: the UK is leaving the EU. As noble Lords have heard me say before in Committee, and on which I have been questioned at length, the decision to hold a referendum was put to the electorate in the 2015 general election. That decision was then put into statute in the European Union (Referendum) Act. The referendum was held and delivered a majority in favour of leaving the EU. Parliament then consented to act on that verdict through the European Union (Notification of Withdrawal) Act.

I do not normally read the Observer, but as Keir Starmer had given an interview I thought it would be appropriate for me to read what he had to say on behalf of the Labour Party. It had some interesting quotes. He said:

Article 50 was triggered a year ago. It expires in 52 weeks and a few days, and I don’t think there is any realistic prospect of it being revoked”.

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

Article 50 also says that there will be a withdrawal deal which will include the framework for our future arrangements. Article 50, which we triggered, does not say that we are giving notice that we are leaving and that we are leaving without a deal.

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

We are giving notice of our withdrawal. The title was in the Bill that we passed to trigger it. Keir Starmer also said:

“Having asked the electorate for a view by way of the referendum, we have to respect the result”.

I agree with him.

I say again only to remind noble Lords so that they can understand my point of view that there has been a legitimate process, marked at intervals by the consent of both Parliament and the electorate. As I said in an earlier debate, amendments that could be perceived as a means to delay or disregard the referendum result carry with them their own risks—people’s faith in their democracy and its institutions. With that in mind, I do not think that it would be right to add an express mechanism within this Bill which might prevent the referendum result being acted upon.

The Prime Minister has been very clear: we are leaving the EU at the end of March 2019. That is not a question of domestic legislation; it is now a question of the EU treaties. While the detail of our future relationship with the EU has yet to be negotiated, I believe that remaining in the EU is the only outcome which cannot be reconciled with the decision taken in the referendum. I do not think that it would be in the interests of either the EU or the UK to open the door to an ever-continuing negotiation process with no certainty that the UK will ever reach a new, settled relationship with the EU. I was going to finish there but I see that the noble Baroness, Lady Ludford, is itching to ask a question.

Photo of Baroness Ludford Baroness Ludford Liberal Democrat Lords Spokesperson (Exiting the European Union)

I thank the noble Lord for anticipating my question. He referred to there being a problem with Clause 7(1), which says:

“A Minister … may by regulations make such provision as … appropriate … arising from the withdrawal of the United Kingdom from the EU”.

If it is “may”, it could also mean “may not”. If there are no regulations to be made because there is no deal, and therefore there are no deficiencies in retained EU law to remedy, and that is the Government’s position, that subsection does not need to be invoked.

That is surely different from Clause 9. I do not see the parallel. Clause 9(1) refers to the parliamentary enactment of whatever the final terms are. We are talking about a scenario where there is no deal. As was said by the noble Lord, Lord Hannay, if you are maintaining that it is unworkable in this situation, the Government need to come up with something that they consider a workable formula. The Minister must surely understand that the point is to make sure there is not wriggle room over where parliamentary responsibility and rights reside, and not to be able to dodge Clause 9(1) by saying, “Well, it’s not really final terms of withdrawal because we are crashing out without a deal”.

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

We hope not to crash out without a deal, as I have said. If we do not have a withdrawal agreement, there is nothing to implement in Clause 9—therefore, Clause 9 would not be necessary. As I have said many times before, our position is that we are leaving the European Union on 29 March 2019, because that was what was authorised by Parliament when it authorised the Prime Minister to submit the notification under Article 50.

Photo of Baroness Altmann Baroness Altmann Conservative 8:45 pm, 26th March 2018

Does my noble friend truly believe that the British people voted to leave the EU with no deal, with all the implications that that has for the livelihoods and business prospects of this country? That was not on the ballot paper. We have respected the British people’s vote by triggering Article 50 and negotiating with the EU but, if it comes down to the point where we cannot get a deal, surely Parliament must be in control of what happens to the interests of our country in that scenario.

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

I believe that the British people voted to leave the EU and we are trying to negotiate the best possible deal to ensure that we leave the EU. To go back to our original argument for all the reasons against the amendment, I hope that the noble Lord, Lord Jay, will consent to withdraw it.

Photo of Lord Jay of Ewelme Lord Jay of Ewelme Chair, EU Home Affairs Sub-Committee

My Lords, I am grateful to those who have spoken in this short debate. I am grateful to the Minister for his reply and for reciting the history, but I simply disagree on the substance of the issue. There is no question of these amendments seeking to countermand the result of the referendum; they are simply to reaffirm the role of Parliament and what I and others believe would unquestionably be the desire of the British people in the event of no deal—that Parliament should take its responsibility and consider these issues before the final decision is made.

There is perhaps a difference of nuance between some of us who have spoken on the likelihood of no deal. I think that David Davis spoke of no deal as a sort of an insurance policy, in case there was a no deal. But I do not think that there is any disagreement among those who have spoken tonight on the consequence of no deal, with the exception of the Minister, or of the need for Parliament to be consulted. I have no doubt that we shall return to this issue at Report, but meanwhile I beg leave to withdraw the amendment.

Amendment 337 withdrawn.

Amendments 338 to 345A not moved.

Clause 14 agreed.

Amendment 346 not moved.

Schedule 6 agreed.

Clause 15: Index of defined expressions

Amendment 347 not moved.

Clause 12: Financial provision

Debate on whether Clause 12 should stand part of the Bill.

Photo of Lord Adonis Lord Adonis Labour

The debate that I seek to initiate is on the ability to increase fees and charges by delegated or sub-delegated powers. It is a straightforward matter of proper parliamentary oversight that that should not happen.

Having said that, my role in this debate is one which I am now performing regularly in this Committee—to act as John the Baptist to my good noble friend Lord Lisvane, who is probably the greatest expert in the history of Parliament on the procedures which are adequate and necessary for raising fees and charges. I now make way for the authorised version to be given to the Committee.

Photo of Lord Lisvane Lord Lisvane Crossbench

My Lords, there are few better warm-up men than the noble Lord, Lord Adonis, but I fear that I will disappoint your Lordships. As the Question formally before the Committee is whether Clause 12 shall stand part of the Bill, I will speak to Amendments 348 and 349 rather than moving Amendment 348. The amendments are in my name and those of my noble and learned friend Lord Judge, my noble friend Lord Pannick and the noble Lord, Lord Tyler. I can be very brief, even at this refreshingly early hour of the evening, as the issues in both amendments have already been considered by the Committee in one way or another. It may indeed be that we have had a sneak preview of the Minister’s response on both issues.

Amendment 348 would prevent fees or charges to be levied by tertiary legislation. At an earlier stage, I expressed concern that this Bill, already proposing to confer sweeping powers upon Ministers, should go even further and permit the making of the law of the land by persons and bodies authorised by a Minister. The authorisation would, as the Minister said in an earlier debate, be subject to the affirmative procedure, but once that authorisation had been made, the law made under it would be under no sort of parliamentary control and, unless in the form of a statutory instrument—which it would not be—would not even be required to be published.

The arguments against tertiary legislation become even stronger when the powers being given to persons and bodies would allow them to levy fees and charges which might well be used to gold-plate their functions. Clause 14(1) defines “public authority” by reference to Section 6 of the Human Rights Act 1998, and Section 6(3) of that Act, in turn, defines “a public authority” as including a court or tribunal—which is fine—but also,

“any person certain of whose functions are functions of a public nature”.

That spreads the net very wide indeed.

Amendment 349 returns to the issue of ancient principle that taxation should be by primary legislation, not by statutory instrument. When this was considered by the Committee earlier in its proceedings, your Lordships were supportive of the proposition that it should be for the House of Commons to impose taxation by primary legislation, not for Ministers to do it by regulations. In a sense, we are possibly getting a little punch drunk as we see power after power after power being arrogated to Ministers. This is one which should not be.

Photo of Lord Judge Lord Judge Judge

My Lords, I was not able, for unavoidable reasons, to be here when the issue of tertiary legislation was addressed in the course of the debate on this Bill, so I want to add something. I do not think that even those who do not see eye to eye with me would accuse me of being an ardent advocate of secondary legislation: I am not. I spoke about this at Second Reading and have been extremely reticent on the issue in Committee, but I shall return to it in much greater detail on Report.

I support my noble friend Lord Lisvane. The provision we are considering—I will take it quite slowly, because this is how I see it—would vest powers in a Minister to use secondary legislation, with negligible proper scrutiny, if any, to bestow lawmaking powers on a public authority, with even less scrutiny. It amounts, in effect, to scrutiny being diminished to extinction. In that process, we as lawmakers are not doing right. We are simply handing power over to people who should not have it. This tertiary form of legislation is, therefore, even more questionable than secondary legislation, for the same reasons and—I add, at this time of night—with knobs on.

Photo of Lord Tyler Lord Tyler Liberal Democrat Lords Spokesperson (Constitutional and Political Reform)

My Lords, I endorse the contributions of the noble Lord, Lord Lisvane, and the noble and learned Lord, Lord Judge, and draw attention to the work of the Delegated Powers and Regulatory Reform Committee, on which the noble Lord, Lord Lisvane, and I sit. One of the things the committee found most uncomfortable was the extent to which Ministers have played games with words in their explanatory memoranda. We were particularly critical of the reference in Schedule 4 to tax-like charges. The committee stated:

“A ‘tax-like charge’ means a tax. Taxes and tax-like charges should not be allowed in subordinate legislation. They are matters for Parliament, a principle central to the Bill of Rights 1688”.

It is not so late and therefore I shall indulge in some further remarks. My only really respectable connection with your Lordships’ House is that of my ancestor, the great Bishop Jonathan Trelawny, the Cornish folk hero who was one of the seven bishops to defy James II’s attempts to impose rules upon this country without Parliament’s acceptance. His portrait is in the Peers’ Guest Room—he is the one at the end with the Beatles haircut.

I make that point because I am amazed and ashamed that Members of the House of Commons have not seen the dangers in this part of the Bill. I speak as a former Member of the House of Commons. This issue goes back to not just the Bill of Rights and the Glorious Revolution of 1688, but far earlier. Reference was made to the Bill of Rights in previous exchanges in Committee. The short-circuiting of the most basic responsibility and role of the House of Commons of approving taxes seems to me an extremely important issue. We should not allow this precedent to be pursued in this Bill. It is the historic role of the House of Commons. I recall that when we had exchanges about tax credits, the former Chancellor of the Exchequer, Mr George Osborne, sought to short-circuit and get round the normal process by which the House of Commons decides financial matters. I remember at the time that the noble Lord, Lord Forsyth, referred, I think, to ship money and Charles I, saying that the last time a member of the Executive sought to short-circuit Parliament, he lost his head.

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

My Lords, I shall add a very quick word because so much has already been said. There is an irony in Schedule 4 which may interest the Committee: namely that the power to provide for fees and charges has been handed to Ministers by means of either secondary or tertiary regulation, depending on which part of this measure you are looking at. Paragraph 3 of Schedule 4 states:

“A Minister of the Crown may only make regulations under paragraph 1with the consent of the Treasury”.

The irony of that is, frankly, extraordinary because it shows where the Government intend the power of the land to lie. We have always suspected that the Treasury is handed some of the greatest powers that are denied to Parliament. If it is considered fit for the Treasury to be able to intervene in fees and charges, then surely it is Parliament’s right to be able to intervene, scrutinise and monitor those fees and charges.

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 the noble Lord, Lord Tyler, was threatening to cut the right reverend Prelate’s head off because of this. However, what may have been a threat to the Minister was to me a great delight: the promise of the noble and learned Lord, Lord Judge, that he will do this with knobs on when we come back on Report. I look forward to that.

I will not add to what has been so well said but I will put a question to the Minister. In a sense, we have covered three things in different groups about the powers given by secondary legislation. One is about the creation of new criminal offences, another is about the setting up of new public bodies, and another, which we return to here, is the ability to raise fees and charges. We do not want to hear, as we come to these amendments on Report, what the Government will do about them. I assume that they will meet us—I hope the whole way, but if not, half way. The Minister may not be able to say that tonight, but he has had notice of it, as we have brought it up before. The time for stonewalling and hearing is now gone. We need to know, before Report, where the Government are planning to move. I hope, therefore, that this evening he will be able to give us an assurance on that.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union) 9:00 pm, 26th March 2018

My Lords, I thank noble Lords for this commendably brief debate at this not so late hour, and I thank the noble Lord, Lord Adonis, for his commendably brief opening statements. I was delighted to see that he made his way up to Newcastle yesterday but, unsurprisingly, he forgot to ask me to meet him for a drink while he was there to speak to his 200 or so Brexit-disliking supporters.

Photo of Lord Adonis Lord Adonis Labour

Anti-Brexit supporters.

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

The noble Lord is right—I am sorry.

I will try to give a relatively detailed explanation. For any policy to be complete, it must have a practical answer to the question of how it will be funded. Clause 12 and Schedule 4 are that answer here. I hasten to add that they are not the answer to all money matters in relation to Brexit. The withdrawal agreement and implementation Bill will provide the statutory underpinning for paying our negotiated financial settlement with the EU and any other financial matters related to the withdrawal agreement. Before I proceed, I make it completely clear that I have heard the principled and eloquently expressed concerns about the powers in Schedule 4 and their scrutiny, and we will look closely at this ahead of Report. I regret to say that I am unable to provide too much detail on that at the moment, but we will carefully consider this issue.

Clause 12 and Schedule 4 provide that all the money which might flow into and out of the Exchequer as a consequence of the Bill is made “proper”, in line with the rules governing public expenditure and as laid down between the Commons and the Treasury in the PAC concordat of 1932—which I assume even the noble Lord, Lord Lisvane, was not around to take part in. Maybe his maiden aunts were around at the time to take part—who knows? These are obviously provisions relating to spending and charges on the public and were closely examined by the other place, which has privilege in financial matters, before the Bill reached us.

It is evident that the process of taking on new functions from the EU, and in the future running them, will cost money. Some of this will be public measures funded from general taxation—and, I hope, more efficiently than they were funded at the EU level. Some will be paid for by users of services to ensure that taxpayers, both corporate and individual, do not end up unfairly subsidising specialist provision. Where the line will fall is clearly a matter for debate in some cases, and I expect that as SIs come before Parliament for scrutiny, that question will, in a handful of cases, be relevant to the discussion. These provisions of the Bill, however, are key to ensuring that the rest of the Bill can be given real-world effect. I hope noble Lords will agree that without funding, the essential EU exit preparations enabled by the Bill could not be put into practice.

I thank the noble and learned Lord, Lord Judge, and the noble Lords, Lord Lisvane and Lord Tyler, for Amendment 348. The Government, as has been said at other times and in other places, are aware of the risks and concerns posed by any legislative sub-delegation to public authorities, but we remain convinced that conferring powers on public authorities other than Ministers to allow them to make provisions of a legislative character can be an appropriate course of action. I stress that, like any other form of sub-delegation under this Bill, any transfer of legislative power must be approved by both this House and the other place following a debate. It will not be possible for an SI to pass through this place, under the eyes of noble Lords, without a thorough and reasonable explanation of how any sub-delegation will be exercised in practice.

In this exceptional Bill, it is right that, although we must address all the issues that we discussed at Second Reading and which will arise under the Bill, Parliament also keeps a close and strict eye on all matters where any financial burden can be imposed on individuals and businesses. However, I remind noble Lords that this power is only available if the public authority is taking on a new function under the Bill and that the fees and charges must be in connection to that function. This is not a general power for the Government or any other public authority to raise moneys as they please.

The Government envisage sub-delegating this power in limited circumstances—for example, where Parliament has already granted to a public authority the power to set up its own rules for fees and charges of the type envisaged by this power, and, for good reasons, made it independent of the Government.

Photo of Lord Tyler Lord Tyler Liberal Democrat Lords Spokesperson (Constitutional and Political Reform)

Will the Minister clarify one point? As I understand it, the affirmative procedure would apply to secondary legislation under Schedule 4 where there is a new fee or charge, but only the negative procedure would apply in subsequent regulations modifying those fees. That is an important qualification of the assurances he was giving to the Committee just now.

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

The noble Lord makes a good point. I will answer his question later. In line with the Bill’s aim to provide continuity, Parliament should have the option of approving the ability of authorities such as the Financial Conduct Authority and the Bank of England to independently make fees and charges for firms that will, after exit and under this Bill, fall under their regulatory remit.

Amendment 349 comes to the heart of the purpose of these powers and I thank the same noble and learned Lords for tabling it. This power is designed to ensure that those using specialist services transferred from the EU to the UK pay for them. This involves providing for fees and charges which, though not taxes in the common sense of the term, are at least tax-like. For the benefit of the noble Lord, Lord Tyler, let me clarify what we mean by tax and tax-like charges in this context. Under the guidance laid down by the Treasury, although fees and charges for services that are set on a strict cost-recovery basis are not taxes, any fee or charge that goes further than direct cost recovery is likely to count as taxation or to be tax-like. This would be the case if it cross-subsidises to construct a progressive regime between large multinationals and small enterprises, if it is a compulsory levy in a regulated and surveilled sector, such as banking, or if it funds the broader functions of an organisation not directly part of the cost of providing a service, such as enforcement.

I hope we can all agree that, as part of providing continuity, this Bill should enable the Government to continue to fund public services in an appropriate manner. Because the Government have directly prohibited the increase or imposition of taxation, including tax-like charges of the type I have just described under other relevant powers in the Bill—particularly Clause 7(1)—we require the ability to do so under this power. To give an example, without this the Bank of England would not be able to bring trade repositories—a vital piece of financial market infrastructure currently supervised at the European level—within the scope of its levy-based funding regimes. This House approved the creation of those delegated regimes through the relevant legislation and I hope that, with the proper information before it, it will approve the relevant power in this Bill, subject to the use of the affirmative scrutiny procedure.

Having said all that, let me repeat what I said at the start. We are looking closely at this matter ahead of Report. We will try to see how we might provide appropriate reassurance to a number of the fairly reasonable concerns that have been raised by noble Lords. Even with that caveat, I recognise that noble Lords may still have concerns but I hope that I have given some insight into the Government’s position and satisfied the House of the honourability of the Government’s intentions. I hope that noble Lords will agree, therefore, to not press their amendments or object to Clause 12 standing part.

Photo of Lord Adonis Lord Adonis Labour

I congratulate the Minister on what was, I thought, an excellent response to the debate. After 10 days in Committee, he has learned from the noble Baroness, Lady Goldie, how to charm the House and we have seen a new side to him that we were not aware of before: his conciliatory and emollient side. He may even, in due course, convert to the anti-Brexit cause at this rate of progress—maybe with another 10 days in Committee we would get there.

However, the Minister did the noble Lord, Lord Lisvane, a great disservice. It is a well-known fact that the noble Lord drafted Magna Carta.

Oh!

Photo of Lord Adonis Lord Adonis Labour

So the idea that he was not aware of the various provisions that the Minister mentioned is, of course, a great calumny.

In conclusion, I apologise to the Minister that I did not give him advance notice of my appearance in Newcastle yesterday to campaign against Brexit. I did think of extending an invitation to him to appear alongside me, but decided that he would probably be so busy preparing his compromises on the amendments he was presenting to the House today that he would not be able to fulfil the engagement.

I have spoken for so long only because the Chief Whip, who has now come in to check, said that we would conclude our business this evening by 9.15 pm—and indeed we will; I did not want him to be disappointed. On that basis, I shall not oppose Clause 12 standing part.

Clause 12 agreed.

Schedule 4: Powers in connection with fees and charges

Amendments 348 to 352 not moved.

Schedule 4 agreed.

Clause 13 agreed.

House resumed.

House adjourned at 9.11 pm.