Brexit: Consumer Protection (European Union Committee Report) - Motion to Take Note

Part of the debate – in the House of Lords at 8:33 pm on 16th January 2019.

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Photo of Baroness Kennedy of The Shaws Baroness Kennedy of The Shaws Chair, EU Justice Sub-Committee 8:33 pm, 16th January 2019

My Lords, this report was prepared by the Justice Sub-Committee, which I chair, of the European Union Committee. I thank the members and staff of the committee for their support and hard work. It really is an incredibly stimulating committee that works incredibly hard.

The European Union Committee of this House has done sterling work across the board. Its sub-committees have produced 40 different reports, and we have contributed quite a number. The idea of those reports was to inform Parliament and the public about issues arising from the decision to leave the European Union. I know that they have been valued in some quarters, but in others they have fallen on deaf ears. At times, the Government’s responses have not treated them with the seriousness we would have liked.

The United Kingdom has been at the core of developing European Union consumer protections, pushing for high standards and strong rights to apply across the single market. We have been at the heart of this and sought that they be enforced throughout the European Union by a court order made in any member state. That means that if you have an issue with a faulty purchased item, you can get an order in your local court in Croydon, for example, and it will become enforceable across Europe. United Kingdom consumers have benefited from this strong regime of standards and redress. When making purchases in the UK, cross-border purchases or when visiting other EU countries for work or holidays, if something goes wrong there can be restitution, compensation or enforcement, as set out in our report. UK companies have said that they have benefited by being able to trade across the European Union with customers who can be confident that the system is consistent and dependable.

EU-wide consumer rights are based on cross-border co-operation between consumer protection organisations, and in the development of this area of law. We are fearful that this will be lost. The UK will be leaving that infrastructure, those mechanisms and those forms of co-operation, whether we have some cobbled together new deal or there is no deal.

Our inquiry, which reported in December 2017, looked into what might be lost by leaving those systems of co-operation, and asked what could be done in order for the UK to continue to participate. In this we were greatly assisted by evidence from consumer advisory bodies and regulators, which I would like to thank for sharing their expertise and advice.

On the one hand, many purchases by UK consumers are made in the UK, and the UK could decide to maintain high standards of consumer protection for domestic purchases; that goes without saying. Indeed, our report tentatively welcomed the EU withdrawal Bill—now an Act—as a means of mirroring in UK domestic law the individual consumer rights introduced by EU legislation, so we are at least able to welcome that formally into our own law.

On the other hand, there is great uncertainty about purchases made from the EU or made in the EU by UK-based consumers travelling in the remaining member states. Our witnesses told us of the loss to consumers, across all sectors of the economy, if the UK does not continue to participate in the EU co-operation mechanisms. They told us of the challenges of participating as a third country outside the EU. That is particularly true if the UK insists on being beyond the jurisdiction of the European Court of Justice, which was one of the red lines. The European Court is the final arbiter for interpreting the rules we have made together. Our report pointed out that the EU withdrawal Act,

“cannot ensure the protection of UK consumers’ rights when they visit the EU 27 post-withdrawal. Nor can it guarantee the UK’s continued access to the EU’s shared network of agencies, mechanisms and infrastructure that police, secure, develop and underpin consumer rights across the Single Market”.

So we are going to be outside of that body of agencies and mechanisms.

When we heard evidence from Margot James MP, the former Minister for Small Business, Consumers and Corporate Responsibility, she reiterated the Government’s aspiration for,

“a deep and special relationship with the EU post-Brexit”.

But she provided no detail on how to overcome the challenges we were describing to her, and in no way helped us to understand how we would participate in these consumer protection arrangements.

The Prime Minister’s deal gave us little comfort, and a no-deal outcome would tear up the rule book. So our report concluded that,

“it is important that the UK’s access to the European Union network should be maintained post-Brexit”,

but questioned whether the Government had given any thought to how it might address the problems. We called on the Government to produce a clear plan addressing these problems as a matter of urgency—how to be part of that infrastructure of agencies and mechanisms.

The Government’s response to our report, received in February 2018, was pretty pathetic. In his covering letter, the then Minister, Andrew Griffiths, thanked the committee for its interest in this “important area” and its,

“thoughtful analysis of the issues”.

He pledged that from the day the UK leaves the EU, the Government will remain,

“committed to maintaining high standards of consumer protection, delivering the stability and continuity consumers need to continue to make purchases”.

He added that in its negotiations with the EU 27, the Government’s objective was to retain,

“effective protections in place for consumers purchasing goods and services across borders”.

He expressed this as an intention that they would co-operate closely.

While the committee and the Government agree that the UK’s strong history of championing consumer rights can continue after we leave the EU, and while we agree on the benefits of cross-border co-operation, the Government’s response was vacuous. It lacked detail on how to address the significant issues at the heart of our report; it failed to address the loss of the reciprocal relationships, institutions and infrastructure that underpin and develop consumer protection policy; and it suggested no potential replacements for any of that, so it was really blather. We are hoping to hear something more solid from the Minister tonight.

The Minister who replied to us assured us that the Government had given “substantial thought” to these issues, had considered,

“in depth, a wide range of options”,

and was,

“continuing to undertake detailed work on this”.

That was a year ago. But the response did not engage in the detail of our concerns, nor with any of our proposed solutions. Either they were ignored or the Government gave vague aspirations but felt unable to share any detail, because these matters remained subject to the Brexit negotiations. We were told that it was all part of that great whispering thing—that they could not give anything away because they were negotiating.

Even on matters fully within the UK’s remit, the Government’s response to our report lacked a clear plan. For example, on the issue of increased pressure on national regulators, there was a vague aspiration to work closely with the Competition and Markets Authority,

“to ensure it is appropriately resourced for any new responsibilities after the UK leaves the EU”,

but there was no detail on those resources or responsibilities. Similarly, the Government maintained its view that the issue of increased pressure on trading standards bodies remains a matter for local authorities, stating that they must remain,

“responsible for their own finances and recruitment, and accountable to their local electorate”.

So it is all down to the local authorities, despite the fact that, as we all know, their central funding has been savagely cut, they are having difficulty funding most of the things they do and they are certainly likely to find this difficult to fund.

At the moment of receiving that response we had 13 months to go, so we lived in hope. In July 2018, our hopes soared: the Government published Command Paper 9593, setting out their “ambitious” plan for post-Brexit relations with the European Union. Three paragraphs of that paper dealt with consumer protection. The Government noted that the UK had a “strong track record” in protecting consumers and repeated their commitment to “maintaining high standards”. The paper concluded:

“There should be cooperation on enforcement, including provisions to allow mutual exchange of information and evidence, and a framework to work collectively”,

on wider consumer issues. But again, when there were eight months to go, there was hardly a detail included in that Command Paper on how this co-operation would be achieved. There was an absence of anything concrete; it was enough to make one weep.

In November last year, the withdrawal agreement and the political declaration were published and presented to Parliament, and the European Union Select Committee published its report on them on 5 December. As a result of yesterday’s vote, we are into uncharted constitutional waters but let us for now continue to consider that some kind of deal is still an option. Whatever is to be concocted in a new withdrawal agreement, one hopes it might mean that consumer protection will be involved. During the transition period, the UK would retain all the responsibilities of EU membership—such as conforming to EU law on consumer protection—but without the related institutional privileges; for example, membership of the EU’s institutions and agencies that set and enforce consumer protection rules.

However, Article 128 of the withdrawal agreement allows for the UK to be involved, to some extent, with EU initiatives and agencies. My questions for the Minister here are: what protections would UK consumers have under the arrangements in the withdrawal agreement? Will there be obligations on the UK relating to EU consumer protection rules? What would Article 128 mean in practice for the UK’s involvement in EU agencies? I would be delighted to hear a reply on these matters from the Minister. Can he also explain, with regard to the Irish backstop and the requirement that if it is used the UK will have to maintain a level playing field across a range of EU policies covering state aid and competition, why consumer protection was not included?

We all understand that the Prime Minister is going to go off and speak to other parties, possibly to find some kind of resolution with them which will make for greater numbers supporting a deal in the Commons. If there is a new or amended withdrawal agreement, we can assume that the political declaration will remain as it is, linked to that withdrawal agreement. I imagine that that might not in itself be changed. I want to ask about the political declaration because, as has been mentioned in other debates today, it is so full of aspiration and so lacking in anything solid.

The political declaration addresses consumer protections in, I suggest, an inadequate way. It deals with their relevance with regard to specific sectors of the economy, including financial services, digital matters, aviation and road transport. My questions are: what protections will the Government seek for UK consumers, including redress mechanisms through courts? What obligations would the Government be willing to have relating to EU consumer protection rules? What access will they seek to negotiate with the EU agencies that set and enforce the rules? British consumer organisations want to be party to those.

Finally, I turn to the rather ghastly prospect of the UK departing without a deal, which would be so detrimental to this whole area of consumer protections. We know already that the way to get a trade deal is to lower your standards; that is what places such as the United States of America will expect. All over the place, it will be expected that we will lower standards to secure trading deals. I am afraid that many of us are anxious as to whether we will go that far to cut the deals that might be necessary if our economy is suffering as a consequence of taking that dire step.

The Government argue that:

“UK consumers should not see any immediate differences in protection between UK law and that of EU Member States as UK and EU law is highly aligned”.

In that regard, we and the European Union remain may aligned for quite some time. However, the Government acknowledge our concerns about purchases in or from the EU, saying that,

“there may be an impact on the extent to which UK consumers are protected when buying goods and services in the remaining Member States”.

There is an admission that if there is no deal our protections are likely to be lowered.

I see that my time is up. The other question here is: what will we have to do about courts? Will UK traders and consumers have to go off and enforce judgments and have to go to courts in the other parts of the European Union, rather than seeking redress in our own courts? I would like to hear what the Minister has to say on that.

In conclusion, we find that consumer protections—which are vital and in which we have played a crucial part—should be a source of concern to us at this time, when we are talking about the possibility of no deal. Certainly, while we are in this process of putting together some sort of deal, if one can be achieved, this is an area where we should be sticking to our guns and trying to get something more solid than the vague aspirational commitments that stand. I beg to move.