Trade Bill - Committee (1st Day)

– in the House of Lords at 3:17 pm on 21st January 2019.

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Votes in this debate

Relevant documents: 33rd Report from the Delegated Powers Committee, 13th Report from the Constitution Committee

Motion

Moved by Lord Taylor of Holbeach

That the House do now resolve itself into Committee.

Amendment to the Motion

Moved by Baroness Smith of Basildon

At the end insert “and resolves that the committee’s report be not received until Her Majesty’s Government has presented to both Houses proposals for a process for making international trade agreements once the United Kingdom is in a position to do so independently of the European Union, including roles for Parliament and the devolved legislatures and administrations in relation to both a negotiating mandate and a final agreement.”

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

My Lords, as we start this Committee stage of the Trade Bill, my amendment seeks to be helpful to your Lordships’ House in finding a constructive framework for further scrutiny of the Bill following Committee. It is now well over a year since the Bill was introduced in the House of Commons, and I think that the 132 days since the Second Reading in your Lordships’ House set a record.

Following consideration in the other place, the Bill was passed to us to undertake our responsibility of scrutiny in the normal way, and we will fulfil that obligation. My amendment recognises that, in 2017, it was perhaps understandable that the Government introduced a skeleton Bill. However, as time moves on, it is essential that we conclude our deliberations within a clearer policy framework before the Bill returns to MPs for further consideration. There are three key reasons for asking the Minister and the Government to accept my amendment today.

First, at its core, this is a no-deal Brexit Bill to deal with a situation which only very few want to see happen, and the other place has already indicated its clear intent that it must not happen. MPs from all parties are urging the Prime Minister to take action to rule out such a catastrophic outcome, as indeed your Lordships’ House did in a Motion passed last Monday by an incredible majority of 169. That alone makes it hard to justify the Bill in its current form.

Secondly, when it was first introduced, the Government presented it as a short and uncomplicated Bill dealing with issues related to a possible no-deal scenario; indeed, the Minister described it as pragmatic and technical. We were informed that the substantive issues about how the Government would deal with new international trade agreements once the UK is in a position to do so independently of the EU would be in a second Bill. I am aware that the Government are consulting the Constitution Committee, and that the Prime Minister is consulting the Liaison Committee in the other place, but no further legislation has been introduced. There is not a White Paper or even a Green Paper, and time is running out. It is not unreasonable that before we complete—not continue, but complete—our consideration of this Bill we should have more information about, and proposals on, such an important policy issue.

I have carefully read the report of our Constitution Committee, which refers to this Bill as a “framework measure” which provides the Government with,

“extensive … delegated … powers, to effect new trade policy”.

That committee raised several issues of concern. At the time, the Government justified the loose drafting by claiming a need for flexibility given the uncertainty over the withdrawal agreement. With no second Bill, the time for flexibility is disappearing fast. Decisions have to be made and mechanisms and processes have to be in place.

Thirdly, we should welcome the fact that, in recent months, we have seen a growing public interest in how and on what basis we should negotiate and operate our trade policy in the future. This is partly due to recognition of the misplaced and misleading optimism—to be polite—of Ministers and others, who told us all how easy trade agreements would be. This is not an issue that Ministers can make up as they go along; it needs serious, forensic, evidence-based policy-making. We know that the terms of future trade with the EU remain unclear, and now the true picture of the lack of progress in securing rollover deals to replace those we currently have with non-EU countries through our membership of the EU has been exposed by the Financial Times.

The International Trade Secretary, Liam Fox, is on record telling us how easy it would all be. Back in July 2017 he said:

“The free trade agreement we will have to do with the European Union should be one of the easiest in … history”.

He then said that all agreements would be ready and in place “one second” after Brexit, with “no disruption of trade”. Not only were those statements irresponsible, they were gravely wrong. Now, the International Trade Secretary says only that he “hopes” they will be in place, and that this depends upon whether other countries are,

“prepared to put the work in”.

Apparently, he has signed a mutual recognition agreement with the Australian High Commission in London to maintain all current relevant aspects of the agreement it has with the EU. But the EU does not have a free trade agreement with Australia.

When this legislation was going through the Commons, we argued that a legally distinct new trade agreement was required. The Government claimed they could simply roll over the existing agreements, but that is clearly not the case. Our country needs a sensible and appropriate scheme for trade, rooted in reality not in fantasy. Trade negotiations are complex and difficult. They require a proper and effective system involving Parliament and the devolved Administrations, in relation both to the negotiated mandate and the final agreements. We should also engage civil society, feeding in the views of consumers, trade unions and companies.

In conclusion, we will be unable to fulfil our obligation of scrutinising the Bill effectively without further information on how the Government intend to provide proper accountability and scrutiny of current and future trade agreements. We need to know how the devolved Administrations will be involved; we need to be assured of the mechanisms for ensuring that our trade policy is compliant with our international obligations; and we need legal commitments that in any future independent trading policy there will be no reduction in, for example, the rights of employees or consumer and environmental standards.

One way in which the Government could do this is by tabling amendments to the Trade Bill in Committee or on Report, but there may be other mechanisms. My amendment does not dictate what they should be but merely states that this House should not receive the Committee’s report on the Bill until both Houses of Parliament receive proposals on the process for making international trade agreements once the UK is in a position to do so independently of the EU. As the Report stage is expected at the end of February and the leave date is 29 March, it is not unreasonable to expect the policy framework by then, with just one month to go.

My amendment is designed to help your Lordships’ House in its deliberations. The Chief Whip is smiling at me, so I hope that is an indication that the Government are inclined to accept it. However, if that smile is misleading and the Government are unable to support us today then, given the seriousness of the issue and my concern for the role of this House in dealing with the legislation, I will seek the opinion of the House. I beg to move.

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

My Lords, it is now over four months since we had Second Reading on this Bill. That is an unusually long gap, and one that I suspect the whole House thinks has been caused by the unwillingness of the Government to expose themselves to defeats on it. It certainly has not been because your Lordships’ House has been otherwise too busy.

Whatever the reason for the delay, during that time people might reasonably have expected two things to happen. The first is that, in line with the commitments made by the Secretary of State for International Trade in 2017, the Government would have negotiated the rollover of the 40 trade deals that the UK has with the EU. Instead, only one has been signed—as we have heard, of a slightly dubious nature—and very few are due to be signed in the near future. Why is that? According to Dr Fox, it is a combination of factors: some countries are unwilling to do so because they simply do not believe that a no-deal Brexit is going to occur; some are having elections; and some have, in his phrase, “no effective government”.

Ha!

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

He must have a lot of sympathy with them. The truth is that it was always unrealistic to expect these deals to be in place by 29 March because most of the EU’s free trade partners will want big UK concessions, particularly on issues such as food imports, requiring long and difficult negotiations that are likely to last several years. The Government sought to deny this but the truth is now there for everyone to see.

The other thing that might reasonably have happened is that the Government might have been clearer about their expected trade policy, how it might work and how they might bring it to Parliament. What would their red lines be? What processes would they follow to get future deals discussed and approved by this Parliament and the devolved assemblies? We still have no clue. In the circumstances, it is completely reasonable for this House to decline to proceed beyond Committee with the Bill. Indeed, it could be argued that we should not even proceed to Committee at all, but the Motion before us allows us to make some progress on the Bill while giving notice to the Government that they really must clarify their intentions if the Bill is to complete its passage through the House.

It will no doubt be argued that this amendment is unprecedented. Perhaps it is but, as we are seeing in the Commons, at a time when the Government have all but collapsed, it is inevitable that Parliament should assert its control over proceedings. That is what the amendment seeks to do, and it has the support of these Benches.

Photo of Viscount Hailsham Viscount Hailsham Conservative

My Lords, I will briefly explain why I support the amendment to the Motion. Any outcome of the present Brexit stalemate other than crashing out without a deal will require more time. I do not believe that there is any national or parliamentary majority for crashing out without a deal. That means we either have to extend the 29 March deadline or revoke Article 50. At the moment, the first option is probably the most acceptable course, but I could live with either. Supporting the amendment to the Motion is a method of encouraging the Government to obtain more time. It also enables the Government to respond to the perfectly sensible points and demands for information made by the noble Baroness and the noble Lord.

I will make two final points, if I may. First, we have arrived at the time when the national interest must be put first, before any narrow party interest. That is the duty of all parliamentarians. In fact, it also happens to coincide with the pragmatic interest. Secondly, speaking directly to my Front Bench: if we crash out without a deal, this Government and their Ministers will not be forgiven lightly, either by the electorate or by the millions of those—myself included—who have historically voted Conservative.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 3:30 pm, 21st January 2019

My Lords, I support the amendment and point out, as have others, that this Bill is being brought forward in a totally different context from when it was debated and passed in the Commons last summer, and at Second Reading here in September. At that time, it was envisaged and presented by the Government as a minor technical measure which would complement an EU withdrawal deal and political declaration, and provide a 21-month transition to fill the gaps that are currently there and which prevent it being fully equipped to provide for an independent trade policy for a UK outside the EU. Those gaps remain and they are highly relevant given the Government’s unwillingness to rule out a no-deal exit on 29 March and the consequent need to operate an independent trade policy from that date.

For example, we do not even know—and more importantly, our businesses do not know—what tariff rates we would apply to imports from the EU and preferential trade partners of the EU on 30 March in the event of no deal. No satisfactory indication has been given of how parliamentary oversight of trade policy will operate in these circumstances. Currently, the situation is clear: the EU Commission can conduct exploratory talks with third countries but it can negotiate with them only when it has received a mandate from the Council; that is, the member states. That gives a measure of democratic control. What will we do to replace that? There is a complete absence of indication. It would be really poor if we went into a period like that without any parliamentary oversight at all; that is hardly a policy that could be called “taking back control” for this Parliament. Surely this gap needs to be filled before the Bill becomes law.

I believe it is being argued that this is unprecedented, as the noble Lord, Lord Newby, said. Perhaps it is, but we are dealing with an unprecedented situation, and unprecedented situations call for unprecedented solutions. Is the amendment unreasonable? I do not think so. It does not place any impediment at all on the completion of Committee, which should proceed precisely as planned. It gives the Government about a month to fill in those gaps in the Bill before Report begins. What is unreasonable about that? I hope the Government will accept the amendment, which I do not think stands in the way of this measure arriving on the statute book in time.

Photo of Baroness Taylor of Bolton Baroness Taylor of Bolton Chair, Constitution Committee

My Lords, I do not want to follow the two previous speakers by talking about what happens, deal or no deal, but I will say a word about the difficulties facing the House on this Bill and on other legislation before us. My noble friend mentioned the Constitution Committee, which issued a report on the Trade Bill in October last year. We did so because we wanted to get ahead of the game by advising the House on our approach to that Bill, as we had done on the EU withdrawal Bill in a way that I think was constructive for the whole House and, ultimately, helpful to the Government because our constructive criticisms meant that the Bill was more fit for purpose when it left this House.

We did that early because we knew of the weight of legislation that would come before us. We have tried to get the Government to give us more information on what legislation we will face and asked to see some things in draft, which we would have been willing to see in confidence. The House will have to face other legislation. We are already seeing arguments about the number of SIs and the difficulty of giving them proper scrutiny in the time available. Time is running out. The Constitution Committee—and, I think, the House as a whole—want to be helpful in making sure that any necessary legislation is actually fit for purpose and will do what is expected of it, but also that so we as parliamentarians can fulfil our role and responsibility to give proper scrutiny.

I ask the Chief Whip and the Leader of the House to reconsider their approach to giving information to the House about what our future work programme will be. It will be extremely difficult to consider as we should all the legislation that will be before us, whatever the outcome of discussions in another place. I have been a member of the usual channels, albeit in the other House. I know that there are indicative timetables on all occasions—maybe more than one in this instance. If the House is to function properly and fulfil all its obligations, it needs greater information to come through the usual channels about what our programme will be and what responsibilities we will face to get the necessary legislation fit for purpose, and to allow us to fulfil our responsibilities.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

My Lords, the House will have seen that there are a number of amendments in my name, as well as those of other colleagues, on the Marshalled List for this Bill. We are taking our role very seriously by approaching this Bill in a constructive manner and, where there are opportunities to try to strengthen its measures, to reflect, as the noble Baroness, Lady Smith, said, the complex, deep and comprehensive trading relationships we have with countries and to take into consideration new standards of quality in provision, and ethics and values in trading. The amendment to the Motion should also be seen in that light.

The United Kingdom has trading arrangements with 104 countries by virtue of our membership of the EU. Thirty-five countries have arrangements in place, 47 partly in place and there are 22 agreements pending. A further five are being updated and there are ongoing negotiations with a further 21. All told, this represents 66% of all United Kingdom trade. That has brought down the average tariff for anyone who trades with United Kingdom to 2%. If there is no deal and no agreements are in place to secure the continuity of the trading relationship, under most favoured nation status under WTO rules trading with the United Kingdom would immediately become 5.7% more expensive. Tariffs would go up almost threefold. That would be a direct consequence of this Parliament not having the ability to scrutinise these arrangements.

As the noble Baroness, Lady Smith, and others have said, the Bill will also set the parameters of future trading relationships, in particular our relationships with the least-developed nations around the world. The countries that trade with us that have most at stake are not necessarily those such as Japan or Korea, which have deep and comprehensive trading agreements —although we have heard nothing from the Government about whether they are even in a position to roll those over legally—but the least-developed nations, which rely almost entirely in some sectors on their trading with the United Kingdom and are now being left in limbo.

It was deeply insulting for Dr Fox to make his statement about countries not lifting the heavy burden to trade with us when we have asked them to do so. For us as a House to give due consideration to such an important measure, which has been slipped at the Government insistence time and again, it is necessary for us to say that the Government now need to bring clarity on how many agreements are ready to be brought forward. On the government’s calendar, there are fewer than 30 sitting days. How on earth will we be able to afford proper, full scrutiny of nearly 100 international agreements, on which our economy is dependent?

Photo of Lord Campbell of Pittenweem Lord Campbell of Pittenweem Liberal Democrat Lords Spokesperson (Defence)

My Lords, I can be very brief. The circumstances we are discussing are entirely of the Government’s making. They may now reflect on the fact that they opposed the amendment proposed by the noble Duke, the Duke of Wellington, which would have given them more flexibility in this matter. It is a great pity that they did not anticipate the difficulties they now face, which are entirely against the interests of the British people.

Photo of Lord Strathclyde Lord Strathclyde Conservative

My Lords, am I alone in finding this a most extraordinary debate? It is deeply disappointing given the eminence from which it comes. The noble Baroness, as Leader of the Opposition, is a leading light of the usual channels. She could have raised any of these issues—perhaps she did—during the course of discussion through the usual channels.

The great principle which underlies the work we do on legislation in this House is that we believe and understand that the Queen’s business should be carried. That means we scrutinise and revise legislation. The amendment—the Motion—says that there should be a full stop. We will do all the work in Committee, we have agreed the business on Second Reading but after Committee, a full stop. There is a theme here: a couple of weeks ago, we had the noble Lord, Lord Foulkes, saying that we should all go on holiday. Now, the noble Baroness is asking us to stop work after Committee.

There is another practical aspect to this. For many years, I was a member of the usual channels. We did not always get it right, but we worked in the interests of the whole House—every aspect of us—to try to find the right time and the right stages to do various bits of business. This Motion drives a coach and horses through all that. For the noble Lord, who was formerly my noble friend, to pray in aid the kind of behaviour that we have seen in the House of Commons and saying that what they are doing there, we should do here, is completely ridiculous and absurd. The noble Lord said that we should take over the running of all this. In this House, the Government have no majority. It proceeds only because we have the agreement of the whole House. We trust and ask the usual channels to do this.

Perhaps the second most disappointing thing which the noble Baroness said is that she will ask the opinion of the House and have a Division. If the business of the House will always be decided by a Division, then God help us. I really hope that she will consider, however important the great issues are, that they can be dealt with in the Bill by amendment in the usual way; they should not be decided like this.

Photo of Lord Kerr of Kinlochard Lord Kerr of Kinlochard Crossbench

My Lords, it was good to hear from the noble Lord, Lord Strathclyde, and to be reminded of the days when everything worked swimmingly. I do not know if he was here on Second Reading, when the Government were perfectly honest and straightforward in admitting that there was a big lacuna in the Bill. They accepted that there was and said it would be filled in at a later stage. We were talking of a two-Bill scenario at that stage; we were also thinking of an implementation period.

I agree with the noble Lord, Lord Hannay: we are now in a completely different scenario. The modesty of the Leader of the Opposition’s proposal is admirable. She is not saying that we should not proceed with the Committee stage, and she is right. We should not down tools. We should go on doing our job trying to improve this Bill. However, the lacuna is still there. We do not know what the machinery will be for legislative scrutiny of future trade negotiations.

I would add to the point made by the noble Lord, Lord Hannay, about the Council. Yes, this country and interests in it will be less informed about trade policy if this Bill with the lacuna in it goes through and we leave the European Union, so losing our voice and vote in the Council. The Council is pretty transparent. However, even more transparent is the European Parliament, where the relevant committee follows trade negotiations extremely closely and a vote in plenary in the Parliament is required before the conclusion of an agreement. We will not have a voice; we will not have a vote; we will not know in this country anything about what the Government are planning to do.

Trade negotiation is no longer just a matter of the import and export of widgets. It is about social rights, environmental rights, the provision of healthcare and investment protection. There are trade-offs between dossiers. The public are entitled to know what the Government are doing. We here are duty bound to have a role in scrutinising what the Government intend to do. On Dr Fox’s current negotiations on the 36 or 39 successor agreements or whatever it is that are going to be ready one minute after midnight if the foreigners get their act together and start doing some work, even our closest friends in places such as Australia and New Zealand sense our vulnerability. They are not happy just with the pro rata division of quotas. They see a chance of gaining a concession. That concession will affect interests in this country; for example, the hill farmers or the dairy trade. What do they know about what Dr Fox is planning to do to them? They know nothing. What is our job? It is to pin down the Government on what they are going to do. That seems a reasonable request by Report stage. We should not down tools, but we should vote with the Leader of the Opposition in her amendment.

Photo of Lord Lansley Lord Lansley Conservative 3:45 pm, 21st January 2019

My Lords, the point made by the noble Lord, Lord Kerr, would be valid only if this Bill were designed to give the Government a power to make a free trade agreement with a country such as Australia or New Zealand, but it is not. I participated at Second Reading, as did the noble Lord. Therefore, he will know that the Bill is designed as a continuity Bill. It is not a Bill to provide a power for establishing new free trade agreements, but to give the Government a power to ensure that the existing free trade agreements which the European Union has with third-party countries are able to be continued in law in this country after exit day. Much of that is already able to be incorporated into our law by virtue of the EU withdrawal Act, but some aspects would not. On that basis, this Bill is not, as most people in this debate seem to be saying, a mechanism by which to establish new free trade agreements with lots of new countries and we need therefore to know what the scrutiny process is; it is a continuity Bill and we should see it solely in that context.

Photo of Lord Reid of Cardowan Lord Reid of Cardowan Labour

My Lords, I have only one brief point to make in response to our noble colleague the noble Lord, Lord Strathclyde. He said that this is an extraordinary procedure. That is because we live in extraordinary times. No one in this country would have imagined even two or three years ago that we would be standing on the eve of the biggest act of self-immolation in economic terms in some 80 years and yet have no plans for the future. I was going to say that the continuity of which has been spoken is a vacuum, but that is too substantial a word for it. It is the most extraordinary set of circumstances that we have seen in my memory, having been involved in politics for over 40 or 50 years, and every day it gets more extraordinary.

Quite apart from the Bill, this morning Downing Street was apparently briefing that the solution would be for Downing Street to amend the Good Friday agreement—forgetting that even if that course of action might commend itself to this House, the Good Friday agreement is the product of two sovereign nations in a bilateral agreement, along with an American President and eight parties in Northern Ireland itself. Yet they speak as though they are ordering a pizza—as if they can just phone up and suddenly the order will be changed. If the noble Lord worries about extraordinary measures taken by this House, he should seek to remove the Government from the extraordinary position of incompetence and blindfold Brexit in which they find themselves.

Photo of Baroness Deech Baroness Deech Crossbench

My Lords, I would not pretend to know a great deal about trade, but this I do know: we live in extraordinary times, and it is all the more important that one sticks with constitutional procedures and the rule of law. Imagine if we had a different Government; it is extremely dangerous to play fast and loose with our established procedures. At this moment, we should be clinging to them; it is really important.

We cannot take back control until we leave on 29 March. Taking back control has always meant that we do so in relation to other countries, not that we fight internal warfare in this House and in the other House. We would not be in this position if the leadership of the party of the noble Baroness, Lady Smith, who moved the amendment, had been more co-operative and constructive. We would not be in this position if the EU itself had been more constructive and co-operative. Its failure to do so is a sign of a lack of confidence in its own future.

It is absolutely essential that we stick with our constitutional procedures and do not play fast and loose with them, because imagine what would happen in a future circumstance with a future Government. That could be far worse, and we must proceed as our procedures require us to do.

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour

My Lords, I think it is the turn of this side of the House—

Photo of Lord Naseby Lord Naseby Conservative

My Lords, it was my privilege for five years of my life to be Deputy Speaker in the other place. In that time, I took through the Maastricht Bill with 28 days and five all-night sittings for five clauses. I submit to your Lordships that we should not be trying to filibuster in this area. As far as I can see, if I were sitting in the other place this has all the signs of a filibuster if I ever saw one. With due deference to those who have spoken already and to the Leader of the Opposition, I say: let us proceed with today’s business, and for the next three days or whatever it may be. None of us in this Chamber knows what is to happen in the next two weeks or whether there will be a normal pause between Committee and Report. Why do we not just wait and see what happens, and then act accordingly? It is not for this House to try to take the initiative away from the Government of the day.

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour

My Lords, it is quite unjustifiable that anybody should accuse people in this House of filibustering on this matter. One can see that we have taken only 35 minutes on a very important matter and I do not think that a single intervention has lasted for more than three minutes. By no stretch of the imagination can that be regarded as a filibuster; it is quite possible that, given the gravity of the situation in our country, the public may well feel that we have spent too little time so far on this Bill.

It has already been said that we live in exceptional circumstances. Is it not exceptional that, over two and a half years, we have had a negotiation with the EU about our future relationship with it and have just decided by an enormous majority that the whole of that negotiation has to be terminated? It was the right decision, but it is the most extraordinary situation. Equally, on the matter of trade agreements, Dr Fox has been happily running around the world for the last two and a half years, no doubt at the taxpayer’s expense, and achieving precisely nothing.

This country’s handling of the whole Brexit issue has been marked by the most extraordinary incompetence; the whole world knows that. That incompetence has often consisted of a quite extraordinarily naive tendency to overestimate our own bargaining power and underestimate the intelligence and bargaining power of other people. That is the very basis of incompetence in a negotiation, but that is the way this has been handled.

If you go to any country and say, “I am afraid we have just walked out of the trade arrangements that we have had for many years. We are in a bit of a mess and would like to negotiate a trade agreement with you. We would like to roll over the existing agreement you have with the EU and have the same benefits as we had when trading with you under it”, they will naturally say, “We will be interested to talk to you about that, but we have a number of points ourselves that we would like to settle on this occasion”. You have somebody else with an agenda, seeking advantages, and it takes a long time for the negotiation to come to any conclusion. That is the rule of business throughout the world. I do not think that Dr Fox has much experience of international business, so he might be surprised to find that is the case, but it would not be a surprise to anybody with the slightest experience of the field.

This is a serious matter. Is it really true, as the noble Lord, Lord Strathclyde, said, that if the Government are completely paralysed and completely fail in achieving their purpose after two and a half years, Parliament should do nothing about it? Of course it should: we exist to make sure that there is a proper balance in the constitution. If one part of the constitution is obviously not performing as it should, the other parts should do something about it. There is no question of filibustering on the Bill. It is an extremely urgent matter. All noble Lords should be paying attention to it and deciding what the country needs to do about it. Under no circumstances should this House abdicate its responsibility for doing that in this crisis.

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 rise to respond to the amendment in the name of the noble Baroness the Leader of the Opposition and to subsequent speakers. I note what the noble Baroness, Lady Taylor, said about the roles of the usual channels and the Government, and the relationship between the two. I also note the comments of my noble friend Lord Strathclyde. However, I cannot allow the speech of the noble Lord, Lord Reid, about the Good Friday agreement, to go without comment. I have no hesitation in saying that what he reported to the House was completely untrue.

Photo of Lord Reid of Cardowan Lord Reid of Cardowan Labour

My Lords, I am not sure that it was parliamentary to accuse another noble Lord of putting an untruth before the House. I said that we read reports this morning. The noble Lord might check the Daily Mail or the Daily Telegraph, for instance. I may be mistaken, but I would be grateful if the noble Lord would withdraw his comment that what I said was an untruth.

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)

All I said was that what the noble Lord reported was an untruth; he himself was not, perhaps, being untruthful. Those newspapers are not in my reading.

The House has heard the arguments made by the noble Baroness and subsequent speakers, and it will have to take the amendment she proposed at face value. However, it is difficult to understand why the House should agree to it. After all, we are shortly going to go into Committee, when all the arguments which have been expressed this afternoon will, no doubt, appear again in the form of amendments and in the debates that surround them. I can only agree with the comments about the Bill by my noble friend Lord Lansley.

The effect of the amendment is to prevent Report stage proceeding until a subjective condition has been fulfilled. I note that in recent weeks many noble Lords opposite have expressed their desire to continue with the Bill, apparently frustrated that the Committee was not scheduled to start earlier. Yet here is an amendment to delay the passage of the Bill. The oddest thing of all is that the noble Lord, Lord Stevenson, who is leading for the Opposition on the Bill, has tabled amendments covering the issues listed in the noble Baroness’s Motion. It seems pre-emptive of her to ask the House to reach such a conclusion now, before the noble Lord, Lord Stevenson, has even started to make his case.

The noble Baroness has exercised considerable restraint and judgment as Leader of the Opposition in the House of Lords in not using the arithmetic of this House to obstruct government business. By doing so, she has ensured that the House has made life difficult for the Government but not broken the conventions between the Houses, despite temptations to do so, I have no doubt. I think that the whole House has been fortunate in the part that she has played. I continue to hold the noble Baroness in the highest regard, so I gently ask her, when she replies, to explain why she is not prepared to allow the House to continue to scrutinise this important legislation, sent to us by the House of Commons, in the normal way. Working in that way, the House will be listening to arguments and considering and deciding on amendments. This is what is meant by holding the Government to account.

It will not be an easy ride for the Government. The Government cannot expect the passage of the Bill to be an easy one. I expect the House’s scrutiny to be challenging. Knowing the noble Baroness as I do, I know that normally she believes in scrutiny and not obstruction, but at face value the only conclusion I have been able to come to is that this is a tactic of obstruction. That is why I hope she will reflect very carefully on whether it is in the interests of the Official Opposition, or indeed the House as a whole, to endorse such an approach. I hope she decides not to test the opinion of the House. If she does, I ask noble Lords on all sides to reflect equally carefully on the precedent, as the noble Baroness, Lady Deech, pointed out, that we could be setting for future government Bills.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords, Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Cabinet Office) 4:00 pm, 21st January 2019

My Lords, I listened carefully to the Government Chief Whip. Perhaps the most encouraging comment he made was that he does not read the Daily Telegraph or the Daily Mail. However, I challenge him on some of the things he said. It is not our intention to delay the Bill. If that were my intention, I would have proposed not to proceed with Committee, but I think it would be wrong for this House to take that move. The noble Lord could have resolved this. It would not, as the noble Lord, Lord Strathclyde said, bring a full stop to the Bill. I find it extraordinary that the Government did not come forward today and say, “Of course you should have that information before Report”. It would have been the easiest thing in the world for the Government to say that it would ensure that this House, in order to fulfil its responsibilities and duties—the issue of process that my noble friend Lady Taylor raised, about being able to function properly and fulfil our obligations—will have the information we need to do so.

As for the comments of the noble Lord, Lord Strathclyde, I have said before that I think that there are two Lord Strathclydes. There is the Lord Strathclyde who was Leader of the Opposition—but that Lord Strathclyde seems to have disappeared into a puff of smoke. I was alerted to the fact that when he was Leader of the Opposition his party backed a Motion that referred the Constitutional Reform Bill to a Select Committee and defeated the then Labour Government. That was approved by your Lordships’ House and it was the first time in 30 years that the Lords had backed a delaying move, and it practically delayed the Bill until the next Session.

I have no intention of taking such an extreme measure as that. All I am asking your Lordships to do is to ensure—I take the point made by the noble Baroness, Lady Deech—that we can fulfil our constitutional procedures and objectives. We want to have Committee and Report, but in an informed way. It would be ridiculous for this House to consider the Bill in its entirety, given the comments made by the Constitution Committee about the gaps, the comments made by the noble Baroness at Second Reading and the commitments made that further legislation would come forward. For us to continue with Report after Committee without that information would be irresponsible.

The noble Lord the Chief Whip, the noble Lord, Lord Strathclyde, and others, said, “We don’t want to delay the Bill”. They are absolutely right. We have not wanted to delay the Bill; we have not delayed it for 132 days since Second Reading. All we are saying is—it is so reasonable that I am stunned that the noble Lord does not agree with me—“Please let us have information: the framework of government policy and the context in which we should proceed to Report”. I cannot see why the Government do not accept that. We want to proceed with the Bill in a responsible, measured and informed way. Our only condition before Report is, “Please give us more information”.

I listened to what the noble Lord the Chief Whip had to say and to the comments from around the House. We will be moving to debate some of those comments in detail in Committee, but as regards Report, we need a lot more. I beg to test the opinion of the House.

Ayes 243, Noes 208.

Division number 1 Trade Bill - Committee (1st Day)

Aye: 241 Members of the House of Lords

No: 206 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Amendment agreed.

Clause 1: Implementation of the Agreement on Government Procurement

Amendment 1

Moved by Lord Stevenson of Balmacara

1: Clause 1, page 2, line 11, at end insert—“( ) Before making regulations under subsection (1)(e) or (f) an appropriate authority must consult such bodies as represent the interests of persons likely to be affected by the regulations including, where appropriate—(a) the Scottish Ministers;(b) the Welsh Ministers;(c) a Northern Ireland devolved authority;(d) a local authority or local authorities; and(e) representatives of appropriate consumer groups, businesses, trade unions and non-governmental organisations.”

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

My Lords, we intend to exercise a considerable amount of scrutiny on the issues in Committee, but—as hinted at by the Chief Whip in his elegant speech, in which he kindly named me—we will also raise other points not specifically relating to the original narrow focus of the Bill but fitting more closely into the debate we have just had. I make no apology for that, because it is important that we probe the Government on their longer-term intentions and receive some assurances about where the particularities of this Bill fit in relation to that.

In moving Amendment 1, I shall speak also to Amendments 2, 3 and 100. This first group relates to the provisions in Clause 1(1) to set out the arrangements under which the Government can sign up to, and through regulations make changes to, the Agreement on Government Procurement. The GPA is an agreement between the EU and currently 18 countries to open up their public procurement markets, operating under a WTO framework. The Government intend that the UK should remain part of this system, becoming an independent member, and the Bill provides delegated powers to facilitate this, should it be required.

We have a number of concerns at that, some of which, in Amendment 1, are largely connected with the question of consultation about this process. The GPA itself is not a particularly interesting or informative document, but it does attempt to do something that I think all Members of the House would regard as a very good process and something we should support. It attempts to level the playing field for those who bid for and get government procurement contracts. It therefore makes it fairer, as all those involved in the GPA are able to bid for and secure work for their workforces, to earn money and to make profits out of that. In a sense it is an economic growth scheme founded on work that has been going on for some time trying to identify why relatively small numbers of companies bid for contracts offered by government under this system. I am sure the Minister, when she comes to respond, will say the UK is at the forefront of trying to open up its procedures; I know previous Ministers have also been concerned that we should have an open playing field and an open market here, so anything that can do that must be good and we would support that.

However, it is important that it is done in a process that reflects the wishes of the people more generally. It is therefore a little unfortunate that the Bill does not spell out the need for consultation not just among those directly involved, particularly local authorities and those groups, but also the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, when it is resumed, which have a considerable amount of contract work going forward. So this is a widely spread requirement that the GPA will open up for broader discussion and debate and, I hope, greater access to it; it is reciprocal in the sense that it should also make it available to UK companies. Before we make regulations, we should encourage much more consultation to make sure that the regulations are appropriate and that the benefits and interests of those concerned are taken into account.

Amendments 2 and 3 are largely taken from comments made in the report referred to in earlier debate on the Select Committee on the Constitution in its report in October on the Trade Bill, which raised a few issues on how the regulations will be framed and brought forward. The starting point is that these regulations will be enacted with powers under the provisions modifying retained direct EU legislation, but the committee pointed out that there was some variation in the wording. I do not wish to quote the committee directly, but the conclusion is that the Government were recommended to include in the Trade Bill the definitions of retained direct principal EU legislation and retained direct minor EU legislation as used in the European Union (Withdrawal) Act 2018, and these make the substance of our Amendment 2.

Amendment 3 follows the comment made in the next part of the report that the Bill’s Explanatory Note states:

“Parliamentary approval for ratifying the UK’s membership of the GPA will be sought separately from the powers in the Bill itself and will be done in accordance with the procedures set out in the Constitutional Reform and Governance Act 2010”.

However, there is some doubt about exactly what the sequencing of that should be and which particular regulations and powers would relate to which. The suggestion therefore made in our Amendment 3 is to restrict the timing and quantum of regulation to a point in the system where previous approval has been received from Parliament under the CRaG Act.

The final amendment relates to what type of regulation should be required. The comment in the Constitution Committee’s report is that the regulations should be subject to the affirmative procedure and our Amendment 100 would put that in clear prose on the face of the Bill. The Bill itself may have been due to be amended by the Government when they came to respond to the Constitution Committee report, but so far I have not seen those amendments so we have aided them by tabling them and I commend them to the Committee. I beg to move.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

My Lords, I support these amendments and will speak to Amendment 100, which is in my name and that of the noble Lord, Lord McNicol. The Committee will be grateful to the noble Lord, Lord Stevenson, for tabling these amendments and allowing us the opportunity of looking in a little more detail at some of the consequences of the Government’s intention to, in effect, join an institution by virtue of leaving it. It is not automatically as straightforward as the Government may suggest. My understanding is that the approval in principle that has been made for the UK to join the GPA in its own right, separate from being a member of the European Union, has a number of riders attached to it that we will discuss when we come to Amendment 4A in my name. But on the strength of the amendments tabled by the noble Lord, one core element of consultation will now be important.

I took the opportunity to look at the schedules to the Canadian annexes relating to its membership of the GPA. It was interesting. One annexe specifies the 82 federal bodies; there are further annexes for each of the federal provinces with the organisations, bodies or elements of government that are included at a provincial level and the exceptions that they all bring to the GPA agreement. There is no automatic consistency across Canada because it is a federal system. In many respects, it is a model of what the United Kingdom’s could be when it comes to procurement policy and procurement agencies.

Interestingly, in Canada the legislative bodies are excluded from the provincial instructions, and at federal level shipbuilding and repair is excluded as well as, of course, defence. There is no automatic inclusion of certain bodies and, necessarily, there is automatic exclusion of certain bodies. The Government have an opportunity to explain in a little more detail how they expect those bodies to be included in the GPA schedules and annexes. As they have indicated reviewing and perhaps updating them, when it comes to expectations about what we will see with links to devolved Administrations and organisations—for example, any bodies or agencies in Scotland, where I live and where I was a representative in the Scottish Parliament—are they automatically to be included within the rollover or have there been discussions about whether they continue to be relevant?

I have no comment on the other amendments, other than to say that I consider Amendment 3 to be appropriate. Looking back at 2013 when Parliament approved the accession and considered the European Council’s decision and the role of the Parliament, it is interesting that the European Scrutiny Committee of the other place highlighted that the Government had got the procedure for application wrong. I am certain that that will not be a precedent with regard to how the Government consider any international agreements and how they will be ratified by Parliament. It is interesting that it is necessary for such an amendment to be put forward to ensure that there is the correct procedure and that there is transparency and scrutiny.

Amendment 100 is in my name and that of my noble friend Lord McNicol to ensure that transparency. It is important as it means we will see a draft and be able to consider its implications. If we have asymmetrical devolution—it may be an ugly term—when it comes to an agreement such as the GPA, if the United Kingdom is in that in its own right, we need a debate, and we need it now, on how the devolved Administrations will be included. When we consider the proportion of public procurement expenditure, which has been estimated by the International Trade Centre as between 10% and 15% of GDP, when we are working with international partners on our development side and when it comes to countries which will potentially have access to the UK market, it is vital that the devolved Administrations and, increasingly, mayors and the regions of England are included. I therefore support these amendments.

Photo of Lord Wigley Lord Wigley Plaid Cymru 4:30 pm, 21st January 2019

My Lords, I am grateful to the noble Lord for introducing this amendment. As far as it goes, I support it, but I shall take up a point that was made a moment ago by the noble Lord, Lord Purvis, from the Liberal Front Bench that trade agreements will certainly need not just consultation with, but the agreement of, the devolved authorities. Let us think of, for example, the trade in lamb in Wales and how basic it is to the rural Welsh economy. Pressure is coming from New Zealand, which is threatening to block movement in the international trade discussions on these matters. If New Zealand were pressing for certain agreements that would undermine our Welsh lamb sector, that would be devastating. The devolved authority has responsibility for economic development, agriculture and rural affairs in Wales. That is an example from Wales. I can well imagine examples from Scotland, such as in the whisky sector. There should be more than just consultation. As I said at Second Reading, there should be a requirement for statutory agreement, a statutory endorsement by the devolved authorities in these areas. It may not be necessary in all areas, but there are certainly some where it is needed.

Therefore, between now and Report I hope there will be an opportunity to explore this area more in conjunction with the devolved Administrations to make sure that at this stage, before a specific difficulty arises, these matters are thought through because when a difficulty does arise, the tension builds up and it becomes a battle of attrition. We need a system that avoids that, and now is the time to get the system right.

Photo of Lord Hain Lord Hain Labour

My Lords, I apologise to the Committee for coming into the Chamber just a couple of minutes into my noble friend Lord Stevenson’s speech. I hope that it is in order to continue to make a brief contribution.

I follow the speeches of my noble friend Lord Wigley and the noble Lord, Lord Purvis, as well as that of my noble friend Lord Stevenson, in saying that it is vital that, particularly in respect of the devolved Administrations— I speak as a former Secretary of State for Wales and Secretary of State for Northern Ireland—we do not see an action replay of what we saw earlier in this whole fiasco. I am talking about a power grab by the Government that repatriated to Westminster powers that had already been devolved but were under the European Union’s aegis. That showed a cast of mind in the Whitehall machine of the Government that I encountered as a Secretary of State, whereby the natural instinct of other departments—particularly Defra and the Home Office, although it went more widely—is to centralise, grasp and keep power, not to devolve it. It is essential that, as the amendment seeks, there is a recognition by Ministers that the natural instinct will be to consult the devolved Governments—and in the case of Northern Ireland, whatever is there; maybe senior civil servants, as now. That should be the immediate instinct of every Minister and every senior official in every government department as they process all this.

My second point relates to paragraph (e) in the amendment, which refers to “appropriate consumer groups” and so on. Will the Government consult the CBI, the FSB, the IoD, the TUC and consumer groups, let alone all the other NGOs that might have an interest? Will that be a natural reflex, as in consulting the devolved Administrations, or will they have to come back in right at the end? I hope that the Minister will be able to give us some reassurance on the record about all that.

Photo of Lord Lansley Lord Lansley Conservative

My Lords, perhaps I may start with Amendment 3 in this group. I am not sure that I understand why it is necessary to do this, as Parliament is approving our membership of the government procurement agreement by virtue of this legislation. It seems to me that we are going through that process now, and the amendment is therefore unnecessary.

Again, I am not sure that I understand why Amendment 2 is needed. Section 7 of the European Union (Withdrawal) Act makes provision for how legislation can be modified by subordinate legislation. I do not see anything in the Bill that disapplies Section 7 of the withdrawal Act, and therefore it applies. We do not need to say it in order for it to apply.

I think that there is a point in Amendment 1, although the drafting is not quite right. In so far as the regulations would relate to changes to government entities for the purpose of the rules on public procurement or the annexes to the GPA, surely it should particularly draw attention to consultation with those government entities or specifically focus on the business organisations or others that would be affected by that public procurement issue. There is a drafting issue about who is likely to be affected. I know that the amendment states that they should be consulted but we need to focus on the entities concerned and how they are changed by virtue of these regulations.

Photo of Lord Monks Lord Monks Labour

My Lords, perhaps I may interject, having been general-secretary of the European Trade Union Confederation for eight years and, during those eight years, having been consulted on the trade arrangements and negotiations being made by the European Union, particularly with Canada, South Korea and, to some extent, Japan. It was a very structured and ordered process, and the logic of it was that free trade generates tremendous wealth and a lot of economic activity but can result in wiping out areas of activity where our industries are less well placed than those in some other countries. So, having a social dimension or some social protection was always our aim in the discussions in the European Union—with mixed success, I might say. The South Korean agreement I am rather pleased with; less so, probably, the Canadian one, surprising as that may seem.

I want to see in the agreements balance between free trade and some protection for the sectors that will be particularly affected. I do not necessarily mean protectionist protections. Welfare state protections, adjustment protections, retraining and redeployment programmes were the kind of things that were encouraged in the trade agreement process. That was because trade unions, employers and others were encouraged to take an active part in the formulation of these agreements. I am looking for assurances from the Government in support of these amendments that, as they approach this new responsibility for a British Government for the first time in many years, they will have that sort of philosophy and approach, and will not simply—desperate as no doubt Dr Fox is to make some agreements pretty quickly—let these be agreements that give up on the need for proper protection for the people who will be adversely affected, as they will be by these agreements.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

My Lords, we begin this first day in Committee with a discussion about some really important matters. I recognise the vast experience of your Lordships on many of these matters and am clear that this experience will be invaluable to the process. Even before we began this debate today, I held a number of meetings with noble Lords from all sides as—I want to underline this from the very beginning—I am very keen to hear all views and to ensure we have a full and proper discussion on these issues. I want that to continue. My door is open to any of your Lordships who wish to speak to me. I look forward to working closely with noble Lords as we scrutinise the Bill’s provisions.

The Trade Bill will put in place the necessary legal powers and structures to enable us to operate a fully functioning trade policy. This will ensure that the UK is ready for exit. It provides continuity for individuals, businesses and our international trading partners; it also ensures that we can protect them. With the leave of the House, I will say that some of the comments made relate to future trade policy and others are about continuity, which is really the purpose of most of the clauses of the Bill. Therefore, I will try in these early amendments to focus on the continuity aspects of what we are discussing. Later in Committee we will look at future trade agreements and will have some time to discuss those.

In the previous debate in the name of the noble Baroness, Lady Smith of Basildon, my noble friend Lord Lansley made the point that this is about continuity. I want to stress that point: we need continuity for our businesses and for our people. The Agreement on Government Procurement, or the GPA, is an element of that continuity. As noble Lords will know, it is a plurilateral agreement within the framework of the WTO. Not all WTO members are party to the agreement. However, the UK has been a participant since its inception through its EU membership.

I turn now to Amendment 1, tabled by the noble Lord, Lord Stevenson of Balmacara, and underline the purpose of subsections (1)(e) and (1)(f) to which it refers. These give a power that is intended to be used to make regulations that reflect technical changes to a list in the UK’s GPA annexe 1, made to ensure that it provides an accurate picture of central government entities. These changes would be made only after machinery-of-government changes and the transfer of functions from one to another. They would therefore be strictly technical changes—such as, for example, BIS becoming BEIS.

We recognise the importance of appropriate transparency. Officials have been liaising and will continue to liaise with the devolved Administrations in preparation for notifying GPA parties of updates to the list. We have already shared the UK’s draft GPA schedule with the International Trade Committee and the devolved Administrations. Officials will continue to work in conjunction with the devolved Administrations as we operate as an independent member of the GPA, and will ensure that the devolved Administrations are engaged in creating modified lists. I want to record on the Floor of the House my gratitude for the work of officials in the devolved Administrations on the UK’s accession to the GPA.

Speed is of the essence. Therefore, as the powers in subsections (1)(e) and (f) will be used only to update the list of central government entities, it would be disproportionate to consult local authorities, trade unions, consumer groups, businesses and NGOs on this clause as these would be small technical changes made to the UK’s annexe to reflect machinery-of-government changes. The noble Lord, Lord Monks, raised the issue of trade unions being involved in future policy. They have already been included in the consultation on the future, but this is about the continuity of subsections (1)(e) and (f) of the GPA. As noble Lords will know, the GPA mutually opens up global procurement markets among its parties. It opens up procurement activities for our businesses worth an approximate £1.3 trillion annually. We are seeking to maintain continuity for business by remaining a participant of the GPA. Clause 1 allows for the UK’s independent membership of the GPA rather than its membership through the EU, and that needs to be implemented in domestic regulations.

Photo of Lord Lansley Lord Lansley Conservative 4:45 pm, 21st January 2019

I am sorry to interrupt my noble friend. She will know that part of this process is, as she rightly said, the sharing with the WTO of the prospective schedules for our accession to the GPA. Those schedules are about not just which government entities are on the list but also the coverage. Is it the Government’s intention, presumably already shared, that the coverage schedules—for example, and this is something to be particularly aware of, the extent to which health service procurement is covered by the GPA rules—are the same as the EU’s? Could my noble friend share with us by what mechanism a consultation would take place if the Government proposed to change the coverage schedules?

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I thank my noble friend for that important question. I think this issue comes later in the amendments, but I can confirm that we intend essentially to take exactly the schedules that currently exist for the UK, as they exist through membership of the EU, and put them into our new independent membership, so that those do not change.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

With respect, I think that the noble Lord had a second and more important part to his question. What happens if we want to change them?

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

My understanding is that any regulations would go through the normal procedures of scrutiny. No changes in law would be allowable without scrutiny.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

The Minister must put me right if I am wrong. She just said that these were such small changes that they would not warrant anything other than simply negative scrutiny. However, as the noble Lord pointed out, they could affect the materiality of how we administer and run our National Health Service, which would be a major change. Surely the whole argument that she is making needs to be resolved: it if the Government are going to say that these changes are so small and trivial that they do not warrant the full scrutiny of consultation, the corollary of that is that they would need to be done by the affirmative system, not the negative.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I can confirm that we are copying the existing schedules directly across. There are no changes, so there is no need for scrutiny of changes, because no changes will be brought across.

Photo of Lord Lansley Lord Lansley Conservative

I want to come back to that, because I think there is a point we need to establish. There is no question about the continuity of the existing schedules; the Minister has made that clear. However, if the Government wished to change the coverage at any point in the future, where is the power to do that? It is not clear to me that Clause 1 provides that power. It takes specific power in relation to the list of government entities, but not the coverage schedule. Of course, if there were such a power, we could look at the scrutiny process applied to that power.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I reassert that there is no power in the Bill to make any changes to those GPA schedules. We can come on to future policy, but this Bill is about continuity and making sure they are put in for the UK as an independent member. As the noble Lord will be aware, there are very explicit protections for our National Health Service. They exist as an exemption in our existing GPA; with the schedules being carried over, they will continue to exist as an exemption. We are very clear it is for the UK to look after the NHS and we intend to continue to do that.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

I am grateful for the Minister’s explanations. The WTO at the end of November—I think this relates to what the Minister is saying—stated:

The UK reiterated that it intends to update its proposed GPA schedule of commitments within three months of their coming into effect”.

So in effect that is a continuity commitment—it has given a future commitment for activity. We are trying to find out when this will come into effect—assuming there is a withdrawal agreement, this will be after the implementation period—and by what mechanism the Government will consult on the changes that they are likely to bring in in the future. As the noble Lord, Lord Lansley, said, some of the most important aspects will be the extent of what is covered and what can be procured, rather than necessarily the names of the bodies. That is of critical importance to agencies in Wales and Scotland when it comes to what can be opened up as market for some of them.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I reiterate to your Lordships that this Bill, and the powers we are requesting, do not allow changes in our schedules to the GPA. Any future changes will need to be brought forward, and that is the subject of a different discussion. Going back to exactly what this clause is about, this discussion is about the addition of any changes to make an accurate description of the central government entities—and that alone. It is only Annexe 1; it is none of the other elements of the annexe in terms of the lists.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

Have the Government therefore discussed and agreed under what parliamentary procedures they are likely to bring these forward?

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

Again, we are talking not about the future but about continuity. When we discuss these clauses, I would ideally like to focus on what we need for continuity. We have time allocated to discuss future changes in Committee; I think that that will be the right time to discuss them.

Photo of Lord Wigley Lord Wigley Plaid Cymru

On that point, might there be a disagreement between Westminster and Cardiff, or Westminster and Edinburgh, on what continuity is —in other words, on the interpretation of where these definitions apply? For example, it is not just medical matters that arise in the health sector: purchases for hospitals and all the rest cover foodstuffs, et cetera. In Wales, we have succeeded in raising the level of local procurement from 35% to 50%, which has had a significant positive economic knock-on. One does not want any of that to be lost in any of these changes. If the Minister could give an assurance that there is no possibility of that happening it would help us.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I will confirm this, but my understanding is that the schedules will be exactly as they are now. The procurement agencies in Wales will be able to put in their own procurement rules in that context, provided that they meet the GPA rules and are done on a level playing field. That will continue. The whole purpose of this is to make those changes and to have continuity—but if there is any change in what I said to the noble Lord I will revert.

Amendment 2 would require the regulations under Clause 1 to make provision to amend retained direct EU legislation only in accordance with the provisions of the European Union (Withdrawal) Act 2018. As I understand it, the amendment seeks to ensure that the powers in Clause 1 cannot be used to amend retained direct EU legislation in a way that is contrary to the provisions of the EU withdrawal Act. This is a concern that I have sympathy with and which the Government have considered carefully. I am therefore happy to assure the noble Lord that the powers cannot be used in this way. I hope that noble Lords will take reassurance from this and will agree that the amendment is unnecessary. Paragraphs 10 to 12 of Schedule 8 to the EU withdrawal Act cover powers to make subordinate legislation on or after the day the Act was passed, so they will bind legislation made under Clause 1 of the Trade Bill without further provisions being made. In addition, I inform the Committee that the Government intend to bring forward an amendment on Report to include the same definition of retained direct principal EU legislation used in the EU withdrawal Act in this Bill to clarify the position even further.

I again thank the noble Lord, Lord Stevenson of Balmacara, for bringing forward Amendment 3. Parliament’s ability to scrutinise the UK’s independent accession to the WTO Agreement on Government Procurement prior to ratification is incredibly important and one that the Government have considered. I can assure noble Lords that it is entirely the Government’s intention to comply with their legal obligations under CRaG to offer Parliament the opportunity to scrutinise the UK’s accession to the GPA. In the light of this assurance, the Government believe that it would be unnecessary to have an amendment that compels this. However, to provide further reassurance to the Committee I will state clearly that the UK’s accession to the GPA is to be on the same terms and with the same rights and obligations that we currently enjoy as a participant through the EU. As with all the Bill, this is about continuity. The UK’s GPA schedules, which have been accepted in principle by the GPA parties, can be viewed publicly on the WTO’s GPA website under the UK portion of the EU schedules.

The noble Lord, Lord Purvis of Tweed, raised some issues about Canada and how we might think about our policy in future. Again, that is for the future and not related to this clause and the Bill.

Amendment 100 was tabled by the noble Lords, Lord McNicol of West Kilbride and Lord Purvis of Tweed. It seeks to change the regulation-making powers in Clause 1 from being subject to the negative procedure to being subject to the affirmative. As drafted, this power would apply only when the powers are exercised by a Minister of the Crown. They would remain negative when exercised by one of the devolved Administrations.

I understand entirely and share the House’s desire to ensure that due parliamentary scrutiny is given to the use of any statutory instruments. However, the report of the Delegated Powers and Regulatory Reform Committee did not raise any issues with the power, which I hope provides further reassurance that the Government are using appropriate procedures under the power in Clause 1.

A similar amendment was laid in the other place. That was defeated in Committee with two votes for and nine votes against. We and they believe that the negative procedure is appropriate for Clause 1, because Parliament will have the opportunity to scrutinise the GPA before the powers in Clause 1 are exercised. The power in Clause 1 allows for changes to domestic procurement regulations in order to reflect the UK’s independent GPA membership, rather than membership through the EU.

The Government are committed to their legal obligation under CRaG before the UK can accede to the GPA as an independent member. The negative procedure would then allow Parliament to scrutinise the resulting amendments to domestic regulations to ensure that UK regulations are compliant with our obligations under the GPA.

Time, as noble Lords will be aware, is short. We must be able to make these regulatory changes quickly and avoid the UK being in breach of its international obligations. The other limbs of the power ensure that the UK’s independent GPA membership is operable, allowing changes to domestic regulation to reflect new accessions to the GPA and withdrawal from it—and, as we have discussed, to update the UK’s list of central government entities.

Prior to the accession of a new party being agreed by the GPA committee, all parties, including the UK, would need to agree to the prospective party’s offer. The GPA committee would reach a decision inviting the new party to accede, after which it would deposit its instrument of accession. Thirty days later, the GPA comes into force for the new party. The UK therefore needs to be able to act swiftly to implement any new accessions and the negative resolution procedure is the only way to ensure that that takes place in time. Without it, the UK could be in breach of its commitments under the GPA and at risk of a dispute. Parliament will have the opportunity to scrutinise the SI when it is laid under the negative procedure. As I said, Clause 1 also allows updates to be made on the list of the UK’s central government entities, included in Annexe 1.

These, as I hope I have shown, are mere technical amendments to reflect machinery of government changes. The negative procedure will ensure that any such updates to our lists are reflected in domestic legislation in a timely fashion. As before, Parliament retains the opportunity to scrutinise the resulting SI when it is laid before both Houses. I am also happy to confirm that the Government have carefully considered the Constitution Committee report referred to in the previous debate. The Government will respond to the committee tomorrow—and, therefore, before the House next meets in Committee to discuss the Bill.

I genuinely appreciate noble Lords’ concerns but hope that this House has found the Government’s response to each of the amendments reassuring. Clause 1 is about ensuring continuity, and ensuring that UK businesses enjoy the same opportunities in future as they do now. That is something that I believe the whole House supports, and I ask the noble Lord to withdraw the amendment.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Conservative 5:00 pm, 21st January 2019

My noble friend helpfully explained how the implementation of the Agreement on Government Procurement would work and referred us to a website with useful detail. She said that where there was accession by another party, there would not be anything major. The whole idea of the provision was continuity, so you would be implementing things that had already happened. I have a simple question—I apologise that I am not expert in this area. The Government say that they are negotiating with a whole list of countries, including Albania and Australia, for example. If they were suddenly to accede to the GPA, which sounds quite positive—because it would mean more trade between countries in public services and in other sorts of procurement—would that then simply be added in, or would it be done in some other legislation? That is not quite continuity. It is very sensible to use an existing system, but I am keen to understand whether we are agreeing to that today or whether it would be done somewhere else. I apologise if my noble friend has already clarified that.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I thank my noble friend for the question. My understanding is that it puts us in the same position as we are today. When parties want to withdraw from or join the GPA, a process is gone through with the EU in which they demonstrate their intention and present their schedules to the WTO. Each member then decides whether or not they are prepared to accept that new addition or withdrawal. That is the process that we would go through. If that should happen, the Bill gives a power to implement under SIs. Parliament would be able to decide whether new members could join or leave.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

I thank all speakers in this short debate. The early contributions were to do largely with devolved issues. I think that we will come back to them, but they raise exactly the thorny difficulties that can emerge from making this work in practice. My noble friend Lord Hain spoke of not wanting to see an action replay of the “power grab”—his words, not mine, but I understand where he is coming from—by the Government in relation to the withdrawal Bill. We do not want to see that repeated, so I hope that the Government are able to reassure us that progress has been made on this and that some sensible and effective negotiations will be in place to allow it to be done effectively and with support all round.

It has not taken us very long to stumble into areas which were exactly the point of the amendment to the committal Motion made by noble friend Lady Smith. We are talking about “what happens if” rather than just about continuity. The noble Lord, Lord Lansley, has stumbled across quite an interesting point—I am in no sense making a point about him; the noble Baroness the former Minister also picked up something about “what happens if” and how it is resolved. I am not saying that we are doing anything wrong here, but it illustrates the difficulty of trying to narrow down to a continuity mode without thinking about the wider context.

I draw from this several things. First, on whose powers we are talking about when the regulations are in place, the Bill uses curious phraseology:

“An appropriate authority may by regulations make such provision as the authority considers appropriate”.

That could be extended to the power being exercised by Ministers in the Scottish Parliament, the Welsh Assembly or the Northern Ireland Assembly when it is reformed. There is nothing wrong with that—if they have the powers and the right to use them, they should do so—but it is a very different scenario from that pointed to by the Minister, about us always having the security of the negative resolution procedure when looking at how the regulations operate. The noble Baroness, Lady Neville-Rolfe, made exactly that point: these things are live and moving. They will change quite rapidly and we will have to exercise some of these arrangements. I am not sure that the negative resolution procedure is right for that.

However, the Minister’s reliance on the procedures under the Constitutional Reform and Governance Act 2010 is surely misplaced. Much of our debate on this Bill will be about the inadequacies of the CRaG procedures at present. To rely on them taking us forward because they are already in statute is to deny a whole series of debates and questions raised by them. I will not go into this at this stage; it will come up later. But it surely cannot be right for this Parliament to accept that a simple Motion to approve a complicated trade agreement, a complicated set of arrangements around procurement, or anything else that falls into that category can be done without amendment, debate or the ability to go through them in the form of primary legislation. We will come back to that.

We have had a good debate on these issues; I shall read Hansard carefully, and I am sure that there will be things that we pick up later in correspondence. For the moment, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendments 2 and 3 not moved.

Amendment 4

Moved by Lord Stevenson of Balmacara

4: Clause 1, page 2, line 13, at end insert—“( ) Regulations under subsection (1) may make provision for all contracts for services tendered by Her Majesty’s Government under the 1994 GPA or the Revised GPA to include conditions, so far as these are consistent with the 1994 GPA or the Revised GPA, with regard to—(a) the transparency of laws, regulations, procedures and practices regarding government procurement;(b) minimum employment standards, rates of pay and similar employment rights;(c) maximum periods for the payment of invoices;(d) environmental standards;(e) human rights obligations;(f) equalities legislation;(g) any other such measures as may be required to protect national security interests, the public interest, human, animal or plant life or health, and intellectual property.”

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

My Lords, the previous debate was about process and how approval mechanisms were in play. This amendment has been grouped with Amendment 5, in the name of the noble Lord, Lord Lansley, which I support.

Amendment 4 shows the sorts of arrangements and concerns that we might have in trying to ensure that procurement works more generally in favour of social objectives—a point made earlier by my noble friend Lord Monks about the work he did in Europe in relation to trade Bills and discussions on these areas. We do not need to spend much time on Amendment 4. The list that appears in it is a familiar one to anyone involved in policy on business during the last three or four years. There has been a sense of the Government beginning to emerge from a period of non-engagement with many of these issues into having similar concerns to those on this side of the House about the way in which it is occasionally necessary for government to raise standards, by making it clear that certain behaviour within business is not acceptable. For example, many Members of the House present today will be aware of the long-running saga over the maximum periods for payment of invoices. Over the years, we have tried to get some movement; yes, there has been some, but it would be nice to see the Government pick up and run with this issue for a change.

The list in the amendment is variable in what it does. There are some high-level issues, for example, to do with,

“the transparency of laws, regulations, procedures and practices regarding government procurement”.

I hope that that provision would be unexceptional. The amendment refers to,

“minimum employment standards, rates of pay and similar employment rights”, which I think feature in the Statement that we are shortly to receive which was made in the other place earlier this afternoon. I have mentioned the payment of invoices and the scandal of late payment; the drag on the economy from that is now worth something like £40 billion. The list also refers to,

“environmental standards … human rights obligations … equalities legislation”, and all those arrangements have been well worked through in terms of discussion. Would it be so difficult to require that anything done under the GPA in relation to Her Majesty’s Government’s work, or by those devolved authorities which are also involved, tries to ensure that we raise standards in the workplace? These proposals are worthy of consideration and I beg to move.

Photo of Lord Lansley Lord Lansley Conservative

My Lords, Amendment 5 is in my name. At the risk of being chided gently by the noble Lord, Lord Stevenson, to an extent I guess it must be regarded as moving from continuity. We will inevitably enter a series of such debates, but this Committee will be none the less useful for at least exposing some of the issues that policymakers will need to consider as they look at using the powers that we propose to give the Government.

Amendment 5 is intended to reflect that under the government procurement agreement, a number of other countries—not the European Union—take the opportunity to put in exceptions to their procurement arrangements that are consistent with pursuing objectives for promoting small and medium-sized enterprises in their own economies. I suppose that the most prominent such example is the Small Business Act in America. Those countries have done this because, in certain circumstances, it can lead to some discriminatory behaviour on the part of government entities undertaking procurement. I freely acknowledge that the European Union does not do this; essentially, because it takes the view that it has created EU public procurement rules that are intended to be wholly non-discriminatory. Those are non-discriminatory between all 28 member states and, by extension, the view the EU took was that it would be unreasonable for it to attempt to discriminate between EU and non-EU countries in taking advantage of the general procurement agreement.

However, if we are to pursue the strategy of promoting small and medium-sized enterprises in the way that the Government have committed to doing, there is, by extension, the possibility of some discrimination on the part of government entities in order to achieve that. Strictly speaking, this is not necessarily discrimination between UK SMEs and those from other countries, although, in practice, exceptions have been put down because that is more likely than not to be the case when pursuing this kind of proactive strategy to increase SME procurement in certain sectors. As I said, the Government have an objective, which, if I recall correctly, changed in the 2015 manifesto from 25% to one-third. The last figures I saw showed that in 2017 central government procurement had reached 22.5%. I am sure I shall rapidly be told that it is much higher in Scotland; that was certainly made clear in the debates in another place. In a sense, that is not the point. The Government have a strategy and a target of one-third, which they have not yet reached.

Before someone astutely points this out, the amendment must, of necessity, relate to procurement that is affected by the government procurement agreement, which is a subset of total public procurement. For example, the Ministry of Defence will largely be outside the GPA and, on the last figures I saw, its SME procurement was 13%. There is certainly an issue about how the Government are going to achieve their overall strategic objective, not least in working with the Ministry of Defence to ensure that, although many of its lead contractors are large companies, those companies engage small and medium-sized businesses as part of their procurement process. The figure of 22.5% that I referred to is both direct and indirect spending and so will include subcontractors.

The purpose of the amendment is to say that we should revisit the question once this provision is in force and we are in the GPA on our own account. It does not actually require the Government to enter an exception to the GPA for the purposes of this target, but it does ask them to go away and think about whether we need to. It asks them to look at the strategy and how we are proposing to meet it and to take account of the devolved Administrations—not telling them what to do but taking account of how they propose to act. On the basis of that, they should decide whether an exception to the GPA’s schedule is required in order for us to meet that strategy. I have not included it, but it would clearly be appropriate for the Government both to consult on that and, in the fullness of time, to come back to Parliament and ask its view on whether or not the strategy needs to be pursued by such an exception.

I will be straightforward with my noble friend. I am not looking for a change to the Bill. I am using the amendment to extract from the Government a commitment that this is something that needs to be looked at. When one is participating in the GPA as one member state, the provisions of our own SME strategy might be distinct and different from the way that the European Union has related to SMEs. I declare an interest as a director of Low Associates Ltd, a small business which contracts to the European Commission.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy) 5:15 pm, 21st January 2019

My Lords, I shall speak to Amendment 5 and before going any further I want to associate ourselves positively with its spirit. We are probably going to hear the word “continuity” many times over the next four days, but I feel that the noble Lord, Lord Lansley, has forfeited the right to use it. The clue is in the word “revisit”, which, by its nature, is not continuity but is proposing what he and we believe to be a beneficial discontinuity. It is quite clear that for the economy in this country and in other countries—as the noble Lord set out, this covers not just UK SMEs but SMEs in general, and certainly that is the wording in his amendment—economies and employment flourish where SMEs flourish. That is a good thing and we would ask the Minister whether this amendment is necessary for the future, to make sure that we do not fall foul of our own rules in terms of discriminating in favour of small and medium-sized companies.

I reiterate the fact that, as well as trade policy, commercial policy is central to this. The noble Lord, Lord Lansley, mentioned the government strategy: it is about how the Government choose to drive these policies home, through their commercial strategy and through the size of the packages they put out to bid, for example. We saw a recent example around the broadband structural bidding, in which it was quite clear that the overall size of the package militated against small and medium-sized companies bidding. That is nothing to do with trade policy, it is to do with the commercial policy of the Government at the time. So we support this with the proviso that the Minister comes back and says whether it actually achieves what the noble Lord, Lord Lansley, is hoping to achieve. I also enjoin all members of the Government to deliver the commercial part of the spirit of this amendment.

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

My Lords, both these amendments provide us with a useful opportunity for discussion on important areas of trade, but both are without a doubt, to my mind, without the Bill. If we approach them in this spirit I think we can accept them as a useful addition for the future. I support my noble friend Lord Lansley’s Amendment 5 and will concentrate upon it because there is always a lot of rhetoric about SMEs and the need to encourage and support them, particularly in this context of increasing and developing international trade and their trading opportunities, and especially in this brave new world that awaits us after Brexit. Therefore, to have a specific quota for procurement is a very good way of drawing attention to the needs of small businesses and to encourage them to come forward when the time comes. Because it is not just a question of legislation: with all trade, it is a question of getting people out and about in the countries where we hope that they will find trading opportunities.

When we talk about international trade, of course there is much more to it than that. There is the whole issue of language skills and specialised negotiating skills which, by their very nature, small and medium-sized businesses may not be able to cope with. They are not likely to have the specialised staff or even the budgets to deal with this. I think that for the future we can certainly build on this amendment and the intention behind it, but as I said at the outset, not in this Bill. I trust that my noble friend the Minister will be able to reassure us that these interventions are not wasted but will be of great use when we come to deal with individual trade Bills in the future.

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

My Lords, I support Amendment 4 in the name of my noble friend. I declare an interest as president of the Woodland Trust and as president or vice-president of a range of environmental organisations.

The noble Lord, Lord Fox, was absolutely right when he said that these would be the “continuity” four days. I will make that point shortly with regard to what we are trying to do with this amendment. It is important that we ensure that our joining of the GPA as an independent entity maintains all sorts of standards: employment and human rights equalities, SME targets, other government national priorities and, in particular, the environment. I therefore support Amendment 4 to enable conditions to be applied to tenders for services.

I will say more about the importance of maintaining environmental standards when we come to the group starting with Amendment 8. However, on Amendment 4 I will simply say that it is a very different thing to operate as one of the EU 28. It was pretty easy to have high environmental ambition when we were sailing as a pack, as it were. It will be very different when we are negotiating as an isolated country, either with the World Trade Organization or in bilateral agreements. I therefore do not believe that the Bill can be just about continuity, because continuity is not an option; in the future we will be operating in a very different environment in all our trade arrangements. It is important to ensure that standards—in my case, particularly environmental standards—are reinforced in all the trade mechanisms we are putting in place as part of a Brexit mechanism.

I therefore very much support Amendment 4 with regard to our changed membership of the GPA and subsequent tenders and contracts, which are an important part of that wider trade system that we are now entering into—which is not an issue of continuity.

Photo of Lord Livingston of Parkhead Lord Livingston of Parkhead Conservative

I echo the comments from my noble friends Lord Lansley and Lady Hooper, that of course the Bill, and in particular this part of it, is not about changing policy or procedure but about continuity. I think they are raising points to consider in future trade negotiations. On Amendment 5, it is important to recognise the more important part about SMEs rather than just SME procurement policy. I know that the Minister has done a lot of work in promoting SME trade around the world; the UK’s policy has been moving towards supporting SMEs, not just in UK procurement but around the world, taking them to see other Governments and incorporating them within the supply chains. The UK has already taken a lot of steps over a number of years. Indeed, in one of the negotiations the EU and the UK had on trade, we tried to incorporate an SME chapter to have more focus on understanding, across any business, that SMEs are important. It is important here, and it keeps on appearing as an issue.

It is fine for us to talk, as noble Lords have, about things we would like to see in future trade agreements with future countries in future ways. However—I know that the Minister will make the point again—we are replicating where we already are. It is right and appropriate to set up signposts for the future, and on SMEs, I am sure that the Minister will say how as a Government we have done a lot, and how we expect to do a lot more and be incorporated, not just within trade agreements but in trade support, and what we do in areas such as trade fairs and in leading many trade delegations. Indeed, a number of noble Lords do a great deal around the world to support UK SME trade, along with the trade department.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

My Lords, the noble Lord, Lord Livingston, has great experience in this regard, and I take note. I am grateful to the noble Lord, Lord Lansley, who has opened the floodgates to talking about the future. Part of the discussion about continuity is that none of these discussions which have been taking place over the last 18 months—I am sure that the Minister will correct me if I am wrong—will have been taken in a vacuum of considering what the UK’s position going forward may well be. Those countries that we have the agreements with have not been approached like that. The noble Lord and other Members of this House will have met many Members of Parliament, government officials and Ministers who do not simply look at continuity but look at what may well be the ethos in which their relationship will begin. Therefore, the line to draw is not an easy one, although I respect the noble Lord and I have great respect for the remarks of the noble Baroness, Lady Hooper.

I support the amendment and the amendment in the name of the noble Lord, Lord Lansley. One of my happiest moments as a Member of the Scottish Parliament was being credited with saving the kilt of the Royal Regiment of Scotland. Since Victorian times, Robert Noble—a tweed manufacturer in Peebles, as it then was—had had the contract to weave the cloth for the regiments of Scotland. However, this was under threat because a quirk of government procurement policy did not specify that the tartan had to be woven on the traditional Dobcross loom; instead, it could be printed cloth, which could be made anywhere in the world. The then Defence Secretary, the noble Lord, Lord Browne of Ladyton, was very supportive but I suspect, as was relayed to me, that the government U-turn on procurement policy was as a result of a word from the Palace that Her Majesty might not appreciate it if the colour ran from the tartan at the parade of the colour.

Essentially, government procurement—or local government procurement—is the lifeblood for the future of many small businesses, whether in weaving, which can be very high-tech, or in the dynamic industry that has been mentioned. Therefore, it is helpful to put on the record what the Government’s likely intentions are. As I have said before, and as we will no doubt talk about in the discussion on the next group of amendments, the Government have committed not only to carry over the GPA schedules but to revise them going forward; they have already said that in discussions with the WTO. It is appropriate that the noble Lord, Lord Lansley, is asking for that positive statement today.

Photo of Lord Risby Lord Risby Conservative 5:30 pm, 21st January 2019

My Lords, as one of the Prime Minister’s trade envoys and as a long-standing deputy chairman of the Small Business Bureau, I support the amendment put forward by my noble friend Lord Lansley. I salute my noble friend Lord Livingston’s efforts, who helped to transform our external commercial activities.

Highlighting the importance of the small business sector is key to what the department is now doing. That is a huge cultural change because, although our small and medium-sized businesses sector is vibrant, it has not been brought into the loop of trade promotion. Huge effort is being undertaken there. I mention that because, earlier in the debate, there was an implication of inaction in the department. I have seen for myself how utterly untrue that is. For example, you can see on the website how small and medium-sized businesses are being offered communication skills and efforts are being made to encourage them; a sophisticated system is being put into effect.

My noble friend talked about strategy. Simply, there has been something of an oversight as far as the sector is concerned, particularly in terms of trade promotion. What is happening now is definitely a considerable change. The amendment highlights the importance of the sector for the future of this country and its future dynamic economic activity, which I hope will happen post Brexit, and offers a framework for participation in procurement. I hope that the Minister will give some sort of encouragement or indication of whether this is at the forefront of her thinking and that of the department when she replies to the debate because I believe that an important message was relayed by my noble friend in his remarks.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Conservative

My Lords, I am a huge supporter of the small business sector and its growth. Indeed, some of the issues raised in Amendment 4, moved by the noble Lord, Lord Stevenson, are also important. However, like other noble Lords, I am not sure that they should be written into the Bill. I want to take this opportunity to ask the Minister a question, which she may prefer to answer in writing. Essentially, I want to pick up on the points about the importance of small businesses made by my noble friend Lord Livingston —who, as has been said, did so much as Trade Minister—and my noble friend Lord Risby.

My noble friend Lord Lansley is right that some countries try to discriminate in the procurement process in various ways. He rightly quoted the US Small Business Act. What can we do about that in policy terms? In particular, can we improve the process facing SMEs trying to win contracts either internationally or here in the UK? From my own experience, including a period serving on the Efficiency Board in the Cabinet Office, bidding rules are complex and vastly expensive—as a result, it is said, of European Union laws and requirements. Is work in hand to simplify our rules as we leave the EU to help SMEs win a bigger share of procurement, as I think we would all like?

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour

My Lords, I have been listening to the debate with great interest, but I am worried that the House may be making a technical mistake that could have wider implications. With the best intentions in mind, many noble Lords have spoken in favour of the suggestion to place quotas on companies to do with the beneficiaries of public procurement for the portion of the contract supplied by small businesses. It has been said that the small business share in defence procurement is much lower than it ought to be. The House should be very careful about that. It is probably not possible to increase that greatly; I speak as a former Defence Procurement Minister, as the House will know. If we send our young men and women into battle, we must give them the very best equipment money can buy. There can be no compromise on that. In my view, we cannot under any circumstances accept something second-best when the best is available.

Defence equipment generally involves a great deal of research and development; the products are often high-tech, modern and unique, designed to our specifications and not for anybody else, so there are not the economies of scale that are generated with substantial sales. That is a problem because most of the big defence contractors have an overwhelmingly large share in this country’s defence business. When I was the Defence Procurement Minister, the five big defence procurement suppliers included BAE Systems, Thales, Lockheed Martin—which is American, of course—and Boeing. They are large companies, some of which are supplied with components and parts by small businesses, to a considerable degree. However, some of them are not and, in practice, it is impossible to force them to do that.

We must buy the best, which is often very expensive. We cannot place such conditions on its procurement. Let me give an example. Of course, we spent billions of pounds buying the F-35, which is a wonderful aircraft. We buy it from Lockheed Martin; it is built and assembled in Fort Worth in northern Texas, close to Dallas. I have been there many times. The British share in its procurement project is considerable: about 15% is produced by BAE Systems, but that is not a very large company. One would have to look at the extent to which BAE Systems procures from small businesses. In the United States, to some extent—but, again, to a limited degree—Lockheed Martin buys goods, equipment, services or software from small companies, but they are American small companies so they do not help us to reach that particular kind of quota.

In some cases, like the Boeing contract for the Chinook helicopter—I once placed an order for 24 of them, so that was a very substantial contract—again the suppliers are largely American. It is not possible to insert British suppliers into the chain because they do not produce what is required for that particular aircraft. It was designed in America according to specifications set down by the American Department of Defense. I do not want to go into too much detail on this; rather I want to give the Committee an indication that it might be worth thinking carefully about these matters before defence procurement is automatically considered as being part of the desirable targets for increasing the share of the market for small businesses. I fear that almost certainly the only sensible solution would be to leave defence out of this altogether. I started off by mentioning the fact that life and death issues are involved, and we should not be imposing any additional constraints on our defence procurement.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

My Lords, we have discussed a number of elements of the GPA, but at its heart it opens up mutually a government procurement market among its parties. That has come about as the result of a number of rounds of negotiations. As I stated earlier, the parties to the GPA have now opened up procurement activities worth an estimated £1.3 trillion annually. This benefits UK businesses and the public sector, as well as our consumers.

Amendment 4, tabled by the noble Lord, Lord Stevenson of Balmacara, seeks to make provision for regulations to be made when implementing the UK’s accession to the GPA that would compel procurement entities which are part of Her Majesty’s Government to include various standards and obligations in their GPA-covered contracts. I understand the reasoning behind the amendment, but the Clause 1 power in the Bill is to implement our current accession to the GPA on the basis of our current commitments, rights and obligations. This is to ensure—I beg the leave of the noble Lord, Lord Fox, once again—continuity for UK businesses, public entities and our partners. We are not seeking to change any of the rights and obligations that procuring entities currently have, nor are we seeking to implement new or future changes to the procurement rules, which is what this amendment seems intended to do.

The Government have been clear that they will maintain the current levels of protection. Indeed, my right honourable friends the Prime Minister and the Secretaries of State at Defra and the DIT have made public commitments to this end. Section 8 of the withdrawal Act will bring all existing regulations into UK law, and our commitment to international standards remains unchanged. These standards include those on the environment through multilateral environmental agreements; labour rights through the International Labour Organization fundamental conventions; and human rights and equalities legislation. The noble Baroness, Lady Young of Old Scone, discussed some of these standards and I believe that we will consider them in more detail in the fifth group of amendments. I will say only that standards are important and that we are aiming to maintain them.

Procuring entities are able to apply their own additional measures of environmental, social and labour standards to contracts, and in fact they do so regularly. Membership of the GPA does not prevent standards being applied to contracts. The Public Contracts Regulations 2015 allow such standards to be applied where they are relevant, proportionate and consistent with the GPA; for example, a recent contract for the refurbishment of Quarry House, the home of the Department of Health and Social Care, included a requirement for sustainably sourced furniture.

There are other means available to the Government to achieve the effect that the noble Lord is seeking. The Chancellor of the Duchy of Lancaster announced in June that the Public Services (Social Value) Act 2012 will be extended in central government to ensure that all major procurement projects explicitly evaluate social value. We will require all departments to report on the social impact of major new procurements. We will train 4,000 commercial buyers on how to take account of social value. The Government are already able to issue public procurement notices which set out our policy on certain aspects of procurement, and these are binding on all government departments. I hope that the noble Lord will be reassured to hear that.

The UK has been a participant in the GPA since its inception in 1994. In the nearly 25 years since then, throughout Governments led by various parties, the UK’s procurement rules and regulations have allowed procuring entities to maintain choice in their contracts. I hope that the Committee will agree that public procurement notices provide the right balance between ensuring that government departments follow appropriate standards and enabling them some flexibility to exercise choice.

Finally, the restriction of this amendment to making provision relating only to GPA contracts risks having the effect that GPA contracts might be subject to different rules from other procurement contracts. That would not be the aim of this Government for two reasons. First, divergent procurement regimes would impose a considerable compliance burden on public bodies, with the attendant risk of legal challenge. Secondly, it may even be unlawful in so far as it could result in the differential treatment of suppliers from GPA countries versus suppliers from countries with which we have other international obligations and agreements.

Amendment 5, tabled by my noble friend Lord Lansley, seeks to add an additional clause to the Clause 1 powers which dictates that the Government must include a report making clear a strategy to ensure that one-third of public procurement contracts are won by small to medium-sized enterprises—SMEs. An appropriate authority would then be required to attempt to introduce exemptions to the UK’s market access offer in order to achieve the targets set out in that report. I have spent most of my career in business and I utterly appreciate the importance of SMEs to our country; they are without doubt the lifeblood of our economy. I also understand that the amendment seeks to ensure that public sector contracts are won by SMEs whenever possible and that we continue to support these enterprises to grow. However, as my noble friend Lady Neville-Rolfe said, we believe that this Bill and the GPA are not the way to achieve that.

I reassure the Committee that the GPA does not prevent SMEs winning UK public sector contracts, nor does it prevent public procurers from choosing to introduce measures to increase SME wins. Over the past seven years, the Government have implemented a wide range of measures to open up the way they do business to make sure that small companies, SMEs, charities and voluntary organisations are in the best possible position to compete for contracts. We know that there is still further work to do, which is why the Government have set a target of 33% of spend with SMEs by the end of this Parliament. The noble Lord, Lord Davies of Stamford, correctly highlighted the complexities in setting targets but, as I said earlier, I think that this debate will be helpful in producing valuable input and suggestions for how we should think about the future, if not in this Bill.

My noble friend Lord Lansley talked about his ideas and how we could implement them. My noble friend Lady Hooper talked about the skills that we will need in languages and so on, while my noble friend Lady Neville-Rolfe talked about enhancing the process. My noble friend Lord Livingston talked about recognising and engaging with SMEs. I take my hat off to him for all the work that he did when he was Trade Minister. I hope he knows that we are trying to put in place policies that will help SMEs. My noble friend Lord Risby does outstanding work as a trade envoy. He talked about other ways of looking at trying to enhance the attractiveness of opportunities for SMEs. Why is this continuity so important? I will reflect on those suggestions, and my door remains open for other suggestions but, going back to the comment by the noble Lord, Lord Fox, this is about continuity.

The GPA is a great benefit to SMEs in ensuring access to public procurement contracts. Since 1994 it has opened up legally guaranteed access to procurement contracts. The GPA operates in a spirit of co-operation and transparency, and the UK must maintain its current open offer in order for SMEs in the UK to continue to benefit from open markets abroad. Indeed, the Federation of Small Businesses has said it is essential that the UK is able to become an independent member of the GPA to allow small businesses continued access to government contracts and procurement opportunities. UK SMEs are competitive abroad and their goods and services, as I know at first hand—it is a real privilege to be able to represent and meet some of them—are in enormous demand globally. We wish to ensure that through the GPA they continue to enjoy legally guaranteed access to foreign procurement markets and that we can continue to help them grow. We continue to be committed to our one-third of spend on public procurement for SMEs by the end of this Parliament. I hope that this provides some reassurance to the Committee and the noble Lords who tabled the amendments, and I ask the noble Lord, Lord Stevenson, to withdraw his amendment.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords) 5:45 pm, 21st January 2019

I am grateful to the Minister for her comments. I think she summed up very accurately the sense in the debate that we have issues here that are worthy of further consideration and should be brought forward and considered, but in another place—and that they can inform and improve the quality of what we do more generally in terms of the Government adhering to high standards in the work they commission, but also that there is a role for SMEs in that which is embraced by the Government. She gave some evidence of work moving towards that.

I think all noble Lords who have contributed to this debate will get something from it—even my noble friend Lord Davies of Stamford, who counselled us not to get too carried away with the drift of trying to get everything included, particularly for SMEs in relation to the safety of our Armed Forces, who we count on to defend us and for whom only the best can do. The SME world would not necessarily accept that it is not performing at its best. It will have a role. I think the key was in something that the noble Lord, Lord Lansley, said: we need to be quite clear what we are talking about here. It is not main contracts.

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour

I want to be absolutely clear about something. I did not suggest for a moment that SMEs do not have a valuable part to play in defence procurement. I said simply that it may be impossible or expensive in terms of the risks for our soldiers and other servicemen and servicewomen if we insist on a particular quota of procurement from small businesses. We should first of all decide what is necessary to procure for our Armed Forces, then we should procure it. We should hope that as a result SMEs have as large a part as possible, and we should encourage the major contractors to have as large a number of small suppliers as possible, but we should not take any risks to meet some arbitrary quota.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

I fully accept what my noble friend has said, and I am sorry if I misrepresented him. I think he has the right point there. It picks up what I was going to say about the point made by the noble Lord, Lord Lansley, that contracting is often seen in terms of large contracts issued by central government to very large manufacturers, and of course it is not like that. The work of the BEIS department in setting up not only the industrial strategy itself but the way it will roll out to the smaller end of the market is a very important element of that. I am sure we all accept that there is a future there for a much broader engagement with big and small projects, but also for a wider range of activity where innovation, skills, flexibility of movement and the ability to adapt to new environments—such a hallmark of SMEs—are used and capitalised on for the benefit of our public good.

In a sense, it is good to hear from the Minister the progress in setting and achieving high standards in our procurement arrangements. The points that need to be brought forward are not just the range and need for these issues to be picked up in all our consideration of contracting; we must not be left behind if other countries are using the GPA, or indeed other measures, to achieve change in their environment and economies, and benefiting from it. We must not miss out on that; we need to have a strategy for it.

The points made about the SME end of the market, particularly in relation to making sure—

Photo of Lord Lansley Lord Lansley Conservative

I am sorry for interrupting. It might be helpful to say that one thing it would be useful for the Government to look at is that, other things being equal, we want other countries not to put down exceptions or engage in any discriminatory behaviour and to be as open as we can possibly make them. We should therefore at least look at what a number of other countries seek to do by putting down their own exemptions—such as the US, in relation to the Small Business Act—and from that arrive at an understanding of what position we will be in relative to them. The GPA should be very much about reciprocal openness of markets, rather than discriminatory behaviour.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

I absolutely agree with that.

My final point is to pick up on the SMEs and the need to consider them not so much as one amorphous group but to try to find ways of reaching out to them in terms of how they operate. I think there is a feeling abroad—it may not be correct—that the Government have a one-size-fits-all approach. That will not work when you are trying to look for innovation, change and the other points I mentioned. So, picking up the points made by the noble Lord, Lord Livingston, we should be very careful about how they can contribute and what will make them engage more than they currently do. The noble Baroness, Lady Neville-Rolfe, said we should make sure we have material help that is actually useful to them, rather than them having to fill in thousands of forms and go through impenetrable websites—I think we are all quite aware that that happens; indeed, we have had examples in this House. I think the point made by the noble Lord, Lord Risby, that there is so much there that can be done, was also well taken. It is an effort we all have to be engaged in if we are going to do it. With that, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Amendment 4A

Moved by Lord Purvis of Tweed

4A: Clause 1, page 2, line 13, at end insert—“( ) This section may not come into force until a Minister of the Crown has laid before each House of Parliament a statement on the ways in which the UK’s membership of the 1994 GPA would be affected if the House of Commons does not pass a resolution approving a withdrawal agreement and a framework for the future relationship for the purposes of section 13(1)(b) of the European Union (Withdrawal) Act 2018.”

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

My Lords, first, I apologise to the Committee that this amendment was tabled on Friday, so colleagues did not have much notice. In many respects it was as a result of the Minister being open and meeting opposition parties and the discussion we had. No doubt we will find out in due course how persuasive I was on my amendment in that private meeting.

The purpose of the amendment is to probe and to seek information. As I mentioned earlier in Committee, the statement by the WTO on 27 November was very clear that there was agreement in principle for the UK’s final market access offer to take part in the GPA after exiting the European Union. The noble Baroness, Lady Neville-Rolfe, mentioned that Australia has announced that ratification of its GPA accession is under way. I think this is the last group of amendments on the GPA, so before we leave it I hope the Minister might be able to expand a little on the point that she made in response earlier, which, if I took it right—she or Hansard can correct me—was that Parliament could decide whether countries could join. What procedure do the Government think Parliament will have to bind the Government in a position on other countries acceding to the WTO GPA once we become a full member? If I got that wrong, no doubt she will correct me; those in the Box can try to assist also.

The agreement was made on the basis of the UK and the EU agreeing a withdrawal agreement and would come into effect after the end of the implementation period. As I mentioned earlier, the UK committed to update its proposed GPA schedule of commitments within three months of it coming into effect. The GPA regular meeting to clarify all those points is scheduled for the end of February this year. My desire is to seek from the Government the latest position. The very significant defeat of the withdrawal agreement in the other place suggests that there has been dialogue with the WTO on the impact on the 27 November decision. I cannot see any situation where would not have been dialogue between our office in Geneva and our colleagues. It would be inconceivable if there had not been any follow-up discussions since the defeat in the House of Commons, so what are the implications for the UK of not entering into a withdrawal agreement? If there has been more recent discussion since 27 November or the position at the WTO has changed, I would be happy to receive that clarification and reassurance from the Minister, but if there is no deal, what are the implications for our membership? Also, what are the timings of the updated proposals for any schedules? Do they continue to be at all relevant?

The amendment is meant to be helpful, to allow the Government to give the Committee an update on the current position and clarify what our relationship with the GPA would be on the basis of there being no deal. On that basis, I hope that the Minister will be able to clarify and I beg to move.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade 6:00 pm, 21st January 2019

My Lords, Clause 1 allows for the implementation of the UK’s independent accession to the GPA in domestic procurement legislation. The power is simple and is limited in its scope. I thank the noble Lord, Lord Purvis of Tweed, for the amendment and I understand that he seeks, through Amendment 4A, to receive a statement from a Minister on the impact of a no-deal exit from the EU on the GPA. I hope that I can offer some reassurances to the Committee on the progress made towards the UK’s accession to the GPA as an independent member

On 27 November, the UK’s independent market access offer to the GPA was approved in principle by the WTO GPA committee. We are glad that our international partners supported the UK’s continued participation in the GPA as we leave the EU and we look forward to finalising the UK’s continued participation shortly. This was the culmination of a great deal of work from officials and my ministerial colleagues both in my department and across Whitehall. The UK is now nearing the end of its process of accession to the GPA, which will ensure our independent membership and continuity of participation.

Every effort is being made across all parties to find a solution for a withdrawal agreement, and agreed implementation will mean that the GPA will take a similar approach to other international agreements and continue our participation during this time under the EU schedules. We are committed to working to provide continuity across all our existing trade agreements. In the unlikely event that no withdrawal agreement can be agreed, the UK’s accession to the GPA will continue to progress as we leave the EU.

I hope that I have reassured the noble Lord, Lord Purvis of Tweed, that continuity of market access for UK businesses is very much the Government’s priority, and that he will feel able to withdraw his amendment.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

The Minister said that if there is no withdrawal agreement our accession will “continue to progress”. That means that we would not be a member. Is that correct?

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

Perhaps it would be helpful if I gave the process for GPA accession. Schedules are laid down and there is an agreement in principle, which has been achieved. Then an invitation is issued to join as an independent member. That is what we are waiting for. The CRaG process will then begin. Then the Foreign Secretary, subject to CRaG going through, will sign an instrument of accession and 30 days after that our accession will be effective.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

I am grateful to the Minister. For my simple understanding, if there is no agreement, what is our status with the GPA on 30 March?

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

We will have to progress and become as quickly as possible an independent member of the GPA. That process will need to progress.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

So it is clear that we would not be a party to it. We would just be in the process of trying to progress our application. I am grateful for that clarification—or do I have the wrong end of the stick?

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

The process will continue and it will be our aim to be an independent member by the time we leave. That is our aim.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

Well, no doubt that is the aim. I was not asking what the aim was, but what the reality would be on 30 March. If we are currently a member because we are in the European Union and we leave the European Union without any agreement, we are mid-process. Even if we have received the invitation to join, we would not be a member.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

Once we are given an invitation to join, our Foreign Secretary puts down an offer of accession, which has to go through the CRaG process in the normal way to make sure that that can take effect.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

I will not detain the Committee much longer but, from my understanding, it is clear that we will not be party to that agreement on the day after we leave if there is no deal. We would be in the process of seeking to join, and Parliament would have to approve that—and it may well happen. But, given the fact that the agreement is based on the principle that within three months of taking effect schedules would be updated, I am not entirely sure that that would be done immediately. That is of concern. If there is no deal, we would not be party to this very considerable agreement.

It is very important, if not today, for the Minister to give more information to the Committee about the implications of that for the many businesses who currently operate under the legal protection of that procurement agreement. In particular, what would that mean for agencies that are currently in mid-procurement or have signed procurement agreements with businesses? What is their status if we leave and we are not a party to the agreement? There are those with much greater legal knowledge than I have, but it is not reassuring in contract law to be outwith an international agreement despite the Government’s intention or aim to join it. That is simply not appropriate. If the Minister wishes to come back on that, I would be happy.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

Plan A is to have a withdrawal agreement. There is then an implementation period and after that there is obviously more time to be able to effect this. In the very unlikely event of there being no deal—and the noble Lord will be aware of what is happening in the other place and the activity there—the Government are still confident that this will be in place and that we can become an independent member of the GPA by the time we leave. That is our intention and there is confidence that that can be achieved.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

We have to put that into the category of all of the other aims that Dr Liam Fox has had with regard to the other agreements we will come to later in Committee. I am grateful to the Minister, but she did not refer to what procedures Parliament would have to veto the accession of other countries once we were out—but perhaps she would wish to write to me and other members of the Committee on that.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I apologise. I should have addressed that question. The Government have to approve the accession of new members to the GPA. The accession member will be reviewed by the ITC, and Parliament has the right to scrutinise the implementing legislation.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

I am grateful for that clarification. I need to refer to Hansard, however, because I thought the Minister said that Parliament could decide. But this is a probing amendment and we now have more information. It has perhaps raised more questions in my mind than answered them, but on the basis of that, I beg leave to withdraw the amendment.

Amendment 4A withdrawn.

Clause 1 agreed.

Amendment 5 not moved.

Clause 2: Implementation of international trade agreements

Amendment 6

Moved by Lord Stevenson of Balmacara

6: Clause 2, page 2, line 15, after “may” insert “following consultation with relevant stakeholders”

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

My Lords, this group of amendments plays back themes that we have already discussed in the first and second groups, so I will not spend much time on them.

Amendment 6 suggests that additional consultation with relevant stakeholders would make it easier to understand what the process is in the clause. Amendment 7 tries to pick up the point which was made in a number of committees of your Lordships’ House and was raised in the other place when this issue was discussed. It replaces “appropriate” in line 16 on page 2 with “necessary”, because it implies that it is not a judgment on a passive basis of what may be considered appropriate, which may be a variable, and it has a particular purpose. I hope the Minister will respond to that.

Amendment 11 again came from the Constitution Committee’s comment, although it has not been picked up elsewhere, that it would be helpful to insert a refining phrase into the documentation related to whether legislation that is retained EU law might be better defined. We touched on this already. There was a concession that, although it was not thought to be strictly necessary in an earlier phase, it was appropriate that that phrasing could be adopted. I wonder whether that will also be the case here. I look forward to hearing the debate. I beg to move.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

My Lords, I support these amendments. They make eminent sense. I shall speak also to Amendment 101 in this group which, in essence, suggests that in moving forward on these agreements the CRAG process is not the most appropriate; and that there is a better way forward by ensuring a more appropriate role for Parliament, and for Parliament to have greater knowledge of why an agreement should be approved. In many respects, this is now becoming fairly standard procedure in other countries, where the Government give much greater information to Parliament about why agreements should be ratified and where each House of Parliament has a greater role on the basis of scrutiny by committees. I am convinced that when it comes to complex, deep and comprehensive agreements, the CRAG process will be shown not to be the appropriate route, and we will need to decide another. This Bill is a very good basis from which to start on a more transparent and open process.

As I mentioned earlier in the debate on whether the House resolve itself into Committee, our agreements amount to 60% of UK trade and are therefore highly significant. The complexity of trade agreements now—they go far beyond simply a discussion of tariffs and the financial element, and have wider impacts on domestic policy, as the noble Lord, Lord Kerr, mentioned—means they require a different form of engagement with Parliament. It starts with information and with greater understanding of the consequences of these agreements. It will no longer be acceptable that agreements such as these can be made under traditional prerogative power for Parliament simply to approve without there being a more meaningful process. That is the intent behind the amendment. It is meant in a positive manner. I believe it is framed in a better way than CRAG, and I hope it will gain support.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade 6:15 pm, 21st January 2019

My Lords, as I repeated, the Government’s priority is to bring certainty to businesses and the public so that we will have continuity in our current trade and investment arrangements with non-EU markets after we have left the EU. Certainty is something for which we have heard widespread support in both Houses of Parliament, and not having the ability to implement our continuity agreements fully could jeopardise our ability to deliver it. Both the International Trade Select Committee and the Trade Bill Committee have heard from external witnesses that continuity is what businesses want. The report published by the International Trade Select Committee on 28 February 2018 clearly stated:

“Almost no one who contributed to our inquiry suggested that the Government’s policy objective of seeking continuity was the wrong one”.

Amendment 6, tabled by the noble Lord, Lord Stevenson of Balmacara, seeks to ensure that before we use the Clause 2 power to implement obligations of a continuity agreement, we have consulted appropriate stakeholders. While I believe I understand where the noble Lord is coming from, this amendment would have the practical impact of delaying our ability to use the Clause 2 power to implement obligations of any continuity agreement until we had satisfied this condition. This would be problematic to the delivery of our programme, as we are working at pace to ensure continuity in existing trade relationships. Once we have signed continuity agreements with our existing partners, we need to ensure that we have implemented all obligations of these agreements to guard against a cliff edge as we leave the EU. This needs to happen before we can bring these agreements into force, which is what will deliver continuity on the ground to businesses which are already benefitting from the terms of EU trade agreements.

We are seeking to balance the need to maintain pace with providing appropriate scrutiny and oversight. That is why, in the other place, we upgraded the operation of the Clause 2 power by requiring a report on each agreement to be laid before both Houses and an affirmative resolution to provide the additional scrutiny that colleagues in the other place were seeking. This means that Members of both Houses will already have the opportunity to consider each use of the power fully through the established affirmative resolution procedure. As I have already mentioned, the power is subject to constraint and will not be used to implement changes other than those necessary to secure continuity in our existing trade relationships.

Amendment 7, tabled by the noble Lord, Lord Stevenson of Balmacara, would mean that instead of using the Clause 2 power to implement “appropriate” changes to domestic regulation, it would be used to implement only “necessary” changes to domestic regulations. Again, I have sympathy with the noble Lord on this point. We are clear that we are going to use this power only to implement changes which are essential to deliver continuity. I understand where he is coming from with his suggested change to the Bill, but we have chosen to use the term “appropriate” following serious consideration of how best to reflect our policy in legislation. We have previously sought advice on this point, and the conclusion of that advice was that “appropriate” is the term which best fits the policy intention. This is because to use the term “necessary” would restrict the use of this power too much. As noble Lords know, our policy aim is to deliver continuity of effect of our agreements. To deliver this, we may need to have some tolerance for changes which may arguably not be strictly necessary but will nevertheless help us to deliver on our commitment of continuity and ensure legal certainty for UK businesses.

Limiting the power to only changes which were strictly necessary would set a very high bar and greatly increase the risk of legal challenge to the use of the power. It is one thing to justify a change as appropriate in all circumstances; it is quite another to demonstrate that that change was absolutely necessary. I am advised that this could provide a field day for lawyers and result in delays to continuity.

An example of a change that we will need to make through this power is ensuring continuity in our procurement arrangements in our free trade agreements. We will need to change the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016 to refer to our UK agreements instead of the EU agreements that they are based on. If we were to amend the wording of this power to say that changes needed to be necessary, we could be drawn into court challenges on whether a change was strictly necessary, thus leading to delays in implementation, which would leave a gap in continuity.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

I thank the noble Baroness for giving way. We are in the territory of “may” and “must”, trying to decide whether we are drafting as we speak. I just want to ask her to calm down a bit, although that sounds a terrible thing to say. She has used the term “absolutely necessary”. I never said “absolutely”; the amendment just says “necessary”. Adding “absolutely necessary” would make things difficult. Therefore, it is not a case of changes being absolutely necessary—it is not essential that we do these things. I accept the point but will she accept that she is slightly overegging the case?

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

It was necessary for the noble Lord to ask about the word “absolutely”, but I object to being asked to calm down. I was trying to give your Lordships the clear advice that we have had because I thought that that was the advice and information they were seeking.

Given that any use of this Clause 2 power will already be subject to the affirmative resolution procedure, and given that we will lay the reports and our continuity free trade agreements will again be ratified by Parliament, Parliament will be fully appraised of the Government’s actions. I hope your Lordships will accept that that means that it will in fact already be fairly difficult for the Government to use the Clause 2 power without Parliament’s consent in one way or another.

I turn to Amendment 11. Clause 2 helps to facilitate a smooth transition by helping to implement the non-tariff obligations of continuity trade agreements. We realise that there are concerns about this power, so we have sought to constrain it as much as possible, and this has a number of parts. First, the power can be used to amend only UK primary legislation that is retained EU law and not any other UK legislation. Secondly, it is valid for only three years, and its lifetime can be extended only with agreement from both Houses of Parliament. We would seek to extend the powers only if it were considered necessary to ensure that our continuity agreements remained operable over time. Thirdly, the use of the power is subject to the affirmative resolution. Fourthly, the power will be used only in relation to continuity trade agreements, as we have made clear in the Explanatory Notes. Fifthly, to provide additional transparency for our programme as a whole, Clause 3 commits, in statute, the Government to providing reports on all continuity trade agreements, explaining our approach to delivering continuity in each case. In addition, I should make it clear to the Committee that regulations made under the Trade Bill will already comply with Section 7 of the European Union (Withdrawal) Act, so this part of the amendment is unnecessary.

On Amendment 101, tabled by the noble Lord, Lord Purvis of Tweed, I assure the Committee that our existing trade agreements have already been examined by Parliament as part of its regular scrutiny of EU business. Ratified free trade agreements have already been through the normal parliamentary scrutiny process for treaty ratification. Our continuity agreements will also go through the CRaG process. The noble Lord raised some concerns about that but it gives parliamentarians an opportunity to challenge them in the established manner. Any regulations made under the Clause 2 power will be introduced under the affirmative resolution, which will provide an opportunity for lengthy examination if we need to make a change to the law.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

No doubt this will be a point that we hear about again. That is obviously the case in relation to the existing agreements but those agreements have been through a democratic process in the European Parliament with British representation. British parliamentarians in the European Parliament were involved in setting the mandate and involved in the committees that scrutinised them in detail in advance of, and during, the negotiation process. The Government are proposing that, even starting with these continuity agreements, there will be no role at all and they are signalling that that is a satisfactory way forward. I do not think that it is satisfactory to have a process in the future involving less scrutiny of trade agreements than British MEPs have been involved in and for which this Parliament has subsequently been part of the ratification process.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

It is important to separate the two. Essentially we are trying to replicate the existing trade agreements, which have already been subject to all the elements of scrutiny to which the noble Lord refers. However, the Bill does not cover future trade agreements, and we will have an opportunity to discuss the appropriate parliamentary scrutiny procedure for those. I have already said on the Floor of the House that I am happy to take all views. The ITC has made its suggestions and the Constitution Committee is looking at treaties. As the noble Baroness, Lady Young of Old Scone, mentioned earlier, their recommendations will be taken into account and we will come back with proposals. This is about replicating the effects of the existing continuity agreements from which our businesses already benefit.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

I am grateful for the Minister’s indulgence. I was also referring to existing agreements. For example, the only one so far that the Government have announced, with Switzerland, has accompanying it a free movement of people agreement, with Chapter 4 and Article 23 guaranteeing the right of movement of Swiss nationals for three months a year without any visa checks and so on. We would have no such ability. The proposal is at odds with the immigration White Paper—it is at odds with what the Government are saying. It raises questions about whether this simply is a straightforward replication. Under the free movement of people agreement, other elements have been discontinued in the existing arrangements and some elements are being continued. It is simply not good enough for the Government to state that these continuity agreements are a like-for-like cut and paste job, which is what the Government used to say. We now know that they are complex. We now know, for example—this was the case even with the Swiss agreement before December—that there are potential issues affecting other domestic law on immigration and migration which we would have no ability to scrutinise properly and separately if we used the CRaG process.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

I simply say to the noble Lord that we are trying to ensure as much continuity as we possibly can. I hope that I did not say that these agreements would be easy; I said that some technical issues would need to be resolved. That is why the Government have committed to lay before the House detailed reports that talk about the changes and the impact of those changes. Both Houses of Parliament will have the ability to review them and they will be subject to the affirmative procedure. I do not stand before the Committee saying that this is all easy. It is complicated, but the Government have committed to laying these reports, with all the detail, before both Houses so that they have a chance to review the agreements.

Photo of Lord Kerr of Kinlochard Lord Kerr of Kinlochard Crossbench

I have a degree of sympathy with the amendment proposed by the noble Lord, Lord Purvis of Tweed. I am grateful to the Minister for the meeting she had with me last week. I was encouraged by what she said then and by what she has said here today about an answer being given to the Constitution Committee—I think she said tomorrow. That seems to be good news.

The point made by the noble Lord, Lord Purvis of Tweed, relates to an aspect of a wider question; it is an important aspect, but the wider question will have to be addressed before we reach Report. It is an important element in the amendment to the Motion which was carried by the House. I look forward to hearing what has been said to the Constitution Committee; I imagine that it is fairly general and that, on points like the one we are discussing now, we would be looking for something more particular from the Government before Report.

I would like to make a personal point: I hope the Government will not approach the question of to what extent parliamentary scrutiny should be allowed and what sort of procedures would be right— super-affirmative procedures, says the noble Lord, Lord Purvis of Tweed, and I agree with him—too restrictively. I spent my youth in Whitehall. I do not think this is a zero-sum game, where giving the legislature more of a say is damaging to the Executive; it is not like that. I spent quite a lot of time negotiating with Americans. The favourite American argument, when one has defeated them on the substance, is to say, “I hear you, I understand you, but Congress would never buy it”. Having, and being known to have, a thorough legislative scrutiny procedure is an extra card in the Government’s hand and quite a useful one. I suggest that, as the Government make up their mind on these matters before Report, Ministers should encourage officials not to be too cautious and restrictive.

Photo of Lord Lansley Lord Lansley Conservative 6:30 pm, 21st January 2019

I would like to say a brief word on this group of amendments. On the latter point made by the noble Lord, Lord Kerr, I entirely agree. He is quite right about the use of, as it were, the scrutiny reserve in negotiations. It is important to have it available. But in these negotiations, of course, one is negotiating to bring in what are effectively new provisions in new agreements. The question is: what is required in relation to existing agreements?

On Amendment 101, I am a bit confused because it refers specifically to free trade agreements and to those which come under Clause 2(3). It seems that we are talking not only about free trade agreements, but about international trade agreements arising under Clauses 2(2) and 2(3). The noble Lord, Lord Purvis of Tweed, might be looking for something slightly wider than what he has put down in his amendment. We will leave that to one side for a moment. The point is this: in the Explanatory Notes, Ministers are quite clear that the intention is to bring existing agreements into effect through the Bill; we are working on that basis. However, there are circumstances in which the substance of an existing agreement, when it is converted into UK law, has to be amended to make it compliant with, or to enter it into, UK law. Paragraph 56 of the Explanatory Notes, for example, says:

“Although the Government’s policy intention is to ensure continuity as far as possible in the effects of the UK’s current trading arrangements, the new UK-partner country agreements that are implemented using”— if the small typo “of” is deleted—

“this power will be legally distinct from the original EU-partner country agreements on which they are based. It may also be necessary to substantively amend the text of the previous EU agreements … so that the new agreements can work in a UK legal context”.

The point of this paragraph is that trying to achieve the same effect does not necessarily mean that we will not have to amend the agreement; we may have to do that. We are getting ahead of ourselves. Surely the point is that what happens in those circumstances should be covered by Clause 3(3). A specific report must be laid before Parliament for that purpose.

I do not subscribe to the way in which the noble Lord, Lord Purvis, is proposing to go about this but, particularly when we come to talk about Clause 3, we might make sure that parliamentary scrutiny is applied to the differences between the provisions of the existing agreements and the agreement as it will be incorporated into UK law. That is the point we have to look at. Everything else, frankly, has been scrutinised in the way that the Minister made clear.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

My Lords, my noble friend Lord Lansley has made a suggestion which I will definitely reflect on, as it is important that these reports give appropriate information. With respect to making the Clause 2 powers super-affirmative, I am concerned that the amendment would damage our ability to deliver the promise of continuity, particularly when time is of the essence. That increases the risk of a cliff-edge. We are trying to offer reassurance by providing these reports; as I said, I will reflect on my noble friend’s comments.

My response to the noble Lord, Lord Kerr of Kinlochard, is that I too am thankful for the conversation we have had. It is exactly the kind of conversation that helps because, given his experience, it aids an informed debate. I want to clarify my response about what we will report back to the Constitution Committee: this will be specifically on the Trade Bill, not on the future. However, I have said on the Floor of the House that we are open to views and we will be coming back with detailed proposals. The noble Lord commented on different ways that one can get negotiating leverage. We are always looking for negotiating leverage; sometimes it is really effective and sometimes not so much. But I take his point that we should be thinking about all the things we can do to add to that.

We have already shared some views with regard to future trade agreements. I am open to hearing views from all Members around the House about what our approach should be. Given all the elements of oversight and scrutiny that we have put in place for these trade continuity agreements, I hope that I can reassure the House and would therefore ask the noble Lord to withdraw the amendment.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords)

My Lords, it has been a very good debate. Most of the interchange has been on the latter part, on Amendment 101, but we have made some interesting discoveries, there is food for thought, and the main points are very clear. With that, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendment 7 not moved.

House resumed.

Sitting suspended.