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Trade Bill - Committee (3rd Day) (continued)

– in the House of Lords at 8:44 pm on 30th January 2019.

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Amendment 37

Moved by Lord Marks of Henley-on-Thames

37: After Clause 5, insert the following new Clause—“Bilateral system of civil judicial cooperation(1) It shall be the objective of an appropriate authority to take all necessary steps to implement an international trade agreement which enables the United Kingdom, after exit day, to fully participate in a bilateral system of civil judicial co-operation for the purposes of facilitating trade between the United Kingdom and the European Union. (2) A bilateral system of civil judicial co-operation under subsection (1) shall include agreed conditions on—(a) jurisdiction, including applicable law and choice of jurisdiction; and(b) bilateral enforcement and recognition of judgments.”

Photo of Lord Marks of Henley-on-Thames Lord Marks of Henley-on-Thames Liberal Democrat Lords Spokesperson (Justice)

My Lords, Amendment 37 in my name and that of the noble Lord, Lord McNicol of West Kilbride, would make it the objective of an appropriate authority to secure a bilateral system of civil judicial co-operation between the UK and the European Union, to include arrangements for the choice of jurisdiction, the choice of law and the bilateral enforcement and recognition of judgments.

The amendment is relevant to the Bill in at least three ways: first, to new free trade agreements with third countries that currently enjoy FTAs with the EU, and therefore with us through the EU; secondly, to bilateral FTAs with third countries that might enter such agreements with us in the expectation of further trade through the UK with the EU member states; and, thirdly, in the event of no deal, when, as the noble Lord, Lord Hannay, pointed out earlier, the Bill—which will then be an Act—after exit day will be the only legislation bearing upon the arrangement of future FTAs.

In moving the amendment, we have every reason to believe that we are pushing at an open door. In debate after debate since the 2016 referendum, mine has been just one of many voices arguing that if we leave the EU we must maintain the whole gamut of the arrangements for cross-border judicial co-operation that we presently enjoy as a member of the EU. Every time, the Government have responded that they recognise and will maintain the benefits of these arrangements for the United Kingdom. Only yesterday we considered SIs laid by the Government on this topic. The noble and learned Lord, Lord Keen, was very clear that the SIs were laid only against the undesirable possibility of a no-deal Brexit, and accepted that should that occur we would be losing a significant benefit; I refer to columns GC 231 and GC 233 in yesterday’s Hansard. We would be forced to fall back on less effective, more costly, extremely inconvenient and altogether inferior alternative arrangements.

Whatever outcome emerges from the current impasse, we should do all we can to replicate all the arrangements for civil and commercial cases that we currently enjoy. These stem largely from the Brussels regime and its provision for the determination of jurisdiction and for the mutual recognition and enforcement of judgments. The Brussels regime principally comprises the Brussels Ia EU regulation and is supplemented by the 2007 Lugano Convention, which provides similar arrangements for Norway, Switzerland, Iceland and Denmark. Choice of law in contract cases, which make up the vast bulk of commercial litigation, is governed largely by the Rome I regulation, and Rome I applies throughout the EU except in Denmark, which has an opt-out for judicial co-operation.

If we failed to replicate the arrangements of the Brussels regime, what we would lose is well summed up in two bullet points in the Explanatory Memorandum to yesterday’s SI on civil jurisdiction and judgments. The first refers to,

“a system of uniform jurisdictional rules to identify the appropriate court in which to bring a civil or commercial claim”.

The second refers to,

“a simplified mechanism to recognise and enforce the judgments of EU Member State/EFTA state courts in civil and commercial cases, with a view to reducing costs for litigants and increasing efficiency. The possibility for such simplified and almost automatic treatment of the judgment of one such state in another is based on the ‘mutual trust’ that each state will have applied the uniform rules of jurisdiction”.

These arrangements have been built up over decades and British lawyers, jurists and judges have played a major part in their development. The European Judicial Network in civil and commercial matters, established in 2001 by the European Council, is an important forum for cross-border co-operation between courts across the EU. It seems to me that there is no significant reason why we should not be able to negotiate some continued access to the European Judicial Network after we leave the EU.

Throughout the European Union, citizens and businesses now know where cross-border disputes are to be determined. They know what law is to be applied. Crucially, they can be confident that court orders obtained in one member state will be recognised and enforced without fuss, delay or extra proceedings throughout the Union. This system has been of incalculable benefit not just to those who use our legal system but to our economy as a whole, because it is widely understood that all member states respect the arrangements and decisions of courts in other member states.

It often seems to me—I hope I can say this as a lawyer without special pleading—to be largely overlooked that our legal system has contributed significantly to Britain’s commercial success during the decades of our EU membership. One reason the United Kingdom has been so successful in attracting both inward investment from outside the EU and trade from elsewhere within the EU has been the fact we have not just excellent financial services and a sophisticated financial architecture—another plus is sometimes said to be political stability but I somehow doubt that at the moment—to add to the benefits of the English language and a convenient time zone, but a well-respected commercial legal system, one that functions without undue delays and at cost levels that are reasonably competitive in the international market, and which produces outcomes that are relatively predictable and generally accepted.

A very important component of that success is that our legal system functions internationally in supporting cross-border trade and international commerce. If we lose that, however frictionless we may make our trading arrangements, we will have compromised our future both as a destination for international investment, attracted to the United Kingdom as a gateway to the European Union, and as a trading partner for member states of the EU and the EEA. Put shortly, at a time of major upheaval, we will have needlessly thrown away a significant competitive advantage. That is something we cannot afford to do and it would be folly indeed. I beg to move.

Photo of Lord Bates Lord Bates The Minister of State, Department for International Development

I thank the noble Lord, Lord Marks, for moving this amendment and raising this very important issue. He is right to highlight the contribution which UK law has made to the commercial contract area and the success of trade and financial services.

We have long made clear our intention to negotiate a new relationship with the EU which covers civil judicial co-operation. The political declaration provides a positive means for discussion on this. It makes it clear that the UK and EU have agreed to explore a bilateral arrangement on matrimonial and parental responsibility and other related matters. This goes further than the arrangements that the EU currently has with any other third country to date.

The UK also remains committed to future co-operation on civil and commercial matters with the EU—recognising that this is in both our interests, for the reasons the noble Lord, Lord Marks, set out—and to similar co-operation with other international partners. In this area, the UK will, as a minimum, continue to prioritise joining Hague 2005 in our own right and seek also to accede to the Lugano Convention. The UK will engage with EU partners to ensure that these important issues, which provide vital protections for citizens, are the focus of detailed negotiations with the EU.

On the specific issues which the noble Lord referred to, co-operation in this area makes clear that the UK and EU have agreed to explore a bilateral arrangement on aspects of law. This goes further than any arrangements that the EU currently has with a third country. The UK also remains committed to international co-operation in future.

The noble Lord asked what would happen in the event of no deal. As a responsible Government, we are preparing for all outcomes, hence the statutory instruments debated in Grand Committee yesterday. We have published a dedicated technical notice for civil judicial co-operation, detailing how the rules would change in the event that we cannot reach a deal. This is not our preferred outcome—we remain focused on getting a deal that works for the UK and the EU. The rules on civil judicial co-operation rely on reciprocity. After exit, even if the UK were to apply these rules unilaterally, there would be no requirement on EU member states to apply the same rules in the UK. Without the guarantee of reciprocity, our broad approach is to repeal existing EU instruments and revert to applying the rules which the UK currently applies in relation to non-EU matters.

I am grateful to the noble Lord for raising this important matter, and I hope that I have provided as much reassurance as I am able to at this stage.

Photo of Lord Marks of Henley-on-Thames Lord Marks of Henley-on-Thames Liberal Democrat Lords Spokesperson (Justice)

My Lords, I am grateful to the Minister for his response, and I will be withdrawing the amendment, with your Lordships’ leave. The plain fact is that the arrangements the Government have in mind in the event of no deal are what I described yesterday as “thin gruel indeed” compared with what we have. They are inferior, bitty and involve a great deal of scope for satellite litigation where parties are having to litigate on issues such as enforcement and jurisdiction in different jurisdictions. This is so important because it highlights an area which has had far too little attention in the event of no deal. It is a significant danger for us—no deal will deprive us of the competitive advantage we enjoy as a member of the EU.

I share the Minister’s confidence that, in the event that we secure an agreement, we will also secure an agreement on judicial co-operation during a transitional period, because it is in the EU’s interests as well as ours. The danger is that people float into no deal by accident, and cost us everything involved in losing judicial co-operation. It is a significant feature that ought to weigh heavily in the minds of all the policymakers involved. With that warning, I beg leave to withdraw the amendment.

Amendment 37 withdrawn.

Amendment 38

Moved by Lord McNicol of West Kilbride

38: After Clause 5, insert the following new Clause—“UK participation in Common Transit ConventionIt shall be the objective of an appropriate authority to achieve before exit day the implementation of an international agreement to enable the United Kingdom to participate in the Common Transit Convention after exit day.”

Photo of Lord McNicol of West Kilbride Lord McNicol of West Kilbride Opposition Whip (Lords)

I rise to move Amendment 38, and thank the noble Baroness, Lady Randerson, for her support. This grouping includes many amendments along the same vein. Your Lordships will be pleased to know that I am not going to speak to each one individually, but I will address the common themes of this group of amendments, pulling out a few specific details. I am sure that a number of noble Lords will be speaking in more detail to their amendments within this group.

This group seeks the inclusion of new clauses after Clause 5 which will put on the face of the Bill a host of organisations, agreements and arrangements which are vital to the continuing smooth operation and functioning of life, organisations and businesses post Brexit. As I am sure the Minister is aware, many of these amendments have come from organisations, trade unions and businesses that are concerned about how they will be affected post Brexit and are seeking ways to mitigate any harm. Many of these amendments do not fully resolve the problem of Brexit, nor all the costs associated with leaving, but if the Government were to accept them it would offer a level of protection and certainty that is currently not there.

I turn to some of the specifics. It is rather nice to see Her Majesty’s Government listening to and acting on our amendments, specifically Amendment 38. I ask the Minister: is it correct, as stated on GOV.UK, that the UK will remain part of the common transit convention? Retaining membership of the CTC will reduce administrative burdens by removing the need for additional import/export declarations when transiting across multiple customs territories. It also provides cash-flow benefits by allowing the movement of goods across a custom territory without the payment of duties until the final destination.

Amendment 38, like so many other amendments in this group, expresses the belief that retaining membership or recognising mutual benefits of existing agreements is a good thing. If the Minister could helpfully accept all the other amendments in this group and add them to the Bill, we could move on rather swiftly. However, unfortunately, I do not think it will be quite that simple, so I will raise a few more points before passing on to others.

Amendment 39 deals with the mutual recognition of qualifications—again, a sensible approach to how we progress through Brexit. The amendment covers many vital roles: nurses, midwives, doctors, vets and architects, to name but a few. If we leave without a deal, no reciprocal recognition of professional qualifications or experience will exist between the UK and the remaining European Economic Area states.

While Her Majesty’s Government and the European Union are negotiating a withdrawal agreement, if a deal cannot be reached there will be significant implications for those who work in Europe and in the UK. To give noble Lords one example, UK-qualified architects who wish to be able to practise in the remaining EEA states after 29 March are being directed to contact the host state regulators of the country they wish to practise in to seek clarity on the respective states registration policies, now and post Brexit. If we were to remain in the mutual recognition of professional qualifications directives, it would not be necessary for individuals to contact host countries’ regulatory bodies. There would also be no need for any new system, such as the recognition of professional qualifications regulations. Could the Minister confirm whether there will be any meaningful differences between the RPQR and the MRPQ?

Amendment 40 is not dissimilar from Amendment 58 in the name of the noble Baroness, Lady Randerson. It simply calls on Her Majesty’s Government to take all necessary steps to implement an international trade agreement that allows us to provide for the continued rail service with Europe and cross-border between Northern Ireland and the Republic. In their Answer to a Written Question on 13 December 2018, the Government stated they would seek bilateral agreement regarding the operation of services through the Channel Tunnel after the UK leaves the EU. Could the Minister update us on those developments?

In further amendments, we explore the road haulage and passenger transport sector and ensuring the continuation of reciprocal agreements and access. Could the Minister clarify what advice has been given to coach firms that operate across Europe on the outcome of a no-deal Brexit?

Amendment 48 calls on the UK to remain in the tripartite agreement on the movement of horses between the UK, France and the Republic of Ireland. If the UK leaves the EU in March 2019 with no deal in place, the UK would be treated as a third country, and therefore any movement of equines to countries within the EU would be subject to EU third-country rules. Her Majesty’s Government were seeking discussions with the European Commission to allow the UK to become a listed third country on the day we leave, as with Australia and New Zealand. Will the Minister update us on those discussions as well?

My noble friend Lord Grantchester has unfortunately had to leave, but he was going to pick up the issue of, and seek clarification on, the pet travel scheme.

Amendment 70 is probably the most comprehensive with regard to the agencies, authorities and organisations that we believe the UK should retain membership of. The list will be well known to the Government, since it comes from the CBI. The first group of nine are bodies of which the CBI says it is essential to retain membership for their members’ benefit. The amendment goes on to list a second group of five bodies, membership of which, although not essential, would provide a smooth road toward regulatory compliance post Brexit. This amendment makes it an objective for an appropriate authority to take all necessary steps to implement an international trade agreement with the EU that would enable the UK to continue to participate in these various EU agencies and bodies.

The November 2018 Political Declaration setting out the Framework for the Future Relationship between the European Union and the United Kingdom stated that, although the parties would preserve regulatory autonomy, they would seek,

“to promote regulatory approaches that … promote avoidance of unnecessary barriers to trade in goods and are compatible to the extent possible”.

Accepting and including these bodies would do just that. With the CBI, TUC and many other organisations calling on the Government to act in such strong language, I hope that the Minister can oblige us, and I look forward to his response. I beg to move.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy) 9:00 pm, 30th January 2019

My Lords, I am grateful to the noble Lord, Lord McNicol of West Kilbride, for introducing this group. As he pointed out, there are 17 amendments that cover objectives for future free trade agreements. The noble Lord, Lord Hannay, is not in his place right now, and I would never disagree with him. He identified a different group of amendments as being the most important part of what we are debating, but, for many people and for the impact that this is going to have out there in the country, this group of amendments is the plumbing. They cover the day-to-day operations of life, so I consider this to be a most important group of amendments.

I am not going to speak to all 17 amendments, but I am going to speak to four of them, which means that, unfortunately, I will break my own rule of brevity, but I will try to be efficient in what I say. I am going to speak to Amendments 39, 43 and 44, to which my name is attached, as well as Amendment 69, to which my noble friend Lady Jolly added her name but is unable to attend.

Amendment 39 requires the UK to negotiate with the EU an international trade agreement that creates a system for the mutual recognition of professional qualifications, as the noble Lord, Lord McNicol, set out. It must be at least as exhaustive as our current system and allow people to work across borders, allow workers to demonstrate the necessary requirements where qualifications diverge, and provide for co-operation between regulators. The noble Lord, Lord McNicol, used the example of architects; looking at the other side of the coin, 20% of the architects in this country come from an EEA or Swiss background. That is just one profession—one activity. The Government have the stated aim of building 300,000 houses; they will not have enough architects if we are not successful with this activity.

Under the current mutual recognition arrangements, for doctors, nurses, vets, dentists, midwives, pharmacists and architects the recognition is automatic, providing that conditions on minimum training and professional experience are met. For others, there is a general system whereby regulators cannot ordinarily refuse applications to practise from other EEA or Swiss nationals in this country if they hold the qualifications required by their home state. Since 1997, the UK has recognised over 142,000 EU qualifications. This is a big job. Noble Lords should remind themselves that there will be a lot of work to do around this, including for lawyers, social workers and engineers. Over 27,000 decisions to recognise UK qualifications have been taken in the EU.

The political declaration states:

The Parties should also develop appropriate arrangements on those professional qualifications which are necessary to the pursuit of regulated professions, where in the Parties’ mutual interest”.

I suggest that replicating the system to be at least as good as the current one is in the interest of this party—the United Kingdom. On that basis, I hope that, as the noble Lord, Lord McNicol, said, we are pushing on an open door here. The four principles set out in this joint amendment are the same as the Government’s four priorities for a future mutual recognition regime. I hope that the Minister can confirm that that is the Government’s understanding; perhaps they can settle some nerves by putting this amendment in the Bill.

Clearly, a no-deal Brexit situation would make life much more difficult. A statutory instrument is running its way through the system; it has been published, but it is subject to the affirmative process and has yet to be debated in the House. I look forward to that; I say that because there are so many SIs, but I look forward to that process, because this is an important part of what we need to do.

The point made by the noble Lord, Lord McNicol, about UK workers working in the EU is equally as important and vital. Clearly, if we leave the European Union with no agreement, we cannot mandate what happens to all our professionals in the EU 27, EEA and Swiss territories. However, I urge the Government to explain what representations they will be making in the event of a no-deal Brexit to carry over the qualifications at the very least, and then, of course, to put in place a regime that works.

Amendment 43 requires the UK to seek to negotiate an international trade agreement with the EU that binds the UK to EU rules on open and fair competition. We have had some discussion around state aid in the debate on a previous amendment, so I will not repeat that. However, this also includes mergers and anti-trust behaviour. The political declaration states:

“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards, environmental standards, climate change, and relevant tax matters, building on the level playing field arrangements provided for in the Withdrawal Agreement”— clearly, now we do not know what that agreement will be—

“and commensurate with the overall economic relationship”.

We have had this discussion in a different context, but a binding undertaking that there will be no regression on standards is important to a lot of people in this House, and other noble Lords who are not here today have made this point with strong arguments.

On Amendment 44 and REACH, the noble Lord, Lord Hain, spoke about regulatory divergence; if there is ever an opportunity for regulatory divergence, it will be around the complexity of something like chemicals legislation. I will not go into huge detail about UK REACH, but this House needs to understand the scale and the scope of this activity. I have experienced it from a business side, and the commitment of European businesses in sitting on literally hundreds of sub-committees, debating and working through the nature of chemicals, how they should be used, and the associated risks, laws and regulations is absolutely huge. I can see looks of consternation.

REACH, as I am sure Ministers know, establishes a common framework of rights and obligations throughout the supply chain around chemicals ranging from chemical manufacturers, importers, distributors, formulators and end-users. It touches all of our lives, every day, practically all of the time. Chemicals are produced and put in the supply chain by upstream manufacturers, and there is a very detailed process by which they are regulated.

EU REACH became law in 2007, and the registration for existing chemicals was completed 11 years later. Every day, there are changes to the REACH legislation, and herein hangs the problem. The United Kingdom has stated in the withdrawal agreement, I believe, that we wish to remain in regulatory step with the European Union around REACH. But how do the Government, in the event that the United Kingdom is no longer part of the European Union, whether through agreement or through falling out without an agreement, envisage this process? Will we simply step back and take every rule that is coming from the EU 27 as the REACH legislation evolves? We will be unlikely to be invited in as equal partners to the REACH process by the European Union. The European Chemicals Agency, which is coming up in Amendment 70—my noble friend Lord Foster will be speaking to that amendment—clearly has a role to play. The United Kingdom’s role within that agency will also be important.

There is an SI which will be inevitable in the event of a no-deal Brexit. This SI is flawed, and I have asked to see the Minister to discuss this particular issue directly. I obviously will not talk about it today.

Suffice to say, this seems like a niche subject—something that only wonks like me should care about—but I have to tell your Lordships that UK companies with a REACH registration will no longer be able to sell into the EEA unless the Government have sorted this out. Downstream users currently importing from the EEA will face new registrations in the UK—whether immediately or over a period of months and days is still not clear. The UK Health and Safety Executive will grandfather existing REACH registrations, but it will then require re-registration or something within a time period within the UK. Formally, the Government have set out that the UK would like to remain part of REACH. How will that be possible?

Finally, turning to Amendment 69, those of us who had the pleasure of taking part in debates on the Nuclear Safeguards Bill will be aware of this particular issue, which is the European Observatory on the Supply of Medical Radioisotopes. I will not go into huge detail here, except to say that this is a vital organisation of which the United Kingdom must remain a member. Again, what will be the mechanics of this? In England, half a million medical scans are performed annually using imported radioisotopes. More than 10,000 patients across the UK have their cancers directly treated by these materials each year. Radioisotopes are also used to diagnose coronary heart disease and for biochemical analysis of blood, serum, urine, hormones and antigens. And of course they also have a scientific and a research use as well. Our research community is worried about this, as is the medical community.

We import 80% of our radioisotopes, in particular from specialist labs in the Netherlands, Belgium and France. There is also a supplier in South Africa, but not to the extent of our European suppliers. They are unstable. I shall not go into the chemistry—my degree has long expired—but these things do not last for ever. You do not buy them and keep them; they fall away. There are fewer than 10 supply reactors worldwide to provide 90% of the world’s supply.

The observatory’s role is to look across, manage and help the United Kingdom to manage its supply chain and ensure that we do not run short of those vital components to everyday help. Clearly, in the long term, we could build our own reactors, but that is not a short-term response.

The Government have stated their aim that we should have UK participation in the European Observatory on the Supply of Medical Isotopes. Amendment 69 states:

“It shall be the objective of an appropriate authority to take all necessary steps to implement an international trade agreement which enables the United Kingdom, after exit day”— which could be a very short time away—

“to fully participate in the European Observatory on the Supply of Medical Radioisotopes.”

How will that be achieved?

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 9:15 pm, 30th January 2019

My Lords, I shall speak to Amendment 63 in my name and those of the noble Lords, Lord Dykes and Lord Browne of Ladyton. I thank them for lending their support to the amendment, which relates not just to Amendment 39 but also, I would argue, Amendment 45—it is bizarre that they are not in the same group.

The amendment relates to lawyers in particular and the right to provide services, establish yourself in the legal profession and practise. I am a currently non-practising Scottish advocate but, as a young, recently qualified advocate, I went to Brussels to practise European law without having to take a separate qualification. I am greatly indebted, as I think are your Lordships, to the noble and learned Lord, Lord Keen of Elie, for moving the relevant statutory instrument, the Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019, which the House adopted. I shall quote him because I cannot put it better than him. He said:

“In the event of us exiting without any deal, there will be no reciprocal rights—which was one reason why, as I indicated, these regulations are required. They are necessary in order that we can establish a position in which all third-party country lawyers will be on the same standing in the absence of a free trade agreement or other agreement with a third-party country. There will be no reciprocity—that will be a matter for the relevant EU country to consider—but clearly it is a matter that we would wish to address in future negotiations consequent on our exit from the European Union. This is dealing with the position in the United Kingdom in light of the existing regulatory regime under EU law. Clearly, and quite patently, you could not address the question of how the EU 27 are going to treat our lawyers going forward”.—[Official Report, 15/1/19; col 177.]

What concerns me greatly is that the next generation of young, budding advocates will qualify on 30 March or 30 April and will be unable immediately to ply their trade, or to continue to ply their trade after 29 March, if we crash out of the European Union without a deal. I could not find it in Hansard, but I took a note of what your Lordships said. I would not like to attribute it to my noble and learned friend Lord Keen, but we learned when the regulations were passed that Ireland’s professional body has taken the opportunity to increase the cost of qualifying as an Irish lawyer to practise there from £300 to £3,000. That is quite an increase. I think we learned from the Liberal Democrat Benches that, in another EU member state, a rule was passed to prevent the sharing of an office or creating a partnership with a British or other third-country lawyer wishing to practise in that country.

We will have a two-tier system. Having passed the regulations, we have, quite rightly, granted those EU lawyers who currently practise here or are qualified and wish to continue to practise here rights to continue or enable them to do so. How can that possibly be? I ask that the Minister use her good offices to ensure that that position is not sustained beyond 29 March.

I entirely endorse what the noble Lord, Lord McNicol, from the Labour Benches said in moving Amendment 38, and I look forward to Amendment 45 on much the same lines. I hosted a meeting here of all the professions that are deeply concerned: architects, dentists, lawyers, nurses and so on. I remind your Lordships that the mutual recognition directive took 21 years to agree in the case of architects. That is not a position to which we would wish to return.

I had a meeting with the Irish Commissioner, Phil Hogan, who was kind enough to receive a group of us from the House of Commons when I was on the Select Committee there. I am currently a member of the all-party parliamentary racing group, and in that capacity and others I attend race meetings. I also had the privilege to represent Thirsk Racecourse, and trainers throughout Thirsk and Malton and the Vale of York, during that period. I am grateful that Amendment 48 is being discussed this evening. If the tripartite agreement existed in its own right before it became part of the arrangements of the European Union, would it not make sense if it reverted immediately to that—a backstop, if you like? Is that the Government’s intention? I see no benefit in taking the tripartite agreement forward as part as existing arrangements. It will get lost in the wash, as it has done this evening in this group of amendments—I have not counted how many of them there are. That would be a very neat way forward. I am sure it would get the agreement of the French and the Irish, and it would be very much in the interests of the business. I remember, when Ireland reduced the rate of VAT, the number of trainers and owners that left this country. Personally, it has been to my advantage because the cottage I live in when I am in North Yorkshire was vacated by a trainer, Sue Bramall, who I understand has had great success training in Ireland, but obviously it is to the UK’s detriment. I would hate to see that happen again here.

I was aghast when I heard the Minister say earlier that the Government sought to revisit Clause 6 on the European Medicines Agency. One of my outside appointments is to work with the Dispensing Doctors’ Association, whose headquarters is based in Kirkbymoorside in North Yorkshire. We are in this curious position where we are going to follow the falsified medicines directive unless we crash out with no deal. That is the only benefit I can see of crashing out with no deal. The GPs in Ireland have been deemed to be self-employed, so they are going to be exempt from the provisions of the falsified medicines directive. Why is there this dichotomy—that we do not wish to be part of the European Medicines Agency, but we do wish to be part of the falsified medicines directive? I would like a route to understanding. I would be very happy to accept a letter on why that should be.

I am not going to rehearse and itemise all the agencies in Amendment 70, but I would make a particular plea for the EASA, the European Food Standards Agency and European Environment Agency. As I have mentioned previously—I have not yet had satisfaction on this point—we should commit to remaining part of the European rapid alert system, on incidents of food hygiene and food poisoning. The need for this was never more apparent than during the 2010 Horsegate scenario. We were lucky that that was a case of food fraud, where horsemeat was passed off as beef. Whatever happens to Clause 6, I hope that the Minister will confirm this evening that we will remain part of the European rapid alert system for such incidents.

Photo of Lord Lansley Lord Lansley Conservative 9:30 pm, 30th January 2019

My Lords, I refer to Amendment 62 in my name, which is part of a series of amendments in this group concerning mutual recognition— mutual recognition of good manufacturing practice, in this instance. I was prompted to table the amendment not least because many people in the pharmaceutical industry see this issue as an important part of our future economic partnership arrangements with the European Union, whether we continue to be EU members or in the single market or not.

Like Amendment 42 on the mutual recognition of authorised economic operators, Amendment 62 relates to instances of where the European Union has substantial mutual recognition agreements with third-party countries. In the case of authorised economic operators, those countries include Switzerland, Japan, the United States and similar countries—although not China in the instance of good manufacturing practice. It would be deeply perverse for us to start with standards that align entirely with those of the European Union, whether on authorised economic operators or good manufacturing practice, looking at the two amendments. If we lost that relationship with the European Union, it would make obvious good sense to maintain that mutual recognition.

In that context, the amendments commend themselves to my noble friends on the Front Bench because they are about continuity and trying to maintain the existing structure of agreements. Of course we want mutual recognition of good manufacturing practice with not only the European Union but the United States, Japan and Switzerland because, if we leave the European Union, four of the five largest pharmaceutical companies will be outside the European Union, with two in Switzerland and two in the United Kingdom. This issue matters a great deal to this important industry. Unfortunately, given the uncertainty and the way in which the European Commission sent advice to companies on their responsibility to prepare as if there would be no deal, pharmaceutical companies have, of course, already invested a considerable amount in ensuring that their batch authorisations and conformity assessments—and the authorisations associated with those—can be conducted inside the EU 27. That has cost quite a lot of pharmaceutical companies quite a lot of money already.

The noble Lord, Lord Fox, was quite right: this group of amendments is about the plumbing, the innards, of this issue. I am afraid that day by day, evidence of the enormity of the cost—in time, energy and money—of trying to stay as close as we can to the position we would have been in if we had stayed in the European Union is mounting. It does not do to dwell on that but there we are.

Finally, I am really surprised that some of our Brexit-supporting colleagues are not here to laud Amendment 38—the lead amendment in the group— on the common transit convention, which will assist significantly with customs simplification and the achievement of some reduction in the friction that might otherwise occur in trade. It is achieved with third-party countries and is not something that the EU absolutely has to offer. However—although I stand to be corrected by my noble friends—as the noble Lord, Lord McNicol, has said, it appears to have been agreed not only that we would remain within the common transit convention after exit day but that we would continue to remain in it even if we were to leave without a deal. That is a positive development.

Associated with it is the new computerised transit system which will help us to try to make progress on some of the customs simplifications that, whatever happens, will be important to the reduction of business costs. I commend to my noble friends Amendment 62, which should certainly be an objective of the Government in their current discussions about the future relationship with the European Union.

Photo of Lord Risby Lord Risby Conservative

My Lords, I will speak to Amendment 48. I am a director of the Horserace Betting Levy Board as a government appointee, and a former Member of Parliament for Newmarket, which, after all, is historically the world headquarters of racing. Equine matters are very dear to my heart.

The situation we have, which is a tripartite deal, developed before the European Union became involved. There is some level of involvement on the part of the European Union and negotiations have been going on in Brussels between the British Horseracing Authority and the Commission. It is important to highlight this because the system has been in existence for many years and has been absolutely seamless. The relationship between the United Kingdom, France and Ireland has flourished. We can think of Irish horses winning in large numbers at Cheltenham, French successes at Ascot and Newmarket, and our own recent victories in the Prix de l’Arc de Triomphe.

The real key is this. The system of horse passports and documentation is managed in the United Kingdom by our highly respected industry bodies: Weatherbys, the Thoroughbred Breeders’ Association and the British Horseracing Authority, with the approval of Defra and the Animal and Plant Health Agency. It works extremely well and is therefore something that should be cherished. It is particularly important to the economy of the Republic of Ireland. People in the equine industry in Ireland are extremely anxious about this situation being damaged in any way.

As a result of the support over the years of our Governments for the equine industry, stretching right across party divides, it has turned into a great success story and is the best-managed and best-organised racing industry in the world. It contributes to the pleasure of millions of people who watch horseracing either at racecourses or on television. All our facilities have been upgraded and the industry should be supported.

I will refer to the comments made by my noble friend Lady McIntosh. If it were somehow possible to retrieve this from where it seems to have landed up and see it go back to its original tripartite status, which was actually free of the European Union, that would be excellent. However, the reality is that for whatever reason there has been a process of greater and greater involvement by the European Union; in which case, I will ask my noble friend two simple questions. What will happen during the transition period in this area of activity which is so important to us? What is our negotiating objective for the longer term as far as the work of the British Horseracing Authority with our own Government is concerned?

I conclude by expressing my admiration for many colleagues both in your Lordships’ House and in another place who have done so much work over the years to keep this industry up to the highest possible standards of governance and popularity. Finally, I will praise one particular individual. When the Single European Act came in and there was a change in the way that VAT was dealt with, we nearly lost the racing industry altogether. We had a huge fight, but it was saved by the former Chancellor of the Exchequer, my noble friend Lord Lamont. For anyone who is interested in and has a passion for racing, he of all people is someone to whom we owe a great deal.

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

My Lords, I start by craving the indulgence of the Committee and offering an apology for the fact that I missed the start of the speech of the noble Lord, Lord McNichol. I was racing back from Cardiff, but noble Lords will know that that involves the Great Western Railway. The train was only a few minutes late but that was the time I needed in order to hear the beginning of the noble Lord’s speech.

I have three amendments in this group, all designed to ensure that we try to keep the transport system running as normally and smoothly as possible after Brexit. I will start with Amendment 41, which relates to road haulage. We have heard the story many times about the dangers to our road haulage system. Indeed, last week the leaked Border Force document estimated that there could be a decline of up to 87% for three to six months after a no-deal Brexit if some arrangements were not put in place. We have had the preparation for the ECMT certificates that would have to come into place if we had no deal: roughly 1,200 certificates for a haulage industry that involves 30,000-plus hauliers. Clearly, this is totally inadequate. We have had the fiasco of the ferry-less ferry services to try to smooth the process.

We have talked many times in this House about Dover, but I want to say a word about Holyhead, the second-largest roll-on roll-off ferry port in Britain. Some 500 lorries per night go through Holyhead—that is three miles of queues, and the route to the port is through the town. In other words, any kind of queuing system caused by a no-deal Brexit would make it impossible for the town to function. I have had meetings with representatives of the Road Haulage Association, who have alarmed me with some information about the way in which the modern haulage industry works. They pointed out to me that an Amazon lorry can have 8,000 individual shipments on it, which—if we do not have arrangements in place—could lead to an individual customs declaration in each of those 8,000 cases. Each customs declaration has 36 different fields that have to be completed. They estimated that it would take 170 staff one day’s worth of work to deal with one lorry. We all know that Amazon will adapt, but it cannot adapt in two months.

There are numerous other cases and examples of the disruption that no deal would bring, so in this amendment I seek to ensure, in relation to road haulage, that we do not have no deal and keep the arrangements as close as possible to what we have now. We should bear in mind—I was told this by a representative of the freight industry—that it is in what it describes as a huge hole. They said, “The moment we do not apply the rules, we lose control of the border”. So it is no good for our Government to say that we will not do the checks and will take it on trust. The point the freight industry is making is that the moment we start taking things on trust, without the checks, we will have serious problems.

In Amendment 57 we move on to aviation. Many noble Lords will recall that last week the airlines came in for criticism because they had been selling tickets without drawing attention to the fact that, if there is no deal and we leave on 29 March without any arrangements, they felt that those tickets might not necessarily be honoured. That was the criticism and yet the Government have claimed that the aviation situation is arranged and organised.

The airlines have been remarkably silent. Of course, we are aware that they have signed non-disclosure agreements with the Government. I am fully aware that if you look closely at the terms and conditions for tickets sold for travel after 29 March you will find the required wording to ensure that passengers have been warned in legal terms about the situation. However, there has not been the publicity that one would like.

The EU has declared that although planes could and would continue to fly after a no-deal Brexit, it would be a limited permission for a limited period. That permission would extend only to the historic level of flights; in other words, no additional routes or services would be allowed. According to IATA, if we leave with no deal 5 million tickets would be cancelled this year. None of this is good for our aviation industry or our holiday plans—and certainly not good for our business community when a large percentage of business flights are included in those 5 million tickets. My amendment seeks to ensure that aviation will continue in the current manner.

On Amendment 58, I felt unable to add my name to Amendment 40 in the name of the noble Lord, Lord McNicol, because it was too narrow. It is okay as far as it goes but we need more. It refers to bilateral arrangements but we need reciprocal access across rail services, not necessarily only on a bilateral basis. The Government said that they want in the future to make bilateral arrangements with Ireland, the Netherlands, Belgium and France—our immediate neighbours. However, rail services currently stretch further than that. I realise that the issue of passenger services relates mainly to Eurostar and the Channel Tunnel, but Eurostar is planning to extend its services beyond those neighbouring countries and into Germany, for example. Freight transport has the North Sea to Mediterranean core network. That freight corridor goes well beyond our immediate neighbours.

In addition, we have to bear in mind that regulatory divergence is bad for manufacturers of trains, the equipment that goes into them and the rails on which they travel. We have a very big industry in that respect and it is extremely worried that our standards are not going to remain in tight alignment.

I believe that these three amendments should be considered seriously as a way of, at a minimum, continuing as far as possible with business as usual, avoiding the perils that we might fall into if we have a free-for-all in the future.

Photo of Viscount Trenchard Viscount Trenchard Conservative 9:45 pm, 30th January 2019

My Lords, the hour is late and a large number of amendments are being debated. I shall not touch on more than one or two. I was impressed by the mention by my noble friends Lady McIntosh and Lord Risby of Amendment 48, on the tripartite agreement. I declare an interest because my brother-in-law is a racehorse trainer near Newbury and he is worried that he will not be able to move his staff and horses round Ireland and France as is necessary for his business. I see no reason why this agreement should not be grandfathered through because it existed before the European Union was founded. I fear, as my noble friend Lord Risby also intimated, that the tentacles of the European state have already embraced Ireland and France to such an extent that they will not have the freedom unilaterally to decide to continue the agreement. I hope, though, that our United Kingdom will have such freedom after Brexit but perhaps we can find a way to preserve this tripartite agreement for the future.

It is clear that all of us would like as little disruption to current arrangements as possible, but most of these amendments should not be in this Bill. They have nothing whatever to do with its purpose. I simply wish to comment on Amendment 55, tabled by the noble Baroness, Lady Kramer, who has not, I believe, spoken to it. Does she not realise that the City of London has suffered from the imposition of several barriers to trade in financial services as a result of having been forced to implement some new European regulations in recent years, such as parts of MiFID II, AIFMD and others. One of the benefits of Brexit is that the City will be free to adopt proportionate and sensible regulation that will enhance its business in years to come.

Brexit also provides an opportunity for the UK to play an enhanced role in the development of proportionate regulation at the global level, balancing the need to protect the consumer and the environment against the requirement to provide an innovation-friendly environment that will enable us to abandon some of the more cumbersome and restrictive parts of the European regulatory regime to which we have become progressively shackled and which is, in places, more about harmonisation and protectionism than about the genuine protection of consumers.

I shall give one example. I have known the chief executive of a Japanese pharmaceutical company for more than 30 years. He told me that when Brexit came along he was not happy, but he has spent more than $8 million upgrading his European network and is now confident that he will be able to research, manufacture and distribute medicines in both the UK and EU27 after Brexit, just as he does now, on whatever basis we leave. He told me that now that he has spent the money, he would like to see the upside of Brexit. He says that the upside is that he expects us to return to what I believe is a more natural state for this country, in which we will have a less cumbersome regulatory regime that will be more helpful for a life sciences company such as his to innovate in new therapies, new drugs and new medicines. What worries me is that, although we are about to leave the European Union, we will, through this type of amendment, promise to continue to align entirely with EU regulation, which in places relies too much on the precautionary principle, and in that case there will be absolutely no upside to leaving. Therefore, we must have a balance here.

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

My Lords, perhaps it is sensible to come in right after the noble Viscount, Lord Trenchard, following that invitation. I will try to be brief.

Amendment 55 stands in my name. In the past two and a half years I have been shocked by how little attention has been paid to financial services and to what would happen to our access to the EU 27 in the field of financial services after any Brexit. I do not suppose that I have to rehearse for this Committee the significance of this industry. It accounts for something like 80% of GDP; it pays £76 billion a year in taxes, which support our National Health Service; and it has created 2 million jobs spread over the country. It is absolutely critical but has been very largely ignored. I make a plea to the Government that they should begin to get serious about financial services and understand their significance.

If I were to describe the industry in the UK, it basically breaks into thirds. Financial services range all the way from the smallest fintech companies, through insurance, asset management and banks, right up to the global sector of the London Stock Exchange and the London Clearing House. It is huge and varied, but roughly a third is domestic-facing and relatively untouched by Brexit.

About a third is intensely based on the industry’s EU 27 clientele. About half of that business has already gone or is in the process of leaving, and if anyone speaks to government on a day when they are being honest, basically they do not think that we have much chance of keeping much of that one-third in the UK over the medium term and certainly not over the long term.

We come to the final third, which is absolutely critical and where the decisions made in the coming weeks and months will have a great impact. I refer to the global piece, which one could think of in a way as being bigger than but represented by the London Stock Exchange and the London Clearing House. The future of that final global third has a real question mark hanging over it.

I say to the noble Viscount, Lord Trenchard, that London is a global centre partly due to its long-standing experience and partly due to good regulation, but critical to it is that it is the global financial centre for the euro—the second most significant global currency. That is what underpins London and its global role. Unfortunately, in all finance, where we know that risk exists, the ultimate protection and backstop in a time of risk is liquidity, and for all euro-denominated transactions that source of final liquidity is the European Central Bank. Therefore, from a European perspective, to be exposed to that level of risk, which is in euro trillions, with no ability to control the regulation, monitoring or supervision of a major global financial centre is really serious and significant.

I believe that fundamentally the Government have never looked at this issue from a European perspective and that they completely underestimate the medium and long-term interest in the European Union in pulling back much of that activity to an area where it can regulate, monitor and supervise because it carries the ultimate risk. Suggestions that have come from the City, which have been kicked around in government and in this House, have come largely from a very small Brexiteer think tank. I know the people well and have been to many of their meetings.

Photo of Viscount Trenchard Viscount Trenchard Conservative

I totally agree that the bulk of the settlement of euro-denominated transactions takes place in London but, in a similar way, London is the most important centre for the settlement of offshore dollar-denominated securities—or even renminbi, or yen. That is because London is the leading global financial market in the world. I have not seen any moves by the United States Fed or Japan’s FSA to try to repatriate London’s role in their currency securities.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy) 10:00 pm, 30th January 2019

I assure the noble Viscount that from the perspective of the dollar, far more of the transactions clear through New York. It is a bigger market. I know we often say that we are the largest, but if we look at the table comparisons, New York is frankly bigger. Certainly, dollar dominance is exercised through New York. The yen is less of a controversial player, and there are not a lot of renminbi. If anybody thinks that China is going to allow its currency to develop a real global presence and not be regulated, monitored and supervised by the Chinese state, they have missed any understanding of how China works. We are convenient but temporary, and we need to recognise that.

People talk about the growing market, but essentially the global markets function in the dollar, the euro and—in the future—the renminbi. They will not function in small African or South American currencies. Those are not players; they are minor currencies. Sterling is treated by the industry as a minor currency. There are two, and there will be three, major currencies that essentially underpin global activity. At the moment one is dominated by New York and the other by London—and the one dominated by London is the euro.

What worries me is that the think tanks that have been going through this process have an underlying conceit and arrogance, and imagine that somehow we are fundamentally and in the long-term superior, that no one else will have the capabilities that we have, and that in the end, Europe needs us more than we need Europe. But Europe works on a five to 10-year strategy to gradually bring back choice pieces of that industry—and we can see it.

I have a real question for the Minister in all this. The right-wing think tank came up with a solution called “mutual recognition”, which basically required the European Union to change how it made regulation and to change its legal framework completely. The think tank thought that was entirely reasonable. It was irrational, and has been abandoned. The Government have finally recognised that it was complete nonsense. There is now an idea that third-country equivalence could be the mechanism that will apply. However, we all know that third-country equivalence can be cancelled for no reason at 29 days’ notice. That is a very unstable way to provide access for a key industry.

Various attempts have been made, but little thought, effort, discussion or energy has gone into trying to find solutions. I am exceedingly worried about that. Looking at that global sector that I talked about, as I understand it, the European Union has provided an equivalence ruling for the London Clearing House for 12 months only. I am sure that it will extend the ruling beyond that—but it is a message. I understand that, as of this moment, no equivalence has been put in place for the London Stock Exchange. Again, that may come, and it may come very much at the last minute. But there is a deep message in all this. I make a real plea to the Government to take our amendment seriously and to recognise that they will have to get totally engaged and make some real compromises—I suspect around their own red lines. If they do not, they will be making absolutely sure that, over five to 10 years, significant parts of the industry will be sucked back into very capable hands in Frankfurt, Paris and Amsterdam.

This is not an instant crisis, although there may be some areas of instant crisis. But it is an area where the Government need to move now, and not lock themselves into a position from which they will see this industry, not perhaps disappear altogether, but lose its global leadership, when they could, with more intelligence and flexibility, have provided some degree of protection.

Photo of Baroness Hooper Baroness Hooper Conservative

My Lords, I apologise for being tail-end Charlie in this discussion—at least, I hope I am. I agree that this is a very important group of amendments. I shall concentrate particularly on Amendment 39 because that is the overarching amendment giving mutual recognition of qualifications, which has been so important for frictionless commercial activities and relationships throughout our membership of the European Union. I trust and hope that the mutual recognition and—dare I say it?—harmonisation to some extent of professional qualifications will be able to continue, to give the continuity to which my noble friend Lord Lansley referred, but also, for example, in the field of education, where university qualifications and degrees have been based on mutual recognition of qualifications and the ability to work in professional fields in more than one country.

My own interest in this is that as a solicitor I went to work in Paris in 1973, a year after we joined the European Community. Although I did not need a carte de travail—a work permit—at that stage, I still needed a carte de séjour, but that was progress. There have always been particular difficulties for the legal profession simply because of the difference between the common-law system and the civil law system. That has led to a different approach to our understanding of what we have been trying to do within the European Community throughout our membership.

I may not be up to speed on all the detail. There may have been discussions, and possibly solutions, about continuing the recognition of professional qualifications, but I am not aware of them. I am surprised that the Law Society, for example, has not provided any briefing in this respect—at least not to me. Still, I would like to hear what the Minister has to say about this. At the next stage of the Bill I would hope that we could be given more certainty about what may happen in future. I am curtailing my remarks because it is a late hour, but I feel that this would be so important, not only to British and Scottish lawyers—I look to my noble friend Lady McIntosh in this respect—but to all the European Union lawyers who have set up offices and are operating in London and other parts of the country, making our commercial activities ever more possible.

Perhaps, as a sort of PS, I might refer to Amendment 48 and the tripartite agreement. I am not sure how this applies to polo ponies. As your Lordships will know, I take a great interest in Latin America and Argentina. Polo ponies are not only from South America and the UK; they have passage rights within the EU. I do not think the tripartite agreement itself applies to polo ponies but I hope that any consideration of this element of the debate could include that important aspect.

Photo of Lord Foster of Bath Lord Foster of Bath Chair, Rural Economy Committee

My Lords, the noble Baroness, Lady Hooper, hoped that she was tail-end Charlie, and I apologise for depriving her of the appellation. In introducing this group of amendments, the noble Lord, Lord McNicol, described them as being about the smooth organisation of business post Brexit, while my noble friend Lord Fox described them as the necessary day-to-day plumbing of post-Brexit life. As we have heard, the amendments cover a wide range of issues, including mutual recognition, not least of qualifications, but also seeking a way to have the maximum continued relationship with many EU bodies, expert groups, agencies and so on. In that regard, Amendment 70 is perhaps the most comprehensive. I share the view of the noble Lord, Lord Lansley, that it is of mutual benefit to ourselves and the European Union if we can find ways of staying as close as possible to many of those bodies. If we fail to do so, there will be some serious difficulties. I believe we need to take positive steps, as is suggested in Amendment 70, for instance, to achieve that close working relationship. If we do not do that, I believe there will be very significant problems.

To illustrate that very briefly, I will touch on two of the bodies that are referred to in Amendment 70: the Body of European Regulators for Electronic CommunicationsBEREC—and the European Regulators Group for Audiovisual Media Services, or ERGA. It is worth remembering that the telecoms industry in this country has revenues of something like £40 billion a year and our broadcasting industry is probably one of the best in the world; both are critical to the UK’s economy and their success depends to a large extent on close co-operation with the EU 27 countries. That is because, in the case of the telecoms industry, for instance, many of the bodies regulated by our own regulator, Ofcom, are members of subsidiaries which operate in many of those other countries—Virgin Media, Vodafone, Three and Telefónica are very good examples. In broadcasting, we have our own domestic channels, but Ofcom also acts as host to something like 500 channels which are not shown in the UK, but are regulated here and shown in other countries. Therefore, it is very important that our regulator continues to work in a way that allows close alignment with the regulations that will apply across Europe. That means having close involvement with those two bodies, BEREC and ERGA.

As such, my questions for the Minister are about how that will be achieved. I suspect he will reject most of the amendments in this group but that he will say it is important to have close relationships, as the noble Lord, Lord Lansley, said. It is worth reflecting that in the other place, the Minister for Digital and the Creative Industries, Margot James, said that Ofcom intended to “seek observer status” within BEREC. As I pointed out on another occasion, that is no longer possible following changes to BEREC’s regulations in December last year. For us to have observer status in BEREC, it would now be necessary for a formal agreement to be made between the UK and the European Union. I am not entirely convinced that that will be easy under the current arrangements without very active steps being taken by the Government.

In Grand Committee last week, the Minister, the noble Lord, Lord Ashton of Hyde, said he was confident that Ofcom would be able to be part of BEREC. He said that during the transition period,

“the UK will no longer be a member state of the EU but, as is set out in the terms of the withdrawal agreement, common rules will remain in place. That is why we expect Ofcom to continue to participate in BEREC”.—[GC 96.]">Official Report, 23/1/19; col. GC 96.]

That is what they are expecting, yet it is in stark contrast to what the withdrawal agreement actually says. In Article 128, it says—I will paraphrase—that with only one caveat, we cannot participate in decision-making or even attend meetings of expert groups or similar entities. The caveat says—again, I paraphrase—that UK representatives or experts may, upon invitation, exceptionally attend meetings or parts of meetings of bodies such as BEREC or ERGA, provided that either the discussion concerns the UK or UK residents or,

“the presence of the United Kingdom is necessary and in the interest of the Union”.

The noble Lord, Lord Ashton of Hyde, saw this as a green light, and declared that there was “every reason” the EU would want Ofcom on these bodies because,

“Ofcom is one of the leading telecoms regulators in Europe—if not the leading one. The interchange between Ofcom and other European regulators has been extremely beneficial … There is every reason to think that they would wish to continue that”.—[Official Report, 23/1/19; col. GC 97.]

That is not an interpretation of Article 128 which any rational person can give. It actually says that we can be involved only in a small way, in exceptional circumstances and when it is necessary, so I do not read Article 128 as meaning that we will easily be able to participate in that particular organisation. The same case could be made for all the other organisations which the Government may wish for us to continue to have close relationships with. My question for the Minister is simple: does he agree with my interpretation, or with his noble friend during the debate in Grand Committee? If he agrees with my interpretation of Article 128, are the Government willing to take the positive steps referred to—for example, in Amendment 70—to achieve that close working relationship which is so important?

I have one other question for the Minister: does he also accept that we have an additional problem not referred to so far in these discussions, in relation to data adequacy? It will be necessary, as I understand it, for there to be a data adequacy agreement between the United Kingdom and the European Union before we will be able to participate in any way in the various bodies referred to in these amendments. Margot James said in the other place that in the event of an agreement, it would take two years. If it was a no-deal Brexit, it would take considerably longer. If that is the case, is it the Minister’s belief that we may have a huge gap between exit day and when we can even begin to have that close working relationship with the variety of groups referred to in these amendments, and which the noble Lord, Lord Lansley, and I believe is so important?

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords) 10:15 pm, 30th January 2019

My Lords, I have to say a few words because my noble friend Lord Grantchester, who would have spoken to a couple of amendments which have not been touched on, unfortunately is unable to be with us this evening as he has a family illness which he had to attend to. I am sure your Lordships will want to send best wishes to him.

The two amendments which have not been referred to are Amendments 47 and 49. One is on time-sensitive goods and the worries here concern the arrangements, particularly around the Channel Tunnel, for goods that are required for immediate delivery. The question underlying the amendment, which the noble Baroness, Lady Neville-Rolfe, also put her name to, was whether the Government had any further information about developments, since if the current arrangement is not going to work, other arrangements will need to be brought into place, as time-sensitive goods are what they say on the tin.

Other noble Lords have spoken about medical isotopes. On behalf of my noble friend Lord Grantchester, I wanted to mention the time-sensitivity of these, not only in the general sense but particularly with air travel, which is often used to transport them. We have experience of problems which have occurred, particularly in Northern Ireland, because the route for radioisotopes required in Northern Ireland is through Coventry Airport, and even under existing arrangements, we have had delays which caused problems for patients, including the cancellation of treatments. Again, any comments from the Minister would be helpful.

On Amendment 49, the pet travel scheme has raised interest among those who travel to Europe with pets, particularly dogs and ferrets, which are the two main groups carried. The existing scheme is thought not to be very effective, and there is a chance to revisit it when it collapses after Brexit. Are Ministers aware that the BVA has set out 16 recommendations on changes to pet travel rules after Brexit? Many of these are sensible and needed, and this would be an opportunity to give the Committee an update on where they are on this matter.

Photo of Lord Bates Lord Bates The Minister of State, Department for International Development

My Lords, I thank noble Lords who have taken part in this debate. The noble Lord, Lord Stevenson, referred to the pet travel scheme. The noble Lord, Lord McNicol, started the debate by talking about transport. The noble Lord, Lord Fox, referred to arrangements for UK-EU chemicals through REACH in particular. My noble friends Lady McIntosh and Lady Hooper talked about legal services. My noble friend Lord Risby talked about horseracing and the tripartite agreement. The noble Baroness, Lady Randerson, talked about transport. My noble friend Lord Lansley talked about authorised economic operators. My noble friend Lord Trenchard talked about horseracing and financial services. The noble Baroness, Lady Kramer, focused very much on financial services. The noble Lord, Lord Foster, talked about telecoms and broadcasting.

That is a flavour of the catch-all that we have here, with 17 amendments. I am looking at the representatives of the usual channels: I am not sure how the grouping of these amendments happened, but they cover a very wide range of agreements. We have heard 12 excellent speakers. They have ranged extensively and generated some 24 questions, to which it falls to me to respond. I am conscious of the time. I will bring my best endeavours to this, but I have the feeling that rather a lengthy letter will be winding its way to noble Lords.

Photo of Lord Bates Lord Bates The Minister of State, Department for International Development

Yes, of course. I will probably miraculously sit down sometime around 10.39 pm. I think that is the convention. Let me go through as much as I can. I apologise to Members of the Committee and to the reporters of our proceedings for the pace at which I am going.

The noble Lord, Lord McNicol, and my noble friend Lord Lansley referred to the common transit area. As my noble friend hinted, this is an area where we have some good news, because the UK has agreed the common transit convention with the secretariat. Letters were received on 19 December 2018. That is taking shape.

The noble Baroness, Lady Kramer, talked about financial services. The Government are seeking a close future relationship on financial services with the EU that reflects our uniquely integrated markets and respects UK and EU autonomy. The political declaration includes commitments to close and structured co-operation on regulatory and supervisory matters, grounded in the future economic partnership. There will be a certain Groundhog Day feeling to the answers to a lot of these questions, because I will simply say that they are a matter for the future economic relationship, which we hope will be deep and extensive across all these headings. Of course, that is for another piece, or other pieces, of legislation.

The noble Baroness, Lady Randerson, spoke to her amendments. On haulage, the Government have been clear that we want to maintain the existing levels of access for UK and EU hauliers. A mutually beneficial road freight agreement with the EU will support the objective of frictionless trade. I very much take the point that the noble Baroness made about us often talking about Dover in the context of roll-on, roll-off, but there is strategic importance, particularly on the island of Ireland, for Holyhead and movements through there. However, we understand that we need the reassurance that we will have in place the arrangements needed to maintain continued access. On that basis, we welcome the contingency proposals being made by the European Commission on the basis that the Government are seeking a very close partnership based on reciprocal and binding agreements that protect the rights of road hauliers to access EU markets and vice versa.

The noble Lord, Lord McNicol, also talked about rail services, which are mentioned in Amendment 40. The Government are carefully considering the potential implications of leaving the EU, including implications for the continuation of cross-border rail. The noble Lord, Lord Fox, also referred to this through the Channel Tunnel and on the island of Ireland. I assure noble Lords that we understand the importance of maintaining the continuity of these important cross-border rail services, and we will continue to negotiate with our European partners to secure the best possible outcome.

In addressing Amendment 43, the noble Lord, Lord Fox, talked about open and fair competition. The Government recognise that commitments to open and fair competition are fundamental to all trading relationships; continuing the control of anti-competitive subsidies and creating a UK-wide subsidy control framework are crucially important. To support the desire for a future relationship, we propose rule alignment on state aid to be enforced by the Competition and Markets Authority, which already has a strong reputation in the UK. We also have strong proposals in other areas, including non-regression provisions for the environment, social issues and employment to ensure that we maintain the highest of standards, as my noble friend Lord Lansley requested.

Turning to Amendment 62, my noble friend Lord Lansley and the noble Lord, Lord Stevenson, said that it raised important issues for the future relationship with the EU, by providing that the patients should not be disadvantaged. We have given commitments that patients should not be disadvantaged; industry should be able to get its products into the UK market as quickly as possible, and we continue to play a leading role in promoting public health. The Government have already set out their aim to secure participation in the European Medicines Agency. The political declaration sets out the mutual commitment of the UK and the EU to explore working together in future medicines regulation and negotiating the UK’s ongoing co-operation.

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

Will the Minister clarify what he said about seeking to participate in the European Medicines Agency? The noble Baroness, Lady Fairhead, in an earlier grouping, said it was the intention to remove Clause 6 from the Bill, or at least bring forward different language about what that participation means. It is pertinent to the point my noble friend Lord Fox made. If it is the Government’s intention to participate in many of these institutions, what do they envisage that participation mechanism to be? If the Government are seeking to change Clause 6, they have to be clear about how they intend that participation to operate.

Photo of Lord Bates Lord Bates The Minister of State, Department for International Development

My noble friend Lady Fairhead made very clear our hesitation in the other place when this amendment was proposed, but it is now in the Bill. We see the commitment to all necessary steps in relation to the European Medicines Agency. We have been very clear that we do not wish to see that extended to other agencies, but it is there in the Bill at present.

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

Just so that we know what might be coming on Report, is it the Government’s intention to bring forward amendments, as the noble Baroness, Lady Fairhead, said, to remove this?

Photo of Lord Bates Lord Bates The Minister of State, Department for International Development

Our position is simply that we are committed to as close a relationship as possible with the European Medicines Agency. We see its value, we are committed to it, and it is in the Bill. We have made our positions clear on that, in terms of how we would view it if similar amendments were proposed for other agencies.

Amendment 39, on mutual recognition of professional qualifications, was spoken to by my noble friends Lady Hooper and Lady McIntosh and by the noble Lords, Lord McNicol and Lord Fox. The Government have clearly set out their objectives for mutual recognition of professional qualifications in the future relationship with the EU. We recognise the importance of mutual recognition for many sectors of our economy and the public sector. It offers all individuals working in regulated professions a means of having their qualifications recognised so that they can continue to provide valuable services. However, Her Majesty’s Government must be in a position to negotiate the best possible outcome. I note the risk that this amendment could undermine that objective and compel Her Majesty’s Government to reject highly beneficial agreements on mutual recognition simply because an agreement delivered its possible outcome in a way that differed from the detailed requirement set out in this amendment.

The noble Lord, Lord Fox, asked what representations the UK will be making in the case of no deal to provide recognition of qualifications, which was the purpose of Amendment 39. The mutual recognition of professional qualifications directives will no longer apply in the event of leaving without a deal, which is of course why we want a deal. The UK will ensure that professionals arriving in the UK with EEA or Swiss qualifications after exit day will have means to seek recognition of their qualifications. The Government have prepared legislation to update the recognition of professional qualifications regulations. This will bring a new system into force for exit day. The UK has reached agreements with Ireland, Liechtenstein, Norway and Switzerland to address specific arrangements for the recognition of professional qualifications.

On Amendment 44 on REACH—the registration, evaluation, authorisation and restriction of chemicals—which the noble Lord, Lord Fox, addressed, the Government recognise the importance of the UK chemicals sector and its trade with the EU. We have set out our aim for a free trade area on goods, including chemicals, which will combine deep regulatory and customs co-operation with no tariffs or quotas. As such, the UK may choose to align with EU rules in relevant areas, including the REACH regulation. In this context, we will also continue to explore with the EU the possibility of co-operation between the UK and the European Chemicals Agency, which is an important part of that regime.

The noble Lord, Lord Foster of Bath, made an interesting point about the reputation of Ofcom, which of course we all recognise as a world-leading authority. He then offered me a pretty difficult choice of choosing between his persuasive speech and the words uttered in Committee by my colleague in government, my noble friend Lord Ashton of Hyde. Given that I speak from the Government Benches, I am afraid that I must side with my noble friend Lord Ashton in this regard. My noble friend wrote to the noble Lord on 29 January on the Electronic Communications and Wireless Telegraphy (Amendment etc.) (EU Exit) Regulations 2019 and placed a copy in the Library—perhaps the noble Lord has not had a chance to see that. However, I will relay the noble Lord’s comments in this debate to my noble friend to see whether he is able to respond to that.

The noble Baroness, Lady Kramer, talked about equivalence for financial services. We are aiming to build on the EU’s third-country equivalence regime.

On medical isotopes, which the noble Lord, Lord Stevenson, mentioned on behalf of the noble Lord, Lord Grantchester, and which my noble friend Lord Lansley referred to, the observatory is not a formal institution of which a country can become a member. It is rather a European Commission body which works with the medical nuclear industry to monitor supplies of such medical materials. UK and other member states do not have formal membership. None the less, I am pleased to confirm that the Government have committed to seek to continue UK co-operation and information sharing with the observatory as part of the future economic partnership. However, the exact capacity in which the UK continues to participate in the observatory is of course a matter for the future negotiation.

In addressing Amendment 63, on legal services, my noble friends Lady McIntosh and Lady Cooper drew from their experiences. The Government are committed to supporting the legal services sector to continue to grow. The Government are planning—

Photo of Lord Bates Lord Bates The Minister of State, Department for International Development

I reassure my noble friend the Chief Whip that I have no problem in keeping it going for as long as he indicates is necessary—such has been the quality of the debate.

I have had a note passed to me which might be important. On Amendment 39, on mutual recognition of professional qualifications, I may have said “Ireland” but I meant to say “Iceland”. I thank the officials for being so attentive.

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

The Ireland/Iceland point is actually very important. The noble Lord, Lord Hain, made a point earlier about cross-border activity—of midwives who live in the north of Ireland and practise in the Republic, for example—which is now in jeopardy. I am less excited about Iceland, with all due respect, given that the island of Ireland’s economy is driven on the ability to have the mutual recognition of all these skills. I enjoin the Government to work quickly on that one.

Photo of Lord Bates Lord Bates The Minister of State, Department for International Development

The Government are very happy to give that undertaking.

On legal services, raised by the noble Baronesses, Lady McIntosh and Lady Hooper, the outcome of the negotiations of course lies ahead of us, but I assure noble Lords that the Government will push very much for a strong relationship in this area. As EU and EFTA lawyers will be subject to domestic rules in the UK, UK lawyers in the EU and EFTA will be subject to the national rules and regulations of individual EU and EFTA member states, if the UK leaves the EU without a deal. This will vary between member states and within member states, where there will be multiple regulators.

The noble Baroness, Lady McIntosh, asked specifically about close participation in the European Medicines Agency. I think I have already dealt with that one and I do not want to tempt further interventions at this point. However, I am pleased that the Government have been clear that we want to remain part of the EMA, which will include remaining part of the falsified medicines directive.

Let me turn to horses—galloping into the final straight with Amendment 48. I am grateful to the noble Baroness, Lady Hooper, who spoke particularly about polo, and the noble Baroness, Lady McIntosh. I also thank the noble Lord, Lord Risby, who talked about his connections with Newmarket, and the noble Lord, Lord McNicol, who asked about this as well. Amendment 48 dealt with the tripartite agreement on the movement of horses. As part of our ongoing preparations for EU exit, the Government aim to ensure that the movement of horses will continue with minimal delay and bureaucracy, while safeguarding biosecurity and animal welfare. Let me reassure noble Lords that we are already working closely with the equine industry to retain the benefits of the tripartite agreement after the UK leaves the EU. The Government actively support a long-term industry-led proposal to allow horses of high health status from third countries to travel to the EU under the TPA arrangements.

I had a note on the pet travel service. As part of the ongoing preparations for EU exit, the Government aim to ensure that the movement of pets will continue with minimal inconvenience to pet owners while safeguarding the UK’s biosecurity and the welfare of travelling animals. We are already working closely with stakeholders in the veterinary and pet travel industries to ensure that the benefits of the EU pet travel scheme are retained after the UK leaves the EU. The Government will submit their application for listed status within the EU pet travel scheme imminently. The UK is seeking technical discussions with the European Commission on its application. Should the UK become a part 1 listed country, there would be little change to current pet travel arrangements. Only minor changes to documentation would be needed.

I hope that noble Lords will feel that in the time available I have dealt with as many issues as possible, and that the noble Lord will therefore consider withdrawing his amendment at this stage.

Photo of Lord McNicol of West Kilbride Lord McNicol of West Kilbride Opposition Whip (Lords)

I have a good 20-minute speech here—no, I am joking. I thank the Minister for his response and all noble Lords and Baronesses for their input to this rather large group of amendments. As I said in my introduction, there is widespread support not just across the House but outside, from organisations, businesses, trade unions and relevant bodies. My takeaway from nearly all the contributions is the mutual benefit that organisations and businesses inside the UK would get from the adoption and inclusion of the amendments. The other words which came from the Government Bench was that their adoption would lead to continuity—a word that has been used many times in the previous two days. With that, I beg leave to withdraw the amendment.

Amendment 38 withdrawn.

Amendments 39 to 44 not moved.

House resumed.

House adjourned at 10.42 pm.