Amendment 59

Trade Bill - Report (2nd Day) – in the House of Lords at 7:33 pm on 13th March 2019.

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Lord Lansley:

Moved by Lord Lansley

59: Schedule 4, page 19, line 27, at end insert “following a report from the International Trade Committee of the House of Commons

Photo of Lord Lansley Lord Lansley Conservative

My Lords, it is a pleasure to be the back-marker on Report. Amendment 59 inserts text into the schedule that sets up the process for appointments to the Trade Remedies Authority, so that the chair can be appointed by the Secretary of State,

“following a report from the International Trade Committee of the House of Commons”.

In effect, this includes the chair of the Trade Remedies Authority in the list of appointments that are subject to pre-appointment scrutiny.

I do not do this lightly. There are about 1,000 senior public appointments, only 50 of which are subject to pre-appointment hearings by Select Committees. The Cabinet Office guidance on this was amended then reissued in January. Paragraph 8 sets out three criteria, the first of which says that such appointments should be for,

“posts which play a key role in regulation of actions by Government”.

This clearly must be satisfied as it determines one of the essential roles of the Department for International Trade in investigating and recommending trade remedies. Secondly, the appointments must be,

“posts which play a key role in protecting and safeguarding the public’s rights and interests in relation to the actions and decisions of Government”.

This instance may not be about the public, but certainly it ticks the box for the business community, which would regard the TRA as one of the most important bodies impacting on its interests in relation to the actions of the Government. Thirdly, the guidance says that appointments subject to pre-appointment hearings must be,

“posts in organisations that have a major impact on public life or the lives of the public where it is vital for the reputation and credibility of that organisation that the post holder acts, and is seen to act, independently of Ministers and the Government”.

Noble Lords will recall that, at a much earlier stage, we debated whether this body should be independent. The Government, having looked around the world, decided that the Trade Remedies Authority should be independent, and seen to be independent. We have three ticks in the box. This is clearly an important appointment; for the Department for International Trade, it must be regarded as the most important appointment. I do not know of any other posts that it is presently asked to scrutinise prior to appointment. This seems a perfectly reasonable way to proceed; nor does it constrain Ministers too far, as we have discovered. Ministers have to consult and liaise with Select Committees, respond to them and take account of what they have said, but they do not have to do what a Select Committee says and in quite a number of instances have not done so. Ministers can still make the appointments that they consider to be the right ones. I do not feel that I am holding the Government back from doing what they need to do. I am just encouraging them to include this appointment in that list. I beg to move.

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

I support the noble Lord, Lord Lansley, and congratulate him on the succinctness with which he has made his point. I have been confused for some time as to why the department might resist this. He has made the points exactly as I would have done. This is a key role with a public-facing responsibility and will hold the Government to account on issues of great importance. Indeed, it is the only body that the DIT will have as a marker; it behoves the department to raise the TRA to the appropriate level so that it is seen to have the importance that the department claims for it. For these reasons, it is absolutely right that we have an established routine that the person selected by the Minister to be the chair of this body—we are not expecting the same to happen for the chief executive or more junior staff, just the chair—should be seen by the International Trade Committee. As he says, it is a courtesy in some senses because the Minister can still appoint should they wish to do so. I support the amendment.

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

My Lords, Amendment 60 is in my name and those of my noble friend Lord Kinnoull and the noble Baroness, Lady McIntosh of Pickering. I also support Amendment 59.

The UK needs a strong and independent Trade Remedies Authority with a balanced membership to investigate alleged dumping and subsidy cases and to recommend remedies. Schedule 4 to the Trade Bill defines the membership of the TRA and its governance. As I have said before, and as the noble Lord, Lord Lansley, emphasised in moving Amendment 59, while both Clause 10 and Schedule 4 make the independence of the TRA a clear objective, this does not sit entirely comfortably with the chair and the non-executives being appointed entirely at the discretion of the Secretary of State.

The governance model of the Office for Students in the Higher Education and Research Act 2017 seems to offer a good model for delivering both independence and balance, and this is the model that has been used in drafting this updated amendment. It would require the Secretary of State to have regard to the desirability of members having between them experience in a number of relevant areas, including UK manufacturing, trade unions, consumers, regional economic growth, regulatory systems and international trade disputes.

The Government have suggested that the TRA should be managed by trade remedies experts rather than by stakeholders with vested interests, in order to be independent. However, the chief executive designate has already told a Commons Select Committee that she is not a trade remedies expert. A properly balanced group of non-executive stakeholders, supported by expert executives, could be effective, independent and balanced. I look forward to hearing from the Minister how the Government will ensure the combination of independence and balanced and relevant expertise that this important body requires.

Photo of The Earl of Kinnoull The Earl of Kinnoull Crossbench

My Lords, Amendment 60 is also in my name. I too have problems with the TRA as currently constituted, in that arguably it lacks independence and balance. It is in looking for independence and balance that the amendment has evolved. Amendment 59 very much deals with the independence point, and on that basis I strongly support it.

In Committee, I said that independence is important, because the TRA needs to be seen to be not a mere cipher for the British state but something which has its own life. There is a problem when one looks at Schedule 4 and sees that the chair is appointed by the Secretary of State, as are all the non-executive directors. The Secretary of State gets the chance to approve the CEO. The non-executive directors will always be in the majority and the Secretary of State has the power to remove them. On top of that, paragraph 34 of Schedule 4, entitled “Guidance”, says that the TRA must have regard to the Secretary of State’s guidance, which seems to me to mean instructions. It seems to be wrongly titled. Therefore, I worry that the independence bit of my beef is not coped with sufficiently. I look forward to hearing something from the Minister to assuage my concerns.

Balance is incredibly important. This cannot be an effective body if there is no balance—balance of experience and background. The point is obvious. Nowhere in Schedule 4 do I see anything that gives rise to a feeling that there would be balance, but I look forward to being corrected on that point.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Conservative

My Lords, I rise simply to say that I do not particularly agree with Amendment 60. It is necessary to have expertise in the TRA. As I said on an earlier occasion, I am not convinced that having a completely separate authority is sensible. The European Union seems to do a very good job on trade negotiations. That, as I recall from my experience as a civil servant, a Minister and a businessperson, was done in-house. I ask the Minister to pause before agreeing to these amendments without thinking about them a little further.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade 7:45 pm, 13th March 2019

My Lords, I thank noble Lords for their continued engagement with the work to establish the Trade Remedies Authority. I trust that I am able to provide reassurance that we are taking proper steps to set up this important body in the right way.

I turn first to Amendment 59, tabled by my noble friend Lord Lansley and the noble Lord, Lord Stevenson of Balmacara. We listened carefully to the points made by them and other noble Lords in Committee about how best to ensure that the senior leadership is as independent as possible. This includes the appropriate role for the International Trade Committee. That is why I am pleased to announce that the Secretary of State is content for the International Trade Committee to conduct a pre-commencement hearing of the TRA chair. This hearing will take place after the Secretary of State has appointed the TRA chair, but before the chair has taken up their position. I further reassure the House that this offer of a pre-commencement hearing by the International Trade Committee will apply to all future TRA chairs, not just the first one. We hope that this will ensure that the ITC has the appropriate role in scrutinising any individual appointed to that position.

I turn now to Amendment 60, for which I thank the noble Baroness, Lady Brown of Cambridge, and the noble Earl, Lord Kinnoull. There are three key issues at hand that I would like to address. The first point is independence. Having had discussions with the noble Baroness and the noble Earl, I will say that independence really matters. We are committed to creating an independent TRA that all our stakeholders can trust and that will be seen as an independent body by third countries. We have taken clear steps to achieve this, including establishing it as a non-departmental public body in the first place, which is different from other organisations around the world, and giving it the appropriate separation from Ministers. We are ensuring that it has an independent board. That is why the Secretary of State will be required to follow the tried and tested Cabinet Office Governance Code on Public Appointments when appointing all non-executive TRA board members.

As this House will be aware, that code enshrines the independence of those members by explicitly stating:

“All public appointments should be governed by the principle of appointment on merit”.

TRA board members must be appointed based on their ability, not the stakeholder group or interest that they represent. The Commissioner for Public Appointments will regulate all non-executive appointments to the TRA, providing independent assurance that the Secretary of State follows the code’s strict rules on making such appointments based on merit and the public interest. While TRA non-executives may well have had experience representing certain stakeholders, we believe that that alone cannot be the reason why they are appointed. To do otherwise would jeopardise the true independence of the board, particularly as this is an investigative body.

The noble Baroness, Lady Brown, referred to the Higher Education and Research Act 2017. We do not feel that it is appropriate to draw parallels between the TRA and the Office for Students. The primary function of the Office for Students is to protect the interests of students, whereas the TRA has been set up to protect UK industry from unfair trading practices, which it will do by undertaking independent and impartial technical investigations into whether these practices have occurred. While this will ensure that manufacturers are protected against unfair trading practices, the TRA has not been set up specifically to protect the interests of those manufacturers or other groups.

The second point relates to skills and experience. I assure your Lordships that we are committed to making sure that the members are best placed to oversee this new function. That is why, when appointing the non-executive members of the TRA, the Secretary of State will have regard to ensuring that the board has the right balance of skills and range of experience. I will do more than pause, as requested by my noble friend Lady Neville-Rolfe. She has wide experience of sitting on boards in both the public and private world, and it is having that right balance and mix of skills and experiences that is most important. Moreover, this process does not happen behind closed doors. To ensure transparency, the requisite skills and experience for each non-executive appointment will be set out in individual TRA job descriptions that will be published in accordance with standard practice.

The noble Earl, Lord Kinnoull, raised a question about the TRA having regard to guidance, and we have included clear statutory restrictions on the Secretary of State’s ability to issue guidance to the TRA. That includes setting out specific circumstances in which the Secretary of State can publish guidance. For example, they cannot publish guidance in relation to a specific case. That is also why the Secretary of State must consult the TRA before publishing guidance, and explicitly have regard to its independence, impartiality and expertise.

These skills and experience requirements include, among others, strong and effective leadership, astute business awareness and an understanding of the complex domestic and international trading environment which the TRA will be operating in. However, we believe that specifying a detailed list of desired experience in statute risks restricting the Secretary of State’s ability to appoint individuals, and the chair and the board’s ability to appoint executives with other relevant experience not detailed here. It suggests that only those criteria listed in legislation are desirable, and may inadvertently displace others. That could create a problem if, in the future, a TRA non-executive was needed to fill a skills or experience gap not covered on the list.

On stakeholders, let me reassure the House that we understand the need to ensure that stakeholders’ interests are accounted for properly. We have also taken clear steps to ensure this. That is why the TRA chair’s job description, and terms and conditions, make clear that he or she will be expected to communicate with stakeholders and incorporate their perspectives into TRA board discussions where appropriate.

We specifically recognise the importance of the devolved Administrations in building the UK’s independent trade policy. That is why we have made several key commitments to ensure they, too, have an appropriate relationship with the TRA and DIT. These include sharing the TRA’s annual report with each devolved Administration, seeking suggestions for the optimal way to recruit TRA non-executives, and suggesting to the TRA chair that the board undergoes specific devolution-focused training. The Welsh Government of course have passed a supplementary legislative consent Motion in the Welsh Assembly, indicating their support for the TRA provisions in this Bill.

As we are reaching the end of Report, I will make some concluding remarks. This stage has provided us with a valuable opportunity to test and improve the detail of this important Bill. I thank your Lordships for that and look forward to Third Reading next week. Having said that, I respectfully ask the noble Lord to withdraw his amendment.

Photo of Lord Lansley Lord Lansley Conservative

My Lords, I am most grateful to the Minister for her response to this short debate. It is fitting that we have further evidence in her response of the constructive and positive way in which Ministers have listened to the debate and sought to meet the concerns raised. That has been evident throughout our discussions.

I apologise—I should have declared an interest. I am the UK co-chair of the UK-Japan 21st Century Group, and in that context Sir David Wright, who is the chair-designate of the Trade Remedies Authority, was a member of that board and a former ambassador to Japan, so I know him. It will be evident from those who know him that the purpose of this discussion is not in any way to question his suitability for the post—far from it—but rather the process by which his successors are to be appointed in years to come. In that context I was grateful for the specific nature of the assurance my noble friend was able to give.

The difference between a pre-appointment hearing, in circumstances where the Secretary of State is minded to appoint somebody who is then seen by the Select Committee, and a pre-commencement hearing, where the Secretary of State has appointed somebody but the post has not been taken up, is a distinction without a difference in circumstances where the Secretary of State could proceed in any case. There is a benefit in such appointments being taken up by those seen by Parliament as well as by the Executive, not least having been seen positively in the context, not of trying to second-guess the Secretary of State’s choice of the right person but of understanding at the outset, before somebody takes up the post, how they propose to approach it, their suitability for the tasks, and what objectives they are looking for—what kind of outcomes they are hoping to achieve. In that respect, what my noble friend was able to say adequately and fully meets the purposes that I was raising in my amendment, so I beg leave to withdraw it.

Amendment 59 withdrawn.

Amendment 60 not moved.