Amendment 81

Trade Bill - Committee (6th Day) – in the House of Lords at 2:15 pm on 15th October 2020.

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Lord Stevenson of Balmacara:

Moved by Lord Stevenson of Balmacara

81: After Clause 6, insert the following new Clause—“Board of Trade AppointmentsAppointments to the Board of Trade may only be made—(a) following the recruitment process set out in the Governance Code for Public Appointments,(b) under the supervision of the Commissioner for Public Appointments, and(c) after appointees have appeared in front of the Select Committee for International Trade of the House of Commons.”

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport)

My Lords, this group covers a lot of ground, including some more discussion on the Trade Remedies Authority, on Board of Trade appointments and on trade advisory groups. In rising—not literally—to move Amendment 81, I shall speak also to the other amendments in my name and that of my noble friend Lord Bassam.

I think that we were all surprised and somewhat shocked at recent appointments to the Board of Trade, but the key issue here is accountability and transparency around appointments to such important bodies. Amendment 81 seeks to establish a public process for board of trade appointments, including advisers to the board. When the Minister comes to respond, I would like him to explain why such appointments do not follow the recruitment processes set out in the Governance Code for Public Appointments, why they are not made under the supervision of the Commissioner for Public Appointments and why prospective appointees —and certainly the senior ones—do not appear in front of the International Trade Select Committee.

Amendments 83 and 106 seek to broaden representation on the trade advisory groups and the TRA. Over the summer, the Government, rather surprisingly, cancelled all their previous arrangements for discussion about trade and launched 11 new trade advisory groups

“to support the UK’s ambitious trade negotiations.”

Apart from the agri-food trade advisory group, there is a considerable lack of wide representation, particularly for the trade unions, which Amendment 83 seeks to address.

Amendment 83 also refers to NDAs—non-disclosure agreements. In June, the Government requested that members of the expert trade advisory groups sign an NDA for seven years to be able to see confidential material relating to trade negotiations. One appreciates that there will be confidential material, but seven years seems out of proportion. Many groups, including the TUC, said that they simply could not sign such an NDA because it would limit their ability to consult their members. That is an important point to bear in mind. The sharing of documents is obviously not to be encouraged while trade negotiations are continuing, but can the Minister say when he comes to respond that the process of reviewing the NDA will end, why seven years was selected and why he thinks it so important that it should be in place?

In previous debates, I have said that Labour is also worried about the Trade Remedies Authority lacking effective stakeholder engagement across sectors and regions. Therefore, Amendment 106 would:

“ensure that the Trade Remedies Authority includes, among its non-executive members, representatives” of

“producers … trade unions … consumers, and … each of the United Kingdom devolved administrations.”

On the TRA, the TUC has said that without trade union representation

“There is no guarantee provided that the non-executive members will represent the interests of workers in manufacturing sectors who will be severely affected by the dumping of cheap goods such as steel, tyres and ceramics.”

Such dumping has already happened recently. Amendment 108 would also ensure five-year terms for members of the TRA, renewable for a further term, to ensure a reasonable turnover.

Ultimately, we need to ensure a degree of transparency and accountability for trade advisers and trade negotiations. The Government insist on trying to hold these away from public scrutiny. These bodies are part of the process and they could, with advantage, listen to these arguments and open them up to a wider group of people. I hope the Minister will view these amendments as proportionate and see them as offering solutions that actually strengthen the Government’s hand in negotiations. I beg to move.

Photo of Baroness Bennett of Manor Castle Baroness Bennett of Manor Castle Green

My Lords, I shall speak primarily to Amendment 81, in the name of the noble Lord, Lord Bassam, ably if very restrainedly just set out by the noble Lord, Lord Stevenson, and to which I attached my name, as did the noble Lord, Lord Rooker. Since we have yet to hear the explanations for Amendments 83, 106, 108 and 113, I will simply say that I offer the Green group’s support to all of them to increase the transparency and representativeness of advice to the Government. I particularly note the strong cross-party support for Amendment 106 and look forward to hearing the explanations for Amendments 110 to 112.

However, I turn to Amendment 81, which is about Board of Trade appointments—or, to give it its full title, the Lords of the Committee of the Privy Council appointed for the consideration of all matters relating to Trade and Foreign Plantations. As an aside, I think that the Government might use this legislative opportunity to bring our constitutional arrangements out of the 17th century, at least in a small way, by modernising the name.

However, Board of Trade appointments might normally be considered a rather arcane matter and something that would be of little public interest, although there would probably be a general assumption, if you were to be brave enough to survey 100 members of the public in the street, that such important roles would, of course, be filled by a fair, competitive and transparent procedure.

Then, of course, we come to Tony Abbott. Should my accent have yet to do so, I remind everyone that I maintain a residual interest in Australian politics. Your Lordships’ House has a tradition of politeness and a different kind of language to that often used in the other place. Normally, I do not find that a constraint; today, I do. Therefore, I will simply produce a factual list: there is clear evidence of misogyny, homophobia, climate change denial, a lack of trade expertise and a clear conflict of interest. The Government really could not have done a better job of highlighting the importance of the amendment. They might have intended the appointment as a blow in the culture war—it is hard to think of another explanation—but they set out their position of intending to use an important technical role for a clearly political purpose. I say very seriously to the Committee that your Lordship’s House has a major constitutional responsibility in ensuring that this amendment is sent to the other place. Defending the Nolan principles should not be necessary, but it clearly is.

Photo of Lord Rooker Lord Rooker Labour

My Lords, I will say a few brief words on Amendment 81, to which I attach my name. It would strengthen the individuals concerned when they have been through quite a rigorous public process for appointment. It would legitimise them and give them greater confidence and an assuredness in dealing with outsiders. If they have been slipped in under the net there is always that residual feeling that, from their point of view, they know that they are there illegitimately.

I speak from personal experience because I have appeared in front of a House of Commons committee. Paragraph (c) does not say that the appointment has to be approved by the House of Commons Select Committee; it just says “appeared”. There have been occasions where people have appeared and there has been a majority against, but the Government still carried on and appointed, which is within the law; they are perfectly entitled to do so.

Those House of Commons hearings are not perfect. I appeared, as an ex-Minister, as the putative chair of the Food Standards Agency. It is true to say—as the record shows—that I was asked more questions in the session about my previous role as Housing and Planning Minister, dealing with some of the constituency matters of the members, than about food standards. It was a bit frustrating, but, nevertheless, they are the ones who ask the questions, and that is what they chose to do.

However, the fact of the matter is that it gives you a greater degree of legitimacy if you have gone through a process. If there has not been one and it has been a ringing-up by chums or a tap on the shoulder, you do not seem legitimate. In the end, it shows. Therefore, I strongly advise the Government to beef up the public appointments process. There may be other ways of doing it, but the fact is that we have some tried and tested systems in this country for public appointments. We have been able to lead in some areas, and this is one where we should not be backsliding; we should use the most rigorous public appointments process that we have because it legitimises those so appointed.

Photo of Lord Wigley Lord Wigley Plaid Cymru

It is a pleasure to follow the noble Lord, Lord Rooker, and I appreciate the very great contribution he is making to our Committee’s work, as do many other colleagues. I am so glad that I can contribute briefly today after having been frozen out of our last session. I was very grateful to the noble Baroness, Lady McIntosh, for explaining my discomfort in having to follow the deliberations of this Committee on Tuesday but being prevented from speaking. Although my name was on amendments on the most recent Marshalled List then available, it was not on the previous list, from which the Committee was working. This may be a matter to which the appropriate people in the House may wish to give some consideration at the appropriate time.

I will speak to Amendment 106 in this group, in the name of the noble Lord, Lord Stevenson, and I am grateful to him for including the need for the Secretary of State to include a representative of each of the devolved Administrations on the Trade Remedies Authority in a non-executive capacity. On many occasions, we have addressed the need to include the devolved Governments in all such matters, and I will not repeat the arguments for ensuring that there is harmonious working and mutual understanding between the TRA and the devolved Governments. Having their voices there will ensure that any potential issues are recognised at an early stage and will in this way eliminate avoidable misunderstandings.

Likewise, I have added my name to Amendment 109, which proposes a similar provision in relation to the TRA advisory committee. Of course, I support the inclusion of other voices, as provided for by other amendments, and I have very much sympathy with the points made by the noble Baroness, Lady Bennett, regarding Mr Abbott. I hope the Minister can give us some reassurance on these matters.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 2:30 pm, 15th October 2020

I am delighted to follow the noble Lord, Lord Wigley. I fell foul of the procedures myself today—I think I am still a new girl, navigating my way through these extraordinary times, but I pay tribute to the facilities we have and we are grateful to have the hybrid system that is working so well.

I shall speak to Amendments 81 and 83 and later amendments. For the record, I perhaps misled my noble friend the Minister in my question at Question Time, but I have the highest possible regard for members of the Trade and Agriculture Commission—they have proven their independence and their value to date. My noble friend said that they take no money for their role, so we are particularly grateful for their public service contribution. My noble friend will be under no illusion, however: I would like the commission to be independent and to have its own resources, its own staff and its own offices, and I shall continue my little campaign in that regard.

On appointments made under Amendment 81, can my noble friend put my mind at rest? What does the Governance Code for Public Appointments say about non-disclosure agreements? I am sure they do not sit comfortably within the present arrangements.

On Amendment 83 and the trade advisory groups, I noticed in the previous group that we had 17 expert trade advisory groups in July with, I think, 250 representatives. In August, we had fewer representatives and only 11 trade advisory groups. I would like to clarify, if I may, what the current composition is. Do they include, for example, anybody—a British national, ideally—who has first-hand experience of negotiating trade through the EU Commission, which would obviously be hugely beneficial at this time, as we set out negotiations on our own? To what extent is industry involved, either through the CBI or otherwise? I understand that the CBI was represented in the earlier trade advisory groups and it is extremely important, if the CBI is not represented, that we have some kind of business representation.

Can my noble friend also put my mind rest that services, both professional—such as legal services—and financial, have bodies that are represented through the trade advisory groups? If that is the case, could he please explain which they are?

I was delighted to sign Amendments 106, 107 and 108. I support the sentiments behind them and I consider them, at this stage, probing amendments, but it is extremely important that the Trade Remedies Authority also represents those categories. In Amendment 106, under proposed new sub-paragraphs (a), (b), (c) and (d) I would add (e) and (f) to include representatives of business, professional and financial services as well, because services are so important to our future trading potential.

On Amendment 108, I repeat my earlier remarks and endorse the provision that a person should hold office

“for a fixed period of five years”,

which would, I think, increase the potential for independence. A fixed term would give Trade Remedies Authority members greater security of tenure and therefore reinforce their independence and impartiality. A commitment was given by my right honourable friend the Minister, Greg Hands, in Committee in the House of Commons, that people are appointed on merit following fair and open competition, in keeping with the Governance Code on Public Appointments. The code itself states that there is a strong presumption that no individual should serve more than two terms or serve in any post for more than 10 years, other than in exceptional circumstances. I therefore hope that my noble friend will see fit to put this in the Bill through this amendment.

Photo of Lord Lansley Lord Lansley Conservative

My Lords, I am glad to follow my noble friend. My amendment in this group is Amendment 113, which I shall come to at the end, where it is listed. However, there are two other areas that I shall briefly touch on.

First, Amendment 81, and those linked to it, cover appointments to the Board of Trade, or indeed to the trade advisory groups. I have a disinclination, I have to say, for statute or, indeed, the Select Committees of either House to be reaching into government departments and telling Secretaries of State who they should have to advise them. Amendment 81 probably misses the point, in that there are, as I understand it, very few appointments to the Board of Trade as such; most of the appointments being discussed are appointments of advisers to the board rather than members of the board itself. However, that is neither here nor there from my point of view. If Ministers are able to give the Committee assurances about the balance they will bring, I would be perfectly happy that they are getting balanced advice—that is terribly important.

Secondly, on Amendment 107, the noble Lord, Lord Stevenson, and my noble friend Lady McIntosh are venturing back into the territory I ventured into on Tuesday. I said that there should be a pre-appointment hearing of the International Trade Select Committee of the other place for the appointment of the chair. I await a letter from my noble friend the Minister explaining why I am wrong. I may well be wrong, but the point was well made by the noble Lord, Lord Rooker: we are dealing here not with the appointment of those who advise the Secretary of State in his own department but an independent body. That independent body is accountable to Parliament, and Parliament should have a say, although not a determining say, in who is appointed to chair it.

I am not proposing, as Amendment 107 does, that these appointments of non-executive members of the Trade Remedies Authority should be subject to consent—that goes further than I would—but the appointment of the TRA chair is important. It has impact and, if not wide public importance, very wide business importance. It is something that should be clearly commented on by Parliament. That does not mean that Ministers cannot go ahead and appoint whom they wish. Indeed, even where there is a pre-appointment confirmatory hearing in other cases, Ministers, when I last looked, on nine occasions made recommendations to which Select Committees objected, and on six of those occasions, Ministers went ahead anyway. It would not prevent Ministers doing what they want to do, but it would give them Parliament’s view, so I am rather sympathetic to that amendment.

Amendment 113 is not about appointments or the membership of the TRA; it refers to Clause 6, which gives the Trade Remedies Authority the power—indeed, the obligation—to give advice to the Secretary of State in a number of respects, and the Secretary of State can request such advice. The Trade Remedies Authority is an independent body; there is a statutory relationship with the Secretary of State and the Secretary of State may ask for advice. For example, and I make no apology for coming back to this, let us say that we are talking about the Airbus and Boeing dispute, and the Secretary of State has asked the Trade Remedies Authority for advice on the “trade remedy measures” adopted by the United States in relation to that dispute, as both sides have secured World Trade Organization consent to the imposition of additional duties. When the Secretary of State asks for that, it is something on which the Trade Remedies Authority should expose for accountability purposes that it has given advice when it comes to the annual report.

It is important, and the fact that its advice has been sought is also important. I do not expect the annual report to go into obsessive or spurious detail, but, when one makes an annual report for an independent body accountable to Parliament, it should tell us how and when this statutory provision has been deployed during the year.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

I call the noble Lord, Lord Judd. No? Let us go to the noble Baroness, Lady Bowles of Berkhamsted.

Photo of Baroness Bowles of Berkhamsted Baroness Bowles of Berkhamsted Liberal Democrat

This mixed group of amendments shows that there are a lot of ideas around the TRA and the thinness of the elaborated governance arrangements, which makes appointments all the more a matter of concern. Amendments up to and including Amendment 109, in my name and that of my noble friend Lady Kramer, concern appointments, the important matter of representation and how to ensure that stakeholders have a voice, and where that voice and influence take place.

We support a role for the Select Committees. I have already spoken about how it can be a positive experience all round. We also agree that there must be a voice and policy influence for stakeholders. However, there is a significant difference between where stakeholders are placed in Amendment 106, in the name of the noble Lord, Lord Stevenson, and in our Amendment 109. This difference is important in terms of what independence means for the TRA and it is that which I wish to probe, but the amendments both show that there are issues around devolution, regional representation and dispute resolution that are missing, as indeed they are in the internal market Bill.

Much of the concern about representation stems from the economic interest test. As I said on Tuesday, it has the potential to play an important part in final decisions about applying remedies and requires analysis of various socioeconomic factors, including effects in geographical areas. The test echoes the EU interests test but has been further elaborated, and as it only covers the UK, offers scope for greater granularity. Guidelines issued in 2019 broadly envisage the economic interest test being technical, but they also say that there should not be an over-prescriptive methodology. While such flexibility may well be appropriate, it does not diminish anxiety.

No other country has quite the same test. The EU’s is nearest, but it has majority voting of member states in Council as a final decider. On the economic interest test, we have the TRA and, in some very limited circumstances, an override possibility for the Secretary of State and then the Upper Tribunal.

The TRA will carry the burden of proof of having to show a disproportionate effect in order to remove or dilute a remedy that is otherwise shown as justified under international trade law criteria. This could be controversial, pitching consumer versus jobs and upstream jobs against downstream jobs that may be in different areas. There is also a requirement to consider competition and market structure, which at its core is also about consumers.

Reducing an otherwise justified remedy will inevitably cause upset—which is why most countries avoid it. It potentially puts the TRA in the position of “picking losers”, so of course stakeholders want to be there to make sure that they are not the losers. Even though there will be hearings and submissions involving all interested parties, there is reasonable justification for stakeholders having some closer involvement in the evolution of the policy, especially for the devolved Administrations.

This far, we agree with the noble Lord, Lord Stevenson, and I hope that the Minister takes note that something is missing. However, we cannot disregard the international background, which is that trade remedies are sensitive measures. WTO rules are detailed and clear, and transposed into UK law, meaning that legal challenges can, and no doubt in due course will, be made to the Upper Tribunal and to the WTO if assessments and procedures are not legally correct.

In the internationally required steps establishing the legitimacy of a remedy, it is vital for the TRA board to be, and be seen to be, free of bias from any source. It is worth noting that the TRA is not set up like the CMA, where the board is at arm’s length from panels that make decisions.

In Amendment 106, the noble Lord, Lord Stevenson, has suggested that the non-executives of the TRA include representatives of a range of stakeholders. I am concerned about the term “representative”, as it could make the TRA into an organisation of stakeholders. If individuals are there to represent interests and influence results of individual investigations, how can that make the TRA independent or look independent? It would be at risk of failing the international perception test.

It would also gobble up all the independent NED positions, which I reckon at a maximum of six after the chair, chief executive and at least one other executive, leaving no separate space for other expertise and the usual business duties without enlarging the board, unless there is doubling or tripling up of roles. If we look at the CMA as an example, we see that it has four executive members on it. The recent adverts for TRA non-execs said that it sought between three and five, so that gives the direction of travel on numbers. On the other hand, if the intention is that, collectively and individually, the TRA NEDs should have knowledge and experience relevant to those various categories, that is different and one would expect it along with other kinds of diversity, although it could still become numerically challenging.

Our Amendment 109 also addresses the matter of stakeholders and would create instead an advisory committee or committees, which would take care of the international perception test concerning independence for the board. The list of stakeholders should probably be longer; for example, to include English regional or LEA input, maybe via a sub-committee. It is possible for the TRA itself to set up such an advisory committee, but I tend to think that it should have legislative status, especially for the devolved Administrations, and maybe its chair should attend the TRA board.

The rest of our amendments in this group are to different matters. Amendment 110 relates to the transfer of liabilities from the Trade Remedies Investigations Directorate, which is done under Schedule 5, and includes liabilities such as pensions. The staff transfer scheme as defined in Schedule 5 seems to be very flexible and, under paragraph 2, specifically allows for transfer of things that normally would not be transferrable, and it can create rights and liabilities. What Schedule 5 does not seem to provide for, unless it is buried in other regulations, is how funding covering the liabilities is assured to the TRA. Therefore, Amendment 110 would add to paragraph 29 in Schedule 4 that funding should also cover liabilities transferred under Schedule 5. I hope the Minister can explain whether this is already catered for and, if not, why not and whether the Government will put forward such an amendment.

Amendments 111 and 112 would add to the requirements of the annual report to cover activities as well as functions, information on the recommendations accepted or rejected by the Secretary of State, an assessment of the impact on consumers and jobs, and the weighting given to various elements of the economic interest test.

Could the Minister also comment on why the annual report goes to the Secretary of State, who must then lay it before Parliament? Although the schedule says that the report must be laid, there is no timetable, so could it be excessively delayed? I notice that the sequence adopted in the internal market Bill is somewhat different, with the proposal being for reports to go directly to Parliament from the CMA. If the TRA is independent, it should be able to publish its annual report and have similar arrangements as under the internal market Bill, including copies being sent directly to the devolved Administrations.

Photo of Baroness Noakes Baroness Noakes Conservative 2:45 pm, 15th October 2020

My Lords, I want to comment on three amendments in this group. First, on Amendment 81, I will echo some of what my noble friend Lord Lansley has said. As I understand it, the Board of Trade is composed only of privy counsellors, and I believe they are normally Cabinet Ministers. The noble Baroness, Lady Bennett of Manor Castle, read out its full title, and I think embedded in there is “privy counsellor”. It would be wholly inappropriate for Parliament ever to be involved in the appointment of privy counsellors to a body.

As we have heard, particularly from the noble Baroness, Lady Bennett, what people are really upset about is the appointment of Tony Abbott. But he is, of course, an adviser to the Board of Trade, and I do not think there is any precedent for Parliament to be involved in the appointment of advisors or for the normal public appointment processes to apply necessarily to advisers. So I would not support Amendment 81 at all.

The noble Baroness, Lady Bowles of Berkhamsted, has said most of what I wanted to say in respect of Amendment 106. I would like to underscore that I do not think that boards of bodies such as the TRA should have representatives on them. The board is a place where the governance of the body is played out, which is why there is a majority, under the schedule, of non-executives. It is important to remember that it is not there to bring a particular point of view, but to make sure that the body is itself well managed and well governed. The issue about bringing stakeholder interests to bear should be covered either by committees —whether we need a special committee to be hard-wired into the schedule or the TRA can use its committee power in the schedule—or, more probably, by ensuring that there are proper mechanisms for consultation in the formulation of any policy. I do not believe we should be using the board in that way. I also note in passing that the representatives are to include each of the United Kingdom devolved Administrations, which leaves England out in the cold. There is no representation for England, which is often one of the failings of devolution—having representatives from the devolved Administrations but forgetting that England is also rather important.

Lastly, Amendment 107 would require the House of Commons, via its International Trade Committee, to consent to the appointment of non-executives to the body. Again, this is unprecedented. It is normal nowadays—although it used not to be—for the chairman to be put through a process, either pre or post-appointment, but I do not think that there is any precedent for the Commons to start approving individual members of public bodies. It is unnecessary and cumbersome to clog up committees by getting involved in the many kinds of individual appointments that are made to public bodies.

Photo of Viscount Trenchard Viscount Trenchard Conservative

My Lords, I have listened to the speeches of the noble Lord, Lord Bassam of Brighton, and the other two proposers of Amendment 81, which seeks to restrict appointments to the Board of Trade. As my noble friend Lady Noakes has pointed out, I think that he intended his amendment to apply to advisers to the Board of Trade. It must be most discouraging for new appointees as advisers to the Board of Trade to hear the criticism of their suitability. I agree with my right honourable friend the Secretary of State that the new Board of Trade should be well advised by experienced people who can make the case for free and fair trade across the UK and around the world. I am happy to see that Tony Abbott, Daniel Hannan and others have been appointed, and I disagree with those who say that people who hold different views on social issues unconnected with trade should not be appointed to such positions. There is, at the present time, great global insecurity as a result of the Covid-19 pandemic. More than ever, the UK needs to be a strong voice for open markets and for reshaping global trading rules, together with countries such as Australia, with which we expect to soon agree on the terms of a new free trade agreement.

In response to the suggestion that appointments to the Board of Trade should be made subject to the Governance Code on Public Appointments, I would say that perhaps the governance code is too restrictive and generally leads to the selection of a particular type of person, excluding those who are able to think outside the box and suggest innovative solutions, rather than those who resist change to practices that will not work well for global Britain in future.

Amendment 83, in the name of the noble Lord, Lord Stevenson of Balmacara, seeks to increase the influence of trade unions over the trade advisory groups. This amendment is also unnecessarily prescriptive, especially as there are representatives of each of the four nations’ national farmers unions on the Trade and Agriculture Commission beside the representative of the Farmers’ Union of Wales. Besides, the further attack on the Government’s prerogative powers on treaty negotiations by exposing day-to-day salient developments in trade negotiations to public scrutiny would seriously detract from our negotiators’ ability to represent British interests successfully.

Amendment 106, in the name of the noble Lord, Lord Stevenson of Balmacara, also unreasonably seeks to restrict the Secretary of State’s ability to appoint the board of the Trade Remedies Authority. It is notable that the noble Lord does not think it so important to include people with experience of international trade disputes and business as he does representatives of his four chosen categories. I tend to agree with what the noble Baroness, Lady Bowles of Berkhamsted, said in this regard. However, I suggest to the Minister that it would be better if the chief executive and both executive and non-executive directors were appointed by the chairman with the approval of the Secretary of State. This would result in better corporate governance and lead to smoother functioning of the board.

I agree with the noble Baroness, Lady Kramer, that her Amendments 110 and 111 would be improvements to the Bill. I agree with the intention of her Amendment 112, and I agree with my noble friend Lord Lansley, in his Amendment 113, that the annual report should be as informative as appropriate. Perhaps the Minister could suggest some suitable amendments to that effect, even if he considers these particular amendments to be too prescriptive.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

I shall now try and call the noble Lord, Lord Judd. Are you there, Lord Judd?

Photo of Lord Judd Lord Judd Labour

My Lords, I apologise for the fact that our BT hub has been playing hell with us this morning—and indeed for several days—which prevented my coming in earlier. I am grateful to those who have accommodated my coming in now.

I want to speak briefly but very strongly in support of my noble friend Lord Stevenson’s amendments. We are talking about taking back control; the Government have repeatedly told us that the whole purpose of Brexit and the rest is so that we take back control. What does this mean? Above all, it means that we are taking responsibility more fully into the hands of the representatives of the British people in our Parliament. It is therefore very important that, when an appointment is made, Parliament can be reassured that the proper procedures have been followed. It is part of scrutiny; it is the nuts of bolts of scrutiny.

As for Amendment 106 and so on, dealing with representation of trade unions and other equally significant organisations in the process, I just do not agree with the noble Viscount. To me, it is common sense and self-evident that the quality of the accountability being exercised by Parliament needs to be informed by those intimately involved in the processes and their consequences.

This is a very sensible amendment. My noble friend’s amendments are about how you effectively make accountability to Parliament and the people have muscle and good effect, as well as rhetoric. I am very glad to support him in his amendment.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy) 3:00 pm, 15th October 2020

My Lords, I drafted Amendment 109 essentially in reaction to Amendment 106 proposed by the noble Lord, Lord Stevenson, which would require the group of non-executive directors of the TRA to include stakeholders. I have no problem with people with those backgrounds and expertise being on that board, but I fear that it could raise false expectations. You could say that this was a particular bête noire of mine: non-execs on a board must act in the interests of the organisation on whose board they sit. Membership is in many ways a gagging order, if they have other interests and represent other relevant parties. The noble Baroness, Lady Noakes, pointed out, as did my noble friend Lady Bowles, that their work is very largely procedural and concerns governance: whether rules have been followed, whether risks have been assessed and what remuneration is right for senior executives. However, I believe that stakeholders, especially given the economic importance and potential impact of the TRA, should be able to speak and persuade freely in the interests of the organisations or different nations of the UK, the businesses they belong to or the consumers they represent. That applies just as much to other relevant groups.

Our proposal in Amendment 106 is to create an advisory committee. In my mind at least—and this is not necessarily underscored in the amendment’s language —it would be like the two-tiered corporate governance systems that we see in many continental European countries. Of course the TRA can set up committees. However, I am concerned that, as they are written in the Bill, they will have a tendency to be ad hoc and lack status, whereas a board that contains representatives with a specific role and status established in legislation has much more impact and is exceedingly important as a flow of information and advice to the TRA. I pick up a comment which I think the noble Lord, Lord Lansley, made, which is that it is really important that advice is balanced, and this would be one of the mechanisms that would help to ensure it.

I join the noble Lord, Lord Stevenson, and others in their call in Amendment 81 for pre-appointment hearings by the Select Committee on International Trade. These would be for appointments to the Board of Trade—and, as the noble Baroness, Lady Noakes, said, TAGs would probably be thrown into that as well. I spoke on this extensively on Tuesday, and I shall not repeat the comments, as the case has been very well made. The same amendment calls for appointments to be made following the governance code for public appointments. We are in a pretty pass when this House has to put such a requirement in a Bill in regard to such key and important appointments. Clearly, it has to do so because No. 10 has been so clear in its intentions to skirt those requirements wherever possible.

The noble Baroness, Lady Noakes—and I saw the noble Lord, Lord Lansley, nodding confirmation—pointed out that the appointments would essentially be limited to members of the Privy Council. I am really shocked at the thought that the Privy Council mechanism is being used to get around what everyone would expect to be a process that came under the governance code for public appointments. The noble Lord, Lord Grimstone, has a long history with that code, and I hope that he will be sufficiently shocked that he goes back to the Government and discusses that issue. All these appointments need to have the absolute smack of integrity, and there must be an absolute absence of cronyism.

Amendment 83 raises the issue of non-disclosure agreements. I was very pleased to see this language in there. I think that the drafting probably needs some work but, again, we are in Committee. Non-disclosure agreements are being widely abused, instead of being kept to their original and narrow purpose of preventing commercial harm essentially by a competitor company, or disclosure of intellectual property, pricing and so on. I have worked with so many whistleblowers who have experienced the impact of these gagging orders, which tend to work very much against the public interest. We need a proper drafting into the Bill of the kind of language that would limit the scope and purpose of non-disclosure agreements to the most restricted kind of necessity that they originally covered, not the expansive use that has become habitual as a way to protect privacy and avoid challenge.

Amendment 110, in my name and that of my noble friend Lady Bowles, again raises the issue of properly funding the TRA, including providing for its inherited liabilities, to protect its independence. I spoke to this on Tuesday, so I shall not repeat myself, but there is a common sense among many of your Lordships that funding the TRA is an issue that has to be challenged. It must not find itself in a position of being short of resource and, therefore, curtailing or basically shaping what it does because of a lack of funding.

Amendments 111 and 112 in my name and that of my noble friend and Amendment 113 in the name of the noble Lord, Lord Lansley, which I think is a very significant amendment, strengthen the reporting requirements of the TRA and finally provide some substance to the report. I spoke on an earlier group of the criticism of this Bill from the Constitution Committee—essentially, of its thinness and skeleton nature. Providing this kind of substance is genuinely critical if the significance of Parliament is to be recognised. As drafted, the Bill, as we have heard on two groups of amendments today, raises issues of transparency and independence. Therefore, like my noble friend Lady Bowles, I find it frustrating and inappropriate that the report of the TRA comes to Parliament only via the Secretary of State. That strikes me as a mark of undesirable dependency. We have been arguing all the way through that the TRA must be visibly, clearly and openly independent. Its ability to report directly to Parliament is surely a litmus test of that.

Photo of Lord Grimstone of Boscobel Lord Grimstone of Boscobel The Minister of State, Department for International Trade, The Minister of State, Department for Business, Energy and Industrial Strategy

My Lords, we have had a most interesting debate on this group of amendments, particularly touching on many aspects of corporate governance. To put my cards on the table, I am a fervent believer that good corporate governance leads to good decisions. Noble Lords were absolutely right to make their comments about the importance of governance.

I thank the noble Lords, Lord Bassam of Brighton and Lord Rooker, and the noble Baroness, Lady Bennett of Manor Castle, for tabling Amendment 81, and the noble Lord, Lord Stevenson of Balmacara, for moving it. Noble Lords may be interested to hear that, technically, the only member of the Board of Trade is its president, the Trade Secretary, as it is a requirement that, to be a member, you must be a privy counsellor. The Board of Trade is one of our most historic boards, which is why, as noble Lords can imagine, it was set up that way. My noble friend Lady Noakes was quite right about this, as was my noble friend Lord Trenchard, who added his normal wisdom to our debate.

The Board of Trade advisers are just that: advisers. They are not board members. We brought together experts from business, academia and government, who we hope will use their expertise and influence to help Britain make a stronger case for free trade on the international stage and to encourage more businesses across the UK regions and nations to boost their international trade. They are not policymakers, as such; the board and its advisers take a collaborative approach, focused on promoting the UK regions as destinations to trade and do business with.

The selection process for all advisers is the same: they are first shortlisted by the president of the board; departmental officials then conduct due diligence, in accordance with guidance from the propriety and ethics team at the Cabinet Office. Throughout this, principles are followed that are consistent with those underpinning the Governance Code on Public Appointments, to provide advice on the suitability of appointments. As they are direct appointments, the Secretary of State considers the advice provided and, following No. 10 approval, has the final decision on whether or not to appoint. The board’s sole function is to provide expert and apolitical advice to the department. As such, the role of adviser to the board does not carry with it the responsibility to make decisions, hold senior staff to account or have any role in striking trade deals while representing the UK overseas.

I listened carefully to the comments made by the noble Baroness, Lady Bennett, and the noble Lord, Lord Wigley, about Mr Tony Abbott. As the PM has made clear, the Government do not agree with all of Tony Abbott’s views; nor do his views reflect the views of the Government. As with all advisers, he has been appointed because of his expertise in trade matters.

I thank again the noble Baroness, Lady Kramer, for her kind words about my small role in public appointments and for explaining the need for all public appointments to be made with integrity. Cronyism must have no place in our public appointment system.

Amendment 83, tabled by the noble Lord, Lord Stevenson, relates to the trade advisory groups established by my department. The trade advisory groups will engage with businesses across the whole of the UK to access the strategic and technical expertise necessary to progress our trade negotiations with new partners across the globe. They have a very wide membership, embracing exactly the types of organisations referred to by my noble friend Lady McIntosh. The names of all members and their affiliations can be found on GOV.UK.

Trade advisory groups are just one part of the Government’s external engagement on international trade. We of course recognise the very important position that civil society organisations, such as trade unions, occupy in our society, particularly the unique insight that they can offer on important issues. I confirm that we are deepening our engagement with trade unions in relation to trade matters and we will announce more details of that in due course.

I have heard the concerns over confidentiality, and I reassure the House that we intend to share sensitive information only where it is relevant to current negotiations and where the trade advisory groups are best positioned to provide advice and expertise. This is information which must of course be protected, because if such information were to be released it may compromise our negotiations with key partners.

It would have belittled the role of the members of the trade advisory groups if they had not been able to have insights into these confidential matters and to offer their advice in relation to them. Consequently, as a sensible precaution, signing a confidentiality agreement will be a prerequisite to membership of the trade advisory groups. These are in no way gagging orders, but a sensible response to the need to allow members to have access to the information. I agree with the noble Lord, Lord Stevenson, that seven years seems a long period at first blush, but I am assured that such a period of time is customary for agreements of this sort.

I turn to Amendments 106 and 107 on the TRA board, in the names of the noble Lord, Lord Stevenson of Balmacara, and my noble friend Lady McIntosh of Pickering. Amendment 106 seeks to require the appointment of board members from specific interest groups and from each of the devolved Administrations. We conducted a wide process for recruiting members of this board and I am pleased to say that applications for the TRA non-executive positions have been received from a wide variety of backgrounds and from across the UK. Consideration of a breadth of experience has been an integral part of the selection process to date, and we are confident that we will be able to appoint a knowledgeable and strong board. Once that process is completed and noble Lords see exactly who the members are, they will endorse that approach.

We have set out our concerns previously that having board members who are beholden to—or perceived to be beholden to—any particular interest group would undermine the independence of the TRA and the core principles of impartiality and objectivity that underpin our new trade remedies framework. This framework has to be impartial and objective. I listened carefully to the expert views of the noble Baroness, Lady Bowles of Berkhamsted, on this matter and her broad agreement with this approach. I also thank my noble friend Lady Noakes for her endorsement of this. If I may, I will write to the noble Baroness, Lady Bowles of Berkhamsted, to answer some of the other detailed points that she made on this topic.

Amendment 107 would require non-executive members of the board to be approved by the International Trade Committee of the other place and also require the Secretary of State to consult the TRA chair on their appointment. I point out that Schedule 4 already requires the Secretary of State to consult with the chair before appointing non-executive board members. Giving a parliamentary committee a veto over non-executive appointments would be unprecedented. Decisions on public appointments are made by Ministers, who are accountable to Parliament and the public for the appointments that they make.

Amendment 108, in the names of the noble Lord, Lord Bassam of Brighton, and my noble friend Lady McIntosh of Pickering, looks to fix in statute the tenure of non-executives appointed to the TRA board. The Governance Code on Public Appointments states that it is usual for Ministers to decide on length of tenure and that no individual should serve more than two terms, or more than 10 years in any post. For the TRA board to function effectively, the resilience and memories of the board will need to be protected, which may require a managed turnover of members both now and in the future. Speaking as someone who has chaired many boards, you certainly do not want all members to leave at the same time. Appointing some of the initial board members for less than five years and staggering the process is a sensible mechanism to ensure that not all tenures end together.

Amendment 109, from the noble Baroness, Lady Kramer, aims to allow the TRA to establish advisory committees comprising stakeholders that include representatives of the devolved nations, the Trades Union Congress, and businesses and consumers. The Government agree that the TRA should have this ability, and I am pleased to tell the noble Baroness that Schedule 4 already allows the TRA to establish a committee including persons who are not members or employees. I am sure that the TRA will want to take heed of the comments made by noble Lords today, including those made by the noble Baroness.

The noble Baroness also tabled Amendment 110 to ensure that the costs of transferring staff to the TRA are adequately provided for. I can give the noble Baroness, Lady Bowles of Berkhamsted, complete reassurance about this. Again, this is already covered by the Bill’s provisions.

Amendment 111, the next amendment in the name of the noble Baroness, Lady Kramer, specifies that performance of the TRA’s activities must be included in its annual report, alongside the performance of its functions. Again, we share the noble Baroness’s ambitions in this area, and Schedule 4 requires the TRA to produce an annual report to be laid in Parliament. This report will include detailed information about the TRA’s performance, governance and use of resources, as well as details of the work it undertakes each year. I can assure the noble Baroness, Lady Bowles, and other noble Lords that this report will find its way punctually to Parliament, even if that is via the Secretary of State. Any activities the TRA carries out will be in the course of performing its statutory functions, and they will therefore be included in the annual report. It will be a comprehensive document.

Amendment 112, also in the name of the noble Baroness, Lady Kramer, would require the TRA to publish in its annual report details of how the economic interest test has been applied, focusing specifically on the impacts on affected industries and how such impacts affect jobs. I can reassure the noble Baroness that details of the economic interest test will be published in the statement of essential facts for each recommendation made by the TRA when a case is concluded, so there is no need to publish this information and duplicate it in the annual report.

I turn finally to Amendment 113, in the name of my noble friend Lord Lansley, which would require the TRA and the Secretary of State to publicly share the fact that the Secretary of State has made a request for information in connection with a matter listed in Clause 6(1), together with the date and purpose. Of course, while I recognise this was not my noble friend’s intent, requiring the TRA to disclose the fact and the timing of assistance it provides to the Secretary of State could have unhelpful consequences. For example, it may well highlight preparations for a dispute against another country, which may be politically sensitive information.

I hope I have reassured noble Lords about the TRA and the trade remedies system, which are designed to have transparency at their core and to provide independent, expert advice to the Secretary of State, and that on that basis they will therefore agree not to press their amendments.

Photo of Lord Faulkner of Worcester Lord Faulkner of Worcester Deputy Chairman of Committees, Deputy Speaker (Lords) 3:15 pm, 15th October 2020

My Lords, I have received no requests from noble Lords wishing to speak after the Minister, so I call the noble Lord, Lord Stevenson of Balmacara.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport)

My Lords, I thank all noble Lords for their contribution to this debate. I especially thank those who supported the amendments in either my name or that of my noble friend Lord Bassam, particularly my noble friends Lord Rooker and Lord Judd.

My noble friend Lord Rooker made a very good point about the additional legitimacy which stems from public hearings, and he was picked up on this by the noble Lord, Lord Lansley, and the noble Baroness, Lady Kramer. Their points were strong enough to be convincing, although I am sorry that the Minister did not give a very explicit reason why he was not prepared to accept the amendment as it stood.

I am reminded that when we discussed this issue last time around, we had a slight advantage: we knew that the then Minister, the noble Baroness, Lady Fairhead, had actually been through that process of hearings as she had been the prospective chair of the BBC. Unfortunately, she was not terribly enthusiastic about the process itself, but I think she agreed with the points made today about the additional support it gives to those who have been through the process, and the general sense in which these appointments are, on one level at least, open for wider consideration and discussion.

In thinking through some of the issues raised later in the debate on the particularities of how organisations appoint, recruit and sustain their organisational structures, we need to have regard to the long-running debate—which I precipitated with some of the amendments that we tabled—about whether these people are to be seen as representatives or whether their background, having been gained in particular areas, would be of value to the organisation concerned. Perhaps I am not as naive as the noble Baronesses, Lady Bowles and Lady Noakes, alleged in suggesting that we needed to have a firm representative structure in place for the TRA; that would be ridiculous.

Taking a step back to look at some of the outcomes of processes to try to have a representative group on boards to help with better decision-making, legitimacy, transparency and all the other issues we are concerned about, it is quite interesting that we do not always get in place the sort of backgrounds reflected by the amendments in front of the Committee. I simply point that out. If the Minister is saying that the advisory committee may be the route here, that the words mentioned in this debate will be reflected on by the TRA, and that he will make sure that this is the case, I think we can feel we have made that point and do not need to continue discussing it.

I have two final points. First, to reassure the noble Viscount, Lord Trenchard, I did not mention any names when talking about appointments to the Board of Trade. Indeed, my amendment was specifically about the absurdity, or the Gilbertian situation we seem to be in, that there is one member and loads of advisers. This is more like a court than an advisory group; I wonder why we go through this charade.

If it is limited to privy counsellors that is one way of doing it, I suppose; it is probably better than some other routes we can think about. However, there are hundreds of privy counsellors. There are probably 100 engaged in this process at the moment—not including myself, of course, but others have been honoured by that. I would not have thought there would be difficulty in finding a privy counsellor if we wanted to make it two instead of one member of the Board of Trade. It really raises the question of why we have a Board of Trade with only one member if it needs advisers to advise it, but does not seem to produce anything one way or the other, yet we have thousands of other people sitting in trade advisory groups and other groups yet to be appointed. I leave that on the table.

My last point is that the Minister was intriguing when he said that the department hoped to deepen its engagement with the trade unions. I am pleased to hear that. I think I can speak for the trade unions to say that they are ready and willing to do what is required. I can only suggest that he gets ahead with his invitation, whatever it is he is going to do.

This is not an attempt to try to hijack things, but the feeling I am left with at the end of this debate, which has been a good, rich and important one, is that there is a bit of ground to make up. All that the Minister can do in using his experience of the processes needed to get fair appointments, the systems that need to be in place in the bodies once they are established, and the engagement with civic society and the wider group of people who are interested and want to support them, is important and will be the sustaining point as we go further down the track. With that, I beg leave to withdraw the amendment.

Amendment 81 withdrawn.

Amendments 82 to 83A not moved.

Photo of Lord Faulkner of Worcester Lord Faulkner of Worcester Deputy Chairman of Committees, Deputy Speaker (Lords)

We now come to the group beginning with Amendment 84. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this, or anything else in this group, to a Division should make that clear in debate.

Clause 7: Collection of exporter information by HMRC