Amendment 81

Part of Trade Bill - Committee (6th Day) – in the House of Lords at 2:30 pm on 15th October 2020.

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Photo of Baroness Bowles of Berkhamsted Baroness Bowles of Berkhamsted Liberal Democrat 2:30 pm, 15th October 2020

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.