Monday 12th March 2018
(6 years, 9 months ago)
Lords ChamberEuropean Union (Withdrawal) Act 2018 View all European Union (Withdrawal) Act 2018 Debates Read Hansard Text Amendment Paper: HL Bill 79-VII Seventh marshalled list for Committee (PDF, 331KB) - (12 Mar 2018)
Lord Hope of Craighead (CB)
My Lords, three amendments in this group are in my name: Amendment 90, which relates to Clause 7; Amendment 130, which relates to Clause 8; and Amendment 148, which relates to Clause 9. They all raise the same point about the extent of the delegated powers given to Ministers of the Crown by these three clauses. The context is the way in which exercise of these powers may affect the devolution settlements for Scotland, under the Scotland Act 1998, and for Wales, under the Government of Wales Act 2006 and the Wales Act 2017. I am obliged to the noble Baroness, Lady Suttie, for her amendments introducing the position of Northern Ireland in exactly the same terms as my amendments.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
Before the noble and learned Lord, Lord Hope, proceeds, it may be of benefit to the House if I now confirm that the Government will bring forward amendments on Report to apply the same protection for the Scotland Act and the Government of Wales Act to the Clause 7 correcting power that applies to the Northern Ireland Act. I will speak about that more at the end of the debate. It may also benefit the House to note that the Government have tabled an amendment to Clause 11 —as I am sure noble Lords are aware—that reflects the significant offer we have made on that issue to ensure that the House can debate the offer when we reach that clause, just as we promised to do in the other place.
Lord Adonis (Lab)
Since he has started speaking, would it not be better for the noble and learned Lord, Lord Hope, to speak fully now and tell us what he was going to say? That would give us much more to respond to and might indeed shorten the debate.
Lord Bourne of Aberystwyth
The noble and learned Lord, Lord Hope, has not yet moved the amendment so he needs to do that first.
Lord Hope of Craighead
I am very grateful to the Minister for his intervention and for the indication that he has given. My amendments extend to Clauses 8 and 9; what he has said is an indication of the way the Government are minded to go on Clause 7, but I must introduce my amendments in relation to Clauses 8 and 9 as well.
The provision relating to Northern Ireland, to which the Minister referred, is what we find in Clause 7(7)(f), which indicates that,
“regulations under subsection (1) may not … amend or repeal the Northern Ireland Act 1998”.
That provision is then substantially qualified in a way one can only understand by reading through the schedules. I am not clear whether the Minister is proposing that the Scotland Act and the Government of Wales Act should be qualified in the same way, but if he intends to qualify them, my amendments are unqualified. It is therefore appropriate for me to explain why my amendments are in the terms they are. Perhaps the noble Lord, Lord Adonis, will appreciate why I need to set this matter out in a little bit of detail and explain why I have brought the amendments forward.
As we have seen, these three clauses confer a very wide power on a Minister of the Crown to make provisions by regulations. That includes a provision to which attention has not been drawn until now, but which is certainly relevant to the amendments in this group: a Minister of the Crown may make a regulation of the same kind that could be made by an Act of Parliament. We find that in Clause 7(5), Clause 8(2) and Clause 9(2). I need not go over what these clauses deal with but, broadly speaking, in Clause 7 the power is to enable a Minister to deal with,
“any other deficiency in retained EU law, arising from the withdrawal of the United Kingdom from the EU”.
In Clause 8, the power is to enable a Minister to,
“prevent or remedy any breach, arising from the withdrawal of the United Kingdom from the EU, of the international obligations of the United Kingdom”.
In Clause 9, it is a wider power to enable the Minister to,
“make such provision as the Minister considers appropriate for the purposes of implementing the withdrawal agreement if the Minister considers that such provision should be in force on or before exit day”.
Each of these clauses is limited in some respects by saying that regulations made under them may not do certain things. The Committee has heard about that in earlier debates today, such as in relation to sentencing, the creation of criminal offences and so on. These amendments seek to add two further limitations. One is that the power under these three clauses may not be used to modify the Scotland Acts and the government of Wales Acts without the consent of the Scottish Parliament or the National Assembly for Wales, as the case may be. As I mentioned earlier, the noble Baroness, Lady Suttie, is seeking to make similar provision in relation to Northern Ireland. Amendment 148 goes a little further than that: it builds in an additional provision relating to the Ministers of the devolved institutions. These are the subject of the group after next, which we will come to later this evening. I will not develop that aspect until we get to that group.
The scale of the transfer of legislative competence to Ministers of the Crown, provided for by these clauses, raises concerns of a fundamental nature. This is not only about the balance of power between Parliament and the Executive, as the Constitution Committee pointed out in paragraph 158 of its report, it also raises concerns about the balance of power within the union and the future of the devolution settlements themselves, referred to in the same report at paragraph 243. Some of what I will be saying in a moment will be directed only to the Scotland Act, but it should be understood as applying equally to the Government of Wales Act and the Wales Act, which are referred to in my amendments.
As I understand the wording of these clauses, if they are left as they are the powers could be used to change the constitutional balance of powers between the UK Government and the devolved institutions which the relevant devolution statutes set out. An aspect worth stressing is the width given to the meaning of the word “deficiencies” in Clause 7. We see it set out at length in subsection (2), supplemented by subsection (3). It is extremely wide and can be widened still, as we can see, given the power in subsection (3). The provisions in Clause 7(6) are about the transfer of functions from EU entities or public authorities in member states to public authorities in the United Kingdom, which would, of course, include public authorities in the devolved areas of Scotland and Wales.
The Committee needs to bear in mind the points made by the noble Lord, Lord Wilson of Dinton, in his speech last Wednesday morning about the width of Clause 7; the meaning to be given to the expression “Minister of the Crown”; and the numbers of people who could be embraced by that expression. The point which was of particular concern to me in the amendments in this group is that the power includes a power to make any provision that can be made by an Act of Parliament. I appreciate that the provision in Clause 7 is time limited. This is also true in the case of Clause 8. In Clause 9, the power is not exercisable after exit day. Nevertheless, as these clauses stand, and while they continue to have effect, it would be open to a Minister of the Crown to modify the Scotland Acts and government of Wales Acts in a way that, as I mentioned earlier, could shift the constitutional balance, and to do so without even consulting the Scottish Parliament and the National Assembly for Wales, let alone obtaining their consent.
A particular part of the Scotland Act which is quite vulnerable to an inadvertent amendment without that process of obtaining consent is the detailed wording of Schedule 5. I was involved, as was the noble and learned Lord, Lord Mackay of Clashfern, in considering the Bill which gave rise to the Scotland Act 1998. We sat until late in the night—indeed, early in the morning—dealing with that Bill and went over Schedule 5 in some detail. It has survived very well over the years since devolution, but it contains considerable detail which could be adjusted a little. That would alter the balance between the UK Government and the Scottish Government in a way that should not be done without the consent of the Scottish Government.
I appreciate that Ministers may say that it is not their intention to modify the Acts in this way, but it is well known that there is a high degree of mistrust between the devolved institutions and the UK Government about where this legislation is going. Personally, I regret that but, from a Scottish point of view, the reason is not hard to find. As one reads through these clauses, and looks at them from the approach of a Scottish Minister, or the Scottish Parliament or, indeed, a lawyer who has dealt with the devolution system since it first came in, it is striking that—apart from Northern Ireland—there is simply no mention in these three clauses of the fact that there are devolved Governments in Wales and Scotland that need to be considered. That aspect causes one some alarm as soon as one begins to read through the Act. It would be desirable to do something about it, if one possibly can. That is why I welcome what the Minister said when I began my speech.
Lord Adonis
My Lords, the Minister unusually intervened at the beginning of the speech of the noble and learned Lord, Lord Hope, to say that he had some significant announcements to make in respect of Scotland and Wales and Clause 7. I assume he also meant Clause 8, but it was not clear. Given that this debate will be precisely on what the terms of Clauses 7 and 8 should be in respect of the devolution settlements, may I suggest that it would be fitting if the Minister made his announcements on the Government’s intentions now, and then noble Lords can respond afterwards? He has already told us that he intends to make such announcements and it would be ridiculous to have a big debate only for us to learn of the Government’s intentions after we have spoken.
Lord Bourne of Aberystwyth
My Lords, I am most grateful to the noble Lord for giving way. I thought I was explicit that my remarks concerned only Clause 7, but I thought that was still significant because, clearly, that is a large part of the debate. I wanted to make it clear at this stage that we have moved significantly on Clause 7, but there is still an issue to be addressed in relation to Clause 8, and, I believe, Clause 9.
Lord Adonis
My Lords, what does the noble Lord mean by “moved significantly”? For those of us not initiated into the intricacies of this, what does he intend to do?
Lord Bourne of Aberystwyth
I seek to indicate that I can confirm that the Government will bring forward amendments on Report to apply the same protection to the Northern Ireland Act as to the Scotland Act and the Government of Wales Act. This means that all the changes we are proposing—bar one, I think, in relation to technical standards, but even that we will be able to spell out in relation to the Bill—and all the powers in relation to corrections will be in the legislation when we get to Report. We will table amendments on Report so that the correction power in Clause 7 will not be necessary. It will be in relation only to international obligations in Clause 8 and complying with the exit in relation to Clause 9.
Lord Judd (Lab)
On that point, could the noble Lord confirm that the amendments to be brought forward by the Government will make absolutely sacrosanct the principle of the preservation of the Good Friday agreement?
Lord Bourne of Aberystwyth
My Lords, I certainly can confirm that but I was going to confirm it, as it were, right at the end of the debate. Clearly, this is fundamental. We are very much wedded to it, as was indicated in December, when there was a meeting with the EU on this issue and as we have stated again and again. I appreciate the point the noble Lord makes. It is important and I can confirm that we will do that.
Lord Wigley (PC)
My Lords, I wish to speak to Amendments 92 and 93 standing in the name of the noble Lord, Lord Foulkes, and myself. I am sorry that he cannot be here to speak to these amendments, but I understand that it is in order for me to do so.
These amendments would restrict Ministers of the Crown from being able to amend or repeal the Wales Act 2017 and the corresponding Scotland Act using regulatory powers. The fact that these amendments are necessary underlines a perceived disregard the UK Government have for the sovereignty of the two devolved parliaments. If the Northern Ireland parliament were in existence, I am sure there would be feelings along similar lines.
The Bill gives sweeping powers to Ministers of the Crown, with which they can do what they like, including amending and/or repealing the devolution settlements. This was exemplified last Friday 9 March, when, despite no agreement being reached at the JMC (EN) meeting on the status of powers being repatriated from Brussels, the UK Government pushed ahead and published their framework analysis. This was essentially a list of devolved areas of policy that the UK Government will take over themselves—I will not list them or go into that, because they will mainly come under Clause 8, as the noble Lord, Lord Bourne, mentioned a moment ago.
Lord Bourne of Aberystwyth
My Lords, I am very grateful to noble Lords who have participated in this very wide-ranging debate, particularly to the noble and learned Lord, Lord Hope, for moving his amendment and the noble Baroness, Lady Suttie, for moving her amendment to the amendment. I shall first try to deal with a couple of very basic points before turning to the substance of the debate and I shall then try to pick up some of the points made by noble Lords. I gently say to the noble Lord, Lord Griffiths, that if my aim was to cut short this debate, I failed fairly spectacularly. I regret that. I had sought to clarify where we were—but I will go through the basic principles again.
I shall deal with a couple of very basic points. First, I do not know where the idea came from that there is some possibility of the Government fundamentally amending or repealing the Government of Wales Act without consent. That is not remotely on our agenda. It is certainly not something that I would tolerate. I suppose it is just about within the scope of Austinian sovereignty, but I do not know where the idea came from that that is a possibility—so let me put that to bed absolutely right away. We are totally committed to devolution—the Government of Wales Act, the Scotland Act and the Northern Ireland Act—and I think that noble Lords will appreciate that point.
Secondly, I think that there has been some confusion. We are not principally dealing with Clause 11 today. There might be some confusion because we have just published the amendments in relation to Clause 11, following an undertaking we gave in another place—but that will be the subject of much broader discussion later. No doubt we will go through that in some substance, so I do not intend to deal with it and pre-empt what is going to happen later in our consideration of the Bill.
I thank noble Lords for this valuable debate. We will consider the main clauses relating to devolution in coming days, but the question of how the powers conferred by the Bill interact with our devolution settlements and the responsibilities of our devolved institutions is no less important and deserves no less robust scrutiny. I shall first speak to the protection for the devolution statutes in relation to the Clause 7(1) correcting power and by extension its Schedule 2 counterpart. There are many amendments in Schedule 3 for those who want some idea of what will be brought forward on Report. It is not a question of them coming forward now. My noble friend Lady McIntosh raised this, but we are not in a position to come up with all the amendments that may be necessary. They will be debated on Report. We are talking about every correction that is necessary being brought forward on Report for Scotland, Northern Ireland and Wales. It is as simple as that. I hope that clarifies what I hoped to clarify right at the start.
I must start by emphasising that the Government recognise the importance of our devolution settlements and the Acts through which they have effect. I think noble Lords who know my history will know that that is my starting point. That is why we have sought to make as many corrections to the Acts as possible in the Bill already. Those, as I say, can be found in Part 2 of Schedule 3. We want to be open and transparent in demonstrating that these are, as noble Lords will discover when they look at them, simply technical fixes to remedy deficiencies created by leaving the EU. For instance, much like in other pieces of legislation, we must remove or replace redundant references to member states or EU institutions.
The noble Baroness, Lady Suttie, is absolutely right to raise the unique importance of the Northern Ireland Act as the statutory manifestation of the Belfast agreement. In response to the noble Lord, Lord Adonis—I hope the record will show this—I do not think I said that we were bringing forward amendments in relation to the Good Friday agreement on Report. What we are doing is bringing forward some amendments in relation to Northern Ireland to make sure that all the amendments that relate to Northern Ireland are in the Bill. I cannot stress often enough or strongly enough our total, steadfast commitment to the Belfast agreement. That is precisely why we have, in this Bill, already generally restricted the correcting power from making corrections to the Northern Ireland Act. As I am sure the noble Baroness, Lady Suttie, is aware, references to Northern Ireland amendments are minimal, and we will seek to make sure that all of those are on the face of the Bill when it comes back on Report.
Noble Lords must recognise that there remain outstanding corrections to the Acts that must be made in order to ensure that they function properly on exit day. Corrections to the Scotland Act and the Government of Wales Act are being discussed with the Scottish and Welsh Governments, and progress is being made. It is a mistake to think that people are at daggers drawn. This is not how things are operating, as many noble Lords are well aware. Day to day, negotiations go on very constructively and effectively—that is what is happening. We have not made all of the corrections on the face of the Bill so far, as we must rightly agree the forms of the corrections to those Acts with the Scottish and Welsh Governments. Indeed, some fall within devolved competence to address. In some cases, alternative mechanisms may exist to deal with them.
I can provide further reassurance, because these are not matters of substantive policy. This is about correcting provisions that will not function correctly once we have left the EU. For example, there is provision in the Government of Wales Act requiring the Auditor-General for Wales to make certain arrangements for bodies established by the European Union. This will need to be updated so that the provision continues to work in a post-exit world. There is one correction that must be made to the Northern Ireland Act, as I have referred to, which relates to technical standards—the quality of goods and safety marks. This, again, is fairly routine and will be brought forward on Report.
It would be irresponsible for us to place these limits on the correcting power if we could not also provide the answers to the questions—which I am now providing —and the assurance that we will deal with these issues on Report. I can confirm that we will bring forward amendments on Report to apply the same protection for the Scotland Act and the Government of Wales Act as for the Northern Ireland Act, so that all the necessary amendments will appear on the face of the Bill on Report. Contrary to what some noble Lords seem to think, we have made substantial progress in discussions, but we were not in a position to remedy the remaining deficiencies for consideration in Committee. I regret that, but I am very pleased that we have made the progress we have.
Lord Forsyth of Drumlean
I do not know whether my noble friend reads the Scottish papers. If he does, he will have seen that there has been headline after headline about the Scottish Government claiming that this is a great power grab by Westminster—attacking the Government and attacking the whole concept of leaving the European Union with scare stories about the impact of it. I am a little puzzled that he can say that there is a gentlemanly discussion going on when that is the perception north of the border.
Lord Bourne of Aberystwyth
My Lords, I do not recognise the power-grab allegation as being anywhere near reality. We are making progress. Of course there are differences, but I think in fairness all parties concerned have indicated, as the noble Lord, Lord Griffiths, did, that progress is being made. These are complex issues and it is a great mistake to see this, in some Animal Farm way as all black and white. It is not like that. Progress is being made. There is still territory to cover and progress to be made, but we are making that progress.
Lord Wigley
Before the Minister moves on, we are aware of his good intentions in this, his experience and his wish to get a coming together of minds. However, if the Government’s intention is always to get agreement for the changes—and, from the tone of what he has said, that is their objective—why should they be building provisions into the clause now under discussion to have a veto for Westminster that overrules either Cardiff or Edinburgh?
Lord Bourne of Aberystwyth
My Lords, I am grateful to the noble Lord. It certainly is my view that we want to get agreement—I have no doubt about that—but I shy away from his idea that one party should have a veto on things where there is no substantive reason why it should do so. I shall come to this, but if something relates to a devolved area, of course we will need the relevant consent of the devolved Administration. However, we are not seeking to add powers in this legislation that do not already exist to give bodies vetoes over Westminster legislation.
Baroness Randerson
It is my understanding that the concept behind the phrase “Westminster will not normally legislate without the consent of the devolved Administrations” depends on what you mean by “normally”. It was explained to me that it meant there was a recognition that very occasionally one would need emergency legislation, perhaps in a situation of terrorism, where it was impossible, possibly because the other body was in recess, to get agreement in a reasonable timescale—that sort of exceptional situation. That is how the meaning of “normally” was explained to me from a legal perspective. Is that accurate? Is that the Government’s understanding of what that word means? If so, would it be possible to reach an agreement with the devolved Administrations on that definition?
Lord Bourne of Aberystwyth
My Lords, the noble Baroness, with her normal quicksilver mind, has darted ahead to the bit of the speech that I have not yet got to, relating to where we are on Clauses 8 and 9. She makes a fair point and I intend to deal with it. I hope I have reassured noble Lords over the correction power, and I thank noble Lords who contributed to that part of the debate.
Amendments 130, 131, 132, 148, 149 and 159, tabled by the noble and learned Lord, Lord Hope, the noble Baroness, Lady Suttie, and the noble Lord, Lord Adonis, seek to extend such a restriction to the international obligations and withdrawal agreement powers. I have listened carefully to what has been said. To avoid any shadow of a doubt, I am very happy to sit down with the noble Lord on what he says about the points raised on international agreements to look at the point on international obligations; I think it related to Schedule 5 to the Scotland Act. I am happy to look at that point with officials. However, I think he must accept, as noble Lords would, that the overriding ability in relation to international agreements must rest with the UK Government as the member state and the body able to conclude international treaties. I do not think there can be any question about that. However, I am happy to look at the valid issue he has raised on that point.
The position on international obligations and the withdrawal agreement powers must necessarily be more nuanced because we do not yet know what changes may be required, as we are not yet sure what the precise shape of the withdrawal agreement will be. However, I can confirm that this power will not be used to unpick the devolution settlements, nor to undermine or amend the Belfast agreement. As I have indicated, we are adhered to both the devolution settlements that we have and to the Belfast agreement that was reached in April 1998 and must be protected in all its parts.
Lord Beith (LD)
The Minister speaks as though the Clause 8 and Clause 9 powers are basically the same. They are not, of course. The Clause 9 powers can be exercised only if a further piece of legislation, a withdrawal Bill, is passed. It is not clear to me why the Minister is letting himself be cornered over this when the powers do not need to be in the Bill at all.
Lord Bourne of Aberystwyth
My Lords, I accept that they are not the same thing. Perhaps by definition, Clause 9 relates to the withdrawal agreement, but that will be made by the United Kingdom Government. As the member state, it will be the United Kingdom Government who will sign the withdrawal agreement. There may—indeed, I am sure there will—be issues about ensuring that our law is compliant with the withdrawal agreement in all parts of the United Kingdom, in both the Westminster Parliament and the devolved Administrations. That is why we need it.
Noble Lords will be aware that it is quite normal to use delegated powers in such ways, including Section 2(2) of the European Communities Act 1972, which amends the devolution statutes to ensure that our legislation reflects the most accurate position in law and ultimately to ensure that we fulfil our international obligations. To give an example, the Treaty of Lisbon (Changes in Terminology) Order 2011 was made under Section 2(2) of the European Communities Act. It amended the Scotland Act, the Northern Ireland Act and the Government of Wales Act to give effect to new terminology relating to the EU. This is not the stuff of power grabs, believe me; it is the stuff of ensuring that day-to-day business can continue. Leaving the EU requires changes of a similar technical nature across the settlements, and we will need the flexibility to ensure that these important Acts operate effectively once we have left the EU. That is precisely what these powers enable.
Amendments 148 and 149 also speak to the concurrent powers for United Kingdom Ministers and would apply a requirement for devolved Ministers to consent to their use. We will consider this matter fully in the next group, but I am very willing to engage with noble Lords on the subject that the noble Baroness, Lady Randerson, raised when she talked about the use of the word “normally”. “Normally” is not subject to definition by government, it is subject to definition in law, but of course we would normally expect the consent of devolved Administrations in conducting discussions on these matters. A lot of this, believe me, is down to ensuring good housekeeping and common sense. If we have the prospect, by agreement, of dealing with this just once in one United Kingdom Parliament rather than repeating it in all the different legislatures of the country, that makes sense.
I shall try to deal quickly with the points raised by noble Lords, I hope in more or less the order in which they were raised. Forgive me if I miss points; I will try to pick them up by letter and will place a copy in the Library for those who did not participate in the debate.
First, I restate my thanks to the noble and learned Lord, Lord Hope, for tabling the amendment and ably and cogently setting out what it was about. I followed precisely what he said and sympathise with a lot of it. I suspect we may disagree on some of the detail and emphasis, but I am certainly willing to engage with the issues he has raised. I also thank the noble Baroness, Lady Suttie, for bringing forward the Northern Ireland dimension. She asked who we will engage with. Sadly, we cannot engage with an Executive at the moment, but we continue to put all our energies into ensuring that we have an Executive in place to engage with. Whatever our differences with them will be, that is far a more desirable form of government and governance of Northern Ireland.
I think the noble Lord, Lord Wigley, spoke next, and spoke also on behalf of the noble Lord, Lord Foulkes. As I said, we will look at Clause 11 later. If I am not mistaken, we sought and obtained agreement from both Scotland and Wales to publish that. There are deep dives, as the parlance has it, going on in all framework areas—I think we are now down to 24 from 27. Full and active engagement on that is the way forward, and significant work is being done.
The noble and learned Lord, Lord Morris, spoke next. He has massive experience and knowledge of this area, so I listened very carefully to what he was saying. I appreciated our earlier chat. I can confirm that these framework areas are frozen, as it were, until we can get down to the substance in the deep dives of the things that need to be devolved and the things that need to be held in the centre. I think there is common agreement, including in Scotland, on the principle that some things will have to be retained in the centre. If we are seeking to pull something back—I do not see that that will happen, but if we were, through some of these other Acts—of course we would need LCMs just as we are seeking an LCM on this legislation. That is, again, a reassurance that I am able to give.
I thank the noble Baroness, Lady Finlay, for the engagement that we have had on this. I can confirm that we are seeking an LCM, as I believe she knows, on this legislation in both Scotland and Wales, and on the other legislation—on agriculture and so on—insofar as this involves potentially encroaching on devolved areas. Of course, once again we would seek to have long and deep discussions, as we are doing. If it were to impinge on devolved areas, we would fairly clearly need that LCM.
I hope I have answered on deficiencies; all of those will be covered in the Bill. An example of an international obligation would be something perhaps not mundane, but, for example, complying with a new law of the sea if there was a new law of the sea convention. That may be something we would seek to amend. It would be that sort of issue.
My noble friend Lady McIntosh asked for full details of the amendments. She will see that we have published the Clause 11 amendments. The amendments to Clause 7 will be tabled on Report. I have given that undertaking. They are not yet ready for reasons I have sought to explain but they will be there for Report stage. I hope she will take some comfort from that.
The noble Baroness, Lady Randerson, spoke with great experience of the devolved areas, and I thank her for her contribution about how things have moved and how there are still rough edges. I share some of the frustration of the noble Baroness, Lady Finlay, because we tried to solve some of this together on asbestos. This is not a power grab. Nobody knows where that power lies. Indeed, there is perhaps a little bit of, “You do it”, “No, you do it”. It is just lack of clarity rather than a power grab, but I hope we will be able to solve and settle it before too long.
I think I have dealt with the point made by the noble Lord, Lord Adonis, who is not in his place at the moment, on the Good Friday agreement. It will not involve any amendments in relation to that agreement, to which we are totally wedded, but there will be some amendments on Report in relation to Northern Ireland and some of the deficiencies that need correcting, in just the same way as in relation to Scotland and Wales. I thank the noble and learned Lord, Lord Wallace, once again for the clarity of what he said. I agree that we should look, perhaps through conversation and discussion, to move this forward. Like my noble friend Lord Forsyth, I have grave doubts. We will not be moving to a position of consent but I would certainly like to see us talking and consulting, and I am very happy to engage with that. To move to a position of consent in non-devolved areas would be dangerous to the union.
I thank my noble and learned friend Lord Mackay of Clashfern once again for what he said. I totally agree: if we think this is difficult, just wait until we get to Clause 11. I think this is relatively straightforward and I can see a way through this where we would have broad agreement. As the noble Lord, Lord Griffiths, indicated, Clause 11 will be a much more difficult area.
The noble Lord, Lord Elystan-Morgan, knows so much about this area, through both his political and legal experience. I agree with him that it is important to move to a position where, for things related to devolved areas, there is a convention that has grown up and is widely accepted about consent. I thank the noble Lord, Lord Griffiths, for his clarity. I agree with him about the importance of transparency and coming up with some common sense; I think that is essentially what he was saying and I do not disagree at all.
We have probably reached agreement on Clause 7. In relation to Clauses 8 and 9, I am very happy to look at the points that were made and discuss them further ahead of Report stage. In the meantime, I ask the noble and learned Lord and the noble Baroness to withdraw their amendments.
Lord Tunnicliffe (Lab)
I believe the amendment under debate is that of the noble Baroness, Lady Suttie.
Lord Bourne of Aberystwyth
I thank noble Lords who have participated in the debate on this group of amendments, particularly the noble and learned Lord, Lord Hope, and the noble Baroness, Lady Suttie, for tabling their amendments. I will seek to deal with the substance and then very briefly pick up some of the points that were made in debate. Amendments 102, 124, 103 and 125 seek to place a requirement on UK Ministers to have the consent of devolved Ministers when using Clause 7(1)—I think that issue will not arise now but I am happy to discuss it further; however, I think we will have exhausted that by bringing proposals forward on Report—Clause 8 and Clause 9, where it is appropriate, in areas of devolved competence.
I stress that the concurrent powers in this Bill do not in any way undermine the devolution settlements. Rather, they give the UK Government and the devolved Administrations the tools required to respond to what is a shared challenge of ensuring the functioning of our statute book in a pragmatic and collaborative manner which reflects current practice, and I stress has been the norm for some time. I made this point on the last group of amendments and an example can be found in new Schedule 3A to the Government of Wales Act 2006, which lists no fewer than 34 laws containing concurrent functions for United Kingdom and Welsh Ministers, including powers to make subordinate legislation.
I also highlight Section 2(2) of the European Communities Act 1972 itself, which is concurrent and has routinely been used to make a single set of regulations to implement directives relating to devolved matters. Take, for example, the Marine Works (Environmental Impact Assessments) Regulations 2007—enacted, therefore, under the last Labour Government. If a deficiency arises within that statutory instrument and we all agree on the best way to correct it, it makes little sense for four Administrations to make four sets of regulations to make the same amendment. This is of course compounded by the volume of legislation that will be needed in this House and in the devolved legislatures to ensure the proper functioning of our laws after exit day.
Our approach in this Bill is to mirror that effect: to continue working collaboratively with devolved Administrations, which is certainly the norm, to ensure that our statute book is fully functioning on exit. This has not been a cause of conflict in the past—there have certainly been differences but they have been few and far between—and we do not believe that it should be a cause of conflict in the future. We cannot compromise the flexibility provided for by the concurrent power that allows us and the devolved Administrations to benefit from shared working. This is crucial for us to meet the considerable task that lies ahead in order to have a complete, functioning statute book on exit day. I remind noble Lords of the clear commitment the Government have made that we will not normally use the powers in this way without the agreement of the devolved Administrations. I am happy to restate that: it is there in black and white in the delegated powers memorandum and in written evidence to the Constitution Committee. It was stated in the other place and I have repeated it here today.
However, I take very serious note of what my noble and learned friend Lord Mackay suggested about the possibility of a memorandum of understanding. I shall take that away and look at it. Noble Lords have asked why such a commitment is not included in the Bill and I would be happy to look at this with them and to hear their views, taking seriously what my noble and learned friend has said. There can be no doubt about the commitment this Government have made to “normally” seek the agreement of the devolved Administrations on these matters. I hope that that offers some reassurance.
Let me pick up some points made by noble Lords during the debate, first thanking the noble and learned Lord, Lord Hope, for the constructive way he has introduced this set of amendments: I am very happy to talk about this further, ahead of research, as I have suggested. I also thank the noble Baroness, Lady Suttie, and quite understand her seeking the best interests of Northern Ireland, which must be treated in precisely the same way. As I have indicated, I am grateful to my noble and learned friend Lord Mackay of Clashfern for his suggestion about a memorandum of understanding, which I would like to take away and look at further.
The noble Lord, Lord Thomas of Gresford, made far-reaching points on Barnett. We certainly made some headway on that when I was in the Assembly—not because I was in the Assembly, but I remember some headway being made on it. That issue is of course still there but it is far beyond the Bill, let alone this amendment. He made a point, as did others, about the importance of trust, which I take very seriously. I thank the noble Baroness, Lady Finlay, very much; trust is important and we need to build it.
My noble friend Lord Deben is at his most deadly when he seeks to praise me. He was being so constructive that I am bound to agree with him, and I thank him very much for his kind comments. I know that he speaks with authority and understanding, particularly on Wales, and once again on the importance of trust. Again, I take the point made by the noble Lord, Lord Kerr, on the importance of that in our discussions. We can of course discuss this further. I thank the noble and learned Lord, Lord Wallace, for clarifying the point and I am sorry if I misrepresented him. It was certainly unintended so I take that point, too.
My noble friend Lord Forsyth made some serious points about the dangers of the unintended consequences of legislation. We have to be careful of that and I take his point but that said, there is the serious and important issue of building up trust, as my noble friend Lady McIntosh reminded us. She also reminded us of how we all have interests in different parts of the country; it is not as if we are talking about a union that does not mean something. When we all have relations, friends and interests in different parts of our country, we have a shared interest in getting this right.
On the suggestion about engaging made by the noble Lord, Lord Wigley, I am very happy between now and Report to meet with officials to see whether we might move in the direction of a memorandum of understanding. My noble and learned friend Lord Mackay, who has vast experience not just of Scottish issues but of legal issues, made a very valid point as to how we might achieve that. In the meantime, I ask the noble and learned Lord and the noble Baroness if they could perhaps withdraw their amendments.
Baroness Suttie
My Lords, I join in the general compliments to the Minister and thank him very much for his courteous and detailed replies this evening, and for his commitment to engage further with noble Lords before Report. We will no doubt return to many of these issues on Clause 11 in Committee, and again during Report. But in the meantime, I beg leave to withdraw my amendment.
Lord Rooker (Lab)
Before the Minister responds, I want to spend a couple of minutes on a highly relevant issue that has not been raised on this Bill at all.
Following the BSE crisis, which was very damaging to the economy, an all-island animal feed arrangement was created in Ireland. It is not generally appreciated that there are a disproportionate number of animals for food production on the island of Ireland, hence its exports to the rest of the world: 15% of the world’s infant formula market is controlled by the dairy industry on the island of Ireland. The animal feed situation, which is crucial, is controlled by the ports around the island of Ireland. After Brexit, the EU will be ultra-sensitive—do not forget that we are the country that gave the world BSE—about the imports of animal feed. Given that there already exists an all-Ireland animal feed arrangement, and all-Ireland control mechanisms at the ports and the mills, how will this work after Brexit for the transport between the north and the south from the feed mills and ports? It simply will not be possible to drive a lorry full of feed across the border into Europe without it being checked. I cannot understand why this issue never gets raised. A third of what we grow feeds animals—it is a huge amount of business. We are what we eat, of course, and the animals are produced that way. What will happen in the island of Ireland to the existing animal feed arrangements? It is highly relevant to this debate.
Lord Callanan
I thank the noble Lord, Lord Berkeley, for this debate on Amendments 104 and 231, which raise the important matter of frontier control procedures and freight transport in relation to the Clause 7(1) power. I am particularly grateful to the noble Lord for his helpful technical and operational suggestions. I would have passed them on to my colleagues in the Department for Transport but my noble friend Lady Sugg has already taken careful note of them and I am sure she would like to take them forward with him personally.
I am pleased to reassure the noble Lord that discussions in this field continue with all those involved in the running of our roads and railways and the freight services that use them. How these services and the procedures involved continue to operate after our exit is, however, a matter to be negotiated with the EU. In the event that there is no negotiated outcome, Her Majesty’s Revenue and Customs will treat EU trade as it currently treats third country trade, which means that businesses trading with the EU will need to comply with additional customs requirements. The Government recognise that this represents a change to how UK businesses currently trade with EU firms and so we will model new customs processes and procedures on the existing Union customs code.
The noble Lord’s amendment would prevent the making of regulations in certain scenarios but it does not, and cannot, do anything to prevent those scenarios arising. This will be determined purely by what happens in the negotiations. All it would do in the unhappy situation that we did not secure a satisfactory agreement with the EU is to leave us unable to reflect that situation in domestic law, which of course would only make the position worse. Furthermore, any report that was carried out before the outcome of the negotiations would necessarily be speculative and so would lack a certain utility.
Happily, I can tell the noble Lord that the transport of goods is incredibly important to both the UK and the EU, as many noble Lords have pointed out, and there is a strong mutual interest in reaching an ambitious agreement which maximises the benefits for all businesses and individuals. As such, the Government aim to negotiate for the most tariff and barrier-free trade with our European neighbours, as the Prime Minister said in her speech last week. The Government will ensure that appropriate measures are taken when implementing whatever may be agreed. It will be done in a phased process, thereby providing businesses with enough time to plan and prepare for the new arrangements, minimising disruption.
Whatever the outcome of the negotiations, the Government believe that it is in the interests of both the UK and the EU to have efficient and effective frontier control procedures to achieve one of the strategic objectives of ensuring that UK-EU trade is as frictionless as possible. We will continue to meet our commitment to keeping Parliament fully informed on these negotiations and allow for proper scrutiny, including through regular statements and in our support for the work of committees in this House and the other place. I hope I have reassured the noble Lord that the Government will work hard on securing an agreement with the EU that works well for all in the road and rail freight sectors and I therefore ask that he will withdraw his amendment.
Lord Campbell-Savours
I asked four questions on trusted trader status. When will I get my answers?
Lord Callanan
I will read Hansard and respond to the noble Lord in writing.
Lord Liddle
The Minister did not answer any of the points that I made about what level of contact the Government have had in Brussels discussing these issues, and why in the interval between the September agreement and March, when the Commission produced its own proposals, Britain appears to have done nothing. Will he please tell us what is going on?
Lord Callanan
We are having extensive discussions with our partners in Europe. We are also having extensive discussions with representatives of the rail freight industry and other players in the sector, but as the noble Lord well knows, the arrangements are a matter for negotiation.
Lord Liddle
If Brussels can produce a proposal, why cannot the British Government produce an alternative proposal?
Lord Callanan
As the noble Lord pointed out, we did produce a customs paper last year. In her speech last week, the Prime Minister referred to two alternative customs arrangements and those matters are being taken forward in the discussions. If the noble Lord reads the Prime Minister’s speech of last Friday, he will see that she referred to them specifically.
Lord Liddle
Of course I have read the Prime Minister’s speech. What do you take me for? I follow these things very closely, but the Minister still has not explained how it is that the Prime Minister simply referred to the principles that were put out last summer. This is a situation of real urgency for the economic actors, so why are the Government not producing proposals? Would the Minister be willing to write to me on this point?
Lord Berkeley
My Lords, I am grateful to all noble Lords who have spoken in this interesting debate. It has been really well informed and I am amazed that the Government have nothing better to respond with other than answers that I think I heard six months ago. As my noble friend has said, time is running out. This is a probing amendment and I am grateful to the noble Viscount, Lord Hailsham, for suggesting that we should have gone harder, and indeed the noble Baroness, Lady Altmann, said the same thing. We have time to have discussions before Report, but it is a sad reflection for all of industry, not only the transport sector. The noble Baroness referred to the manufacturing sector and said that we are no further on. The Commission has produced papers but we just get motherhood and apple pie. I do not think I can take this any further tonight, so I beg leave to withdraw the amendment.
Lord Callanan
My Lords, I am again grateful to the noble Lord, Lord Berkeley, for bringing this important matter before the Committee. The Government are considering carefully all the potential implications arising from the UK’s exit from the EU, including the implications for the UK’s future relationship with the European Union Agency for Railways. The UK’s continued participation in the agency as a third country and its continued co-operation in the fields of rail safety and standards, as well as the implications for the UK’s technical standards regime, is, of course, a matter for the negotiations.
Our domestic railway and the cross-border services that link us with the EU serve an incredibly important function in the transport of goods and people across the UK and between the UK and the EU. In 2016, there were some 1.7 billion passenger journeys facilitated by rail in the UK, while the rail freight industry transports goods that would otherwise require 7.6 million more lorry journeys each year. Equally, the Channel Tunnel was responsible for 25% by value of all trade in goods between the UK and continental Europe in 2014, facilitating an estimated £91.4 billion of trade in total. Passenger services through the tunnel, including Eurostar and Le Shuttle, and international rail freight services, transported an estimated 20.8 million passengers and 22.5 million tonnes of goods in 2016.
As the Prime Minister made clear in her Mansion House speech last week, we want to maintain the continuity of rail services that link us with the EU, which provide important economic benefits to both the UK and the EU. However, our participation in the European Union Agency for Railways is not something that the Bill can legislate for. For decades, we have worked closely with our European partners to develop a regime in the field of rail safety and standards that reflects UK practice. We strongly believe it is in both our and the EU’s interests to ensure continued productive co-operation on safety and standards in the future, regardless of the outcome of negotiations. As I have said, this will be a matter for negotiations. In considering all relevant factors relating to the future rail safety and standards framework, the Government remain committed to our railways continuing to have the highest standards and remaining steadfastly amongst the safest in the EU.
We will continue to take on board the views of industry. The Government have a number of established mechanisms for engaging regularly with the rail sector. These include, for example, the Rail Delivery Group and the Rail Supply Group, whose members include the supply chain, passenger and freight operators, and Network Rail. As we prepare for the UK’s withdrawal from the EU, the Government will continue this engagement with a wide range of stakeholders from across the UK’s rail industry to seek views, which the UK has taken, and will continue to take, into consideration.
In the light of that, I hope I have satisfied the noble Lord that we understand the importance of maintaining the continuity of our important EU rail links, as well as maintaining a safe and effective railway. This will continue to be an important factor as we approach the negotiations. I therefore hope he feels able to withdraw his amendment.
Lord Berkeley
I am grateful to the Minister for that reply. It is not news to me, because, obviously, I am aware of what is going on. Could he possibly write to me quite soon about some information that I have which states that the Department for Transport is looking at which regulations from Europe could be torn up as soon as we leave? It is apparently highly confidential, which probably means that we will end up retaining a mishmash of half European and half British regulations, with a divergence which will be incredibly bad for both our manufacturing industry and operators.
Lord Callanan
My noble friend Lady Sugg will be happy to discuss that with the noble Lord.
Lord Berkeley
I am grateful to the Minister. I beg leave to withdraw the amendment.
Baroness Altmann
I rise briefly to explain why I have added my name to these important amendments. One thing that has not been mentioned in Committee so far is the idea that the arrangements we have with Europe also protect the safety, maintenance and repair facilities around our country for our aviation and aerospace industries. We must maintain alignment of regulation. We have 100 airports and 172 maintenance and repair facilities, and if we jeopardise the standards of safety, if we are not in the open skies agreement and not in EASA, then the US apparently is already planning to send its own inspectors to make sure that our standards are up to scratch. If we cannot reassure people that we will maintain those standards, we will not have a functioning aerospace and aviation industry.
Another important element that must not be forgotten is that if we do not maintain our membership of the open skies agreement and EASA, the flights taken by ordinary citizens will increase in price. One estimate from the consultancy Oxera is that if all flights operated by third country airlines were removed, air fares for UK passengers would rise by between 15% and 30%—a Brexit surcharge which people were never told to expect to pay when they voted to leave the EU. These restrictions cannot be overcome simply by airlines setting up subsidiaries in Europe, because ownership restrictions do not allow non-EU investors to own a controlling interest in EU airlines.
I urge my noble friend the Minister to make a commitment to the Committee that we intend to maintain membership of EASA and the open skies agreement, notwithstanding the jurisdiction of the European Court of Justice.
Lord Callanan
My Lords, to start with, I apologise to the noble Lord, Lord Tunnicliffe, as we are more than happy engage in discussions with interested parties. Before I had this job, I was Aviation Minister and had regular meetings with all the concerned parties in the industry, and my noble friend Lady Sugg has told me she is very happy to continue those discussions. I am sorry if I did not make that clear to him earlier. We are of course carefully considering all the potential implications arising from the UK’s exit from the EU, including the implications for the UK’s future relationship with the European Aviation Safety Agency and the Single European Sky agreement. I thank the noble Lords, Lord Berkeley and Lord Adonis—surprisingly, I see that the latter is not in his place—for their amendment.
Lord Callanan
I will repeat the words that I used, for the noble Lord’s benefit:
“The Prime Minister … acknowledged that an appropriate financial contribution would be necessary and that there will be a role for the Court of Justice of the European Union”.
As I was saying, the precise form and nature of the UK’s future relationship with EASA, as well as continued co-operation with the EU in the field of aviation safety more generally, will of course be a matter for the negotiations. The UK’s geographical position means that, with Ireland, the UK services over 80% of traffic entering or leaving EU airspace from the North Atlantic. Given that, the level of interaction between the UK and the EU demands close co-operation. The Government recognise the need for UK air traffic management arrangements to remain interoperable with the rest of Europe once the UK has left the EU. Safe and efficient air traffic management is a priority for us. The UK’s air traffic management system will remain closely bound to that of our European partners. We seek a close and collaborative relationship in this area, just as in many others. However, NATS will continue to provide the same high-quality service to airspace users that it does today.
The Government also want to avoid disadvantaging industry by imposing additional regulatory burdens. The Bill is part of that: it allows the Government to be clear that we are committed to maintaining a harmonised safety system that benefits both the UK and EU aviation networks and maintains the high safety standards that we all wish to see. I hope what I have said has been reassuring for noble Lords and that they feel able to withdraw the amendment.
Lord Liddle
My Lords, what about the point about the affirmative procedure?
Lord Callanan
I took on board the noble Lord’s question but I am unable to give him those reassurances at the moment.
Lord Berkeley
I am grateful to the Minister for his reply and to all noble Lords who have spoken in this excellent debate. The Prime Minister has made more progress here than in the logistics, customs and railway sectors. My final question to the Minister is: has the European Union agreed this? Until it is agreed, it is not a lot of good. We need to revisit this and, we hope, have regular updates. I hope the Government will push very hard for it to be a priority—as my noble friend Lord Whitty said, to have this signed, sealed and delivered at as early a stage as possible. On that basis, I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town (Lab)
My Lords, I have little to add but I have tabled Amendments 350 and 351 in this group. I should like to mention the importance of ensuring parliamentary scrutiny, in particular of tertiary legislation which was mentioned by the noble Lord, Lord Lisvane. We will deal with that issue later in a different group. The issue he raises is covered in paragraph 15 of the report of the Delegated Powers Committee. There is to be no time limit on the ability to pass tertiary legislation.
As has been made clear both last Wednesday and today, in seeking to bring into UK law the provisions that are currently effected in the UK by virtue of the 1972 Act and our EU membership, the Government have simply slipped into a belief that they should take control of all of this and have drafted for themselves powers and possibilities that rightly belong in Parliament, not with the Executive. As has been said, these amendments are to ensure that use of the powers will be properly scrutinised, and that they will be used by Parliament, rather than Ministers. I hope that the Minister has heard this often and strongly enough to be able to indicate, even at this late hour of the night, that it should be the Government who bring forward amendments on this on Report, because the arguments have been so well made. We should expect them to take the next step.
Lord Callanan
My Lords, I know that concerns regarding the delegation of legislative power, particularly where that delegation permits sub-delegation or allows for tertiary legislation, are shared by many in the Committee. I know that this debate has been brief because the hour is late, but I am aware of the concerns. I say up front in response to the noble Baroness, Lady Hayter, that the Government understand these concerns. We have listened carefully to this debate and to other representations that we have received, so for Report we will look to see how we can provide additional reassurances and transparency around sub-delegation and additional scrutiny of any fees and charges made under Schedule 4.
I will go into this in a little more detail, if noble Lords will forgive me. I know that it is late, but these are serious amendments on an aspect of the Bill that is of legitimate concern, unlike some of the amendments we discussed earlier. I hope I can do something to put some concerns to rest. I shall first take a moment to clarify that, where a legislative function is being sub-delegated under Clause 7 or any of the other powers in the Bill, that power will also be constrained by the policy restrictions that apply to the delegating power. In the case of Clause 7(1), that includes all the restrictions in Clause 7(7).
Although, beyond Ministers, there are indeed a great number of public authorities in the UK, there are only a very small number to which it would be appropriate for Ministers to sub-delegate legislative functions as an appropriate correction for a deficiency in retained EU law. Again, these will all be subject to the affirmative procedure.
I also restate that any SI providing for legislative sub-delegation will be subject to the affirmative scrutiny procedure and will have to set out what conditions apply to the exercise of that power. Whether scrutinising the sub-delegation of any of the powers in this Bill, the creation of a new, specific and targeted legislative function, or the transfer of any legislative power from the EU, I would expect this House in particular to take a keen interest in these instruments and to have vigorous debates on the appropriateness of the conditions proposed for the exercise of the power before voting on the instrument.
While the Government are listening to the Committee’s concerns about the form that this sub-delegation will take, they believe that conferring powers on public authorities, including Ministers, to allow them to make provisions of a legislative character or other legislation can be an appropriate course of action, either to make corrections to retained EU law or to maintain a regime in the future. This is particularly true where there is a need for specialised, technical rules to be developed, introduced and maintained by a body that has the necessary dedicated resource and expertise.
I will give noble Lords an example. The EU binding technical standards—the detailed technical rules developed by EU regulators for financial services—demonstrate where it might be appropriate to sub-delegate the responsibility for correcting. These standards, which run to almost 10,000 pages, fill out the detail of how firms need to comply with requirements of policy set in higher legislation. The PRA and FCA have already been given the responsibility by Parliament of developing and making the domestic detailed rules needed to ensure that financial services firms are stable, well managed and meet the needs of consumers. These UK public bodies have played a leading role in the EU to develop these standards, so they already have the necessary resources and expertise to review and correct them to operate effectively in the UK from day one of exit.
Baroness Kramer (LD)
Perhaps the Minister could help me with a clarification. As I understand it, the FCA and others have the powers he just described as a consequence of a cascade that comes, as he said, from higher levels of legislation that originated in a democratic process. They therefore have safeguards, frameworks, constraints, mitigations and appeals processes—all kinds of characteristics sitting around them. How do the powers of sub-delegation which the Minister described relate to any of those structures of cascade or framework, since we are supposedly leaving the EU?
Lord Callanan
I am not sure that the powers originated in a democratic framework; a lot of them came from EU legislation introduced by regulation which takes automatic effect through the European Communities Act. We could have an argument about whether that is a democratic framework, but perhaps now is not the time.
Lord Callanan
Let me make some further progress and see whether it responds to the noble Baroness’s questions.
Some of the powers to make legislation that will be transferred under the powers in the Bill are integral parts of regimes currently managed at the EU level; for example, where the European Commission currently legislates to add to or remove active compounds from lists of biocidal products. Where sub-delegated or transferred legislative powers are crucial to the functioning of a regime, it would not be appropriate for those powers to be subject to a sunset. That would only postpone rather than remove the requirement in the limited time available before exit for either a regular flow of primary legislation to keep regimes up to date or a suite of primary legislation to design equivalent powers to those which the Government intend to transfer under this Bill.
Perhaps I may address the three elements of Amendments 350 and 351 tabled by the noble Baroness, Lady Hayter. First, I turn to the scrutiny of the exercise of the powers by Ministers of the Crown in Schedule 4. We have laid out in Schedule 7, which I know we will debate at length another day, provisions for the scrutiny of those powers. Our position is that the powers should indeed be subject to the affirmative procedure where Ministers are creating new fees and charges regimes, or where we seek to grant an authority the power to set its own fees and charges. It is the sort of framework being established in which this House rightly takes a great interest. All this is of course possible under Schedule 4 only in relation to new functions that we are transferring from the EU or setting up on exit under the powers in the Bill. We have not provided for the adjustment of these, or for existing fees or charges, to be subject to the affirmative procedure. In years to come, there will be many such adjustments as technology cuts costs and inflation raises them. This ebb and flow can make a real difference to businesses, but does not normally represent a matter requiring debate and division within this House.
Nevertheless, I accept the point made by the Delegated Powers and Regulatory Reform Committee that the raising of a fee not by 1% or 2% but by, let us say, 13,000% would be a substantial matter. I trust, however, in the expertise of the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments to draw this House’s attention to such matters. I remind noble Lords that the negative procedure for statutory instruments does not mean no scrutiny at all, nor does it prevent debate. Nevertheless, if I have not addressed sufficiently the noble Baroness’s concerns on this point, I would be more than happy to discuss further how we might do so. As I said at the start, we are looking closely at this issue and expect to come back to it on Report.
Secondly, these powers are vested also in the devolved Ministers—we do not have the noble Lord, Lord Wigley, with us to make his regular point about devolved matters. While the scrutiny of the powers is important and, as I have just set out, the Government have tried to ensure that the most important of the regulations made under them will be affirmative, it is not for this House to dictate scrutiny to the devolved legislatures. The Bill contains a starting base of procedures for the devolved exercise of powers. While the devolved Administrations are competent to change these following Royal Assent, discussions continue with them about any alterations they may think it appropriate to make in the Bill. It would also not be appropriate for us to require the devolved Ministers to seek our approval for their statutory instruments—I am sure the noble Baroness did not intend this to happen.
My third point regards the sub-delegation of the power to provide for fees and charges. It bears repeating that any instrument providing for this will have to be affirmative, can delegate this power only to a body being given a new function under this Bill, and will have to set out the conditions for the exercise of that power.
Baroness Hayter of Kentish Town
It sounds as though what the Minster is reading out dates from before today’s debate on fees and charges. I had hoped that, in light of that, this continued idea of setting these by secondary legislation had gone from his mind.
Lord Callanan
We said that we would return to this matter on Report, but we are now talking about the sub-delegation of those fees and charges.
Moving on to Amendment 352 in the name of my noble friend Lord Hailsham, I am in total agreement with the principle that the Government should not raise fees or charges from the public, whether businesses or individuals, without considering the impact on those who will pay or the impact on both the payers and the wider economy. I may be wrong but I doubt that many in this Committee, other than the noble Lord, Lord Macpherson, who is sadly not in his place and is of course intimately familiar with it, will have read Managing Public Money. This weighty tome is easily available online and serves as the sacred text of Her Majesty’s Treasury regarding many things, including the setting of new fees and charges. It sets out that charges on the public must be subject to the general practices on consultation and economic and financial analysis. Without this, the consent of Her Majesty’s Treasury to establishing a new fee or charge, required by paragraph 3 of Schedule 4 for all new fees or charges under the Bill, cannot be obtained.
I hope that this long explanation, for which I apologise at this late hour, and my other points have gone some way to reassuring noble Lords. I am happy to continue discussing these important issues, but in the meantime I hope noble Lords will not press their amendments today.
Lord Lisvane
My Lords, I am extremely grateful to the Minister for the detail he went into in his reply, particularly at this late hour. I also pay tribute to him for his customary generosity in being prepared to discuss these matters outside the Chamber. He recommended one weighty tome with which, as a former accounting officer, I am moderately familiar. Perhaps I may recommend to him another weighty tome, Craies On Legislation, edited in masterly fashion by Daniel Greenberg, former parliamentary counsel. I think it is at chapter 3.5.1 that he will find a very good treatment of the dos and don’ts of sub-delegation. That might be something we discuss before we come back to these matters on Report.
Of course, he is absolutely right to say that the consigning of these powers to a body or a person will require the affirmative procedure, and that is fine up to a point, but the exercise of the powers, once sub-delegated, will be free of the trammels of the accepted processes, so it becomes even more important that, in the consigning of the powers, the constraints on how they can be used by the consignee, if I can use that rather unlegislative term, are made absolutely clear. That is something, perhaps, on which we can have further conversations between now and Report. On that basis, I beg leave to withdraw Amendment 110.
Baroness Hayter of Kentish Town
My Lords, I do not think that anyone who has read the excellent December 2016 report Brexit: Financial Services from our EU Committee chaired by the noble Baroness, Lady Falkner, will be under any illusion about the challenge that Brexit poses to this economically crucial sector of our economy. This evening we have heard of the needs both of those in the financial sector and of those who depend on it, and we have heard of one possible way forward, but the most important point is that something is needed urgently.
The British Insurance Brokers’ Association, to which we have just heard reference, the Alternative Investment Management Association, the ABI and TheCityUK have all come to me, and I am sure to other Members of this House, to raise their concerns about Brexit and particularly the wider implications for the legal sector and the insolvency sector and what that means for investors as well as for the more traditional City firms. Along the lines outlined by the noble Lord, Lord Carrington, TheCityUK has called for a bespoke market access agreement based on mutual recognition, regulatory supervision and co-operation, with, as we have heard, particular emphasis on mutual recognition and the enforcement of judgments.
In long-term contracts, legal continuity and certainty are vital for business, as we have heard, but also for consumers, as the ABI has stressed. Retired British citizens in nice warm areas such as the south of Spain need to know whether their annuities and pensions from London-based providers will continue after March next year, and indeed after December 2020.
The AIMA wants to see regulatory frameworks that enable managers to deal with any type of fund vehicle or account, as they now do, as they manage the savings and investments of pension funds and insurance companies. The British Insurance Brokers’ Association—100,000 people are employed in that industry, and they arrange 70% of all general insurance—says that it is “critical” to reach a transition agreement quickly and, following that, a mutual free-trade agreement.
The one word that I want to leave the Minister with is “urgency”, because insurance renewals are already being issued for annual policies renewable on 30 March next year, a date that I know is uppermost in his mind. Any policies running after 30 March next year would result in uncertainty over the legitimacy of that part of the policy that is effective after we leave. So we need these brokers to be able to ensure that there are no interruptions in customers’ cover, and that extends to whether we can be insured when we travel and when we drive our cars abroad, and to travel insurance if the EHIC ends—these are real things that people rely on day by day.
As we know, the UK is the world’s largest exporter of financial services to the EU, which is where I have to disagree with the noble Viscount, Lord Trenchard. He thinks that there is great hope somewhere else, but actually, for us to earn money in the EU and maintain all the customers we serve there, we must first prioritise establishing that we can continue with what we do so well there. Shoring up that business certainty through a formal agreement on regulatory equivalence or something similar is becoming ever more urgent.
We first started debating this report in the House in December 2016. We are now in March 2018, and I fear we are no clearer in knowing what the Government are doing. I hope that at this late hour, not just of the clock but of the calendar in moving towards when we leave, the Government will be able to provide a little more assurance than they have done thus far.
Lord Callanan
My Lords, I first thank my noble friend Lord Carrington for his amendment, which has enabled us to have this excellent short discussion. I also thank the noble Baroness, Lady Falkner, for her contribution. Of course, I know the report of her committee extremely well, as I was a member of the committee when it was produced and I participated in many of the discussions to which she referred, and which she very ably chaired. I thank my noble friend Lord Trenchard for his comments. He made some excellent points and pointed out the global nature of many of the financial services regulations that we are talking about.
The noble Lord, Lord Hunt, made some good points about the insurance industry. I can assure him that we will continue the work that we are doing in consultation and discussions with the industry as we take the negotiations forward.
However, although I thanked the noble Lord, Lord Carrington, for his amendment, I am afraid that we cannot accept it for reasons that I will explain. It would not be practical given that the negotiations on the UK’s future relationship and the eventual arrangements for market access in financial services post Brexit have yet to begin. It will be important that in entering negotiations the UK retains a degree of flexibility as to what the precise arrangements for market access for financial services firms may be. It is imperative that both sides come to the negotiating table with a constructive mind set. That was the essence of the Chancellor’s contribution last week. Agreeing now to set out a report according to the specific and detailed criteria set out in the proposed new clause would prejudge a great deal of the substance that has yet to be discussed by both ourselves and the EU.
I emphasise that the Government share the aims of the noble Lord’s amendment. We are seeking an ambitious relationship that takes account of the fact that the UK and the EU start from a position of total alignment, with unprecedented experience in working with one another’s regulators and institutions. As the Chancellor outlined last week, the UK is a global financial services hub—an engine that powers the real economy and the UK—and it is a real asset for Europe too.
In his speech—this refers to the point made by the noble Baroness, Lady Kramer—the Chancellor set out three key elements for a possible approach to a future partnership: a binding dialogue for establishing regulatory requirements for cross-border trade; supervisory co-operation arrangements that are reciprocal, reliable and prioritise financial stability; and an independent arbitration mechanism that has the confidence of both parties to provide durable dispute resolution. We hope that we would agree that the UK cannot be a rule taker in financial services but, by working together as the Government have proposed, the UK and the EU can preserve market access and strengthen stability and prosperity in the UK as well as the rest of Europe.
Underpinning this is our commitment to upholding the robust standards which are, as the noble Viscount, Lord Trenchard, pointed out, often based on international standards that we have developed since the financial crisis. These aims have consistently been emphasised in government messaging—more recently by the Secretary of State for Exiting the European Union and by the Chancellor. These align with what we have been hearing from the financial services sector in terms of a desirable end state deal. However, the details have to be worked through via the negotiations and the process will require imagination on both sides. This proposed new clause would set out a prescriptive template for the Government to follow. Negotiations are by their nature fluid and we cannot agree to provide a report based on a set of potential end state arrangements, which are predefined and outlined specifically here, that prejudges the outcome of negotiations before those talks have even started.
These issues are extremely important and I hope that the Government’s conduct in negotiations, as well as the clear public stance of Ministers on the significance of financial services to our future relationship, will help to provide reassurance over our commitment to securing agreement on these issues. Once the negotiations conclude, the Government will need to make clear the substance of what has been agreed. This is particularly so in order to enable the industry to understand the provisions for market access and how they sit within the UK’s agreed relationship with the EU on financial services going forward. We will of course, as always, be happy to update Parliament when the appropriate time comes. However, in light of the need to preserve UK flexibility in the negotiations, I hope that the noble Lord will feel able to withdraw his amendment.
Baroness Falkner of Margravine
Before we dispense with the amendment I have a brief question for the Minister. If I have understood him correctly, he has just said that when the negotiations are complete, the Government would set out and clarify their position. Can he tell me what he means by “when the negotiations are complete”? Is he talking about the negotiations on the withdrawal agreement—in other words, by the end of this year—or the agreement on the FTA, in which case we will not know the parameters of the Government’s thinking until very much later when we are into the transition agreement itself? There I would have to agree with my noble friend Lady Kramer that essentially, businesses will have made up their mind and taken the necessary actions, not least because the regulators require them to carry out their contingency planning.
Lord Callanan
I think I mean both. We will update the House on the position at the end of the negotiations on the withdrawal agreement, on the agreement on the future FTA, and if I can add a third criterion to that, of course on the negotiations for the implementation period, for which we hope to be able to provide an update in the very near future. All those factors are important in the provision of financial services. If we get the implementation period agreed in the near future, which we hope and expect, that will provide a slightly longer period for businesses to establish the appropriate stability, but it is hoped that as we get to the end of the year we will have the withdrawal agreement. We expect that to provide the details of the framework for future co-operation. I will be very happy to update noble Lords at all of these stages.
