Brexit: Consumer Protection (European Union Committee Report)
(5 years, 10 months ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Kennedy of The Shaws
To move that this House takes note of the Report from the European Union Committee Brexit: will consumers be protected? (9th Report, HL Paper 51).
Baroness Kennedy of The Shaws (Lab)
My Lords, this report was prepared by the Justice Sub-Committee, which I chair, of the European Union Committee. I thank the members and staff of the committee for their support and hard work. It really is an incredibly stimulating committee that works incredibly hard.
The European Union Committee of this House has done sterling work across the board. Its sub-committees have produced 40 different reports, and we have contributed quite a number. The idea of those reports was to inform Parliament and the public about issues arising from the decision to leave the European Union. I know that they have been valued in some quarters, but in others they have fallen on deaf ears. At times, the Government’s responses have not treated them with the seriousness we would have liked.
The United Kingdom has been at the core of developing European Union consumer protections, pushing for high standards and strong rights to apply across the single market. We have been at the heart of this and sought that they be enforced throughout the European Union by a court order made in any member state. That means that if you have an issue with a faulty purchased item, you can get an order in your local court in Croydon, for example, and it will become enforceable across Europe. United Kingdom consumers have benefited from this strong regime of standards and redress. When making purchases in the UK, cross-border purchases or when visiting other EU countries for work or holidays, if something goes wrong there can be restitution, compensation or enforcement, as set out in our report. UK companies have said that they have benefited by being able to trade across the European Union with customers who can be confident that the system is consistent and dependable.
EU-wide consumer rights are based on cross-border co-operation between consumer protection organisations, and in the development of this area of law. We are fearful that this will be lost. The UK will be leaving that infrastructure, those mechanisms and those forms of co-operation, whether we have some cobbled together new deal or there is no deal.
Our inquiry, which reported in December 2017, looked into what might be lost by leaving those systems of co-operation, and asked what could be done in order for the UK to continue to participate. In this we were greatly assisted by evidence from consumer advisory bodies and regulators, which I would like to thank for sharing their expertise and advice.
On the one hand, many purchases by UK consumers are made in the UK, and the UK could decide to maintain high standards of consumer protection for domestic purchases; that goes without saying. Indeed, our report tentatively welcomed the EU withdrawal Bill—now an Act—as a means of mirroring in UK domestic law the individual consumer rights introduced by EU legislation, so we are at least able to welcome that formally into our own law.
On the other hand, there is great uncertainty about purchases made from the EU or made in the EU by UK-based consumers travelling in the remaining member states. Our witnesses told us of the loss to consumers, across all sectors of the economy, if the UK does not continue to participate in the EU co-operation mechanisms. They told us of the challenges of participating as a third country outside the EU. That is particularly true if the UK insists on being beyond the jurisdiction of the European Court of Justice, which was one of the red lines. The European Court is the final arbiter for interpreting the rules we have made together. Our report pointed out that the EU withdrawal Act,
“cannot ensure the protection of UK consumers’ rights when they visit the EU 27 post-withdrawal. Nor can it guarantee the UK’s continued access to the EU’s shared network of agencies, mechanisms and infrastructure that police, secure, develop and underpin consumer rights across the Single Market”.
So we are going to be outside of that body of agencies and mechanisms.
When we heard evidence from Margot James MP, the former Minister for Small Business, Consumers and Corporate Responsibility, she reiterated the Government’s aspiration for,
“a deep and special relationship with the EU post-Brexit”.
But she provided no detail on how to overcome the challenges we were describing to her, and in no way helped us to understand how we would participate in these consumer protection arrangements.
The Prime Minister’s deal gave us little comfort, and a no-deal outcome would tear up the rule book. So our report concluded that,
“it is important that the UK’s access to the European Union network should be maintained post-Brexit”,
but questioned whether the Government had given any thought to how they might address the problems. We called on the Government to produce a clear plan addressing these problems as a matter of urgency—how to be part of that infrastructure of agencies and mechanisms.
The Government’s response to our report, received in February 2018, was pretty pathetic. In his covering letter, the then Minister, Andrew Griffiths, thanked the committee for its interest in this “important area” and its,
“thoughtful analysis of the issues”.
He pledged that from the day the UK leaves the EU, the Government will remain,
“committed to maintaining high standards of consumer protection, delivering the stability and continuity consumers need to continue to make purchases”.
He added that in its negotiations with the EU 27, the Government’s objective was to retain,
“effective protections in place for consumers purchasing goods and services across borders”.
He expressed this as an intention that they would co-operate closely.
While the committee and the Government agree that the UK’s strong history of championing consumer rights can continue after we leave the EU, and while we agree on the benefits of cross-border co-operation, the Government’s response was vacuous. It lacked detail on how to address the significant issues at the heart of our report; it failed to address the loss of the reciprocal relationships, institutions and infrastructure that underpin and develop consumer protection policy; and it suggested no potential replacements for any of that, so it was really blather. We are hoping to hear something more solid from the Minister tonight.
The Minister who replied to us assured us that the Government had given “substantial thought” to these issues, had considered,
“in depth, a wide range of options”,
and was,
“continuing to undertake detailed work on this”.
That was a year ago. But the response did not engage in the detail of our concerns, nor with any of our proposed solutions. Either they were ignored or the Government gave vague aspirations but felt unable to share any detail, because these matters remained subject to the Brexit negotiations. We were told that it was all part of that great whispering thing—that they could not give anything away because they were negotiating.
Even on matters fully within the UK’s remit, the Government’s response to our report lacked a clear plan. For example, on the issue of increased pressure on national regulators, there was a vague aspiration to work closely with the Competition and Markets Authority,
“to ensure it is appropriately resourced for any new responsibilities after the UK leaves the EU”,
but there was no detail on those resources or responsibilities. Similarly, the Government maintained its view that the issue of increased pressure on trading standards bodies remains a matter for local authorities, stating that they must remain,
“responsible for their own finances and recruitment, and accountable to their local electorate”.
So it is all down to the local authorities, despite the fact that, as we all know, their central funding has been savagely cut, they are having difficulty funding most of the things they do and they are certainly likely to find this difficult to fund.
At the moment of receiving that response we had 13 months to go, so we lived in hope. In July 2018, our hopes soared: the Government published Command Paper 9593, setting out their “ambitious” plan for post-Brexit relations with the European Union. Three paragraphs of that paper dealt with consumer protection. The Government noted that the UK had a “strong track record” in protecting consumers and repeated their commitment to “maintaining high standards”. The paper concluded:
“There should be cooperation on enforcement, including provisions to allow mutual exchange of information and evidence, and a framework to work collectively”,
on wider consumer issues. But again, when there were eight months to go, there was hardly a detail included in that Command Paper on how this co-operation would be achieved. There was an absence of anything concrete; it was enough to make one weep.
In November last year, the withdrawal agreement and the political declaration were published and presented to Parliament, and the European Union Select Committee published its report on them on 5 December. As a result of yesterday’s vote, we are into uncharted constitutional waters but let us for now continue to consider that some kind of deal is still an option. Whatever is to be concocted in a new withdrawal agreement, one hopes it might mean that consumer protection will be involved. During the transition period, the UK would retain all the responsibilities of EU membership—such as conforming to EU law on consumer protection—but without the related institutional privileges; for example, membership of the EU’s institutions and agencies that set and enforce consumer protection rules.
However, Article 128 of the withdrawal agreement allows for the UK to be involved, to some extent, with EU initiatives and agencies. My questions for the Minister here are: what protections would UK consumers have under the arrangements in the withdrawal agreement? Will there be obligations on the UK relating to EU consumer protection rules? What would Article 128 mean in practice for the UK’s involvement in EU agencies? I would be delighted to hear a reply on these matters from the Minister. Can he also explain, with regard to the Irish backstop and the requirement that if it is used the UK will have to maintain a level playing field across a range of EU policies covering state aid and competition, why consumer protection was not included?
We all understand that the Prime Minister is going to go off and speak to other parties, possibly to find some kind of resolution with them which will make for greater numbers supporting a deal in the Commons. If there is a new or amended withdrawal agreement, we can assume that the political declaration will remain as it is, linked to that withdrawal agreement. I imagine that that might not in itself be changed. I want to ask about the political declaration because, as has been mentioned in other debates today, it is so full of aspiration and so lacking in anything solid.
The political declaration addresses consumer protections in, I suggest, an inadequate way. It deals with their relevance with regard to specific sectors of the economy, including financial services, digital matters, aviation and road transport. My questions are: what protections will the Government seek for UK consumers, including redress mechanisms through courts? What obligations would the Government be willing to have relating to EU consumer protection rules? What access will they seek to negotiate with the EU agencies that set and enforce the rules? British consumer organisations want to be party to those.
Finally, I turn to the rather ghastly prospect of the UK departing without a deal, which would be so detrimental to this whole area of consumer protections. We know already that the way to get a trade deal is to lower your standards; that is what places such as the United States of America will expect. All over the place, it will be expected that we will lower standards to secure trading deals. I am afraid that many of us are anxious as to whether we will go that far to cut the deals that might be necessary if our economy is suffering as a consequence of taking that dire step.
The Government argue that:
“UK consumers should not see any immediate differences in protection between UK law and that of EU Member States as UK and EU law is highly aligned”.
In that regard, we and the European Union may remain aligned for quite some time. However, the Government acknowledge our concerns about purchases in or from the EU, saying that,
“there may be an impact on the extent to which UK consumers are protected when buying goods and services in the remaining Member States”.
There is an admission that if there is no deal our protections are likely to be lowered.
I see that my time is up. The other question here is: what will we have to do about courts? Will UK traders and consumers have to go off and enforce judgments and have to go to courts in the other parts of the European Union, rather than seeking redress in our own courts? I would like to hear what the Minister has to say on that.
In conclusion, we find that consumer protections—which are vital and in which we have played a crucial part—should be a source of concern to us at this time, when we are talking about the possibility of no deal. Certainly, while we are in this process of putting together some sort of deal, if one can be achieved, this is an area where we should be sticking to our guns and trying to get something more solid than the vague aspirational commitments that stand. I beg to move.
Baroness Burt of Solihull (LD)
My Lords, we are here to take note of the European Union Committee report on the effect on consumer protection of withdrawal from the European Union, and I certainly commend the committee and the noble Baroness, Lady Kennedy of The Shaws, for undertaking this very important work. I was not a member of the committee, so I am extremely grateful for the clear and very interesting account that she gave of what happened on it.
The report tries to be positive, but I sincerely doubt whether any situation that we try to construct for ourselves from outside the EU to protect consumers will ever measure up to the protection that our own consumers—and EU consumers—currently enjoy through the complex and intertwined relationships that have developed to protect them over the past 50 years.
However, paragraph 20 of the report makes the point that our national law often provides for a higher degree of protection than the EU. That is true, and I truly hope that we will continue to be leaders in the field of consumer protection policy. But, since the interaction that we will have with our hitherto European partners will be so severely diminished, opportunities to learn from each other and create legislation to more effectively protect consumers will be severely limited. Consumers in the EU and the UK will be the poorer.
However, the government response to this is that existing consumer protections that are based on EU law in the UK will be retained. That will be fine when UK customers buy from UK-based traders—and ONS figures tell us that 82% of UK online purchases come from the UK-based companies. But, of course, if we are buying from EU-based companies—or EU citizens buy from UK-based companies—the situation will be different and protections will not be the same, particularly ongoing.
In paragraph 60 of the report, the Government is requested to address specifically the rights of UK citizens who visit EU 27 countries post Brexit. In their response I am unable to see anything that is particularly clear or helpful, other than the fact that they are working on it. I ask the Minister: have I got this wrong? If I have not, can he confirm when we will know what protections UK consumers visiting the EU 27 will enjoy?
A key issue raised by the report concerns how the Government are going to maintain access to the cross-co-operation mechanisms that facilitate the protection of European consumers. The noble Baroness, Lady Hayter, referred to this in the statutory instrument that she, the Minister and I took part in last night, on preparing the UK law in the event of a no-deal Brexit. She said that the Government had ended,
“the requirement on our enforcement bodies to help other EU states in the interest of their consumers. They have made it voluntary rather than a requirement. That was never necessary”.—[Official Report, 15/1/19; col. 208.]
Can the Minister explain why this step was taken? If consumers on both sides benefit, what would be the reasoning for discontinuing it?
In paragraph 84 of the report, grave concern was raised by the Select Committee about the clear evidence that national regulatory and trading standards bodies are already struggling to fulfil their important roles because of financial constraints, even before the additional complications and challenges of Brexit. The noble Baroness, Lady Kennedy, has already mentioned this. All the work that our consumer protection bodies do needs to be properly funded. If it is not being sufficiently funded now, what hope is there for protecting the needs of consumers in the future?
Finally, in the Government’s response to this question and others, they say that,
“the Government is fully committed to securing the … best possible deal for consumers”.
Surely the best possible deal is the deal that we have now.
Lord Cashman (Lab)
My Lords, I welcome this report from the sub-committee on which I serve and take this opportunity to congratulate my noble friend Lady Kennedy of The Shaws, who eloquently introduced the report and who chairs our sub-committee so effectively. She has so extensively covered the report that I might best serve your Lordships’ House by sitting down and saying nothing. However—there is always a “however”—I want to take a slightly different point of view.
The report highlights widely shared concerns regarding the Government’s Brexit negotiations and their impact on our ability to maintain protections and standards in consumer policy both within the EU 27 and in the United Kingdom when we are outside. I am among those Members of your Lordships’ House who have deep concerns about the kind of country that we will become once we leave the European Union and the potentially negative effect on the rights that we currently enjoy and, worryingly, take for granted. In other debates, I have expressed my concern about the abolition of the Charter of Fundamental Rights. Despite verbal reassurances from the Government, my concern remains, and not only on consumer rights and protections. The response from the Government to this report has not reassured me.
Since we joined the European project in 1973, the institutions of the European Union have agreed a wide range of legislation dealing with consumer protection rights. That legislation is woven into member states’ national law. This EU-wide approach does two things: it sets minimum standards for consumer contracts and performs a similar task for specific areas of the economy, as outlined in our report. There is a wide range of regulations and directives—I know this from having served in the European Parliament for 15 years—on consumer rights, on unfair business-to-consumer commercial practices, on the sale of consumer goods and associated guarantees, and the directive on unfair contract terms in consumer contracts. There are other important measures: the travel regulation on common rules in the field of civil aviation security, the directive on package travel, package holidays and package tours, and the welcome and much-used regulation establishing rules on compensation and assistance to passengers in the event of denied boarding and cancellation or long delays.
I could then refer to financial services directives, energy directives, energy efficiency and product labelling. I could go on, but my point is that, through EU-wide co-operation and with our influence in the European Union, we have seen grow a raft of measures which ensure that consumer protection, product standardisation and health and safety, as well as other rights, are at the heart of the internal market.
Time and again in our hearings witnesses emphasised the role played, as my noble friend Lady Kennedy outlined, by the United Kingdom in shaping these rules, not least by those UK Members of the European Parliament who, unlike UKIP Members of the European Parliament, turned up and worked within the parliamentary process by amending, shaping and improving legislation rather than merely trying to obstruct it. It is undeniable that we have helped to shape, protect and promote consumer rights and responsibilities within the biggest single market in the world, a single market which the Government now want to walk away from, yet could remain within even with Brexit, enforcing the conditionality of freedom of movement. The only certainty we have at the moment is that there will be serious repercussions for consumers and businesses in the United Kingdom, and I have not been reassured by the Government otherwise.
In conclusion, I cannot overstate, as my noble friend Lady Kennedy also stated, the importance of the EU agencies: aviation, medicines and food safety, to name three. Many witnesses emphasised the importance of these agencies, networks and infrastructure, largely created by EU law and which work on a reciprocal basis. Development policy and information sharing are essential means of protecting and enforcing consumer rights. These rights must not be diminished nor diluted. They must be built upon and protected and we must work with others to ensure that these rights are respected if or when we leave the European Union.
Lord Bilimoria (CB)
My Lords, the noble Baroness, Lady Kennedy, said that this is about standards and redress, about compensation and an enforcement system that is dependable, about consumer protection, and about four and a half decades of partnership and co-operation. I thank the noble Baroness and her committee for this report, Brexit: Will Consumers be Protected?. It starts right up front by highlighting the Government’s platitudes:
“This report highlights our concerns about the Government’s approach to the negotiation of the UK’s post-Brexit participation in the important areas of EU cooperation that help protect consumers’ rights. Beyond advocating a deep and special relationship with the EU post-Brexit, the Minister was unable to provide us with any detail as to how the Government might secure, post-Brexit, the UK’s access to a range of cross-border mechanisms and infrastructure that facilitate and encourage cooperation between the various national bodies responsible for protecting consumers”.
The withdrawal Bill is 600 pages long and covers three areas: the backstop; the £30 billion; and citizens’ rights. Then there are 26 pages of a wish list: the political declaration. The report says very clearly that over the last 40 years the,
“EU’s consumer protection acquis … has grown to encompass around 90 European Directives that apply across the Single Market. The rights enshrined in these Directives enable consumers to seek redress for any poor service they receive … at home or in another EU Member State”.
The withdrawal Bill tries to mirror everything but it cannot. EU law is not static. If we leave the European Union, it will change and then we will diverge. The Government need to reassure us very clearly about this. Chris Woolard, executive director of strategy and competition at the FCA, said that the landscape between the EU and its member states in this context is “complex and interconnected”.
References to consumer protection are scattered throughout the EU treaties. As a result of the interaction, the consumer protection acquis and other UK law is interwoven in this complex, interconnected fashion. Citizens’ legal protections are strengthened by a harmonised system of consumer protection. While the many items of EU law provide the basis for consumer protection in the UK, our national law quite often offers an even higher degree of protection. So we talk about EU bureaucracy, but we use the EU bureaucracy and we do more: we use the law for our benefit. The Government produced all these papers about consumer rights and protection after Brexit and said that if there is a no-deal situation:
“If you have a dispute with a business based in the EU after … 29 March 2019, it is less likely that you will be able to use the UK courts to try to put things right”.
So as a consumer you will be worse off. The European Parliament, in its advice, Consequences of Brexit in the Area of Consumer Protection, talks about the EEA model, saying:
“From the perspective of consumers in the EU28, an EEA membership of the UK is the most favourable Brexit scenario. It would ensure the application of the high European consumer protection standards for consumers in the EU27 and in the UK to a very large extent”.
But, as I have always said, the EEA is the least worst option. When it comes to the WTO, the EU says that it will be a disaster.
Which? magazine managing director Alex Neill said that a no-deal Brexit could mean,
“a bonfire of consumer rights and protections”,
be that for booking package tours or free roaming. When you come to return goods purchased from the EU, it will be more difficult. You will not be able to use the small claims court after a no-deal Brexit. The ECAA allows UK airlines to operate freely in Europe; if the UK drops out, consumers may face less choice and higher prices. You will no longer be able to insist that timeshare contracts be in English. A no-deal Brexit could see consumers hit with higher credit card surcharges and slower payments for European goods. Paying in euros might take longer. We may not be able to use online dispute resolution any more. I could go on.
Whichever way we look at it, these laws are intertwined—even the Bar Council has said it. It will be very difficult to protect the consumer if we break away from these laws. If we do not have the passporting rights, what about consumer lending? That is in jeopardy as well.
To conclude, this whole area of consumer protection shows once again how much we as a country have taken for granted as members of the European Union. By leaving, we will lose out. British consumers will lose out. It shows, once again, that in 2016 people voted to leave by a very narrow margin of 52% to 48%, with four months’ notice to learn about things so complicated that they covered 40 years of our membership of Europe. Three years later so much has transpired—let alone what happened yesterday. Now we know the facts. Now we know that, in an area such as consumer protection, once people know the reality—including what we have learned today—what they are going to lose out on and that no deal is not an option, the only fair, democratic way out of this deadlock, including for the 2 million youngsters, including two of my children, who were not old enough to vote in 2016 but who are now, is to go back to the people and give them a say as to whether they want to leave the European Union or remain in it.
Lord Judd (Lab)
My Lords, as a Member of the committee I thank the noble Baroness, Lady Kennedy of The Shaws, for the report and the way in which she introduced it. Hers is a good committee to belong to. I have been on a number in my life, but never on one in which it is possible to enjoy the proceedings so much. It is a very lively committee. We have a chair who understands leadership; she certainly has views, but she knows how to listen, and the art of leadership is to listen and bring people together. What is remarkable about this group is that we are a group together, and I unashamedly take this opportunity to say thank you to the noble Baroness.
I also thank all the witnesses; reports depend very much upon their quality, and we have had some first-class discussions with witnesses, not least in this field. We are also served by outstanding staff and legal advisers, who sometimes have to be tolerant of our idiosyncratic ways of handling things in our committee, but who fit in well and are very effective. Again, they have my real appreciation.
A great deal of sadness is brought out in this report, as has been emphasised in other spheres—not least security, which we have just been discussing. British leadership has been critical to the evolution of what is working very satisfactorily and well in Europe. To see so much positive and dedicated work by British people in the evolution of European policy being cast aside is certainly a matter of sadness.
It is clear that, whatever transpires, co-operation will remain essential. It cannot produce results as effective as the integrated approach which has emerged, but it will be essential. With the greatest possible respect to the Minister, we have not seen any convincing evidence at all about what the specific lines of co-operation will be and the kind of direction the Government will be giving in that context.
Similarly, the regulation has worked well. Among a lot of consumer organisations in this country there is a great deal of respect for the regulation and how it has emerged and is working. We will need to have new forms of regulation, and of course they will not be as complete or as effective as what we have had in place. We are still very unclear about what will be the protection for UK consumers when they are working, living or holidaying in Europe, or what will be the position of businesses.
It is a sad experience to have to consider a report of this kind, when we are seeing so much of something which is so central to life and the well-being and smooth operation of society as this area is being jeopardised without yet any clear indication of what we will have. I find it exasperating that there is no clear evidence of how we can begin to think we will better serve the British people outside Europe than within it.
The Earl of Kinnoull (CB)
My Lords, it is a great pleasure once again to follow the noble Lord, Lord Judd, who spoke with his typical wisdom. He is the conscience of our sub-committee, and we value him enormously. I declare my interests as set out in the register of the House, in particular those in respect of consumer financial services.
I will also begin by adding my tribute to our staff. The Justice Sub-Committee staff are especially hard-worked, because they are also the legal resource for the main Select Committee and all the other sub-committees as well. We have now published, as a whole structure, 38 unanimous reports, which are of a very high quality, and this report was no exception. I add my warm congratulations to our energetic chair, the noble Baroness, Lady Kennedy of The Shaws, who made an excellent speech. Writing a speech is like writing an essay, is it not? It is jolly hard to write a short one that is nice and clear, and hers certainly was clear and short.
Consumer protection has two main elements: efforts to protect the consumer before they buy the goods or services, and efforts to give the consumer access to remedies when things have gone wrong after they have bought them. I will confine myself to three important matters on which I ask the Minister for an update.
The first is about the European Committee for Standardisation—CEN—and its electrical sister, CENELEC. These bodies are not EU bodies but European bodies, and are well tried and tested committee structures that bring together the national standards for safety and quality in 34 countries today. The post-Brexit problem is set out in paragraphs 33 to 35 of our report and lies in the fact that CEN and CENELEC’s eligibility for membership is currently limited to,
“an EU Member, an accession country or an EFTA country”.
The rules were not written with a Brexit in mind.
Witnesses told us, and we agreed, that it was vital that the UK got the eligibility criteria altered so that the UK retained its membership. At paragraph 41, we recommended that the Government support the British Standards Institute’s efforts to achieve British membership post Brexit. The Government’s response essentially said that that was the BSI’s problem alone, but that they would remain “in close contact” with it. I need hardly say that we found that disappointingly lukewarm and not at all in the spirit of the Government’s many commitments to maintaining consumer protection at the commendably high levels that the UK enjoys.
The White Paper on the future relationship did not cast any further light on the situation, nor did the political declaration, both documents being drafted at a rather higher level. I ask the Minister for an update on where we are with CEN and CENELEC.
My second point concerns the consumer protection co-operation regulation. The CPC regulation provides the mechanism for the exchange of information between national enforcement bodies, such as the CMA and, where necessary, empowers them to bring legal action to enforce consumer protection laws. Starting in 2016, the Commission sought to develop and modernise the CPC mechanisms for co-operation. Importantly, the new regulation, which has since emerged, encourages co-operation with non-EU member states.
At paragraph 75, we urged the Government to engage with that aspect. In their response, the Government said:
“The UK has worked with the European Council to agree an ambitious new CPC regulation which strengthens cross-border cooperation and enforcement for the new digital environment. We are pleased that progress was made to agree this file by the end of 2017”.
That was all good news, and the new regulation will come into force in 2020, but did not answer our point at paragraph 75, which was that the Government should,
“make every effort to engage the provision in the reformed Regulation … that encourages cooperation with non-EU Member States”.
There is no help in the political declaration on this matter, so can the Minister update us on whether the Government are planning to co-operate as a non-member state post Brexit, per the reformed CPC regulation and, assuming that that is the case, what they have done about it so far?
My final area of concern is the mutual recognition of judgments and civil justice co-operation generally. When things have gone wrong for a consumer, they need to be able to rely on the court system. This is highly important for consumers buying goods or services in the EU today, as others have observed. It helps to provide that vital confidence that underpins international trade, which in turn drives prosperity. Today, a British consumer can go to a British court with a problem, obtain a judgment and have it enforced in any EU country. I do not mind repeating that, because it is vital.
As I have already observed, the Government have often stated their commitment to consumer protection in the Brexit process. Indeed, they published their framework proposal on this area in June last year, and more detail was contained in the White Paper of July, which stated:
“The UK is therefore keen to explore a new bilateral agreement with the EU, which would cover a coherent package of rules on jurisdiction, choice of jurisdiction, applicable law, and recognition and enforcement of judgements”,
and that the UK will therefore seek to participate in the Lugano convention after exit.
However, in their paper Consumer Rights If There’s No Brexit Deal of October last year, the Government warned:
“UK consumers will also no longer be able to use the UK courts effectively to seek redress from EU based traders, and if a UK court does make a judgement, the enforcement of that judgement will be more difficult as we will no longer be part of the EU. In addition, there will no longer be reciprocal obligations on the UK or EU Member States to investigate breaches of consumer laws or take forward enforcement actions.”
In the current situation, it is of course impossible to be sure where we will end up, or indeed when, but we can plan and take out at least some insurance that would help in several of the potential outcomes.
The Lugano convention concerns the recognition and enforcement of judgments and covers the EU, Switzerland, Norway and Iceland. Were we to leave the EU, early accession to that convention would certainly form part of the “coherent package of rules” mentioned in the White Paper, but importantly our accession to it would need the consent not just of the EU but of Switzerland, Norway and Iceland. Accordingly, making progress early is extremely important. I have asked some Written Questions of the noble and learned Lord, Lord Keen, who responded in October, saying that there had been some limited progress. I therefore close by asking the Minister to update us further on the Lugano convention position.
Lord Anderson of Swansea (Lab)
My Lords, the report is headed Brexit: Will Consumers be Protected? This invites the response that of course they will, but the key question was posed by my noble friend Lord Judd: will they be protected as effectively as at present? Many of the concerns expressed today were also reflected in the debate we have just had on security. I have one general point and a number of subsidiary points.
First, I echo the comments of many colleagues. It has been a privilege to serve on a sub-committee so ably chaired by my noble friend Lady Kennedy, who has led a very happy committee in an exemplary way. On Brexit, as a committee we have dealt with a number of issues. Apart from consumer protection, we have dealt with intellectual property and dispute resolution post Brexit. The common feature of these three recent inquiries is that all have a major impact on UK consumers. None played any serious role in the referendum campaign. None, initially at least, received any serious attention from the Government. Virtually all the witnesses who appeared before us were content that the status quo was the best practically available and that what we were doing effectively was trying to limit the damage to the interests of the public. One feature of the committee, which I noted when I had the privilege of chairing the Foreign Affairs Committee in the other place, was that sometimes the evidence given was important in itself, in that it was conveyed to Government and led to certain concessions or changes in government policy. I hope I was right in detecting a certain difference in tone from the Government as we proceeded.
This debate is welcome but has been delayed considerably. After all, our report was published in December 2017 and the Government’s reply was in February last year, so the passage of time may have had at least some effect. The point has been made about the way in which the Minister tried to pass responsibility for trade standards totally to local authorities, failing to mention the resource problem of local authorities. However, she did hint that,
“we might seek to improve the resourcing available to consumer enforcement prior to Brexit”.
Has any decision been made to follow this up? What has happened?
The network of arrangements for consultation and co-operation that has been developed over the years was mentioned by all the witnesses. For example, the chief executive of the Chartered Trading Standards Institute said that,
“a lot of consumer protection is based on relationships with colleagues”.
Clearly these sort of relationships, often informal, are of great importance in the exchange of good practice and information. Surely the danger is that such important informal relationships will atrophy unless provided for in new arrangements. What proposal do the Government have? I concede that many of the bodies are not confined to the European Union, but many are.
I turn now to the fact that, even if there is little immediate effect on consumers, particularly given that the withdrawal Bill converts the body of existing EU law into domestic law, there will certainly be a change over time. As the noble Lord, Lord Bilimoria, said, the situation is not static. It is a dynamic situation and, over time, the law will be added to and refined, new case law will be developed and our ability to influence the law will be much reduced. As outsiders, clearly we will not be in the driving seat, whatever form of association we develop. What structures do the Government envisage to mitigate the difficulties I have mentioned?
These problems will be particularly acute if there is no deal. The Government conceded the problem in respect of no deal in the several working documents mentioned. For example, they said that, if we leave without a deal,
“there may be an impact on the extent to which UK consumers are protected when buying goods and services in the remaining Member States”.
They warned that:
“UK consumers will … no longer be able to use the UK courts effectively to seek redress from EU based traders”.
The Government concede the adverse effects.
The point I am seeking to make about the consumer protection co-operation regulation has been well made by the noble Earl, Lord Kinnoull, and I adopt what he said on that.
The final paragraph of our report invites the Government to, as a matter of urgency, produce a clear plan on how the CMA and national regulators can collaborate with their counterparts in Europe. Over a year later, I see no plan. Can we envisage such a plan?
Baroness Hayter of Kentish Town (Lab)
My Lords, I too thank and pay tribute to my noble friend Lady Kennedy for her committee’s report and for opening today’s debate. It has been a little unnerving, as it has exposed both the scale of the problems likely to be faced by consumers—even with a deal, let alone after a crash-out—and the paucity of the Government’s response; “platitudes” was the word used by the noble Lord, Lord Bilimoria.
I start with my regret about how the Government have disregarded consumers over the past two years, failing to engage properly with consumer bodies and representatives. I am sure that the Minister has been briefed that, as early as 13 February 2017, I had cause to write to his predecessor at the department, the noble Lord, Lord Prior, about the lack of meetings on Brexit with consumer representatives. Given that lack of engagement, on 22 March 2017, the chief executives of Citizens Advice and Which?, together with Martin Lewis of MoneySavingExpert.com, wrote to the Prime Minister stressing the importance of consumers to the economy and calling for a,
“cross-Government high-level working group focused solely on securing the best possible deal for UK consumers”.
Sadly, that never happened—and, despite my umpteen Written Questions, there has been no improvement.
Indeed, the last letter I had from the noble Lord, Lord Callanan, on 13 November, supposedly set out Ministers’ meetings with consumer groups. But when I looked, I saw that the list of 27 included discussions with the FCA, Ofcom, the BSI and some finance companies, as well as meetings with the CAB unrelated to Brexit. That is a poor record. In fact, there has been precious little involvement throughout the process, which is probably partly why the problems outlined today have been allowed to fester.
It is hard to know where to start, so great is the impact of leaving the EU on consumers, where, as we have heard this evening, the raising of standards and their effective enforcement have helped protect British consumers. Just as we can buy goods made in the EU, confident in the knowledge that they meet recognised standards, so too can our enforcement bodies—the CMA, trading standards and the police—share intelligence with equivalent bodies across the EU, while court judgments here can be enforced there and vice versa.
As we heard from the noble Baroness, Lady Burt, we touched on consumer rights enforcement last night. However, we did not mention that the local enforcement bodies—trading standards—have been halved since 2010, as the noble Baroness, Lady Burt, and my noble friend Lady Kennedy noted. CTSI warns us that it will be exactly those front-line trading standards which will have to unpick the uncertainties after exit and of course will have to carry out far more checks once we can no longer rely on safe products arriving from the EU. So will the Government now provide trading standards with the resources they need, as pressed by my noble friend Lord Anderson? Will they take steps to ensure that our enforcement agencies can continue participating in those EU consumer networks?
Half of the dodgy non-food products reported to RAPEX—the EU rapid alert system—concern motor vehicles. This is clearly serious, as enforcing standards is essential for road safety. However, the Government have not been clear on how they will ensure that cars do meet standards, given that eight out of 10 imported cars are from the EU. REACH, RAPEX and ANEC all facilitate data sharing, policy formation and enforcement. Loss of UK membership—and indeed, leadership, as my noble friend Lord Judd said—of these bodies will be drastic. It would be particularly sad in the case of ANEC, which represents consumers to the standard-setting bodies CEN and CENELEC—a point raised by the noble Earl, Lord Kinnoull. The chair of ANEC is a British consumer champion, Arnold Pindar, and it will be sad for ANEC as well as ourselves if the UK no longer participates. I have of course written and asked questions of Ministers about any ongoing role for the UK on ANEC—but they have gone unanswered.
Products will obviously pose a risk but so, too, will food safety. There is an immediate threat to food prices in the case of no deal, because tariffs will be imposed and a third of our food comes from the EU. There is also a threat to food safety, because outside of the European Food Standards Agency there will be reduced intelligence sharing and joint safety assessments. As I warned last night, the inane proposal that we just wave through lorries at entry ports in order to avoid road congestion is simply an open invitation for out-of-time or improperly labelled food products. So perhaps there will be more horsemeat in our lasagne and, if Mr Fox gets his beloved US trade deal, we can look forward to chlorinated chicken.
However, it is not only food that will be more expensive, as Which? has warned. In a no-deal exit, tariffs will be imposed on a range of goods, adding pressure to families already struggling with the cost of living.
While the focus of what we looked at was obviously consumers in the UK, the challenge of a no-deal exit for foreign travel will be enormous, let alone for the 1 million Brits already living in the EU who might suddenly find that they will need to take a driving test to get a Spanish or French driving licence once ours is no longer recognised beyond a holiday stay. Holidaymakers may need to revert to the old green card proof of insurance—which I think all of us in the House are old enough to remember—if driving abroad. We might also lose compensation for cancellations and delays.
I first wrote to the noble Baroness, Lady Sugg, on 5 February last year about whether UK citizens on an EU airline from a third country, or a UK citizen on a UK airline from a third country to an EU state, would still be covered by EU consumer rights legislation. Sadly, I have received no satisfactory reply and, since then, the threat of no deal has made compensation for any delays to or from the EU even less likely. Therefore, will the Minister set out the current position on this in the case of no deal?
As serious for travellers is that with no deal we will lose the EHIC, the European Health Insurance Card. Not only will that mean that our easy access to medical treatment will be at risk; older consumers—again, looking around the House—or those with pre-existing medical conditions will face real challenges in getting health insurance for travel in the EU. Can the Minister set out the Government’s plans to ensure that holidaymakers will still be fully covered across the EU in the case of no deal?
The UKECC, which everyone in this House will know stands for the UK European Consumer Centre, handles 16,000 cases a year and is partly funded by the European Union’s consumer programme. Perhaps the Minister can confirm the arrangements that his department is making to continue its role after March.
The Government’s own no-deal consumer rights paper fails to outline how consumer rights will be affected when buying from EU businesses. Indeed, there is a woeful lack of detail on how rights will be impacted, especially as the redress schemes will disappear. In fact, I maintain that UK consumers will simply have far less protection. It would perhaps have been a little more honest if the Government had made that explicit in the paper they published and had made some suggestions about how to mitigate the risk to consumers. Astonishingly, although the Government’s report warns businesses selling into the EU that they should keep apprised of future changes in EU regulations, it fails to offer any advice or support on how to achieve this. Both businesses and consumers must be updated by the Government, so some help on that would be of assistance. It is clear that the Government are not doing enough with either consumers or businesses, and that is clearly causing anxiety. Having listened to the Government’s radio ads, they are really content-empty, probably causing less rather than more clarity.
The recent Which? survey found that nearly two-thirds of the over-65s are worried about Brexit. Even among the 35 to 64 age group, there has been a dramatic rise of 25 percentage points since September 2016, with its “Brexit worry figure” now at 61%. Is it any wonder that consumer spending in December was down 1%—the biggest decline for over a year?
This House will recall that we passed an amendment to the withdrawal Bill to retain the Charter of Fundamental Rights, referred to by my noble friend Lord Cashman. A part of our thinking when we passed that was prompted by Article 38, ensuring,
“a high level of consumer protection”.
In sweeping away this objective in the way the Government have sought to do, I fear that they are sacrificing consumers on the altar of Brexit. It is a sad day after nearly half a century of improving consumer rights.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I join other speakers in offering my congratulations to the noble Baroness, Lady Kennedy of The Shaws, on chairing the EU Justice Sub-Committee and on producing this report. I also congratulate her on chairing what the noble Lord, Lord Anderson, described as a happy committee. I congratulate, too, on all their work the noble Lords, Lord Anderson, Lord Judd and Lord Cashman, and the noble Earl, Lord Kinnoull, as I do the members of the committee who are not able to be here. When she goes away, the noble Baroness will, if nothing else, have the praise of her noble friend Lord Judd, who described her as someone who had views, and I am sure that all of us would echo that. All of us who have known the noble Baroness for some time know that she is certainly somebody who has views.
It is my pleasure, indeed my joy, to respond on behalf of the Government—it is late but we will, I hope, be finished by 10 o’clock. I welcome the focus of the committee, which has been on consumer protection. I am grateful to the noble Baroness, Lady Burt, for emphasising the very high standard of consumer protection that we have in UK law. It is useful to point that out. Maintaining and enforcing this protection effectively remains a government priority as the UK withdraws from the EU.
The report was published in December 2017, which, I accept, is now quite a long time ago. The Government responded in a timely fashion in February 2018, almost a year ago. I will not go through the response produced by my colleague Andrew Griffiths at that time. It is now on the record and has been referred to in the debate. I can only apologise for the fact that it does take time for some of these reports to get debated. It might have been the noble Lord, Lord Bilimoria, who said during this debate or the previous one that we have had time and should perhaps have used other evenings for debating some of these reports. These are matters beyond my pay grade, and for the usual channels. I apologise, but we are having the debate on this occasion.
What has been happening this week will not have escaped noble Lords. My noble friend Lady Williams referred to the old adage that a week is a long time in politics—this week somewhat longer than others, even though it is only Wednesday. In the context of this debate and the timing of the EU exit process, obviously things change; there are many questions to be answered on what will happen next. I am unlikely to be able to address them all in detail during my 20 minutes or so of winding up. What I can say is that the withdrawal agreement still offers a time-limited implementation period during which UK consumer protections based on EU law will be retained; this meets our main aim of an orderly Brexit delivering the stability and continuity that consumers and business both need and demand.
The terms of the future relationship will continue to be a matter—dare I say it, as colleagues have done on earlier occasions—for negotiation. We are aiming for high levels of cross-border co-operation on consumer issues as part of our new relationship with the EU. As a responsible Government, we continue to prepare proportionately for all scenarios. In order to minimise disruption, our preparations for a no-deal scenario are focused on maintaining continuity in the short term for businesses and citizens; for example, the Government have committed to funding the European Consumer Centre for at least one year in the event of a no-deal exit. Consumers will be able to contact this service for help and advice until at least March 2020. We have also progressed legislation under the withdrawal Act to ensure that consumer law will continue to function effectively after exit day.
As the Government made clear in our written response, we recognise the importance of effective cross-border enforcement co-operation and information-sharing systems in protecting consumers. I can reassure the House again that the Government are fully committed to negotiating the best possible deal with our partners to deliver this. We want UK consumers to be able to buy with confidence from traders in the EU, and vice versa. The way that consumer protections apply when buying cross-border in future, and how reciprocal arrangements would work, are a matter for the negotiations. The political declaration on the framework for the future relationship sets out that the UK and EU will work together to safeguard high standards of consumer rights.
I shall say a little about national regulatory and trading standards bodies. On the role of national regulators, the Government are working closely with stakeholders across the consumer protection landscape to ensure that enforcement remains effective after EU withdrawal. We work hard to make sure that national, regional and local enforcement is joined up. National Trading Standards supports its local colleagues in sharing intelligence and handling complex or wider-ranging issues that span local authority boundaries. The Government have also set up the Consumer Protection Partnership, which helps enforcers and consumer advice groups to work together to pool information, identify new issues and make the best use of their resources.
On funding, about which the noble Baronesses, Lady Burt and Lady Hayter, and the noble Lord, Lord Anderson, all expressed some concern, it is important to be clear about the different funding streams. Local authorities are responsible for their own finances and recruitment, and are accountable to their local electorate. That means that spending and resourcing decisions for individual trading standards are a matter for each local authority, and they will determine their own priorities. In addition, two national bodies, National Trading Standards and Trading Standards Scotland, have responsibility for prioritising and co-ordinating cross-local authority boundary enforcement. Combined funding from my department for those two organisations is just over £14 million per year in 2018-19, enabling serious regional and national level breaches of consumer law to be tackled effectively.
Baroness Hayter of Kentish Town
We were discussing not the national issues but rather local trading standards having to check local products. I think the Minister is saying that although there will be more checks, they are not going to make any more money available.
Lord Henley
My Lords, I have given the amount of money that will be available from central government for National Trading Standards and for Trading Standards Scotland. Obviously, as I made clear, other matters are a matter for local authorities.
I turn to engagement with stakeholders. We have continued to engage regularly with consumer groups, despite what the noble Baroness had to say, and we will continue to do so; we have recently had two ministerial round tables. The noble Baroness said that I would come with a briefing setting out a long list. She has received a letter containing our meetings with the appropriate authorities and she seemed to imply that most of those meetings were not adequate. She is right: I have come with a long list. I am not going to read through it all, partly because—I have to admit that this is my own incompetence—I see that the list that I have come with starts at the beginning of 2018 but only goes up to June 2018. There will be many more going beyond that.
The point that I wanted to make is that this is not just a list of Ministers from my own department, although they appear as well; there are Ministers from other departments such as DExEU, the DWP, Defra, the DfE and DCMS. Even the Treasury has been gracious enough to see people. I am sure that that will continue. I feel that we have engaged and will continue to engage in order to ensure that there is the appropriate protection in the right way and that we listen to everyone’s concerns.
I shall deal with some of the specific concerns raised in the course of the debate, starting with those raised by the noble Earl, Lord Kinnoull. I am grateful to him for alerting me to them, as they are very important. He wanted an update on CEN and CENELEC and what we intend. As I think he will be aware, the British Standards Institution, the UK’s national standards body, is independent of the Government, but we are working together to ensure that our future relationship with European standards bodies continues to support a productive and open competitive business environment in the UK. The members of CEN and CENELEC have agreed a transition period until the end of 2020, to resolve their membership criteria and find a form of wording that continues to include the BSI as a full member.
The noble Earl wanted an update on the efforts to achieve good civil justice co-operation and participation in the Lugano Convention. The political declaration on the framework for the future relationship between the EU and the UK provides a positive basis for discussions on this, and we remain committed to future co-operation with the EU on civil and commercial matters, recognising that it is in our interests to co-operate with international parties. The UK will continue to prioritise joining Hague 2005 in our own right and seek to accede to the Lugano Convention. The UK will engage with EU partners to ensure that these important issues, which provide essential protections for systems, are a focus of the detailed negotiations to come.
I also want to address some of the concerns raised by the noble Baroness, Lady Hayter, including those she alluded to last night when we were dealing with EU exit regulations, particularly the consumer protection regulations. She asked about information sharing and noted how vital it was for product safety and alerting other authorities. She asked whether that will continue and wanted assurances that we would retain access to RAPEX, the EU rapid alert system for dangerous non-food products. Information sharing with other countries is one of the most important ways that we can help to protect consumers from unsafe products and it is in all our interests that EU and UK market surveillance authorities continue to share information. Work is under way to explore options for maintaining information sharing across borders as part of our ongoing partnership. We will also ensure that the UK’s market surveillance system continues to be robust following our exit from the EU.
The noble Baroness also asked whether we would be just waving goods through to avoid congestion at the border. Again, I assure her that we continue to take the issue of consumer product safety seriously and are committed to ensuring that only safe products are placed on the UK market now and in the future. Our robust programme of risk-based market surveillance will continue to include the ability to intercept products as they enter the UK, check products already on the market and gather information through a variety of intelligence sources. If there is a no-deal exit, EU and UK product-safety legislation will be aligned on day one, and therefore we do not anticipate significant changes in risk initially. She also asked about EHICs—I think I have one of those cards in my wallet at the moment—and I will write to her about that, if I may, as I will have to take advice from the Department of Health and Social Care in due course.
The noble Baroness, Lady Kennedy, was worried that we would see a watering down of consumer rights after Brexit. I make it clear that we want to continue to maintain close co-operation with the EU on consumer enforcement, as I think I have made clear throughout my speech. We will seek to do that as part of the future economic partnership.
I accept that cross-border enforcement co-operation might become more difficult in the event of a no-deal exit, but we have retained all the necessary powers for our enforcement bodies to continue protecting consumers in the UK courts in cases of infringement of retained EU consumer law. The exact impact on consumers will be difficult to predict because the scale, nature and severity of infringements will vary. It will also depend on the degree to which UK and EU enforcers are willing and able to co-operate with each other. As I made clear, we will obviously continue to work with consumer groups and enforcers to monitor the impacts and to respond as necessary.
Lastly, I will touch on the Competition and Markets Authority, which the noble Baroness referred to, and whether it is prepared for a no-deal exit. We remain confident in the CMA’s ability to be ready for exit day. It continues to plan for such an outcome. BEIS continues to work closely with the CMA to ensure that that is the case. As the noble Baroness will remember, in the Budget back in autumn 2017, I think, my right honourable friend the Chancellor committed £3 billion over the next two financial years to help departments, which includes the CMA and the devolved Administrations, prepare for the UK’s exit from the EU. The CMA is recruiting additional consumer protection staff, which amounts to a 25% increase in its capacity in anticipation of more complex cross-border consumer protection work. The vast majority of those roles have now been filled.
I hope that I have dealt with most of the questions. As I said to the noble Baroness, Lady Hayter, I will write to her on her question about the EHIC. If I find that there are other matters that I need to write on, I will do so. I again thank and congratulate the noble Baroness on—as the noble Lord, Lord Anderson, put it—her happy sub-committee. I thank and congratulate all those who participated in the debate and give the assurance that continued effective consumer protection and enforcement after EU withdrawal remains a priority for Her Majesty’s Government.
Baroness Kennedy of The Shaws
My Lords, I too thank everyone who took part in this debate. I assure the House that I have not paid handsomely for the tributes that have been paid to me. It is fair to say that our committee is a happy place because we all agree that hard work is best done if you can create a conducive atmosphere. We have very different, divergent views, but the committee’s spirit is to listen and we contribute in a spirit of collaboration. That is one thing that we know: collaborating produces good outcomes. We might miss that when we leave the European Union.
I will reiterate something said by others. We have a very good secretariat in this committee. We could not do this work without them. One of them is here tonight: Alex Horne, who is a really formidable lawyer. He and his colleague, Tim Mitchell, provide us with incredibly fine lawyerly advice. Others on the secretariat serve the committee very well.
The noble Lord, Lord Bilimoria, said something very important: “Now we know”. In many ways that should be the strapline for what has happened over the two and half years since the referendum. Many of the things that are the subsoil of our relationship with the rest of Europe were not known to all of us. On this committee I have learned hugely about the collaboration and co-operation, about the ways we, the British, have contributed to a good and energetic Union. Out of that come positive things which make the world a better place.
That is something we should be saying. We did not say it hard enough in the years when we were in the European Union, and it is regrettable that at this late stage we are having to communicate to each other the incredible benefits that have come by working together. Now we know. If only we could get that out to the general public and to some of the people who so vociferously argue against the Union. I thank everyone. I beg to move.