The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, in opening in this difficult week, I affirm our unqualified and unending respect for this Parliament and its institutions, and for democracy and democratic decisions.
I am grateful to be opening this debate. No fewer than 125 noble Lords took part in last Thursday’s debate for the Second Reading of what was then the European Union (Future Relationship) Bill, but the time for contributions and reflections was necessarily compressed—as it is again today, I understand. With much still to pore over and deliberate, I welcome the opportunity—as, I know, will my ministerial colleagues—that today’s occasion affords to take your Lordships’ wisdom further. I particularly look forward to hearing the maiden speech of my noble friend Lord Wharton of Yarm.
Since last we were here together, we have welcomed in a new year and a new chapter for the United Kingdom. We have kept faith with the British people who voted in 2016 to leave the European Union in the largest democratic exercise in this nation’s history: a vote for freedom, for parliamentary sovereignty and for change.
I am grateful to your Lordships for enabling the Bill’s passage in such unusual circumstances. Its enactment into law enabled the trade and co-operation agreement to be provisionally implemented and our future relationship with the European Union to begin. As I said in this House at Second Reading:
“The nature of any compromise is that not everyone gets what they wish for.”—[Official Report, 30/12/20; col. 1921.]
Overall, however, this deal is good for both the United Kingdom and Europe. A no-quota, no-tariff deal is good news for families and businesses in every part of the United Kingdom.
This Canada-style agreement, worth more than £650 billion, is the first free trade agreement based on zero tariffs and zero quotas that the EU has ever reached with an independent country. As of 1 January, the United Kingdom now enjoys full political and economic independence. The pledges made to the British public during the 2016 referendum and in the general election last year have been delivered. From now on, our laws will be determined by our elected politicians, and MPs will be accountable to the voters who send them to Parliament to legislate on their behalf.
The Canada-style agreement takes back control of our laws, borders, trade, money and waters. It ends any role for the European Court and protects the Belfast/Good Friday agreement. It provides certainty for business, from service providers to our world-leading manufacturers—including our car industry—thus safe-guarding highly skilled jobs and investment across our country.
We have protected the integrity of our internal market and Northern Ireland’s place within it thanks to the agreement on implementing the protocol that exists as part of the withdrawal agreement. That was struck with the European Union earlier in December by my right honourable friend the Chancellor of the Duchy of Lancaster. To support traders in preparing for the end of the grace period, the UK Government will work with supermarkets, retailers and their suppliers to move to new end-to-end digital systems that will enable goods to be moved in accordance with the protocol in the most streamlined way possible. This will be backed by a major injection of new UK Government funding as part of the broader support package we have announced.
My right honourable friend the Chancellor of the Duchy has also been working hard to ensure that our borders and the many businesses involved in trading with the European Union were prepared for the end of the transition period on 31 December. To that end, the Government have worked closely with hauliers, carriers and relevant operators on the requirements of a number of systems. All the necessary changes, including changes to IT systems, were carried out successfully in the run-up to 31 December.
In addition, we have put in place measures of support to mitigate potential teething problems following our exit from the EU customs union and the single market and will continue to work with stakeholders to work through any disruption that arises. But noble Lords should recognise that, even though we have left behind the EU customs union, the EU single market and, indeed, the EU’s entire legal order, we are not walking away from Europe—quite the reverse. This agreement—this new chapter for global Britain—is also the beginning of our new partnership with our closest neighbours.
We have already seen that friendly co-operation at work. On New Year’s Eve, the Foreign Secretary announced that, working side by side with the Chief Minister of Gibraltar and following intensive discussions with the Spanish Government, we reached agreement on a political framework to form the basis of a separate treaty between the UK and the European Union regarding Gibraltar. We have sent this to the European Commission to initiate negotiations on the formal treaty. All sides are committed to ensuring border fluidity, which is clearly in the best interests of the people living on both sides. We remain steadfast in our support for Gibraltar and its sovereignty. We have a warm and strong relationship with Spain, which we look forward to building on in 2021.
On financial services, this agreement provides a stable foundation for us to develop our future relationship with the EU and facilitate new arrangements to promote international financial services trade. Alongside the agreement we have agreed a joint declaration on regulatory co-operation in the area of financial services. This sets out the commitment to structured regulatory co-operation on financial services, with the aim of establishing a durable and stable relationship. The parties will now discuss how to move forward with equivalence determinations between the European Union and the UK and will codify this in a memorandum of understanding on regulatory co-operation by the end of March.
On the creative industries, and musicians in particular, I heard the remarks made by many noble Lords in last week’s debate. The Government recognise the importance of the UK’s thriving cultural industries. We recognise that there will be some additional processes for those working in the creative industries. However, our agreement with the EU contains transparency and procedural facilitation measures that will help ensure that visa processes are as prompt and smooth as possible.
During our negotiations with the EU, the UK proposed measures that would have allowed musicians to travel and perform in the UK and the EU more easily, without needing work permits. Specifically, we proposed including the work done by musicians, artists and entertainers, and their accompanying staff, in the list of permitted activities for short-term visitors. In practice, this would have delivered an outcome closer to the UK’s approach to incoming musicians, artists and entertainers, but these proposals were, sadly, rejected by the EU.
We have always been clear that the safety and security of our citizens is the Government’s top priority. This agreement delivers a comprehensive package of capabilities that will ensure that we can work with counterparts across Europe to tackle serious crime and terrorism, protecting the public and bringing criminals to justice. We have agreed streamlined extradition arrangements based on the EU’s surrender agreement with Norway and Iceland, but with stronger safeguards. The deal supports effective operational co-operation with Europol and Eurojust. It also enables the fast and effective exchange of national DNA, fingerprint and vehicle registration data via the Prüm system to aid law enforcement agencies investigating crime and terrorism.
The Government are already taking advantage of the opportunities available to us as an independent, sovereign nation, and we will continue to do so. As of 1 January, we abolished the tampon tax, honouring a government commitment. This was made possible only by the end of the transition period and the freedom from EU law mandating VAT on sanitary products.
Last week my noble friend the Leader of the House set out the fundamentals of the trade and co-operation agreement. I have focused on some of them today and given the House an update. We believe that the agreement will help unlock investment and protect high-value jobs right across the United Kingdom, from financial services through to car manufacturing. The UK can now regulate in a way that suits the UK economy and UK businesses, doing things in a more innovative and effective way without being bound by EU rules. We will now take full advantage of the remarkable opportunities available to us as an independent trading nation, striking trade deals with other partners around the world. I look forward to hearing fruitful and positive ideas from your Lordships in the course of this debate.
Lord True (Con)
My Lords, this has been a very long debate. First, I congratulate my noble friend Lord Wharton of Yarm on his outstanding maiden speech, which set a good tone for us in terms of what I think should be constructive dialogue in future. I fear that, having heard the rest of the debate, he may understand why his Bill did not quite make the progress he had hoped for in this House.
I must say, this was not the most optimistic debate. I cannot change the minds of many noble Lords—I hope that action will do so—but I must reject the opening challenge from the noble Lord, Lord Oates: to apologise for saying that the British people voted for freedom from the constraints of the European Union. I do not apologise and I do not ask the British people to apologise for their decision. I suggest that the Liberal Democrats cease to challenge the decision of the British people with that kind of language.
The noble Lord, Lord Skidelsky, spoke of the owl of Minerva—a delightful, Hegelian image. The owl of Minerva was on the coins of ancient Athens, whose attempts to impose a customs union in the Aegean led, after glory, to catastrophe. One hopes that that will be avoided by all of us, in whatever part of Europe we live, for as long as the youngest among us live.
I offered us a challenge when the debate opened: I said that I was looking forward to hearing the wisdom of the House of Lords and ideas on how we could use the new freedoms we have gained. I fear that I heard very few constructive suggestions, but I accept that, in a typically intelligent intervention, the noble Lord, Lord Stevenson of Balmacara, set out a lot of areas where there would be grounds for agreement between us and the Opposition going forward.
My noble friend Lord Bridges was, I think, the first to ask, other than ensuring that our goods and services can flow to the EU and that our businesses can grow and prosper mightily, what more we can offer and what the United Kingdom will be. The treaty is just the beginning of a new partnership in Europe that will build on common bonds of friendship and co-operation, but as sovereign equals with greater democratic autonomy. In future, the UK will remain distinctively open and global, working with our allies in Europe and around the world to leverage our unique assets, some of which were spoken about by the noble Lord, Lord Butler of Brockwell. We will act as a problem-solving and burden-sharing nation and as a force for good in the world, including for free trade.
The UK can now regulate in more innovative and effective ways which suit our economy and businesses, without being bound by EU rules. In any case, the EU and UK systems will naturally diverge over time. The Government have set out an ambitious domestic agenda, including on green matters and key areas such as environmental regulation and financial services, where the Government will aim to lead the global race to the top.
Many noble Lords spoke about goods moving between the UK and the EU and dwelt on the negative side—typically, I fear—including some of the problems that businesses face now that Britain has chosen to leave the single market and customs union. I emphasise that the agreement secured 100% tariff liberalisation, so there will be no tariffs on trade in UK and EU goods. That is worth emphasising because it is the first deal of this kind that the EU has ever signed.
The agreement includes modern and appropriate rules of origin, meaning that goods produced in either of our markets can qualify for zero-tariff trade. This will allow British manufacturers to use a significant level of input from abroad in British products where appropriate, such as sugar in confectionery or batteries in electric vehicles. We secured product-specific rules of origin that are tailored to the needs of UK businesses in, for example, the automotive, aluminium, chemicals, machinery and food and drink sectors, to which many noble Lords rightly paid attention. Importantly, the rules of origin prevent us having to accept from the EU imports at zero tariffs that are disproportionately produced elsewhere in the world.
In addition to what we agreed in the FTA, we have also agreed an administrative simplification to support businesses so that, throughout 2021, traders do not need supplier declarations from business suppliers to be in place when goods are exported.
We have always been clear that the future means that there will be new customs processes for goods headed from GB into the EU and vice versa, but the agreement will reduce the costs of these new processes for traders by supporting efficient customs arrangements covering all trade in goods while ensuring that customs authorities can protect their interests. We agreed to co-operate in facilitating trade at roll-on roll-off ports in particular and to recognise each other’s authorised economic operator security and safety schemes from 1 January.
The agreement also supports co-operation and mutual assistance between the UK and the EU on customs and VAT, including assistance in recovery of indirect taxes. This will help us to enforce our borders efficiently, to safeguard revenue and to combat fraud.
It is clear that unnecessary technical barriers to trade can increase costs for exporters through additional administrative costs and regulatory hurdles. The agreement features wide-ranging provisions on technical barriers to trade that seek to facilitate trade by avoiding unnecessary regulatory barriers between the two parties. This is supported by five sectoral annexes with dedicated provisions for growth sectors: automotive, pharmaceuticals, chemicals, organic products and wine.
The agreement also ensures that the UK and the EU can maintain fully independent SPS rules to protect human, animal and plant life and health, preserving our right to regulate independently. It includes measures—referred to by more than one noble Lord—to facilitate efficient management of disease, pest and food safety incidents; to co-operate on the fight against antimicrobial resistance and protect animal welfare; and to identify potential to facilitate trade further without compromising biosecurity.
My noble friend Lord Taylor of Holbeach raised important points about the horticultural industry, in which his family is so renowned. Frictionless trade would require regulatory alignment with the European Union, which would undermine not only our regulatory autonomy but our sovereignty as an independent trading nation. We have put in place a framework to agree to trade facilitations going forward, including on SPS and including potential reductions in the frequency of import checks. It is in both parties’ interests to pursue that. We continue to work closely with traders on our implementing processes to ensure that exporters understand the requirements they need to meet to continue trading with the EU. I can say to my noble friend that that includes an understanding of the issues of the horticultural industry.
The noble Baroness, Lady Bakewell of Hardington Mandeville, asked about geographical indications. There was not a section on geographical indications in the intellectual property chapter. Instead, we included a review clause which allows us to agree rules on protection of GIs in future, should we so wish. The UK retains full autonomy over its GIs regime.
I was asked whether lamb produced by hill farmers would be specifically included in the zero-tariff category. The deal maintains zero tariffs and zero quotas on trade in goods between the UK and the EU—I say again that it is the first time that the EU has ever agreed to complete tariff and quota-free access in an FTA. I am sure that Parisian restaurateurs, after Covid, will be delighted that Welsh lamb is still coming their way.
I was asked about delays to fish exports. We believe that no vehicles are being held at this time, but we are monitoring the situation and I can assure the House that we will continue to do so. We have had extensive engagement with the industry during the past two years to help it prepare for the new processes that it will need to follow. On the UK side of the border, now that Operation Brock has been activated, we will prioritise fish to ensure that it reaches Dover quickly.
So far as certification is concerned, we are indeed seeking to make more vets available, but checks are more usually made by local authorities. The Government have recently offered £1 million and more to local authorities to increase capacity and assist certification of fish products.
We are not currently seeing significant disruption at the border, although there are incidents caused by the end of the transition period. It is of course early days and, as is normally the case during the first days of January, volumes of traffic have been low. However, I assure the House that the Government remain vigilant on the situation on a 24/7 basis. We have a new high-tech border operations centre, which is operating 24/7, and we are working closely with local resilience forums. The most significant issue that we are currently facing at the short-strait border is the requirement for all people crossing into France, including freight drivers, to have been tested for Covid. Our priority is to communicate the message that hauliers should be tested.
My noble friend Lord Holmes of Richmond and the noble Viscount, Lord Waverley, in very constructive speeches, referred to the opportunities arising from the move to create the world’s most effective border for the UK. The 2025 UK Border Strategy, published on 17 December 2020, sets that out. Certainly, technology and data analytics have the potential to greatly improve the operation of the border.
On Northern Ireland, the noble Lord, Lord Empey—quite rightly perhaps—took me to task on my opening speech. Of course I acknowledge the particular circumstances of Northern Ireland. I assure noble Lords that the flow of goods under the Northern Ireland protocol is smooth overall and that there are no significant queues at NI ports. Where there are individual issues, they are being quickly addressed by DAERA and HMRC. Traders are widely taking up the trader support service.
The grace periods for businesses are in operation and are generally working well. This applies to supermarkets and their suppliers. As a result, the overwhelming majority of parcels continue to move smoothly between GB and NI. I state very firmly that there is no reason for businesses not to continue to send such goods to Northern Ireland. We are aware of issues that hauliers have experienced in transiting Dublin Port and, as referred to in the context of Welsh ports, we are engaging with the Irish authorities and the Northern Ireland Executive on this issue.
A large number of noble Lords spoke about services. The agreement secures continued market access across a broad range of key sectors, including professional and business services, and significantly exceeds what is available under WTO rules. We ensured that the services covered by this agreement are, at a minimum, in line with both sides’ best offer to date in similar agreements such as those with Canada and Japan. That includes unprecedented provisions on legal services and creates additional certainty and clarity. There are specific issues relating to patents, raised by the noble Lord, Lord Bassam of Brighton, and IPO and MoJ officials have agreed to discuss concerns with the sector.
On green cards, mentioned by the noble Lord, Lord Hunt, we will certainly need those.
I welcome the wise comments of my noble friends Lord Sharpe of Epsom, Lord Risby and Lord Griffiths, the noble Lords, Lord Butler of Brockwell and Lord King of Lothbury, and others about financial services. Financial services are, and will remain, a key strength of the United Kingdom and the agreement ensures that our regulatory authorities can effectively supervise the financial services industry based on values of openness, stability and transparency. We aim to reach agreement on the memorandum of understanding by March 2021 to establish a framework for co-operation, but I endorse the comments of the noble Lord, Lord Butler of Brockwell, on these matters.
On data adequacy, I repeat what I said to the House last week: we do not expect the bridging mechanism to have to last for more than six months, and we hope that matters will be concluded sooner.
I have only a minute left, regrettably, but I should refer to musicians and the creative industries, to which the Government attach the greatest importance. In negotiations with the EU on business travel, we proposed to expand the list of permitted activities for short-term business visitors, notably to include work done by artists, entertainers and musicians, and supporting staff. This would have ensured that musicians could have travelled to the EU without work permits. However, the EU rejected this, considering that touring musicians were providing a service directly to consumers, rather than performing a business visit. We did point out that there are other types of short-term businesses that provide direct services, but the EU did not alter its position. Considering the EU’s refusal to consider our proposals, it seems unlikely that it will want to reopen the subject so soon after negotiations have concluded. However, there is a review clause on the list of permitted activities, and I can assure the House that the Government will continue to give the highest priority to this important sector.
I have run out of time to address matters of security. Civil servants right across Whitehall, given the breadth of the debate we have had, have been dreading the words I am about to utter, but given the literally scores of questions that noble Lords rightly asked, I will attempt to ensure that a comprehensive letter is produced and placed in the Library of the House.
I believe that the agreement presents a great opportunity for a future global Britain. I thank all noble Lords who took part in the debate—even if, at times, I was a little disappointed in its tone.