Trade Bill

Baroness Fairhead Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Thursday 8th October 2020 Grand Committee

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, the noble Lord, Lord McNally, has withdrawn, so I call the noble Baroness, Lady Fairhead.

[Baroness Fairhead (Con)]

My Lords, before I turn to the amendments, I will begin by welcoming my noble friend the Minister to the House most warmly, as this is the first time that I have spoken on the Trade Bill since he assumed his role. As I have been participating both remotely and in person, I congratulate him not only on his clear grip of the subject matter but on the assuredness with which he has steered the Bill through. I am particularly struck by the effective working relationships that he appears to have developed with my noble friends and with Members across the House. I have little doubt that, combined with his experience and superb track record, this will enable him to be a very effective and enormously respected Member of this House.

I am delighted that the Trade Bill has returned to your Lordships’ House, not because we shed much blood, sweat and tears over its previous incarceration—although we did—but because it is an important Bill for the UK, her businesses and her people. It creates important tools that we will need for the UK to step into the future as a strong, independent and high-integrity trading partner. I am also happy that it remains, in the words of my noble friend the Minister, all about continuity and certainty—two elements that businesses large and small, up and down the country, really value.

However, that does not mean that the Bill cannot be made even better. As I have said on the Floor of the House and as the noble Lord, Lord Stevenson of Balmacara, rightly recalled last week, it is my view that

“no legislation passes the scrutiny of this House without being improved”.—[Official Report, 6/3/19; col. 615.]

That is why I want to speak to Amendments 57 and 63 in particular, and to address the issues of transparency, engagement and parliamentary scrutiny. I have one question and one request for the Minister, both of which I will come to.

I want to be clear that I am not speaking about transparency, engagement and scrutiny of continuity trade agreements that are expected to have no significant changes. I agree with my noble friend the Minister that they have already undergone rigorous scrutiny in both the EU and the UK, and I am content that the Government will continue to publish parliamentary reports for the remainder of such agreements that are transitioning. Further, I note that any secondary legislation required to implement these agreements will be subject to the affirmative procedure, requiring debates in both Houses. However, it is here that I have my question. Can my noble friend confirm that this Bill’s scrutiny provisions apply exclusively to continuity trade agreements and cannot be used for future trade agreements, for it strikes me that the wording could be construed as so doing?

Turning to the future free trade agreements, a number of your Lordships have highlighted the importance and extensive reach of modern FTAs. They cover areas far beyond trade alone and include, among others, geopolitical commitments and environmental, food and other standards. Your Lordships have also highlighted the transparency and genuine engagement permitted by the previous scrutiny process to bodies such as civil groups, industry bodies, trade unions and many more, not least the devolved nations. Let us be clear: transparency with no ability to engage is a much weaker proposition.

Finally, a number of your Lordships, including my noble friend Lord Lilley, the noble Lords, Lord Kerr of Kinlochard and Lord Purvis of Tweed, and the noble Baroness, Lady Kramer, have previously highlighted—as did my noble friend Lord Lansley today—the benefit of having a rigorous scrutiny process which, properly structured, can have the benefit of strengthening, not weakening, one’s negotiating hand. To be clear, I am not suggesting any change to the fundamental constitutional principle that underpins the negotiation of all international treaties, including FTAs: that the making and amending of, and withdrawing from, such treaties is a royal prerogative function.

However, taking all this into account, I continue to believe that further detail and improvement is required in both transparency and engagement with wider audiences and enhanced parliamentary scrutiny. I shall direct my comments to two main amendments: Amendment 57 in the names of the noble Lord, Lord Stevenson of Balmacara, and the noble Baroness, Lady Finlay of Llandaff, and Amendment 63 in the names of my noble friend Lord Lansley and the noble Baroness, Lady Jones of Moulsecoomb, as they aim to address these issues. They have been laid out elegantly by those who have put them forward. On Amendment 63, I agree strongly with words of the noble and learned Lord, Lord Goldsmith, that the ability to have a debate, if an issue has been raised on any of the future FTAs, is important. On Amendment 57, I support some, but not all, of its provisions. I very strongly support the need to consult. I am not fully seized by the concept of a mandate rather than objectives, but I think there are elements in Amendment 57 that should be considered and pondered by the Government.

Let me turn to transparency and engagement. Clearly, transparency needs to respect the commercial, confidential elements of negotiations. That said, interested parties across the UK need to have sufficient information in a timely fashion about the areas of discussion, the ability to submit their views and objectives and clear mechanisms for feeding in and engaging. The Government have established a number of bodies to enable this to happen: the Strategic Trade Advisory Group and 11 sector-based trade advisory groups. This is a terrific start, but I encourage the Government to ensure that those bodies are kept under review, to ensure that the appropriate, rich level of engagement is achieved to enable businesses to contribute.

Turning to parliamentary scrutiny, I realise that the Command Paper of February 2019 is not binding on this Government, but I am happy to observe that it has been complied with in practice. It is an excellent base from which to build. It required the previous Government to produce an outline approach to negotiations, including its objectives, and it had to be accompanied by a detailed economic analysis. It also committed the Government to publishing progress reports after each negotiating round, and annual trade reports across all live negotiations.

Economic Environment: Growth and Jobs

Baroness Fairhead Excerpts

Thursday 11th July 2019 Lords Chamber

[Baroness Fairhead (Con)]

My Lords, I congratulate my noble friend Lady Neville-Rolfe on raising this important issue and thank her for her many contributions to UK business over her impressive career.

In terms of being a good place for business, we perform well internationally. We are number 9 out of 190 countries and, as my noble friend Lord Leigh of Hurley said, our unemployment rate is at its lowest since 1974, and employment is increasing. A lot of this success is due to initiatives by government, and by government and businesses together, of which we should all be proud. Just recently, the industrial strategy, with its £37 billion for productivity investment, support for R&D and sector deals, is creating real excitement. It is now supported by the export strategy and the productivity plan led by Sir Charlie Mayfield, which is giving practical checklists to SMEs.

We need to be balanced in our criticism, but that is not to say that there is not more to be done. I will concentrate on access to finance, with a particular focus on SMEs and scale-ups, because they are most keenly affected. It is worth calling out the success of two government schemes: the enterprise investment scheme and the seed enterprise investment scheme, which were begun a couple of decades ago. My noble friend Lord Flight, through his chairmanship of the association, has helped to ensure the strong and continued government commitment, including its endorsement as part of the patient capital review. As regards enhancement, SMEs want to applaud the continuity but also welcome ongoing efforts to simplify the process.

The British Business Bank has been another important addition. It now has a range of programmes, including the Start Up Loans Company, having backed over 50,000 companies, with an average loan size of £6,500. In fact, HMT has just boosted its funding by an extra £2.5 billion as a result of the patient capital review, and that is to be welcomed.

Yet challenges remain. They are particularly acute for high-growth, innovative companies that are seeking to gain access to long-term financing. While the UK has a lot of sources of financing, we are still some way behind the US in terms of the depth of our markets. First, therefore, it is important that, as we leave the EU, we replace the European Investment fund post EU exit—I will return to that message.

Secondly, there is a need to spread access to growth capital across all regions of the UK. As my noble friend Lady Neville-Rolfe referred to, London and the south-east receive the lion’s share of equity investment in SMEs, despite high-growth companies being much more broadly spread across the country. The British Business Bank has established regional funds with the northern powerhouse, the Midlands Engine, and with the Cornwall & Isles of Scilly Investment Fund, but they too rely on European funding. It is therefore important to understand how the proposed UK shared prosperity fund would replace this European funding to allow further regional access to finance funding in the future.

Thirdly, we need to improve access to information for growing companies so that they can better negotiate what remains a complex landscape of financial choices. Again, the British Business Bank launched a national finance hub with online information, better signposting and better referral processes. However, it is important that this is co-ordinated nationally and controlled through the LEPs and growth hubs.

A final area of access to finance that I would like to highlight is our export credit agency, UK Export Finance. That is a key pillar of our UK export strategy from last year. Evidence shows that companies which export are statistically more profitable, employ more people with higher skills levels, are more innovative and endure longer. UKEF is 100 years old, but it is considered today as the best in its class by its export finance agency credit agency peers. During my time as a Minister, it was described to me as, variously, “the game-changer in exporting”, as well as “our best kept secret”. The DIT and UKEF have clearly embraced this challenge to improve awareness, partnering with high-street banks to make access easier, but the success of this agency means that competitors are chasing at our heels. In particular, a number of countries, such as France and Malaysia are providing support in that critical early stage of exporting where you are exploring and investigating and beginning opportunities. One suggestion, therefore, is to look at our programme, to build on the trade access programme, which is currently relatively small, and both increase the funding available and extend the range of areas that can be covered.

Scale-ups is an area of rich opportunity. Although the UK comes third in the OECD rankings as a great place to start a business, when it comes to growing a business we fall to 13th, and these scale-ups really matter. According to the ScaleUp Institute, these 37,000 companies generated £1.3 trillion of turnover to the UK economy. They create three times as many jobs per week as the FTSE 100, they are 42% more productive than their sector peers and they are more likely to export. The challenges that they have faced for many years are well articulated. These challenges predate Brexit and within our power as a country to solve. We have a Scale-Up Taskforce and a Minister to champion them. However, the tax landscape and finding the right finance are important factors, and this is where outstanding questions remain about post-EU exit funding. Notably, of the 219 programmes mapped by the institute, one in three is currently co-funded by the ERDF and scale-up initiatives have substantial support from the EU. We need to avoid a scale-up void when we leave the EU.

Finally, I shall touch on the annual investment allowance. In its 2019 survey, the British Chambers of Commerce found that more than a third of its companies are planning to use the allowance in the next two years. The allowance is valued, but the BCC suggests two improvements: expanding it to include investment in people and removing disincentives.

I ask my noble friend for reassurance on these matters regarding funding to ensure that we build on the progress that we have made in recent years.