Future UK-EU Relationship on Professional and Business Services (EU Committee Report)

Baroness Hayter of Kentish Town Excerpts

Thursday 22nd July 2021 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, the sad story of this excellent report, so ably introduced by my noble friend Lady Donaghy, is that the Government failed to heed the clarion call to place our professional and business services centre stage in negotiations with the EU. That is hard to explain, given what a great foreign earner those services represent, the sheer numbers employed and the role that they play in servicing other business so that they too can trade and prosper. All those were mentioned by the noble Baroness, Lady Bottomley, the noble and learned Lord, Lord Hope, my noble friends Lord Davies of Brixton and Lord Liddle and others.

The TCA focused on fishing and goods and, in the words of the noble Baroness, Lady Neville-Rolfe, rather ignored services, leaving them facing barriers to their continuation and growth. In particular, while the TCA provides a framework, as my noble friend Lord Davies of Brixton said, for mutual recognition of professional qualifications, this new system will, in the judgment of TheCityUK, take a long time to yield any meaningful results. I hope that the Government will hear the need for urgency in making progress on that vital aspect, as mentioned by the noble and learned Lord, Lord Thomas of Cwmgiedd.

While there are undoubtedly some positives in regard to legal services—a sector mentioned by the noble Baroness, Lady McIntosh, and others—particularly on where UK lawyers can practise UK and international law under home title anywhere in the EU without requalification, such access is subject to national restrictions. Importantly, along with all professional and business services, including cultural services, the trade agreement provides little on the movement of people. That is one of the biggest losses for UK professional service providers in doing business in the EU.

Perhaps most worrying since the conclusion of the TCA is the absence of agreement on Lugano, about which I have tabled Written Questions, though I await responses from the Government. Perhaps the Minister can update the House as to why he thinks that the European Commission has concluded that it is

“not in a position to give its consent to invite the United Kingdom to accede to the Lugano Convention”

and tell us what steps the Government are taking to rectify that and mitigate the resulting difficulties.

There remains work to be done to improve our trading relationship with the EU over the ongoing provision of the UK’s professional and business services. TheCityUK has outlined its priorities, some covering financial services, which are beyond the scope of this report, but a number are germane to our debate, particularly over data adequacy—as mentioned by the noble Lord, Lord McNally—Lugano and the movement of people. However, TheCityUK’s major message to us is the most important: outstanding practical and implementation issues are unlikely to be solved

“until the political situation between the parties is heavily de-escalated”.

That is our plea to the Government. Can we tone down the language? Can we stop the playground name-calling and accusations of bad faith? Please can we not even think of triggering dispute mechanisms or other such macho devices? How can we possibly at this moment be setting ourselves on a collision course with the EU by threatening to suspend parts of the Brexit deal, which the Government have only just negotiated and signed, if the EU does not accede to our demands?

As the FT says today, the Command Paper

“represents a root-and-branch rewriting of the Brexit deal UK prime minister Boris Johnson agreed with the EU in October 2019”,

amounting to an attempt to tear up an international treaty—an attempt, in the view of the FT, that the EU was bound refuse. Indeed, I understand from the BBC website that Mrs von der Leyen has already this afternoon rejected the Prime Minister’s bid to renegotiate the protocol. That is not just important for the protocol, but how does it help our wider relationship with our vital partner, particularly the continuation of the business and professional services on which, as we have heard from all speakers, we are so dependent? Can we please heed the noble and learned Lord, Lord Thomas, and look to the future and so keep our eye on the major prize? That is increased and growing trade in professional and business services with our nearest neighbour and our biggest single market—an objective that does not have to be at the expense of trade further afield.

We need better atmospherics to achieve the improvement in our relationships with the EU on the services that we are discussing today. They are vital for our economy, both in the direct benefit of these services and for all the other businesses that they support—goods, fishing, agriculture, academia. Everything that we do with the EU tends to depend on advice, legal advice, professional services and recruitment—all the ones that we are covering today, including, of course, accountancy. I hope that the noble Lord will offer some real assurances that the Government share our ambition in this regard to ensure that this sector of our economy continues to thrive, grow with the EU and help all the other bits of our economy and, similarly, trade with this biggest and nearest partner.