No-deal Brexit: Short Positions against the Pound

Bill Esterson Excerpts

Monday 30th September 2019 Commons Chamber

[Mr Clarke]

I have a great deal of admiration for the former Chancellor, but I am clear that in this case he is wrong.

[Bill Esterson (Sefton Central) (Lab)]

A number of hedge funds expect to benefit as a result of their short positions on a number of sectors in the economy, including construction and shopping centres. It cannot be right that as a deliberate result of Government policy those hedge funds are going to cash in at the expense not only of those sectors but of the constituents of every single Member of this House.

[Mr Clarke]

Government policy is to leave the European Union with a deal, if at all possible, and that remains our central case. The hon. Gentleman’s question in many ways summarises the past few minutes, in so far as it does not get to the substantive point, which is that the only reason we are at risk of a no-deal exit is that we have not managed to persuade the Opposition that they should get behind our attempts to secure a better deal rather than seek constantly to undermine them.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 21st May 2019 Commons Chamber

[Elizabeth Truss]

I was pleased to have the opportunity to meet my hon. Friend to discuss this issue. The reality is that there is a big gap in funding, with the lowest-funded authorities getting approximately £4,300 per pupil and the top-funded authorities getting £6,800. We are looking at that, because we have to have fairness across the country.

[Bill Esterson (Sefton Central) (Lab)]

Revenue funding continues to flow to oil refineries in the middle east at the expense of tidal technology, an area in which we are a world leader. When will this Government accept that investing in tidal energy would bring huge benefits to the whole economy?

[Robert Jenrick]

This Government are investing in innovation in the tidal and marine sector. For example, we have invested in the marine innovation centre in Shetland, and I recently met a delegation to discuss those proposals. However, investments that we make on behalf of the taxpayer have to be the right strategic energy investments for the country and provide good value for money for the taxpayer.

Clydesdale Bank and SMEs

Bill Esterson Excerpts

Tuesday 19th March 2019 Commons Chamber

[John Glen]

I believe the dispute resolution service that has been set up gives the scope to go back over 10 years of disputed cases, and there is a desire to provide quick access. As the right hon. Gentleman points out, some of these cases have been going on for far too long. The situation is that the banks were in a very bad place with respect to the power they wielded over individuals and small businesses. They want to sort this out, and that is why they have engaged constructively in the construction of this dispute resolution service.

[Bill Esterson (Sefton Central) (Lab)]

Like other Members who have spoken, I have a number of constituents whose businesses were ruined by the actions of the banks. I think this is a much larger-scale problem than the Minister perhaps implied in some of his earlier answers. It is about an imbalance of power in the relationship between the banks and their customers. The banks have had years to provide redress and they have had years of a voluntary system in that regard, so how is a new voluntary tribunal system going to provide the redress the banks need to provide? Surely the time will come when the Minister will need to make this a mandatory system to provide the justice needed by small business customers who were ruined?

[John Glen]

We have not in recent times had a system set up to give quick access in relation to disputes over the past 10 years, and my concern was to provide something that is effective and deals with all the issues that have been raised over the time I have been in office.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 29th January 2019 Commons Chamber

[Elizabeth Truss]

My hon. Friend is correct. Of course, Scotch whisky is one of our flagship exports right across the world. We have the opportunity to renegotiate some very high tariffs and make it even more of a bestseller.

[Bill Esterson (Sefton Central) (Lab)]

The Government’s deal was rejected by a record vote in the House. Business leaders in Scotland and across the UK want the Government to rule out any prospect of no deal, and the Chancellor told business leaders that that was possible, so why have the Government not ruled out any prospect of no deal?

[Elizabeth Truss]

It is important that we keep no deal on the table to get a better deal from the EU. I strongly encourage the hon. Gentleman to support our deal as the best way to take no deal off the table.

ONS Decisions: Student Loans

Bill Esterson Excerpts

Tuesday 18th December 2018 Commons Chamber

[Elizabeth Truss]

In the spring statement, we would expect to see the revised forecasts. Of course, Government spending plans, which incorporate a huge number of areas and a huge number of Departments, will be announced at the spending review in the Budget.

[Bill Esterson (Sefton Central) (Lab)]

The ONS has confirmed that this is an accounting trick, which this Government have been happy to use to cover up the true extent of the deficit and the mismanagement of the public finances. If this was in the private sector, the finance director would now be being hauled over the coals. When is the Government’s finance director going to admit that they were wrong, and apologise to both students and the public?

Business Rates

Bill Esterson Excerpts

Wednesday 13th June 2018 Westminster Hall

[Rachael Maskell]

My hon. Friend makes an excellent point, because it is the small retailers that are really struggling to survive, and it is an issue of survival in the current age. Of course, business rates are at the heart of the decision by businesses as to whether to remain open or close.

Other organisations have been brought to my attention that are even worse affected than those with the 600% increases I have cited. For instance, there are organisations that have had rooftop solar panels installed and then seen their business rates rise by as much as 800%, and all for doing the right thing. The Valuation Office Agency is discussing similar measures for battery storage, all at a time when green energy and microgeneration should be promoted; instead, people are being deterred from doing their bit for the environment.

Let us remind ourselves that business rates are set by multiplying the valuation rate—that valuation rate is based on the market rental value, as if the property was being placed on the open market—by a multiplier set by Government. In England, that is 49.3p, or 48p for small businesses. It cannot be raised by more than the rate of the retail prices index, or the consumer prices index from this year.

There are certain relief schemes in place, three tiers of arrangements to reduce the burden on small businesses, and an array of different arrangements for charities, rural businesses and community sports clubs. Last April, temporary relief was also introduced, with an additional relief fund of £300 million, which was to be shared between local authorities around the country over four years. Pubs with a rateable value above £100,000 were given relief at a flat rate of £1,000, which is subject to current state aid rules. I would like the Minister to examine that specific issue. There are also relief schemes for fibre infrastructure, local newspapers and empty properties.

York received £788,000, but the local council’s governance of the money provided by that fund has been extremely poor. It started with an application process in May to provide grants to businesses that were struggling and that could guarantee—that is, guarantee—they would be sustainable. However, because businesses were unable to give such an assurance, they were unable to apply. In December, the council therefore changed its mind. All businesses with premises that have a rateable value under £200,000 and that had experienced a business rates increase of over 12.5%—except for national chains and local government premises—automatically received a discount, meaning that the council did not even consider hardship issues; the discount was an automatic entitlement. The Government should have provided far better guidance for councils that were handing out taxpayers’ money; the councils really did not have the understanding of what was required of them to support businesses.

This year, York will receive £383,000; next year, it will receive £158,000 and the following year just £23,000. That tapering leaves businesses in an incredibly vulnerable position, without any long-term solutions being provided by the Government. Businesses are crying out for such solutions.

York is not unique, but it does provide the Government with an excellent case study as to why the business rates system is failing. I will provide some examples of the systematic problems that my city is facing.

Retailers in high-value rental areas pay the highest rates, whereas companies selling goods on the internet from warehouses in low-value rental areas pay the lowest. For example, Amazon is the largest retail business in the UK, with a warehouse of 65,000 square feet outside York. In York, Amazon pays £1.4 million in rates. Marks & Spencer in York city centre is seven times smaller in size, but it still pays £500,000 in business rates, or about a third of the amount that Amazon pays.

The smallest stores pay the most. For example, in York city centre small shops pay up to £950 per square metre, whereas larger companies benefit from a special larger store rate of £110 per square metre. If all companies in York paid the same as small businesses in York, Marks & Spencer would have a rateable value of £9 million and Amazon would have a rateable value of £61 million. Across the sector, the perception has grown that the Valuation Office Agency gives large companies favourable treatment to avoid lengthy and costly disputes, and clearly small businesses are suffering.

[Bill Esterson (Sefton Central) (Lab)]

The comparison between what is paid by large out-of-town and online retailers and what is paid on high streets is extremely well drawn. Does my hon. Friend agree that the problem is that unless something is done—and it can only be done by the Government—to create a fairer business taxation system to even up the situation between online and out-of-town retailers on the one hand and the high street on the other, high streets and their communities will continue to suffer, and anybody who works in those areas, and their families, will be put under pressure? This issue has to be dealt with urgently, and the Government must intervene to address the problems of unfair business taxation.

[Rachael Maskell]

The point my hon. Friend raises is the point of this debate. The reality is that we are talking often about independent business in which families have invested, maybe for generations, building it up and building a reputation, only to find that the competition from online sales and out-of-town stores is challenging. In addition, such businesses then have the weight and burden of business rates to pay on top of high rental values for their properties. The sums simply do not add up, and it is driving them out of town.

That situation is why we are seeing so many closure notices on shops. Some shops have been part of communities for decades and are sadly no longer there. That is certainly true of York. Our communities are losing their identity as a result and that is changing what happens in our town and city centres. I could relate so many stories from York of how independent shops have disappeared to be replaced by vertical drinking establishments and other such premises. That changes the whole context of our city. It is vital that we get on top of the business rates issue.

We have to recognise that businesses are penalised when they try to do the right thing, as equipment adds to the rateable value of business premises. Companies are penalised for making improvements to their businesses. Labour’s manifesto promised to exclude all new investment in plant and machinery from future business rates to encourage investment. We want to see employers investing in the future of their business, but they are deterred. If that investment would put up their rateable value, why take those steps when they are already struggling?

European Affairs

Bill Esterson Excerpts

Thursday 15th March 2018 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

First, I apologise to the House for missing the start of the debate, which was entirely beyond my control.

I also thank my hon. Friends for their contributions: my hon. Friends the Members for Nottingham East (Mr Leslie), for Lewisham East (Heidi Alexander), for Bridgend (Mrs Moon), for Ellesmere Port and Neston (Justin Madders) and for Brentford and Isleworth (Ruth Cadbury). I will just mention the comment of my hon. Friend the Member for Lewisham East, who described the Government’s approach and their fantasy trade deals as a dog’s breakfast; I have to say that my dog would turn up his nose at these fantasy trade deals on offer from the Government.

It cannot be right that the Government have so little regard for the sovereignty of this House that they provide little more than a two-day general debate and offer no meaningful vote, when most of this debate was always going to be about the single biggest issue to face this country in generations. As my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook) told us in his opening remarks yesterday, the Government are attempting to look like they are doing something when in fact they are not only doing nothing, but have no idea what they even should be doing. Instead of filling two days of parliamentary time on this general debate, the Government should be bringing back the Trade Bill and the Taxation (Cross-border Trade) Bill and introducing the other Bills that they promised, including those on fisheries and agriculture.

Yesterday, the Minister for Trade Policy, the right hon. Member for Chelsea and Fulham (Greg Hands), congratulated the Government on bringing forward the trade and customs Bills and suggested that

“they have been designed to prepare us for every eventuality, although they will be needed regardless of the outcome of our negotiations with the EU. They will give us a strong trade remedies regime.”—[Official Report, 14 March 2018; Vol. 637, c. 915.]

However, they have not prepared us for every eventuality. In fact, they prepare us for no eventuality whatsoever as they fail to set out any legislative procedure for future trade agreements or for the protections of our rights and standards. As for the trade remedies authority, it has been described by the Manufacturing Trade Remedies Alliance, the industry body representing our manufacturing sector, as being the weakest in the world. The Opposition recognised the need for a trade remedies authority in our reasoned amendment on Second Reading. In Committee, we tried to strengthen the powers and the contribution that the authority will need to make, but the Government voted against and defeated every single one of our amendments. The Government know that they are in trouble with those Bills, which is why they are afraid to bring them back here. As many right hon. and hon. Members have pointed out, significant matters remain unresolved, and no credible solution has been presented by the Government, but they are none the less eager to rule options out.

The UK’s trade with the EU accounts for 44% of our total exports—some £229 billion. A further 16% of our exports go to those 70 or so countries that are party to some form of a trade agreement with the EU, including South Korea, Norway and Switzerland. In short, the majority of our trade is with EU or countries with which the EU has a trade agreement. The EU is of course the largest trading bloc in the world, and it is inconceivable that any trade agreement that the UK might be able to conclude with countries outside the EU would make up for the potential loss of trade once we leave. Of course, the UK will have to conclude new agreements with those countries that have an agreement with the EU, and the Government have attempted to spin the Trade Bill as being simply about that.

However, some of the agreements may well be significantly different from existing arrangements. South Korea, Chile and the other countries involved may well want an agreement with the UK after we leave the EU, but the question is why those countries would want to agree to the same terms that we currently enjoy as EU members. Furthermore, they will want to ensure that there is no overall disruption to their current trade with the EU. Of course, they will want a clear picture of what our future agreement with the EU looks like. Everybody is out for the best they can get for themselves. Every opportunity to take a little more and give a little less will be capitalised upon.

We already know that some of these countries, such as South Korea and Chile, have told the EU that they want to revise terms of their existing deals once the UK has left. Meanwhile, other countries have publicly called for changes to their trade with the UK after Brexit, calling for divergence from EU standards or liberalisation of tariff rate quotas. They do not want the same terms as before; they want better terms—for them, not for the UK. It will come down to who has the upper hand and the benefit of experience in trade talks.

Investors want to know whether they will be able to continue to participate in European supply chains and how rules of origin will apply after Brexit. Will they have to complete arduous customs declarations and advanced screening applications? Will their goods be held up at ports and train stations? It is clear that the Government have absolutely no idea what to do about the border on the island of Ireland. The Government have repeatedly told us that they will not have a hard border, nor will they have a border at sea. They have told us there will be no infrastructure on the border, yet they have also suggested that a digital border will be put in place and have hinted that it will involve CCTV and automatic number-plate recognition technology. Quite how CCTV and ANPR can exist without infrastructure, I do not know; that is a step even further in the Secretary of State’s blue-sky thinking. That proposition is untried and untested, and it has been dismissed categorically by businesses, the Irish Government and the European Union. Even if that were not the case, it would require a substantial systems overhaul across the European Union as well as in the UK, and HMRC has already said that it would not be in a position to roll that out by the time the UK leaves the EU.

Further, the success of any border arrangement, if such an arrangement could be found, would depend entirely on the extent to which UK regulations and standards were compatible with those of the EU. Those are fundamental questions, but despite 20 months having passed since the referendum result and a year since article 50 was triggered, the Government are no further on with answers to them.

Many of those issues would be substantially resolved if, as the Opposition have suggested, the Government were to negotiate a new, bespoke, comprehensive UK-EU customs union. Such a customs union would allow existing trade arrangements to be rolled over with minimal changes. That is what the Government say that they want. Disruption to trade, such as changes to rules of origin requirements and diagonal cumulation, would also be avoided.

Under Labour’s suggested approach, we would work alongside the EU in new trade arrangements. It is shocking that the Government have drawn a red line of not being in a customs union, without modelling the effects either way. If we agreed an EU-UK customs union, the EU would be enhanced by having the strength of the world’s sixth-largest economy joining it in negotiations, and we would be strengthened by negotiating alongside the largest trading bloc in the world.

Our approach would also remove the need for customs checkpoints and accompanying infrastructure on roads between Northern Ireland and the Republic of Ireland. Our approach recognises that the EU is the largest market in the world, and that we are stronger in future negotiations alongside it. The Labour party seeks solutions to the problems that the Government have presented to the country.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 27th February 2018 Commons Chamber

[Mr Speaker]

I do not think the hon. Gentleman represents a north-west constituency.

[Bill Esterson (Sefton Central) (Lab)]

This Government have done nothing to deliver local rail infrastructure in the north-west, which is vital for jobs and the economy. When are they going to invest in decent local rail services, including those used by my constituents from Southport to Manchester? If the Government will not do it, they should stand aside and let us get on with the job.

[Robert Jenrick]

The Government have been investing more in railways across the country than any Government since Victorian times, including in the north of England. Across the country, the Government have invested £0.25 trillion in infrastructure projects since 2010, 4,500 of which have already been completed.

Community Bank Closures

Bill Esterson Excerpts

Thursday 8th February 2018 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) on securing the debate, in collaboration with the hon. Member for Hazel Grove (Mr Wragg). It has been an excellent debate. Many examples were cited, and there was cross-party acknowledgment of the devastating impact on all our communities of the closure of branches of a variety of banks.

The point about the impact on accessibility was well made. Members spoke about the impact on individuals and communities. As the Social Market Foundation points out, 11% of the population rely completely on high street bank branches, and that is typically the older and poorer parts of our communities. This is an example of financial exclusion, and it is a real problem throughout the country. Only 30% of the over-65 population use online banking. That is of particular importance in constituencies such as mine, which is in the top 20 of constituencies for people aged over 65. That is a real cause for concern, to which I shall return later, with examples from my constituency.

Individuals and businesses need banking services to suit their needs. A British Banking Association survey found that 58% of people surveyed stated that access to a branch—using a branch—was important to them, and 57% believed that face-to-face relationships with their bank were important. Those figures go up for businesses: for SMEs, the figures are that 68% believe that a branch is important and that 66% find that face-to-face banking is important. Therefore, the impact of branch closures is felt by individuals in their personal banking and for business banking, with particular impacts on our high streets—our communities. The Federation of Small Businesses warns that it is a great worry for its members that many now struggle to do the banking that they need.

In my constituency, in the last few years alone, we have seen closures of RBS, TSB, the Co-op bank, HBOS and HSBC branches. Alongside those we have seen significant post office closures. I agree with the Members who spoke about the important role that the post office network plays in providing banking services. Unfortunately, I see no evidence of co-ordination between the banks and the Post Office to ensure that post offices provide services in place of banks when there are closures.

In one of the three towns in my constituency—the town of Maghull, where I live—we have seen significant closures, adding Barclays to the list that I gave. The RBS branch in Maghull now opens for only two days, Monday and Friday. As was pointed out to me today by a constituent whose business has to bank the takings every day, that is absolutely hopeless. What are businesses to do on Tuesday, Wednesday and Thursday?

NatWest’s justification—it is online and anyone can see it—for the closure of its branch in Maghull includes the point that it is only 3.4 miles to the nearest bank, but that is hopeless if people cannot travel there by bus or car. For many older people, it is completely out of the question. NatWest also states that it consulted its local MP: it clearly thinks that everything is OK because it asked me whether it was all right to close the branch. I did not say that it was, by the way.

We have heard some excellent speeches today. My hon. Friend the Member for Stoke-on-Trent North made points similar to mine about closures in the towns that she represents. She spoke about the vital function of bank branches for businesses depositing the day’s takings, and about the impact of the proposed closure of the LINK network. My hon. Friend the Member for Ogmore (Chris Elmore) spoke about NatWest closures, and said that his constituency now contains only one bank to serve all the communities there. My hon. Friend the Member for Glasgow North East (Mr Sweeney), among others, mentioned the lack of awareness of post office services. My hon. Friend the Member for Don Valley made a powerful case—

[Caroline Flint]

Right hon.

[Bill Esterson]

I am very sorry—my right hon. Friend the Member for Don Valley. I am pleased to be able to set the record straight.

[Caroline Flint]

I worked hard for that.

[Bill Esterson]

My right hon. Friend is working very hard on this campaign, as well as having worked hard to achieve that recognition in this place.

My hon. Friend the Member for Midlothian (Danielle Rowley) mentioned the RBS closures, as did other Members in all parts of the House. Some spoke in a very heated way and no love was lost on a couple of occasions. An important point was made about the limited response of RBS to the concern that was being expressed about the closures. My hon. Friend the Member for Bury North (James Frith) drew attention to the key role of banks in attracting footfall and trade for other local businesses. He rightly spoke of the importance of Labour’s regional banking offer and the opportunity that it presents for community banking.

Like other Members who spoke, my hon. Friend the Member for Clwyd South (Susan Elan Jones) represents an area that contains only one bank branch to serve all her constituents. My hon. Friend the Member for Sedgefield (Phil Wilson) mentioned bus services and said that many of his constituents did not have access to the internet or phone. He also spoke about the impact on his local town centres. My hon. Friend the Member for Glasgow North East said that bank branch closures hit the poorest communities hardest. He also rightly observed that we might do well to emulate and learn from the successful arrangements in Germany.

These branch closures are happening at a time when banks are making healthy profits. We have to wonder who the customers are, and whether the banks have lost sight of the fact that it is the personal and business banking customers who are their customers. I always thought that putting customers first was the way for a business to operate and succeed. That was certainly a lesson that I learned when I ran a business.

Has the time come to put public good ahead of short-term profit? The challenger banks—such as Metro, which is open seven days a week, and the Bank of Dave, which results from the entrepreneurial approach taken by Dave Fishwick in Burnley—have demonstrated that it is possible to make a success of a bank branch. Is it time for banks and financial services to be seen as a utility, an essential public service that delivers for customers—for high streets, communities and small businesses? We regulate the financial services sector now, and I can tell the Minister that if the Government will not add to that regulation by addressing this issue, a Labour Government certainly will. We will ensure that no closure can happen without proper local consultation, and, crucially, without the approval of the Financial Conduct Authority.

I cannot conclude without mentioning the hon. Member for Strangford (Jim Shannon), who mentioned RBS and GRG: the systematic abuse, the intentional and co-ordinated approach of management, the clear RBS board responsibility for the mistreatment of small businesses. That serves as another reminder that the current attitude and approach of banks is not what is needed by their customers.

Government must intervene so that the banks work for us. As a number of right hon. and hon. Members have pointed out, the banking access protocol has not delivered. There is an impact on communities, travel, public transport, the environment, economies and businesses from lowering footfall, and there is lower lending in places without bank branches. Some 10% of households do not have the internet, and only 9% of small firms approached their banks in 2016 for finance. All of these things are examples of why the banking system is not delivering.

This is not about the nostalgia of Captain Mainwaring or Walmington-on-Sea; it is about what is needed today. Face-to-face banking for business and personal customers matters, service matters, and bank branches matter and can be alongside the post office. If we put the public good first, we can be successful. The voluntary approach has not worked, and the only organisation that can ensure our banking system delivers is Government. It is time to act.

Trade Bill (Third sitting)

Bill Esterson Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 25th January 2018 Public Bill Committees

[Bill Esterson (Sefton Central) (Lab)]

What about the English?

[Hon. Members]

Ah!

--- Later in debate ---

[The Chair]

Could you speak up, please?

Elspeth Macdonald: Yes. This Bill provides for carry-over from existing trade agreements between the EU and third countries. I think that the European Union (Withdrawal) Bill has some influence on this process, too.

[Bill Esterson]

Q Gary Stephenson, in your 2016 annual report, you said:

“the proposed new international trading arrangements…may be on disadvantageous terms compared to the current conditions.”

Could you say what your concerns are about the trade agreements covered in this Bill, and where you see the possibility of them being included on disadvantageous terms?

Gary Stephenson: I assume that refers more to the EU situation, in that in Scotland, a large proportion of our exports are to the EU, and we are clearly looking potentially at more challenging conditions from the standpoint of, “Will the UK be added to the EU list of approved countries?”, and registration of approved establishments. At the moment, it is probably the sheer volume of materials having to pass through customs and border inspection posts and so on that is likely to cause increased trading challenges, unless we get that right, and that is a critical piece.

[Bill Esterson]

Q I asked about a slightly different issue: the agreements being moved over to between the UK and the 40 or so partners.

Gary Stephenson: For the EU free trade agreements, I do not necessarily see them being as challenging. The only issue would be—take Korea. We used to export to Korea before the free trade agreement. The free trade agreement came in and basically removed the tariff, so the only difference, hopefully, would be that we are back to a tariff situation, which we did not have during the free trade agreement.

[Bill Esterson]

Q Sure. We had evidence on Tuesday that the EU will still have a say, or that it will be relevant to include the EU in discussions about the so-called roll-over—the move to corresponding agreements, as a different way of putting it. What is your take on that? Some deals are tripartite, rather than bipartite.

Gary Stephenson: I think the issue here is that the EU will still have a say in this. To what extent do we want to negotiate bilateral agreements with these free trade association countries? Or do we want a trilateral-type agreement, which would be a sort of joint EU-UK-third country negotiation?

[Bill Esterson]

Q What is your view, for this process?

Gary Stephenson: My view would be that a trilateral would be a better option, because you are not looking at changing anything.

[Bill Esterson]

Q Can I ask Elspeth Macdonald about tariff rate quotas? What concerns does your sector have about the potential changes to the UK’s current share of TRQs and any changes to regulatory standards that would allow overseas producers to access UK markets as a result of a copy-and-paste approach to the existing free trade agreements?

Elspeth Macdonald: Certainly, in relation to regulatory standards—technical standards—for food, industry and consumers are generally fairly confident and satisfied with the standards in the current EU regulatory framework. Certainly, when we talk to businesses and the public about the regulatory standards governing the food that they eat, and the food that they buy and use in their businesses, in Scotland, there is a generally high degree of satisfaction with EU standards. Any changes in future that began to change those regulatory standards away from those that currently provide a high degree of public health protection and consumer protection would be of some concern.

[Bill Esterson]

Q On the tariff rate quotas, we have heard from other countries that they want not just the current level of quotas to be maintained between the EU and the UK, and the split that the UK Government have proposed, but additional quotas.

Elspeth Macdonald: My organisation’s perspective on this is probably more around the non-tariff side. Certainly, businesses that we regulate in Scotland will be concerned to ensure that they have as little disruption as possible to their access to markets.

[Bill Esterson]

Q But what if one of the consequences of the negotiations to produce corresponding agreements was additional quotas that increased imports in your sector? Do you have a view on that?

Gary Stephenson: That is probably more in the food manufacturers’ area, because how the tariff rate quota is divided up is obviously for negotiation between the UK and the EU. I know that the World Trade Organisation has some influence on how it is divided up. This is where the specific industry sector should be consulted on what it believes would be the fair quota. Any of us is probably not in a position to set out a position on any specific quota. Take lamb as an example: what is a suitable quota that the UK would take back from the EU? It is a complex area, and I think it is best to ask that question of the sector responsible.

[Hannah Bardell (Livingston) (SNP)]

Q Happy Burns day to everyone, and I thank the witnesses for joining us today. Following on with the issue of cost, the meat sector is potentially looking at WTO tariffs on meat processors at 60%. If that is coupled with HMRC saying that 130,000 companies have never filled out a customs declaration, what impact, from a food and drink and meat processing perspective, do you think there will be on the sector, broadly and in terms of bureaucracy and staffing? Do you feel that adequate investigation and consultation has taken place?

Gary Stephenson: Wow, that is a big one. There are a number of elements to this. My company is in a fairly unique position in the food industry, in that we already import product into the EU, so we understand the complexities of that process. It is about whether the region you are from is authorised on the EU legislation side. Is your business registered within the EU as a registered business to produce that product? Other countries have similar issues. The US has similar legislation, which requires overseas suppliers to be registered with the Food and Drug Administration.

There is an additional piece: the export health certificates, which are not needed for the EU at present, but will be. Each one of those costs the business. It is not just the cost of the certificates—the vet must come to inspect. Have we got enough vets in the UK to provide that service? That is an additional challenge.

--- Later in debate ---

[Martin Vickers]

Q But if changes were required, surely you would want to be a part of that? It is perfectly possible that we could construct a better system.

David Scott: I appreciate that, but I do not believe that we can. I think the current system works in the best interests of the UK. The Medicines and Healthcare Products Regulatory Agency is regarded as a powerhouse within the regulatory sphere. If we tried to set up a secondary or different regulatory system, it would not be to the benefit of the UK in terms of how we operate in the global marketplace for some pharma services.

[Bill Esterson]

Q Gordon MacIntyre-Kemp, can I come back very briefly to the question that you were answering from Barry Gardiner? You said that devolution was incompatible with the production of rapid trade deals. Does that also apply to what this Bill is attempting to do by creating corresponding agreements to the current EU free trade agreements?

Gordon MacIntyre-Kemp: Yes, and I think there is a great deal of confusion around it. I do not believe that there is sufficient clarity in the Bill about what is defined as a free trade agreement, for instance. If you do a deal with a nation that has multiple elements including an element of free trade, does that mean that the Minister would have full powers to do a deal that runs contrary to or overruns devolved powers? What is a specific trade deal? That needs to be defined, so as to limit the scope of the regulatory powers being granted by the Bill. A lot more clarity needs to come through in terms of the legal writing of it.

[Bill Esterson]

Q This is a question for all three of you. We have just been asking about consultation with devolved Governments. What about consultation with business, particularly sectors such as pharmaceuticals, chemicals and medical supplies, on non-tariff measures? What do you believe should be the consultation before a negotiation takes place, particularly on the provisions of the Bill, with the creation of corresponding agreements?

David Scott: From my perspective, it would be good to engage with Life Sciences Scotland, the industry leadership group there, to understand the concerns and any wishes likely to be put forward. There is also the Scottish Lifesciences Association. There are a number of bodies in Scotland that should be spoken to and asked to come provide evidence from that perspective, so you can get a wider perspective on how Scotland’s life sciences community feels, not just in pharma and chemical but in animal health and across the broad remit of research and all these sorts of things, and get some information from the whole body of Scotland that is representative of the wishes of industry and business from that perspective.

Jonathan Hindle: I do not have a particular Scottish perspective on this. Generally speaking, the furnishing and furniture industry is keen to achieve what I am hearing from a lot of other industries: stability and consistency, equivalence and mutual recognition across the process. We are keen to advocate dialogue wherever we can have it to achieve that transition as smoothly as possible.

[Bill Esterson]

Q What are your concerns about consistency?

Jonathan Hindle: I cannot say that our industry is concerned at the moment that there will not be consistency; in everything that we are reading, we are told that attempts are being made to make that transition as smooth as possible. We do not currently endure any significant issues. There are some issues with policing and surveillance of some of the standards that we have mutually agreed; that is a current scenario and a problem now. I am hoping that the formation of the Trade Remedies Authority will allow for some more robust investment in policing and surveillance of the standards where we currently endure problems, but I would not say that we are suffering from dumping in the fullest sense of its description in this context, although we are a very substantial net importer. There is a big trade gap that we as a nation endure in our industry.

Gordon MacIntyre-Kemp: You have raised an important point. Business for Scotland represents mainly small and medium-sized enterprises in Scotland. We surveyed 758 businesses and asked for their opinions on how the trade deals in Brexit have been processed and handled. There were 199,000 employees, half of the companies exported, and 41% had at least one non-UK-born EU national on their staff. We found that only 8% of Scottish business owners trusted the UK Government to deliver a deal that works best for Scottish business. Interestingly enough, 76.81% to 77% thought that calling a halt to Brexit would be beneficial to the Scottish economy. I think you have got an issue there: business does not really understand what is going on and there is a great deal of uncertainty. There is more uncertainty and more negativity towards Brexit in Scotland because Scotland voted to remain, and therefore there is less confidence in business as a direct result of that; so you will see that follow through.

I think the period between the point where we are still talking about deals and the point where we can actually start looking at trade deals has to be used for a massive consultation exercise with all the sorts of bodies that David mentioned before, but right across the UK. If we are going to do that we need to be preparing for it now. We need to be talking about it now. We need to be saying, “How are we actually going to deliver this?” Business for Scotland will be able to help, from a Scottish perspective, as much as we possibly can.

[Bill Esterson]

Q Again, when you are talking about trade deals, remember that the Bill is about the creation of corresponding deals. You are applying what you say to the provisions of the Bill as much as anything else.

Gordon MacIntyre-Kemp: Yes.

David Scott: Can I echo that? I think uncertainty is a killer at this point, specifically for my customers, whom I trade with on a global basis. They have a global supply chain and have to make contingency plans to ensure that whatever medicines they make are available to patients. Those contingency plans cannot wait until the eleventh hour or the last minute of any negotiations of any sort. I can tell you that they are starting to put those contingency plans in place now, and that they will have a massive effect on companies such as mine, and companies across the UK that support pharmaceutical R&D and the development and release of products on to the European market.

[Hannah Bardell]

Q Thank you for attending, and happy Burns day.

Perhaps I can start with you, David, and pick up on what has been said about confusion. The way I read your comments was that you were talking about concerns about legislative change under the Bill, and the ability to make changes in primary legislation. As we know, the Law Society of Scotland has raised issues concerning the timescale that that might mean for your organisation and sector. Could you talk about that a bit? Also, I notice from your photograph that you are MHRA and Food and Drug Administration approved. On the impact of leaving, and potential disjoint—we have already lost the European Medicines Agency to Amsterdam—can you talk about the impact on your sector and company?

David Scott: Yes, the potential impact is massive. The whole of the medicines regulation is about harmonisation and working under one single set of standards, which are beneficial and mean that the speed to market of life-saving medicines is reduced. If we try to come up with a different set of regulations or way of working, and have duplication of effort, which is what would happen under the current proposal if we became a third country outside the EEA, pharma will look at us and think, “Is the market big enough?”

We are now a net exporter of pharmaceuticals into the European Union and have a trade surplus. We want to avoid anything that puts us into a deficit. If we cannot get some harmonisation and cannot stick with the current harmonisation, I am concerned that we will lose our reputation—or not our reputation, because the MHRA is one of the best in the world, as far as I am concerned, but the ability to get joined-up connectedness. That would have a massive impact on my industry and my company, without question. I would then be forced, contingency-wise, to say “What do I do? I can’t serve some of my customers’ needs in a different regulatory system.” It is a massive thing for us.