Earl of Kinnoull debates involving the Cabinet Office

There have been 26 exchanges involving Earl of Kinnoull and the Cabinet Office

Thu 25th February 2021 Ministerial and other Maternity Allowances Bill (Lords Chamber) 1 interactions (163 words)
Thu 4th February 2021 Protocol on Ireland/Northern Ireland: Border Controls (Lords Chamber) 3 interactions (81 words)
Thu 14th January 2021 Constitution, Democracy and Human Rights Commission (Lords Chamber) 2 interactions (11 words)
Tue 12th January 2021 Essential Services: Large-scale Technology (Lords Chamber) 2 interactions (20 words)
Wed 30th December 2020 European Union (Future Relationship) Bill (Lords Chamber) 3 interactions (417 words)
Thu 10th December 2020 UK-EU Withdrawal Agreement (Lords Chamber) 3 interactions (79 words)
Thu 19th November 2020 Union Capability: Dunlop Review (Lords Chamber) 2 interactions (11 words)
Thu 19th November 2020 Northern Ireland Protocol: Implementation Proposals (Lords Chamber) 3 interactions (84 words)
Thu 12th November 2020 Great Britain and Northern Ireland: Access for Goods (Lords Chamber) 2 interactions (11 words)
Wed 21st October 2020 EU Exit: Negotiations and the Joint Committee (Lords Chamber) 3 interactions (74 words)
Wed 23rd September 2020 EU: Future Relationship (Grand Committee) 3 interactions (1,078 words)
Wed 15th July 2020 EU Exit: End of Transition Period (Lords Chamber) 3 interactions (113 words)
Tue 30th June 2020 David Frost (Lords Chamber) 3 interactions (66 words)
Thu 18th June 2020 UK-EU Negotiations (Lords Chamber) 3 interactions (65 words)
Tue 9th June 2020 EU: Trade and Security Partnership (Lords Chamber) 3 interactions (58 words)
Thu 21st May 2020 Northern Ireland Protocol (Lords Chamber) 3 interactions (113 words)
Wed 20th May 2020 EU: Future Relationship (Lords Chamber) 3 interactions (104 words)
Tue 12th May 2020 Beyond Brexit (European Union Committee Report) (Lords Chamber) 3 interactions (364 words)
Wed 29th April 2020 Public Services: Update (Lords Chamber) 9 interactions (38 words)
Mon 16th March 2020 European Union: Negotiations (European Union Committee Report) (Lords Chamber) 12 interactions (2,182 words)
Thu 17th January 2019 Brexit: Stability of the Union (Lords Chamber) 3 interactions (544 words)
Thu 8th February 2018 Brexit: European Arrest Warrant (European Union Committee) (Lords Chamber) 3 interactions (537 words)
Tue 7th November 2017 Risk Transformation Regulations 2017 (Lords Chamber) 3 interactions (649 words)
Wed 13th September 2017 Financial Guidance and Claims Bill [HL] (Lords Chamber) 22 interactions (2,317 words)
Wed 6th September 2017 Financial Guidance and Claims Bill [HL] (Lords Chamber) 3 interactions (298 words)
Wed 16th March 2016 Trade Union Bill (Lords Chamber) 7 interactions (835 words)

Ministerial and other Maternity Allowances Bill

(Committee: 1st sitting (Hansard): House of Lords)
Earl of Kinnoull Excerpts
Thursday 25th February 2021

(4 days, 7 hours ago)

Lords Chamber

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Cabinet Office
Earl of Kinnoull Portrait The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
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My Lords, the hybrid Sitting of the House will now resume. I ask that all Members respect social distancing. I will call Members to speak in the order listed. During the debate on each group, I invite Members, including Members in the Chamber, to email the clerk if they wish to speak after the Minister. I will call Members to speak in order of request. The groupings are binding. A participant who might wish to press an amendment other than the lead amendment in the group to a Division must give notice, either in the debate or by emailing the clerk. Leave should be given to withdraw amendments in the usual way and, when putting the Question, I will collect voices in the Chamber only. If a Member taking part remotely wants their voice accounted for if the Question is put, they must make this clear when speaking on the group. We will now begin.

Clause 1: Payment of maternity allowance: Ministerial office

Amendment 1

Protocol on Ireland/Northern Ireland: Border Controls

Earl of Kinnoull Excerpts
Thursday 4th February 2021

(3 weeks, 4 days ago)

Lords Chamber

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Cabinet Office
Lord True Portrait Lord True (Con)
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My Lords, the position of businesses and the impact on them are obviously something that the Government monitor and watch with concern. My right honourable friend the Chancellor of the Duchy of Lancaster has told Vice-President Šefčovič that our focus must be on making the protocol work in the interests of people and businesses in Northern Ireland. As to the last part of my noble friend’s question, I do not resile from, indeed I support strongly, what the Prime Minister said in the other place yesterday.

Earl of Kinnoull Portrait The Earl of Kinnoull (Non-Afl) [V]
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My Lords, cool heads and dialogue are needed in such difficult circumstances between all the institutions of the UK, Ireland, Northern Ireland and the EU. I welcome the joint statement’s commitment yesterday to the Good Friday agreement and to avoiding disruption to the everyday lives of the people of Northern Ireland. What further changes to arrangements for the movement of goods arising out of the joint committee agreement of 17 December are still to be enacted, and when will they be?

Lord True Portrait Lord True (Con)
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My Lords, this is an ongoing process and obviously, as the noble Earl will know, my right honourable friend sent a further letter to Vice-President Šefčovič this week embracing a wide range of matters that we believe need to be addressed. However, I certainly agree with the noble Earl’s original remark that cool heads are required in this situation.

Constitution, Democracy and Human Rights Commission

Earl of Kinnoull Excerpts
Thursday 14th January 2021

(1 month, 2 weeks ago)

Lords Chamber

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Cabinet Office
Lord True Portrait Lord True (Con)
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I am grateful for the noble Baroness’s support for the approach that I have outlined. On her specific question, I cannot give a commitment on that at the Dispatch Box now, but I will repeat what I have said to the House: other workstreams on constitutional review will be announced in due course.

Earl of Kinnoull Portrait The Deputy Speaker (The Earl of Kinnoull) (Non-Afl)
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My Lords, the time allowed for this Question has now elapsed.

Essential Services: Large-scale Technology

Earl of Kinnoull Excerpts
Tuesday 12th January 2021

(1 month, 2 weeks ago)

Lords Chamber

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Cabinet Office
Lord True Portrait Lord True (Con)
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My Lords, the noble Lord makes a very important point. Looking at the colour of our hair, he and I should declare an interest in this matter. We need to extend understanding and use of technology, and access to it, but equally I urge all organisations, including banks, to remember that for many people a personal service is not only a matter of choice but a matter of necessity.

Earl of Kinnoull Portrait The Deputy Speaker (The Earl of Kinnoull) (Non-Afl)
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My Lords, the time allowed for this Question has now elapsed and we therefore move to the fourth Oral Question.

European Union (Future Relationship) Bill

(2nd reading (Hansard): House of Lords)
(3rd reading (Hansard): House of Lords)
(Committee negatived (Hansard): House of Lords)
Earl of Kinnoull Excerpts
Wednesday 30th December 2020

(2 months ago)

Lords Chamber

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Cabinet Office
Lord Ricketts Portrait Lord Ricketts (CB) [V]
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My Lords, I do not believe that this thin agreement—as the noble Lord, Lord Maude, called it—with the EU is in the long-term interests of this country. But I will support the Bill this evening, because the only alternative would be the worse chaos of a no-deal departure.

The British people will discover in the months ahead that this agreement will produce an avalanche of restrictions, bureaucracy, extra costs and delays. As that reality sinks in, at least this deal provides a platform on which to start the long process of building back a closer partnership in the years ahead.

I have two brief comments on the substance. The agreement on security and justice provides for a closer association with the EU than I, for one, had feared. I welcome that. But the principle underlying all the complex detail is that the UK will no longer have direct, real-time access to the EU databases and systems which have become so important for British policing, as the noble Lord, Lord Paddick, just explained. We heard in the Lords EU Security and Justice Sub-Committee that British police had consulted the SIS II database over 600 million times in 2019. In future, they will have to request information from the SIS II database, with all the delays that will entail.

Access to some of the other databases for fingerprints, DNA and passenger name records looks at first sight to be easier, but the overall loss will be significant. I cannot understand how it can be claimed that Brexit will make us safer. The question is rather: how much loss of capability will there be? What will be the operational impact of slower and more cumbersome processes, and more police officers tied up in front of computer screens making requests to the EU? Your Lordships’ EU Security and Justice Sub-Committee will hold an inquiry into this in the new year and will report to the House.

Briefly, my view is that the decision not to continue participation in Erasmus is short-sighted and mean-spirited. Erasmus gave life-enhancing opportunities to many thousands of students from the UK and across the EU. Less well-known is the fact that it also enabled vocational and adult education colleges and schools, many in disadvantaged areas, to set up joint projects with counterparts across Europe. It lifted the admin burden of organisers, which allowed smaller organisations that did not have the resources to arrange projects. I am deeply sceptical that a UK scheme, starting from scratch with the funding envisaged, will come anywhere near replicating the transformational impact Erasmus has had on so many lives. I hope this decision to leave Erasmus will be reviewed at the first opportunity.

Earl of Kinnoull Portrait The Earl of Kinnoull (Non-Afl)
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My Lords, I very much enjoyed the valedictory speech of the noble Lord, Lord Cavendish of Furness, who has been a stalwart and perceptive member of the European Union Committee. I wish him well—and indeed many plates of oysters—in his retirement.

The EU Committee has reported many times in the last four and a half years on the risks associated with not having a wide-ranging agreement with the EU. The 1,256 pages of Christmas Eve are thus very welcome, and I add my congratulations to the Government on achieving a deal, in particular to the noble Lord, Lord Frost, and his large and hard-working negotiating team. However, this represents only the start of a long process. Many areas are not covered, as we have already heard, and—for many that are—much detail has yet to be hammered out.

As noble Lords have just heard, the EU family of committees has already begun its work of full scrutiny of the trade and co-operation agreement—the TCA—and will in due course publish detailed analysis on every aspect of the agreement in a series of reports. The TCA sets up a partnership council that will be supported by a partnership committee, 18 specialised committees and four working groups, and it will have the ability to create more committees. This structure will sit alongside the existing joint committee on the withdrawal agreement, its six specialised committees and working group—a total of 32 committees across the two treaties. Like the joint committee on the withdrawal agreement, the partnership council of the TCA has the very major power to alter the TCA itself by decision. Scrutiny of this new and powerful structure will be of great interest to Parliament, so I ask the Minister to confirm that the Government will work with us to put in place a proportionate and transparent scrutiny system.

An important aspect of the TCA is the establishment of a parliamentary partnership assembly—a body that will involve Members of both Houses and of the European Parliament. I much welcome this and will return to it when we have more time. That assembly and the many TCA and withdrawal agreement committees represent a vital set of channels of communication and will offer the opportunity to help to repair the mutual trust that the Brexit process has dented. In the meantime, I acknowledge that legislation is vital to ensure that the TCA comes into force on 1 January to avoid the significant disruption and adverse risks that no deal would represent, so I support the Bill.

Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, having spent many years in your Lordships’ House on the Opposition Front Bench with responsibility for foreign affairs following my time in the Foreign Office long ago in the days of Francis Pym, I have always found it possible to combine a passionate interest and attachment to what the Prime Minister recently called the history, security, values and geology that bind us to our friends in Europe with an economic belief that the current European project, which is still in transition, will ultimately face challenges and possible failure on economic and then political grounds. I have always believed that we are better as a close friend and ally on the borders of the EU than one of 28 member states principally tied to the economic and political constraints within it.

Accordingly, I congratulate the Government and the negotiating teams on both sides, and associate myself with the 17.4 million people, including myself, who voted for Brexit and began the process that has led to the passing of this historic Bill. I believe the surprising strength of this deal will in time lead other member states carefully to consider their membership of the European Union.

The Bruges speech in 1988 was the turning point for many of us in government in the 1980s. We can now end the 30 years and more of fractious debate and often exhausting misdirected political energy and demonstrate increasing certainty for business after four and a half years of uncertainty. This Bill—this return to national sovereignty—comes at a time in our history when the establishment pillars of 20th-century Britain are also being challenged as we rightly move to a more meritocratic society where we must level up.

Today, we have loosened and restructured unequivocally the political ties of interstate integration. In 2021 there will be a growing awareness of the importance of entrepreneurship, productivity, competitiveness and opportunity in a global market—themes that will need to resonate as loudly in the boardrooms and on factory floors of UK-based companies as they will be reflected in the increasingly unfettered corridors of Westminster and Whitehall.

However, I temper my optimism with a recognition that, as has been said, this future relationship Bill is ultimately a tool—not an end in itself, but a new beginning, capable of unleashing this country’s potential and above all its people. In using that tool in the Bill before us, I regret the use of Henry VIII powers, which are widely evident in this Bill and which permit the Government to avoid parliamentary accountability and scrutiny with, as became known after the Statute of Proclamations in 1539, a swift flick of the quill that leaves spilt ink on otherwise excellent parchment.

That said, with unfettered optimism and determination, the Prime Minister has delivered, but what above all should be remembered is that Parliament today approves the Bill. The PM should be congratulated. Today is a historic day and a most welcome opportunity that cannot and should not be taken for granted. It must be grasped to be successful.

UK-EU Withdrawal Agreement

Earl of Kinnoull Excerpts
Thursday 10th December 2020

(2 months, 3 weeks ago)

Lords Chamber

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Cabinet Office
Lord Russell of Liverpool Portrait The Deputy Speaker (Lord Russell of Liverpool) (CB)
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We now come to the 30 minutes allocated for Back-Bench questions. There are 18 speakers listed. I appeal to all noble Lords, out of courtesy to one another and to the House, to be extremely brief. I am sure that the Minister will also be succinct.

Earl of Kinnoull Portrait The Earl of Kinnoull (Non-Afl) [V]
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My Lords, the Statement and its associated Command Paper are very welcome, particularly as they are evidence that both sides in the UK-EU joint committee are now working together in a pragmatic and friendly way. I congratulate all involved. However, we still have no satisfactory structures in place for parliamentary scrutiny, either of the joint committee itself or of new EU law applying to Northern Ireland under the protocol. What steps is the Minister taking to facilitate such scrutiny?

Lord True Portrait Lord True (Con)
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My Lords, I am a poor and feeble plant, but by standing here I am seeking to assist scrutiny. I understand the broader thrust of the question from the noble Earl, but he will also understand that arrangements for the scrutiny of government across the board by committees in your Lordships’ House is not a matter for the Executive. It is matter for your Lordships’ House and it is not for me to declare. As far as my ministerial responsibility is concerned, I am ready to appear before whatever committee, and this House, at any time that is requested.

Union Capability: Dunlop Review

Earl of Kinnoull Excerpts
Thursday 19th November 2020

(3 months, 1 week ago)

Lords Chamber

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Cabinet Office
Lord True Portrait Lord True (Con)
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My Lords, I do not agree that the United Kingdom is imploding. That is unhelpful talk. No political party in this country wishes to actively and swiftly break up the United Kingdom, except the one that I have mentioned. There is important co-operative work going on which will continue in full respect of the devolution settlement. We should all, in all parties, subscribe to that, as the noble Lord, Lord Caine, said.

Earl of Kinnoull Portrait The Deputy Speaker (The Earl of Kinnoull) (Non-Afl)
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My Lords, the time allowed for this Question has now elapsed.

Northern Ireland Protocol: Implementation Proposals

Earl of Kinnoull Excerpts
Thursday 19th November 2020

(3 months, 1 week ago)

Lords Chamber

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Lord True Portrait Lord True (Con)
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My noble friend raises an important point and I can certainly reassure him that the Government remain committed to the Belfast/Good Friday agreement in its entirety, including all three strands; east-west is vital, as he says. We are delivering on our unequivocal commitment to deliver unfettered access, and I hope very much that noble Lords will reconsider their obstruction of the legislation on that subject.

Earl of Kinnoull Portrait The Earl of Kinnoull (Non-Afl)
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My Lords, I warmly welcome the joint letter of 5 November from the First Minister and Deputy First Minister to Commissioner Šefčovič. In view of the significant concerns that they jointly expressed, what is being done to allow supermarkets to continue to service Northern Ireland from Great Britain? Can the Minister confirm reports that the UK and the EU are considering agreeing a grace period to allow supermarkets time to adapt to the protocols approach, which is still under discussion in the Joint Committee?

Lord True Portrait Lord True (Con)
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My Lords, the noble Earl raises an extremely important point. I cannot go into matters that are, as he implies, under active discussion, but we have certainly committed to an intensified process of engagement with the EU to resolve all outstanding issues such as this, which includes securing flexibilities for trade from GB to NI. That is particularly important for supermarkets, where we have been clear that specific solutions are required. The recent joint letter from the First Minister and Deputy First Minister reflects how important that issue is for Northern Ireland, and we will continue to work closely with the Executive to get a solution to this problem.

Great Britain and Northern Ireland: Access for Goods

Earl of Kinnoull Excerpts
Thursday 12th November 2020

(3 months, 2 weeks ago)

Lords Chamber

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Lord True Portrait Lord True (Con)
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My Lords, I very much agree with what my noble friend said. I underline his last remarks: it is astonishing that Keir Starmer required the Labour Party in this House to vote against a legitimate legal commitment to unfettered access.

Earl of Kinnoull Portrait The Deputy Speaker (The Earl of Kinnoull) (Non-Afl)
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My Lords, the time allowed for this Question has now elapsed.

EU Exit: Negotiations and the Joint Committee

Earl of Kinnoull Excerpts
Wednesday 21st October 2020

(4 months, 1 week ago)

Lords Chamber

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Baroness Garden of Frognal Portrait The Deputy Speaker (Baroness Garden of Frognal) (LD)
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My Lords, we now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief, so that I can call the maximum number of speakers.

Earl of Kinnoull Portrait The Earl of Kinnoull (Non-Afl)
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My Lords, there is a stark difference between the level of information contained in the statements made by the two sides following the joint committee meeting on Monday. Why is it that this sovereign Parliament gets so much less information than the EU 27 Parliaments and the European Parliament? Will the Minister commit that, going forward, a much greater level of information will be given on meetings of the joint committee and its sub-committees?

Lord True Portrait Lord True (Con)
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My Lords, a Written Ministerial Statement was issued. I am sorry if the noble Earl feels that more could and should be said. I always enjoy my engagements with him. The Statement referred to a number of matters discussed in the joint committee on 19 October. In addition to that, if he wants, I can be more helpful: the committee discussed work on the establishment of a list of individuals to sit on an arbitration panel, as required under the WA. Both parties are progressing work to establish a list of suitable arbitrators. As the noble Earl knows, it was agreed to have a further meeting of the committee in November, and other work will continue in the interim. The discussions are obviously ongoing, and I know that he understands, and I respect that, that there are some constraints on what one can share at a time of active talks.

EU: Future Relationship

Earl of Kinnoull Excerpts
Wednesday 23rd September 2020

(5 months, 1 week ago)

Grand Committee

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Cabinet Office
Lord Bradshaw Portrait Lord Bradshaw (LD) [V]
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My Lords, that was a massive contribution from the noble Lord, Lord Hain, and a tremendous catalogue of the disadvantages that we will face. Monsieur Barnier reflected recently that the demands of the UK so far as concerned the road haulage sector—for this purpose, that includes short-sea shipping—were too close to the existing Common Market rights without meeting any of its obligations. I want to concentrate on road haulage because it is so essential to our economy and so vulnerable to any disruption.

What Monsieur Barnier said should have sounded warning bells, meaning we should prepare ourselves for a no-deal Brexit, particularly in the light of the steadily worsening relations with the EU and the rhetoric emanating from Downing Street, to which the noble Lord, Lord Hain, drew our attention. Business is not prepared for a no-deal Brexit and the likely disruption of supply chains affecting both food and production lines, which are dependent on just-in-time delivery.

Whatever Michael Gove is saying, the effect on the UK economy is potentially calamitous and awful. When the noble Lord, Lord True, replies to the debate, I wonder whether he will be a little less opaque than usual, not brush those real issues aside, and confirm that the Government will have a new freight management system before we leave the EU. That certainly is not the view of the logistics industry, which we heard this morning. Those people were mostly warm supporters of the Government’s wish to leave the EU and feel angry that matters are now in some sort of limbo. Any special permits likely to be available will in no way be sufficient to meet demand. We heard in a debate on Monday that there were bilateral agreements on the way, that there would be more permits, and that there would be a need for further negotiations. None of that bluster, if I can call it that, actually faces up to the fact that we are in a desperate situation.

Since the UK has been involved with Brexit, the EU has been developing a new mobility package, which it published at the end of July and which impacts on freight transport access and access to the profession. Of course, the UK was not a party to those negotiations, but have the Government made any assessment of the impact of the new arrangements on the UK?

Assuming a worst-case scenario now—I am afraid that we have to—enormous lorry parks will be necessary for goods to await clearance. How large will those semi-permanent additions to local landscapes be? How will local planning consent be required to establish them, or will the Government simply ride over local wishes and dump them on unwilling localities that they choose? Will such facilities incorporate places for people to sleep, service lorries, refreshment and trans-shipment facilities? Who will pay for all this? It is a lot of money. In other modes of transport, it is usual for the operator to build his own facilities. Ship operators build their own ports. Train operators build their own stations. Bus operators build their own bus stations. But these facilities are likely to be very large impositions on neighbourhoods. I want to know how they will be policed, as I fear that they will be centres of totally unregulated crime, affecting both goods and people.

Those are a few of the problems on which the House, and more particularly the logistics industry, wants answers.

Earl of Kinnoull Portrait The Earl of Kinnoull (Non-Afl)
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My Lords, it is a great pleasure to follow the noble Lord, Lord Bradshaw, in this thought-provoking debate; I thank the noble Lord the Chief Whip for finding such a substantial slot for this important Motion at a critical period in the lead-in to the final tableau of the Brexit drama. I also thank the Minister for his time in recent weeks, both virtually and physically, and for the courteous and frank way in which he engages with my committee.

In the period leading up to Sunday 6 September, I had thought that the two interrelated strands of UK-EU discussions implementing the withdrawal agreement and the negotiations on the future relationship were on some sort of glide path to actual landing rather than crashing, albeit that the rhetoric between the parties had become sharp and the temperature had risen somewhat. It was on that day that the rumours of what was in the internal market Bill surfaced and boiling point was reached instantaneously.

Perhaps I could step back and start with the withdrawal agreement and its Ireland/Northern Ireland protocol. The protocol is a masterly fudge which left much to the joint committee structure to resolve. We reported on that in June this year, but I remind the Committee that the protocol consists of two pages of recitals, 19 articles and more than 40 pages of the seven annexes, which are really just lists of legislation.

The essential problem that it sought to address was to maintain the Good Friday agreement absolutely while protecting the EU and UK single markets. The soft recitals contain a number of very comforting paragraphs for the UK including

“DETERMINED that the application of this protocol should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland”

and later on

“HAVING REGARD to the importance of maintaining the integral place of Northern Ireland in the United Kingdom’s internal market”.

The hard text of the articles suggests, that in the absence of further agreement at the Joint Committee, every EU customs rule and practice will apply on everything moving to or from Great Britain to Northern Ireland or the border in the Irish sea.

We were critical in our June report of what we saw as a lack of early government pace in implementing the withdrawal agreement. It is now our impression that this has been addressed, but still marrying up the aspirations of the recitals with the hard fallback position of the articles has not yet happened. This failure of process, of statecraft, on the part of both parties is also of great concern and will potentially have damaging consequences for all on the island of Ireland.

The withdrawal agreement as a whole contains plenty of dispute resolution mechanisms but, instead of going down this path, the Government now propose to take powers under the internal market Bill to allow them to disapply parts of the protocol. My committee anticipates reporting on these aspects of the internal market Bill in time for its Second Reading in this House, and we have written to the Chancellor of the Duchy of Lancaster asking for clarification on various assertions made by the UK since 6 September and why the dispute resolution mechanisms under the withdrawal agreement are not used. We expect a response at the end of this week.

The debacle on the withdrawal agreement has spilled over into the negotiations on the future relationship with the EU, and it could not be otherwise. After all, Michel Barnier is Maroš Šefčovič’s deputy and alternate on the joint committee on the withdrawal agreement and the interrelation is shown by the simple fact that the deeper any future relationship agreement between the UK and the EU goes, the lighter the burden should be on the withdrawal agreement customs administration. We reported in March this year on the material available on the negotiating positions of the EU and the UK and compared them with the political declaration. The Committee will recall that both sides had moved their positions away from the mutually agreed, but admittedly not legally binding, political declaration.

While the gap looked quite wide in March, the British position was that everything that they were now asking for was precedentially to be found in other EU international agreements. The EU has pushed back on this with various arguments, and I do not want to rehearse them here, save for one comment made to me by a senior EU official this month. He said that the UK had selected the best-in-class precedents on each of the difficult topics. It is, however, greatly to the credit of the two negotiating teams that, despite the very short time period, the additional problems posed by Covid-19 and the non-discussion of some issues due to the EU tactic of parallelism, they got to the point at the start of September where the finish line was within sight, just about, albeit with a small number of the most difficult issues to be resolved.

As I said, my strong impression was of progress at the start of the month. Nothing was tied down—the principle of nothing is agreed until everything is agreed applies—but the key differences between the two sides in terms of the future relationship were boiled down to state aid and fish—difficult, but, one would think, manageable. What the internal market Bill has done is place trust at the centre of the debate. It raised the already high temperature but also took these two separate but linked strands, each of which is difficult in its own right, and combined them into a single strand. It has doubled both the stakes and the difficulty, and has done so in the most public and confrontational way possible. The glide path for this single strand is much harder to discern and, without a bit of calm on both sides, I fear the prospects of a mutually beneficial landing are not good.

We heard much on the progress of the talks from the Minister in his opening, and I thank him for that. He covered the Northern Ireland protocol in his speech and the internal market Bill provisions that have caused so much uproar. My only question for the Minister is: will he explain why the dispute resolution mechanisms in the withdrawal agreement were not a sufficient safety net so that this extra safety net was necessary?

In closing, I note that with so many challenges facing us, surely it is time for some old-fashioned diplomacy to bring the two great democratic sides together.

Lord Thomas of Cwmgiedd Portrait Lord Thomas of Cwmgiedd (CB) [V]
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My Lords, it is a privilege for me to follow the noble Earl, Lord Kinnoull, on whose committee I serve and which—before I joined it, I must hastily add—has done so much to clarify the position in relation to Northern Ireland and other aspects of the negotiation. I thank the Minister for his clear and courteous introduction to this debate.

So many of the points I would have wished to have made have already been made, but I shall take three as briefly as possible. First, on the inclusion of the devolved Governments, I do not believe it is too late, even at this 11th hour, for there to be more involvement of the devolved Governments in the formulation of the final strategy and in the final negotiations. What has happened in the past few days in relation to co-operation on Covid-19 has, without doubt, been beneficial to the whole of the UK. Why not do this in respect of the UK negotiations? It is a sad conclusion to say that what has happened to date is wholly inadequate—as the noble Baroness, Lady Hayter, so eloquently pointed out—judged, as people should be judged, by deeds rather than words.

Secondly, it is important to move forward in a way that produces a good long-term relationship while respecting the sovereignty of the United Kingdom. A positive future relationship with the European Union is, without doubt, in the interests of the UK and throughout the EU. I make one point regarding the development of the law. We live in a world that in my current day-to-day experience is, despite the effects of the pandemic, becoming more global than ever. Online meetings and discussion fora have driven globalisation, dialogue and interaction at a faster and more inclusive pace over the past six months, and I think it is inevitable over the next six months. It is so easy to contribute worldwide without having to travel and yet to make the points powerfully at meetings, conferences and negotiations. Moreover we have seen how data is ever more easily transmitted, which is driving and building an even more valuable market quite apart from progress in digitalisation. This means that the law must develop apace. To date, the UK has exercised a considerable degree of influence in the development of the laws that underpin trade, commerce, including trade in data, and other aspects of the digital economy and our financial and professional services. We are currently leaders, and this is hugely beneficial to the UK. From the new year, we will be on our own. In relative terms we must accept that we are a small-sized player, and in such circumstances our reputation and integrity will be central to our continued ability to punch above our size. Apart from integrity and reputation, we need close working relations in order to drive forward legal development. What matters is that we have in place a good structure for legal development and also regulatory co-operation, supervisory arrangements and the management of data, which are allied to it. The City’s suggestion of a memorandum of understanding is well made and entirely consistent with sovereignty, however you may wish to describe it. Relying on unilateral actions, such as the equivalence decisions, is not the way forward in our globalised world.

Our ability—and this is the third point that I wish to make—to move forward and build our position for the future must be done on good, sound legal foundations. It is a common experience for a lawyer that people disagree about the meaning of agreements, even those that may have been made only a short while before. I was not entirely surprised that there might be disagreements about the meaning of the Northern Ireland protocol or difficulties in working it through, but we agreed it. In such circumstances, what is expected is that the parties try to resolve their disagreements through provisions such as those in the protocol and the withdrawal agreement, and if they cannot resolve it by agreement, they do what litigants always do, and that is use the dispute resolution mechanisms. If a quicker decision were needed than through the mechanisms contemplated in the agreement, then modifications would be proposed. That regularly happens when a dispute arises that needs urgent resolution. I see no reason why the current dispute could not be resolved in a matter of a month or more. If the British Government believe that they are right, why not propose that?

Therefore, it is very difficult to understand why that obviously right course was not followed. However, what is entirely understandable is the resignation of the two expert leading government lawyers, Sir Jonathan Jones and the noble and learned Lord, Lord Keen, who carry the highest degree of respect in the profession and have so expertly advised and helped the Government throughout this period. In following what is required, you uphold the rule of law and you comply with the law. As the Civil Service Code reminds us, complying with the law is an essential aspect of integrity. What you do not do is deliberately break an agreement or threaten it. Many have spoken powerfully about that, and I need say no more about it or about the consequences, but there are due consequences for the areas about which I have spoken.

First, the rule of law, our adherence to it and respect for it, is central to our position in the world and our leadership in the development of the law and those other areas of commerce and trade underpinned by the law: financial and professional services and the digital and data economies. That is central to our future, and we do ourselves enormous damage by pursuing the current course. Secondly, we need agreements with the EU and others for the future. Who wants to deal, or at least deal on good terms, with those who break or threaten to break agreements rather than have recourse to dispute resolution? I very much hope that the Minister will be able to explain, as the noble Earl, Lord Kinnoull, has already asked, why we are not pursuing that course.

EU Exit: End of Transition Period

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Wednesday 15th July 2020

(7 months, 2 weeks ago)

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My Lords, unfortunately, I could not hear absolutely clearly. I will say, first, that the advertising campaign will certainly be directed to both businesses and individuals. The right reverend Prelate makes the wise point that specialist advisers will be available to help; it will not be simply a question of looking at a website, although I think the government website is to be commended.

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My Lords, the Statement says that the guidance for Northern Ireland is to be published

“in the coming weeks and on an ongoing basis throughout the transition period”.—[Official Report, Commons, 13/7/20; col. 1270.]

We heard a bit from the Minister about “in the coming weeks”, but it is clear that Northern Ireland is far from being in the same position as the rest of the UK. Is it really the case that Northern Ireland business could be receiving vital guidance in December, as the wording of the Statement implies, and will Northern Ireland be able to take full advantage of the phased approach outlined in the Statement, given the terms of the Northern Ireland protocol?

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My Lords, the noble Earl rightly says that Northern Ireland is on a separate track and governed by a separate protocol. Discussions are ongoing, as I think he knows. There will, as I told the House, be further information later this month. I take note of the points he makes about the timescale. The Government are well aware of the need for clarity and proper dispatch in carrying this forward.

David Frost

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Tuesday 30th June 2020

(8 months ago)

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No, my Lords. Mr Frost has extensive diplomatic experience, and the previous four incumbents as National Security Adviser also emerged from a diplomatic career.

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My Lords, will the Minister explain how, in this intense phase of the Brexit negotiations—the tunnel—our chief negotiator will have the time for his induction into his new role? Does he accept that there is a strong risk that the Brexit negotiations will not be concluded by the end of September, and that the undivided attention of the chief negotiator is needed until they are concluded?

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My Lords, I do not agree that there will be a difficulty. The announcement suggests that Mr Frost will take up his appointment around the end of August, and, as the noble Lord said, there will be a period of handover. Mr Frost will remain chief negotiator for the EU talks until agreement is reached, or until they end. That will remain his first priority. As I have already said, he will also be ready to answer to Select Committees of the House in that period.

UK-EU Negotiations

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Thursday 18th June 2020

(8 months, 2 weeks ago)

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My Lords, I will preface my answer by saying that some noble Lords will have seen the name of my noble friend Lord Forsyth on the speakers’ list. It is not that he has not turned up; he suffered a close family bereavement, and I know that all noble Lords who may be asking themselves why he is not here will understand that.

The noble Viscount’s question was framed in a manner about the cultural, social and instinctive links that the United Kingdom has with other European nations. Some of those have been institutional links of different sorts, while others have been links that are not in any sense political. I am personally committed, as are the Government, to maintaining the closest possible cultural and societal links between the nations of Europe. The question is what institutions are required to secure that. I submit that the European Union is not one of them; other institutions and arrangements are currently still under consideration.

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My Lords, Michel Barnier, in his remarks following the fourth round of negotiations, said that the full legal text of the future relationship was needed by 31 October for planning and ratification reasons. There is no mention of these constraints in the Statement. Does the Minister agree with Monsieur Barnier’s analysis? If not, what is the date by which a full legal text is needed?

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My Lords, I shall not go into specific dates regarding the text. We have published texts at appropriate stages of the negotiations. We have said—and the Prime Minister said again at the high-level meeting—that October is too late for us to get serious. If I remember, those were his words. I think that the intensification in the negotiations will help us to answer the noble Earl’s question and others.

EU: Trade and Security Partnership

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Tuesday 9th June 2020

(8 months, 3 weeks ago)

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My Lords, there is regular contact between government Ministers and Ministers in the devolved Administrations. Those contacts will continue.

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My Lords, Michel Barnier, in his statement of 5 June, following the fourth round of negotiations, referred to the need to have

“a full legal text by 31 October at the latest, i.e. in less than 5 months.”

Does the Minister agree with that timetable? If not, what does he think the latest date is for a full legal text?

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My Lords, the Government still hope to have a successful outcome, as I said. Mr Frost indicated some measures that might be taken to intensify discussions. There will also be, as noble Lords know, a high-level meeting later this month.

Northern Ireland Protocol

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Thursday 21st May 2020

(9 months, 2 weeks ago)

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The status of Northern Ireland under the protocol is well known and often discussed. Northern Ireland will effectively be operating within the EU single market but also within the internal market of the United Kingdom. The arrangements that we have put in place are envisaged in the protocol but, at present, the details of their implementation are under discussion.

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My Lords, I too welcome the arrival of the White Paper, if not everything in it. The transition period began at the end of January, with 11 months to plan and agree matters in Northern Ireland, of which just over seven months remain. However, the White Paper sets out for the first time a host of necessary future actions, with some important workstreams yet to start. These include data flows, new groups and fora, as well as new physical infrastructure for the agri-food sector. Can the Minister assure the House that the klaxons are sounding and that there is now real urgency and momentum behind preparing Northern Ireland for life under the protocol?

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My Lords, I do not know about klaxons; I have always found them rather unpleasant. The United Kingdom Government regard Northern Ireland and its people as equal in every way to the rest of the United Kingdom and thus deserving the same privileges and the same attention. I can assure the noble Earl that whatever problems there have been with Covid—we all recognise the need to deal with them—we have engaged, we are engaging and we will engage on the principles and the practicalities of making these systems work, and indeed making them work for the benefit of the people of Northern Ireland. At all stages, we will respect the Good Friday agreement and the need to carry the consent of parties on both sides of the sectarian divide.

EU: Future Relationship

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Wednesday 20th May 2020

(9 months, 2 weeks ago)

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My Lords, Question Time is not the moment for a debate on sovereignty. I must say I think the noble Lord probably used some much firmer language than Mr Frost in his diplomatic career occasionally. One of the issues is a sense that the EU wishes to exercise influence and authority within this country after the end of transition. The noble Lord quoted Latin the last time he spoke. I commend to him the wise advice of the Emperor Augustus, “consilium coercendi intra terminos imperii”—that is, a power should stay within its own fixed bounds. On issues such as the so-called level playing field, the jurisdiction of the ECJ and fisheries, we are asking the EU to recognise that the UK has chosen to be an independent state.

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My Lords, in the last week my committee has had meetings with senior representatives of the European Commission, the European Parliament and the EU 27. An emerging theme has been the need to rebuild mutual trust, and a vital part of addressing that is interparliamentary work. When asked about the EU proposals on inter- parliamentary work, the Minister told the House on 12 May:

“the government are keenly supportive of such proposals”.—[Official Report, 12/5/20; col. 657.]

Michel Barnier talked on 15 May of a “lack of ambition” on the respective roles of the European Parliament and the British Parliament. I ask the Minister: which is correct?

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My Lords, I do not think there is any distinction between the two. The Government wish to see good relations between this Parliament—both your Lordships’ House and the other place—and other parliaments around the world, including the European Parliament. But it remains the Government’s view that while we are of course supportive of dialogue between parliamentarians, it is for your Lordships and those in the other place to determine how they wish to engage; it is not for a Government to bind this and future Parliaments to a particular methodology by a treaty.

Beyond Brexit (European Union Committee Report)

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Tuesday 12th May 2020

(9 months, 3 weeks ago)

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My Lords, I thank the noble Lord, Lord Boswell, for all he has done to lead the European Union Committee with such skill and dedication. However, I note that aiming to “win friends and influence people” does not seem to be the UK’s strategy in its current negotiations with the EU. We hear that the Government almost seem to want them to fail, with lasting damage on both sides.

Leaving the EU with no deal, or an inadequate deal, is the next major crisis we may face. We could not stop a pandemic hitting the United Kingdom; we can stop the damage that would result from crashing out of transition on 31 December. At the height of this pandemic, surely the Government must extend the transition period.

As this report indicated, so long ago now, we need to relearn how to work constructively with our neighbours, with whom we share the closest approach to global challenges. With Trump in the White House and China increasingly dominant, the EU must play a major global role. As Sir Ivan Rogers pointed out, we will need to do more than ever before to make our new relationship work. That will need engagement from the very top.

We have another global crisis threatening us: climate change. A vaccine will not take that away. The Government have said that they wish to work with the EU on issues such as this. We used to maximise our influence by leading in the EU; now, we need to ensure that we are at least involved. That will be a difficult, but essential, task.

This report laid out some of the ways in which we can stay informed and engaged. I hope that it does not fall on deaf ears.

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My Lords, while there is not time for the usual courtesies, I must begin by thanking my predecessor as chair, the noble Lord, Lord Boswell of Aynho, for his long service to the committee and his excellent and hugely informative opening speech; it was a fitting swan-song.

I shall focus only on the institutional structure for the future EU relationship, and in particular its parliamentary dimension. Our relationship with the EU—its 27 member states and 450 million citizens—will be complex, and a relationship of such complexity will need structure. Within that structure, the parliamentary dimension will be vital: to support dialogue, to build relationships and to promote transparency.

There are many precedents on which we could draw in designing such a body: for instance, the British-Irish Parliamentary Assembly or the Council of Europe Parliamentary Assembly. There are also precedents on the EU side. Indeed, the EU’s March draft agreement included a clause setting up a parliamentary partnership assembly, made up of representatives of this Parliament and the European Parliament. While I do not agree with every word of the EU’s proposal, I welcome it as starting point.

When questioned by my committee on 5 May, Michael Gove agreed that

“engagement, discussion and dialogue between parliamentarians is always a good thing”,

but insisted that it was not for the Government to

“prescribe exactly how Parliament chooses to operate.”

The Government have placed the onus on Parliament to respond to the EU’s initiative. I understand the constitutional propriety of that position, but how, given the large Commons majority, is Parliament to act unless the Government take the lead?

As chair of your Lordships’ committee charged with considering EU matters, I believe very strongly that we need to establish a structured interparliamentary dialogue as part of the future relationship. Indeed, the committee supports that. My question to the Minister is: how exactly do the Government expect Parliament to signal its support for an interparliamentary body? Will a report from my committee be sufficient? Or a joint enterprise with the Committee on the Future Relationship with the European Union in the House of Commons? I am happy to do whatever it takes to try to break this logjam and I ask the Minister for his help.

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My Lords, we must consider this report in light of the global pandemic. Decisions about our future relationship with the EU must be informed by Covid-19, recognising our international interdependence rather than being driven by ideology. Our European neighbours remain our friends and allies. This must continue for the sake of all, and especially for vulnerable children.

Concluding talks by the deadline under present circumstances will be very challenging. I am particularly concerned about the impact on refugee children and our continued co-operation with European nations through the Dublin Regulation. Can the Minister outline the Government’s plans to ensure separated asylum-seeking children in Europe continue to be reunited with family members in the UK, whatever happens to negotiations?

I am anxious too about the impact on vulnerable children who are already here. The success of the EU settled status scheme may be compromised by the pandemic. Local authorities have a duty to apply for their looked-after children. However, the Children’s Society found that just one in 10 of local authorities’ looked-after children has been awarded status. Considering Covid-19, what assessment have Her Majesty’s Government made of the feasibility that all looked-after children will have applied to the EUSS by June 2021?

We must consider whether we can achieve a new, fruitful, negotiated relationship with the EU by December under current constraints. Will the Government set out criteria against which Parliament can evaluate the progress of negotiations? Do the Government accept that any trade deal must be negotiated by October at the latest if it is to be ratified before the deadline? At this time, when businesses are facing significant economic uncertainty, we must be mindful that these negotiations are an additional source of concern.

Public Services: Update

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Wednesday 29th April 2020

(10 months ago)

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My Lords, I am not going to follow the noble Lord into considering history; otherwise, one could go back further and further into how we got into the 2008 crisis and so on. The thing we must do now is to go forward and look forward. I cannot at this virtual Dispatch Box anticipate what the Chancellor will do in managing the economy as and when we come out of this crisis, but it is this Government’s firm resolve to level up, as the Prime Minister has repeatedly stated. Indeed, in in this crisis, as we know, additional resources have been given to local authorities and the social care sector. Of course, I understand, accept and share the spirit of the noble Lord’s remarks, if not following him in every detail.

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Baroness Pinnock? Baroness Pinnock is not responding. Baroness Watkins of Tavistock.

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My Lords, I, too, welcome the Statement and join in the expression of appreciation of everyone who is working so hard during this unprecedented public health challenge. However, I want to raise a question about the future of the acquisition and delivery of PPE. We are very aware that in the past few weeks, this has not been conducted as efficiently and effectively as everybody would like, including Ministers. However, we know that with the Spanish flu there were two further peaks. Can the Government assure us that by this autumn, we will have sufficient and robust supplies of PPE that meet the right standards from the HSE’s perspective? Looking at the Statement and the four teams that are working together, many people, including me, do not quite understand where the noble Lord, Lord Deighton, who is co-ordinating the manufacture and distribution of PPE locally, will link in with those four teams. We could, of course, become completely self-reliant as a country on PPE, which may be something we want to think about in the longer term. I would be very happy to have a virtual meeting to discuss this further if it is appropriate.

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PPE is of course of fundamental importance. If anybody in the country did not realise it at the start of this crisis, it is fully understood now. Ministers have always understood it. We had a large stockpile. Great efforts will continue to be made to ensure that our front line has sufficient equipment. I note the points that the noble Baroness made about the experience of Spanish flu, and I would certainly be interested in talking to her about it on another occasion, but I must reiterate that the Government are 100% committed to securing a stable and safe supply of PPE now and in the future.

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I again call the noble Baroness, Lady Pinnock.

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Following on from the noble Lord, Lord Laming, I want to explore the needs of local authorities a bit further. Councils of all political persuasions are very concerned about the considerable shortfall in the funding they need—for example, to prevent the failure of private sector social care provision. Will the Minister join me in urging the Government to meet this large and urgent need for additional funding—over and above, I have to say, what has already been provided to local government during this crisis?

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My Lords, I regret that the sound was not very good for my noble friend’s question. I certainly caught her concern for farmers, and I take that point; my right honourable friend George Eustice has been addressing that matter. I am sorry that could not catch the other parts of her question, but I will ensure that she gets a written reply.

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My Lords, that concludes Back-Bench questions on the Statement. The day’s Virtual Proceedings are now complete and are adjourned.

European Union: Negotiations (European Union Committee Report)

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Monday 16th March 2020

(11 months, 2 weeks ago)

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That this House agrees with the conclusion of the European Union Select Committee, that the Council Decision authorising the opening of negotiations for a new partnership with the United Kingdom of Great Britain and Northern Ireland, published in draft on 3 February 2020, and adopted in amended form by the General Affairs Council on 25 February 2020, raises matters of vital national interest to the United Kingdom.

Relevant document: 8th Report from the European Union Committee

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My Lords, I thank those who, despite difficult national circumstances, have signed up for this debate. I extend my best wishes to those who are, for entirely understandable reasons, staying away from Westminster.

This is the first time that the House is debating a Motion under Section 29 of the European Union (Withdrawal Agreement) Act. Section 29 imposes a duty and a power on the European Union Committee of this House. This is in addition to the remit already reflected in our terms of reference, which, inter alia, is to help inform parliamentary and public debate on EU-related matters. The new Section 29 comes into play once we have identified a document of “vital national interest”, and leads on to the production of a report, a Motion and a debate in a relatively short timespan. The document we are concerned with today is the Council’s decision that was adopted on 25 February: the EU’s negotiating mandate for our future relationship.

Before I address the detail of the report, I will say how glad I am that the Government have tabled their Motion today, as we had expressed our regret—at paragraph 29 of our report—that the UK Parliament had not had the opportunity to debate these vital matters to date. The fact that the Government also have put down their Motion sets a good precedent. Can the Minister commit to tabling further Motions in government time as and when there are significant developments in the negotiations?

I thank Michael Gove, who has agreed to appear before us shortly. However, we are still trying to establish clarity and structure as to how the Government will work with committees scrutinising the future relationship negotiations and, importantly, the withdrawal agreement’s implementation. As a committee, we have commented on this several times. It is very important to get it right. Will the Minister commit to working with me in agreeing in short order the structure of this engagement for the months ahead?

Our report is neutral, factual and analytical. We have sought to compare the Council decision of 25 February with the Government’s command paper of 27 February on the future relationship and the political declaration that was agreed by both parties in October 2019. A further relevant item is Article 184 of the withdrawal agreement, ratified in January this year. This places a treaty obligation upon both parties to

“use their best endeavours, in good faith and in full respect of their respective legal orders, to take the necessary steps to negotiate expeditiously the agreements governing their future relationship referred to in the Political Declaration”.

The Council decision is structured very similarly to the political declaration, with some texts simply copied over. Naturally, there are areas where the EU has expanded on the political declaration, a number where the emphasis has changed and some that are omitted. Broadly, however, the council decision is a mark-up and development of the political declaration, and this has facilitated our analysis.

Things have been rather more difficult where the UK’s Command Paper is concerned. During the passage of the withdrawal agreement Act in January, we heard from the noble and learned Lord, Lord Keen of Elie, who said:

“The political declaration ... sets out the framework for a comprehensive and ambitious free trade agreement with the EU. The general election result has clearly shown that the public support that vision and we consider that we have been given the mandate to begin negotiations on that basis.” [Official Report, 13/1/20; col. 553.]

This was clarified later by the noble Lord, Lord Callanan, who said that

“the Government’s vision for the future relationship with the EU is already set out … in the political declaration”. [Official Report, 20/01/20; col. 1004.]

Yet the Command Paper is a wholly different structure from that of the political declaration and is instead based on existing EU free trade agreements, such as its Canadian and Japanese ones. This makes it very difficult to conduct a line-by-line comparison with the political declaration, or to trace and explain changes to the Government’s position since the political declaration was settled in October last year.

At paragraph 26 of our report we said:

“It would be helpful if the Government, without prejudicing its negotiating position, could publish a comparative analysis of the Political Declaration and the Command Paper, explaining the changes in its approach.”

Will the Minister commit to provide this in the near future?

The bulk of our report is taken up by a comparison of the UK and EU opening negotiating positions. These are opening positions; it is the haka at the start of a match, and both sides will have left themselves room to manoeuvre. But the current trajectory, as exposed by our analysis, is clear: the two sides are currently diverging, not converging. I draw your Lordships’ attention to four examples.

The first is the overarching structure that the two sides state they are aiming for. The Council decision envisages a single association agreement. The Command Paper proposes a “suite” of agreements within a “broader friendly dialogue”. It would be helpful to hear from the Minister about the strength of feeling that the UK has on this.

The second is fisheries—I have no doubt we will hear more about this in the debate. I stress that this is very much one area where the devolved Administrations need to be involved. The political declaration looks to a new fisheries agreement but lacks detail in this difficult area. Both sides have now set out their vision in considerable detail. There is a lot to be said for the Government’s position, in particular their reliance upon scientific evidence. But it is fundamentally incompatible with the EU’s position, and it is not easy to see how this gap will be bridged.

Thirdly, and equally difficult, is the “level playing field”. The political declaration again lacked detail in this difficult area. Since agreeing the political declaration, the EU has toughened its line, as we set out in paragraphs 107 and 108 of the report. The political declaration contained no explicit reference to continuing UK alignment to EU rules. Instead, it referred to

“appropriate and relevant Union and international standards”.

The Council decision now wants to use

“Union standards as a reference point”

and, more importantly, for EU state aid rules to apply “to and in” the UK. So the EU’s position has hardened, and state aid will necessarily be a key point of disagreement. Again, the widening gap looks hard to bridge, not least given the position of Northern Ireland, where EU state aid rules will apply directly as a result of the Northern Ireland protocol of the withdrawal agreement.

My fourth and final example concerns foreign and defence policy. The Government have set their face against a formal structure and there are no discussions about this in the future relationship negotiations. The terms of reference document notes that while the EU would be open to have them, the UK feels that none are needed. The political declaration on this area states that the future partnership

“should provide for appropriate dialogue, consultation, coordination, exchange of information and cooperation mechanisms.”

To take sanctions as an example, co-ordination is vital if they are to have real bite. It seems to me that effective co-ordination would require at least some structure. Given the political declaration’s language, I ask the Minister to comment.

We expect both sides to produce draft legal texts shortly—indeed, the EU’s text was leaked over the weekend. I have received four copies through separate leaking arrangements. It is 441 pages long. I very much hope that we will be able to scrutinise both texts. The risk is that, on the current trajectory, these texts will reinforce the divergence between the UK and EU approaches and that, in effect, both parties could back themselves into opposing corners.

In closing, I come to time: the ticking clock so often cited in this era of silent digital timepieces. The Government’s insistence on the 31 December deadline and the threat of walking away after June have added greatly to this time pressure. Current world events must be adding further to it. Statecraft might be best served by at least some flexibility here.

I hope that the Minister will offer a considered explanation of the Government’s approach to the negotiations. I certainly do not expect him to give away the Government’s negotiating confidences. However, simply restating their demands and insisting that they will walk away if those are not met is not enough for Parliament in our bounden duty to play our scrutiny role in these vital negotiations. I beg to move.

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Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom
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That is the point I am trying to make; this should have been answered in the report. It does not matter where it comes from. Whether our closeness to the EU makes any difference to our relationship with it is questionable. The problem is that we have had the nerve to vote in favour of leaving the EU. Therefore, the EU must redefine the position of a country that leaves so that it can mete out special treatment to that country and somehow discourage others from leaving as well. This report should have addressed these issues. Does it make any difference whether or not a country is close to the EU? Does the size of trade make any difference? I agree that our trade with the EU is probably greater than that with the United States, but the United States does a massive amount of trade too. Nobody is asking for a level playing field with the United States, and they would be told where to go if they tried. We should be questioning these things, as I hoped the report would. Perhaps the noble Earl, Lord Kinnoull, can tell me why this was not included in the report.

Earl of Kinnoull Portrait The Earl of Kinnoull
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Certainly I can make some practical points on the very interesting questions that have been raised by the noble Lord. These are vital documents that have become public. There has been no opportunity for Parliament to read a report or have a debate. We were given a power and a duty under Section 29 of the Act. We heard a very interesting interpretation of that, which I am afraid I disagree with. If we were to write and address a separate question, we would have to take evidence or find evidence in the stock of evidence that we have, and there was no time to do that. The second of those documents, the Command Paper, arrived on 27 February. We had a report agreed by people on every position of the spectrum agreed by 3 March. We felt that it was important to bring it to the House immediately so that we could have this very interesting debate.

Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom
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The document that I am reading says that this statement was made on 18 February. That is quite a distance from 3 March, when the report went to the printers. I question whether you can reach a decision as a committee unless you have taken evidence. The whole business of whether how close you are to the EU counts or whether the size of your trade is a determinant factor is surely something that the committee can make its mind up about without taking evidence.

Earl of Kinnoull Portrait The Earl of Kinnoull
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Section 29 addresses that issue. The Command Paper—a key document in our report—was issued on 27 February. I do not have Section 29 in front of me, but it says specifically that such evidence as we have deemed necessary should have been taken. I am sure we would have loved to read a report about a whole lot of other very interesting questions, but unless we had the evidence on file we would have had to have taken more evidence, which would have slowed things down immensely.

Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom
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We could go on arguing about this indefinitely. However, the noble Earl is rather underestimating the intellectual abilities of his committee if it cannot reach a conclusion on this relatively simple issue without taking evidence. I will move on to the amendment in the name of the noble Baroness, Lady Hayter.

Break in Debate

Earl of Kinnoull Portrait The Earl of Kinnoull
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My Lords, very briefly, I thank the staff of the committee. As I tried to explain in an obviously unsatisfactory answer to the noble Lord, Lord Hamilton, this was done in a tremendous rush, with lots of late-night oil being burned, because we got the Command Paper on 27 February and the staff and the whole committee had agreed to our report by 3 March. I hope the House feels that we performed our duty in trying to do that.

Secondly, I thank everyone who has spoken in our four and a half hours of debate, which I found fascinating. New points and new thoughts have been put to me—I live in this world 24/7 and enjoy everything—and it has been rich in content.

One gypsy’s warning was given. About half the membership mentioned Northern Ireland and I hope the Minister will reread the excellent speech of the noble Lord, Lord Kerr of Kinlochard, which summarised the issues and got to the nub of them. I should say, as a minor piece of advertising, that we worked together in Northern Ireland and have taken evidence both there and here. Our next work will focus in that direction, and I hope we will have the opportunity to consider what we have found out today on the Floor of the House. This is definitely something that needs attention. It is not an unwinnable position at all, but it needs attention; it is a gypsy’s warning.

I will comment finally on whether our report answers our own question on divergence. I am afraid it does not. There are two elements that one is asking for with divergence: an explanation as to what has diverged, and the justification for why it is right to diverge. In our report, through burning the midnight oil, we have been able to do a reasonable job of explaining what has diverged. We will ask Europeans why they are diverging—I tried to point out that there were divergences on both sides. As scrutineers, we will also need to ask the Government to explain and justify why the divergence is taking place, assuming that there will be future divergence. I am afraid that our question on that is still live. I hope that, when the Government respond to our report, we will get some clues.

Lord Hain Portrait Lord Hain
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I very much welcome the committee’s intention to look at Northern Ireland. For some time, the Government said of the Irish border that it would all be all right on the night and we should not worry about it. They then conceded that there was something to worry about—and the agreement protects the open border, provided it is maintained. But there is still considerable denial about de facto checks and a virtual border in the Irish Sea. I very much welcome the committee’s intention to look at that.

Earl of Kinnoull Portrait The Earl of Kinnoull
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I thank the noble Lord for that. Here, I point to the very important intervention on that issue by the noble Lord, Lord Lamont of Lerwick. He pointed out that the situation is quite dynamic. If a free trade agreement results, it will greatly reduce, although not eliminate, the list of problems.

This has been an excellent debate and I thank everyone again. I commend the report to the House.

Brexit: Stability of the Union

Earl of Kinnoull Excerpts
Thursday 17th January 2019

(2 years, 1 month ago)

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Lord Bruce of Bennachie Portrait Lord Bruce of Bennachie (LD)
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My Lords, across the UK, Scotland and London voted most strongly for remain, which is somewhat ironic given the nationalists’ antipathy towards London and London-based government. Northern Ireland voted clearly for remain, only to find its hard-line Brexit party tweaking the tail of a Brexit-traumatised Conservative Government. A lot has been said, I think rightly, about Theresa May’s and Jeremy Corbyn’s cavalier disregard for those who voted remain. “You lost. Get over it”, they say, but they have been unable to come up with anything that can unite a majority. When the DUP is challenged for representing a minority in Northern Ireland, it asserts that remain voters are predominantly nationalists and can therefore apparently be discounted—second-class votes.

Membership of the EU resides with the United Kingdom and it is not possible for parts of the UK to be in and parts to be out. I suggest that raises the question as to whether we should ever have sought a simple binary majority, or one that was qualified by the views of the constituent parts of the United Kingdom as well.

During a recent visit to Derry, I was able to see and hear how differences already affect what is located on which side of the border and how people and services operate. Moderate unionists who voted remain are beginning to consider whether the complexities of Brexit might make the prospect of a united Ireland unexpectedly attractive, especially now they see a much more liberal Republic and a frozen conservative Province in the north. The polarisation of Northern Ireland politics has left the Province without a democratic voice. Disillusioned young people at an integrated school that I visited in Derry told me that they thought that violence would return to the Province. I was quite shocked that they were unanimous in their view.

For a long time—the noble Lord, Lord Lisvane, referred to this—many people thought that nationalism could be contained within the European Union or at least under its umbrella. That is kind of logical given that the raison d’être of the European Union was to find mechanisms to avoid conflicts getting out of control and leading to war—which has been one of its great achievements.

For many years, the SNP campaigned under the slogan, “Independence in Europe”, so leaving the EU is a problem for it. First, a significant proportion of its voters chose Brexit. Secondly, leaving the UK without the comfort of the EU umbrella could leave Scotland in a cold place, with no prospect of a quick re-entry into the EU. Campaigners in favour of remain have sometimes prayed in aid divergence with Scotland as a threat to the union in simplistic terms. The people of Scotland voted remain by a large margin. Theresa May’s dead deal, something similar or no deal would in many ways be a betrayal of Scotland, or at least an insensitive disregard for the concerns and preferences of its people. Of course, that is seized on by the SNP to make the case for a second independence referendum. “Let’s vote for independence and rejoin the EU”, it says, except it is not that simple. First, the UK is overwhelmingly Scotland’s biggest market. Secondly, however sympathetic the EU may be to Scotland’s warmth towards that Union—in contrast with the SNP’s hostility to this union—Scotland would have to take years and deep economic pain before it could accede to membership, during which time it would be outside both unions.

Surely it is time, Brexit or not, to sort out the mess that the United Kingdom has become and to create a constitution worthy of its name, which guarantees the human rights of everyone in the United Kingdom and accommodates the views and wishes of the devolved Administrations and the regions of England in a legal framework. The Bill in the name of the noble Lord, Lord Lisvane, is a good start. I understand why he asserts that nothing could challenge the sovereignty of this United Kingdom Parliament, but I think that he would recognise that, if it were a matter of a transition to a federal Government, we would eventually need a constitution to which even this House and the other House would have to be subordinated. That is how most modern democracies work. Ours is not working; it is time that we modernised it.

Earl of Kinnoull Portrait The Earl of Kinnoull (CB)
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My Lords, it is a pleasure to follow the noble Lord, Lord Bruce of Bennachie, who spoke with his customary clarity. I, too, congratulate the noble Lord, Lord Lisvane, on securing this important debate.

I shall make just two points. The first concerns arrangements for intergovernmental relations in our union. Our intergovernmental arrangements are completely out of date. The governing document is a 60-page memorandum of understanding dated October 2013. Our Constitution Committee produced a report, Inter-governmental Relations in the United Kingdom, in March 2015 and made many recommendations. It produced a second report, The Union and Devolution, in May 2016 and made further recommendations. The Government’s response to the first report turned up only in January 2017. In the meantime, nothing has happened to the memorandum of understanding, yet since it was published in October 2013, we have had the Scottish referendum, the Scotland Act 2016, the Wales Act 2017 and now Brexit. The landscape has changed and is changing further. Much more power over many more areas resides with devolved structures, yet the Government have not followed up and have ignored the compelling reports of the Constitution Committee. This failure to engage in a calculated reconstruction of how intergovernmental relations work in the union is a very risky omission and action is needed. Can the Minister tell us what is happening and what the timetable is for having new arrangements?

My second point concerns inter-parliamentary arrangements in our union. The EU Select Committee’s July 2017 report Brexit: Devolution concluded that there was a need for more inter-parliamentary dialogue and co-operation. For Brexit, we recommended regular joint meetings between the relevant committees with responsibility for Brexit-related issues in the Scottish Parliament, the Welsh and Northern Ireland Assemblies, and of course at Westminster. We recommended that these take place for the duration of the Brexit negotiations. We went on to say, at paragraph 298:

“In the longer term, we also see a need for a strengthened forum for interparliamentary dialogue within the post-Brexit United Kingdom”.

The Interparliamentary Forum on Brexit was established as a direct result of these recommendations. The forum brings together the chairs of the committees scrutinising Brexit-related issues in Westminster and the devolved Administrations. In the House of Lords, this includes the EU Select Committee, the Constitution Committee, the Delegated Powers Committee, and the Secondary Legislation Scrutiny Committee. Representatives of the Northern Ireland Assembly of course cannot attend but officials come as observers. The forum has met five times so far and is meeting for a sixth today, here in the House of Lords as we speak. Those at the forum, whatever their views on the union or on Brexit, come together to discuss the Brexit process and the implications for the devolution settlement that flow from it. Participants have been clear that the combination of interesting agendas and the ability to meet and discuss matters with opposite numbers has been most valuable. Today it will discuss the Brexit developments of the past few days and will meet the Minister for the Constitution, Chloe Smith, to discuss intergovernmental relations.

In closing I ask the Minister my second question: does he regard this as a heathy development? Does he think it is a possible template for a necessary formal inter-parliamentary strand of the UK’s devolved structure?

Lord Wigley Portrait Lord Wigley (PC)
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My Lords, I thank the noble Lord, Lord Lisvane, for the way he introduced this debate and I dedicate my contribution to the memory of Steffan Lewis AM, who died last Friday at the age of 34. In two brief years in the National Assembly, Steffan had already made a huge impact, not least with the White Paper, Securing Wales’ Future. That document, addressing issues which face Wales in the context of Brexit, gained cross-party support in the Assembly. Steffan Lewis saw quite clearly that Brexit, particularly in its most extreme manifestation, could have significant negative implications for the future relationships in these islands, partly because of the narrow, inward-looking nationalism that underpins much of the Brexit approach. This contrasts with the civic nationalism which we have carefully nurtured in Wales.

The Welsh nation is not a racial construct. We are a mongrel people, defined not by blood and race but by community, culture and values. Those values underpin an outward-looking set of beliefs which recognises everyone in Wales, whatever their language, colour or creed, as full and equal citizens of our country. Our values as a nation have run through our politics. It is no coincidence that Lloyd George led the fight to establish social security and Aneurin Bevan the NHS. Wales is a nation whose roots are deep in our European heritage. In terms of language, culture, religion and traditions, our identity is European and it is an identity we have no intention of abandoning. It is to safeguard our values, communities and culture that we have aspired to greater political self-determination—to greater independence, if you like. But independence is a relative concept and whereas every nation has a right to independence, it also has a responsibility towards its neighbours and the wider world.

Over the past two generations, Wales has secured a considerable degree of independence. In practical terms, we have our own independent education policies; likewise with roads and housing. We make our own laws and determine our own priorities but we also recognise that there are matters, such as environmental issues, which we cannot control alone but must be governed in larger units, be that on a world, a European or indeed a British level.

In determining this, the European concept of subsidiarity should always come into play: matters should be decided as close as possible to the communities on which those decisions impact. Today’s debate is timely, but one of the real dangers is that we see our relationships as a dipole between Brussels and London, rather than as a multilayered, decentralist structure driven by subsidiarity. In that way, we could easily find ourselves centralising on to a British level decisions that have been systematically decentralised over the past two decades within a European framework.

That is why there was so much grief in Cardiff and Edinburgh when we saw—in terms of agricultural policy, industrial development incentives and procurement rules—what was felt to be a power grab by London. This awoke all the old forebodings and generated unnecessary fear. The real danger is that we put into reverse all the gains we have made—in autonomy, identity, assuming responsibility and developing multilateral cultural links—and that we get sucked back into the vortex of a unified, centralised British state.

To every action, there is an equal and opposite reaction. That, more than any other single factor, is what will drive the movement towards greater independence for Wales and Scotland, if that is what happens. It may well be that new structures can be developed in terms of a federal or confederal state which can appropriately serve nations—and indeed regions—with diverse identities, different challenges and our own aspirations. The Bill of the noble Lord, Lord Lisvane, is relevant in that regard.

Over the past 12 months, during which Steffan Lewis knew of his bowel cancer, he continued his work with bravery and dedication. He refused to let his illness define his life. Only last month, he proposed Plaid Cymru’s amendment to the Labour Government’s Motion on the withdrawal agreement, spelling out why it should be rejected. To the credit of Labour Members, they recognised Steffan’s case and accepted his amendment.

In the wake of Tuesday’s vote, MPs across party lines may try to secure a sensible compromise, such as a model based on the UK retaining its customs union and single market relationship with the EU, and accepting the free movement of people, goods and money between the countries of Britain and the 27 EU member states as a way forward. If that is so, it will provide a framework within which Wales, Scotland and Northern Ireland—and indeed England—can develop an evolving relationship, facilitating the maximum degree of self-government to which their peoples aspire, while simultaneously enabling families, businesses and civic society to blossom without the artificial barriers which a blinkered 19th century approach to independence implies.

In conclusion, it is hugely ironic that it is in this context that a key to Britain’s future relationship with Europe may be found. It is an even greater sadness that Steff has not lived to see the relevance of his analysis become centre stage as we contemplate the future relationships of the nations of these islands.

Brexit: European Arrest Warrant (European Union Committee)

Earl of Kinnoull Excerpts
Thursday 8th February 2018

(3 years ago)

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Lord Brown of Eaton-under-Heywood Portrait Lord Brown of Eaton-under-Heywood (CB)
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My Lords, I have prepared a speech and shall deliver it, although what of any great value it will add to the series of outstanding speeches that we have already had—and it would be invidious to choose between them—may be doubted.

In the increasingly borderless world in which we live, it is really difficult, as others have said, to overstate the critical importance of the European arrest warrant to international criminal justice. The scheme, as your Lordships know, originated in a European Council framework decision in 2002 and was transposed into UK legislation in the Extradition Act 2003, coming into force on 1 January 2004. It immediately transformed extradition arrangements between EU states, making for an altogether swifter and more streamlined process. It was immeasurably an improvement on what had gone before; essentially, the 1957 Council of Europe Convention on Extradition was criticised variously as being,

“inefficient, cumbersome, slow (which resulted in long periods of pre-trial detention for suspects), expensive, technical, political, restrictive, containing a series of loopholes and subject to less judicial oversight”.

That is the description in the EU Committee report of 2013, paper 159, to which my noble friend Lord Hannay has already referred.

As your Lordships will know, under the Lisbon treaty the Government initially opted out of some 130 measures in the field of justice and home affairs and then, in December 2014, three years ago, opted back into 35 including, notably for our purposes, the European arrest warrant. This for the first time conferred jurisdiction on the CJEU or the ECJ in regard to our operation of the scheme. This opt-in occurred during a 15-month period in which the ad hoc Select Committee on Extradition Law of this House sat. I was privileged to be a member of that committee, under the excellent chairmanship of the noble Lord, Lord Inglewood. On 10 November 2014, we published a short interim report recommending that we should indeed opt back into the scheme. In our final report on 10 March 2015, we reiterated, with emphasis, that conclusion. Of course, we had by then indeed opted back in.

In preparing the interim report, we heard oral evidence from two witnesses: the noble Baroness, Lady Ludford, who supported the opt-in, and Mr Jacob Rees-Mogg, who advocated leaving the scheme on the basis that it was an unacceptable extension of European judicial influence. That was not a view that we accepted, nor, evidently, was it a view shared by the Government, who of course then opted in.

I should perhaps note that, during the pre-Lisbon operation of the scheme, and therefore before the European court had jurisdiction over its operation here, a number of EAW cases came before our courts, both in this House and then, after we were banished in 2009, in the Supreme Court. Indeed, I was involved in a number of them, including, shortly before I retired in 2012, a Mr Assange’s appeal—although, in the event, it appears to have taken him no further than Knightsbridge. Against that background, I assert some experience at least of the scheme in practice.

I believe that, both before and after we opted in, overall the European arrest warrant has operated admirably. Of course, as the noble Baroness, Lady Ludford, said, there have been flaws and obviously there remains room for further improvement. There have, however, been certain notable legislative amendments made to the 2003 Act that have undoubtedly helped; for example, the introduction of a forum bar, the effectiveness of which can be seen this very week in the Administrative Court’s judgment in the Lauri Love case, the computer hacker with Asperger’s who is not now to be extradited to the Unites States but who will, one trusts, instead be tried here for his alleged criminal activities. That was under Part 2, not Part 1, of the 2003 Act and is not therefore an EAW case, but the point is none the less well made.

Perhaps I should note in this connection that I in fact wrote the single judgment of the Appellate Committee of this House in the earlier case of McKinnon, where we unanimously dismissed Mr McKinnon’s appeal—a judgment that was then fully upheld in Strasbourg under the European convention. Of course, at that stage there was no question arising at all as to Mr McKinnon’s health. It was argued on an unarguable case by the noble Lord, Lord Pannick; he failed. Only later was Asperger’s diagnosed and there was of course then executive discretion—which is no longer there—for the Home Secretary to bar extradition. Now, the position has improved under the legislation: there is a forum bar, and the court rather than the Executive will make the final determination on the merits of issues such as oppression.

Thus far, I have focused on the critical importance of the warrant scheme—as all your Lordships have, I think, emphasised—and the imperative need, as I see it, to maintain its operation in the post-Brexit era. Indeed, as I read the Government’s response to the report, there is really no longer any doubt or dispute about its importance and the necessity of maintaining it. Rather, the remaining question is simply about how in future its operation should be judicially overseen. I say this simply remains the question, but actually, as other noble Lords have indicated, it is really rather difficult.

The Government’s response, I think of December last, to this report, consistent with their published paper in September last, the future partnership paper Security, Law Enforcement and Criminal Justice, while asserting that they will,

“bring about an end to the direct jurisdiction of the CJEU in the UK”,

recognises that some form of supranational resolution mechanism will be required, certainly after the transitional implementation standstill period, during which, as I understand it, the Government are now ready to accept that they will continue to acknowledge the CJEU’s continuing jurisdiction in this field. But what will then follow?

As I read the report, while indeed it acknowledges the need for some future international judicial process to be devised in place of the CJEU’s direct jurisdiction, it gives, as others have pointed out, no real clues as to what precisely, or indeed even imprecisely, it currently envisages will fit the bill. For all the reasons set out in this admirable report, it needs to be a court, a judicial body, as opposed to some arbitral body. It needs to be available to individuals and not merely to states. It needs to enforce the scheme, I would suggest, in full measure, and not, for example, some alternative scheme, such as that devised in the case of Iceland and Norway, whereby those states are now entitled to refuse to extradite their own nationals, which under the EAW scheme is not a permitted restriction. Above all, it has to be acceptable to the other 27 EU states.

For my part, I cannot see how any replacement for the existing role of the CJEU would be an improvement on it. As I have said on other occasions, I greatly regret that the Government have demonised that court and, essentially on ideological or doctrinal grounds, are intent on ending its jurisdiction. I cannot think of a single instance of that court’s rulings in this field which has caused the UK the least problem or, indeed, been regarded as in any way unsatisfactory. That court may on occasion be criticised for its integrationist approach and its bias towards ever-closer union, but no such tendency has the least application or relevance in this particular context, and to schemes such as the EAW, and so too, indeed, in relation to other criminal justice measures which we opted back into.

I am conscious that I am taking up a lot of your Lordships’ time, but it is perhaps worth mentioning that essentially the same point arises also with regard to a number of EU civil justice co-operative measures: the various Brussels Regulations, maintenance regulations and so forth, dealing with a host of important questions affecting our citizens and businesses, the recognition and enforcement of judicial judgments, family law disputes and so on. All these were the subject of an excellent report, and subsequent debate last December, led by the noble Baroness, Lady Kennedy of The Shaws. Frankly, the same problems of certainty, predictability and continuity were left at the end of that debate as I fear may be left at the end of today’s debate too. I would dearly love the Minister to assuage my doubts and misgivings when he comes—as I understand it, comparatively fresh to this issue—to wind up. I just hope he can.

As a postscript, the one point on which I record my disagreement with the noble Baroness, Lady Ludford, is on the European Charter of Fundamental Rights. My mind of course, as always, remains open until I have heard the last word of the argument on both sides, but my present feeling is that the Government are right to discard that. I can see that it would add nothing whatever to the issue of the European arrest warrant.

Earl of Kinnoull Portrait The Earl of Kinnoull (CB)
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My Lords, I apologise that I was not able to put my name down for the debate and am speaking in the gap; I was due to be an expert witness in a case today which has now been delayed at short notice. I declare my interests as a member of both the European Union Select Committee and of the EU Justice Sub-Committee, which is so ably chaired by the noble Baroness who spoke earlier.

I will make just a very few points. First, this is an excellent report. It is jolly hard to write a short essay; it is only 22 pages and it frames everything very well. I congratulate the noble Lord, Lord Jay, and his committee on that. Secondly, I was also on the four-day EU Select Committee trip to Ireland last week, and I sat through the eye-opening session with representatives of the Police Service of Northern Ireland. They made it very clear how important to the overall setup the European arrest warrant is. The key quote was:

“It is a critical part of our toolbox”.

I wrote that down on my papers, and it underlines the importance of achieving a solution here. It is also worth saying that, apart from that, we heard the same point made by politicians and by academics—it was not just a dry comment made by policemen.

My final point is about a comment made to me by an Austrian lawyer in January. He said, knowing what I do on the Select Committee, “I do hope something will be done about the European Union arrest warrant”. I replied, “I’m very surprised that that is the first thing you’ve had to say about Brexit”. I should say that I know this person very well. He said, “It is, because it is something which Austria uses a lot, and it’s a very important feature”. Being me, I started looking up the statistics. I have here the at-a-glance infographic issued by the European Parliament about the arrest warrant. It is very interesting: Austria was in fact the sixth-biggest issuer of arrest warrants in the period covered by the statistics, which was 2005 to 2013. But more interesting is the data on incoming receipts. The country with the largest number was Germany, and the country with the second-largest number was Britain: in that period we received 32,100 arrest warrants. Germany received more than that. The country receiving the next-highest number of incoming arrest warrants—requests to perform an arrest in your country—was France, with only 6,420.

Those statistics show how important it is for European Union countries for their own justice purposes to continue to be able to exercise things for us, just as it is vital for us to be able to do it as well. For that reason, I feel very much that we are pushing at an open door. I always love listening to the noble and learned Lord, Lord Brown of Eaton-under-Heywood, who laid out a very sensible way of trying to handle this issue, which I look forward to reading again. That seems to be where a solution could be found. I hope that the Minister will be able to give us some comfort that we are pushing at the open door.

Lord Marks of Henley-on-Thames Portrait Lord Marks of Henley-on-Thames (LD)
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My Lords, I join others in thanking the noble Lord, Lord Jay, for his part in this excellent report and for the thoughtful and persuasive way in which he opened this debate.

I agree with the Prime Minister when, as Home Secretary in 2014, she said, in advocating our opting back in to the European arrest warrant, that our losing the EAW would turn the UK into,

“a honeypot for all of Europe’s criminals on the run from justice”.

The noble Lord, Lord Hannay, pointed out her support for the EAW system. When Naz Shah MP put the Prime Minister’s words to Nick Hurd, the Policing Minister, during his evidence to the Home Affairs Committee on 23 January, the Minister replied:

“The European Arrest Warrant is an incredibly important tool in the box. The data is quite striking. Prior to the implementation of the European Arrest Warrant in 2004, fewer than 60 individuals a year were extradited from the UK to any country, not just the EU. Between 2004 and 2016-17, EAW has enabled the UK to surrender over 10,000 individuals accused or convicted of a criminal offence to other member states. This has included those accused or convicted of murder, child sexual offences and terrorism offences. During that period, the EAW has been used to surrender over 1,400 individuals to the UK to face justice, so it is a very important tool”.

He went on to say that,

“we want to preserve that capability as close to the existing status quo as possible”.

Those words echo those of Amber Rudd, quoted in the introduction to the EU Committee’s report. The noble Baroness, Lady Kennedy, also spoke of the effectiveness of the warrant in combating serious crime across Europe, and all speakers have recognised the importance of reciprocity.

Day after day in this House we hear Ministers answering questions on Brexit topics by saying that the Government’s aim is to maintain our relationship with the EU as closely as possible in its existing form. Those of us who believe that the whole project of leaving the EU is a disastrous mistake have every right to ask, “Then why are we leaving?”.

All speakers in this debate agree that it is crucial for this country to continue to reap the benefits of the European arrest warrant system. The noble and learned Lord, Lord Brown, stressed the remarkable superiority of the warrant system over other extradition systems as it has developed to mitigate the flaws that it had. However, the report highlights the serious difficulties in our retaining the system if we do not accept the jurisdiction of the CJEU. I understand that to be the central point made by the noble Lord, Lord Jay, in opening.

Why have the Government made breaking with the CJEU such an unyielding red line if they want to achieve a deep and special partnership with the EU? I see it more as an unbending rod for the Government’s back than a defensible red line. If the Government genuinely want this partnership, they must accept that in areas of European co-operation, whether on citizens’ rights, trade standards, the environment or cross-border security co-operation, European law will continue to hold sway, and its oversight is now and will remain with the CJEU or something very close to it.

In the legal and security areas, the arguments surrounding the European arrest warrant apply equally across the field. They apply to Europol, the EU agency for law enforcement, which is critical to the fight against serious organised crime, people trafficking, cybercrime and terrorism. It is an agency to which the United Kingdom has contributed greatly, not least through its energetic British director. The UK is probably the single largest user of Europol in the EU.

The arguments apply also to data sharing under the Schengen Information System—the vast database to which EU member states have access under the judicial oversight of the CJEU. They apply to Eurojust, the EU agency that promotes co-ordination and co-operation between EU investigating and prosecuting authorities, and to which the DPP has made it clear that she attaches great importance. My noble friend Lady Ludford stressed the DPP’s complete commitment to the European arrest warrant as well. They apply to protection for citizens under the data protection directive. In civil matters they apply to resolving choice of law issues, currently achieved by the Rome regulations; to dealing with issues of jurisdiction, recognition and enforcement in civil and commercial matters covered by the Brussels I regulation; and to the recognition and enforcement of judgments in family law, covered by the Brussels II regulation. In all these areas Ministers claim to want maximum co-operation, yet they insist on rejecting CJEU jurisdiction.

The noble Lord, Lord Jay, pointed out the difficulties already arising with the European arrest warrant, particularly on the island of Ireland. The noble Earl, Lord Kinnoull, made the same point. I would point out in that respect to the noble and learned Lord, Lord Brown of Eaton-under-Heywood, that it was the likely absence of the protection of the Charter of Fundamental Rights that caused the problem with Ireland. I urge him to consider that in the context of his opposition to it.

The Government’s response to this report is typical. It explicitly recognises the need for a mechanism for dispute resolution. Although I cannot manage the eloquence of the language of the noble Lord, Lord O’Neill, on the subject of the Government’s response, I will say that their proposals are uncertain and muddled: uncertain, because all they can say is that they are committed to a constructive dialogue; muddled, because they imply that post Brexit our law can diverge from EU law in all areas, which betrays a fundamental failure to appreciate that for international co-operation to work one law must govern the behaviour of both parties and that law must be binding.

In European arrest warrant cases individuals have a direct entitlement to have their rights under EU law protected by national courts. As the noble Baroness, Lady Kennedy, and my noble friend Lady Ludford pointed out, these are cases involving individual liberty. If the system is to retain the confidence of citizens and governments, there must be judicial oversight at a supranational level, which in this context means the EU level, and it must be binding on all parties. Why should the EU 27 be expected to accept a non-binding alternative arbitration system for the oversight of arrest warrants when they already have a functioning, efficient and binding system in place?

Much is said on the other side about the affront to UK sovereignty involved in accepting the direct application of EU law and the jurisdiction of the CJEU. Yet we accept the UN charter and the jurisdiction of the international court in The Hague, and we accept the jurisdiction of the European Court of Human Rights under the European Convention of Human Rights. Why not the CJEU? If Brexit is to proceed on the basis of continuing partnership, then on all areas covered by the partnership we need to reach agreement on a system of judicial oversight that is both binding and workable.

Although I do not necessarily share this view, one can see the argument that, if we leave the EU, the fact that the CJEU will no longer have a British judge and a British advocate-general would make the court appear one-sided. Well then, will the Minister explain why the Government do not seek to secure that areas covered by new partnership issues arising between the UK and the EU will be justiciable by a parallel court? Call it what you like, but effectively it would be a division of the CJEU but with a British judge and a British advocate-general. Has such an obvious arrangement even been considered by the Government?

This whole issue has been blown out of all proportion by the soundbites of ideologues. The UK has been a successful litigant before the European court. Research for the Institute for Government published in December demonstrated that the UK has the highest success rate before the court of any EU member state. These negotiations are difficult enough without red lines that are illogical, unnecessary and indefensible. If this whole sad enterprise is going to proceed, and if the Government are serious about partnership, then in this, as in all areas, will they please stop posturing and make proposals to our partners that have some chance of being agreed and are realistic and workable?

Risk Transformation Regulations 2017

Earl of Kinnoull Excerpts
Tuesday 7th November 2017

(3 years, 3 months ago)

Lords Chamber

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Cabinet Office
Lord Young of Cookham Portrait Lord Young of Cookham (Con)
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My Lords, I hope that the noble Lord, Lord Tunnicliffe, will be in an equally benign mood when he addresses the regulations in my name.

The Risk Transformation Regulations 2017 introduce a bespoke regulatory framework for insurance-linked securities business in the UK, announced at Budget 2015. The regulations comprise three main elements. First, they provide for UK regulators to apply a new authorisation and supervisory regime for insurance-linked securities vehicles in the UK. Secondly, they introduce a new type of company to enable multiple insurance-linked securities deals to be managed in a single company. Finally, they set out the rules for the issuance of insurance-linked securities investments so that the interests of protection buyers and investors are protected.

In an insurance-linked securities transaction, risk is transferred from an insurer or reinsurer to the capital markets. An insurer contracts with an entity specifically established to take on insurance risk. These entities are often known as insurance special purpose vehicles, and are called “transformer vehicles” in the regulations. The insurer transfers a specified risk to the transformer vehicle, paying reinsurance premiums for the risk transferred, and the vehicle then raises collateral to cover that risk by issuing securities to capital market investors. Investors earn income on their securities from the premiums paid by the insurer. Should the insured event take place, the collateral is released to the insurer to compensate them for their loss. If the insured event does not take place, the collateral is returned to investors. Investors are attracted to insurance-linked securities transactions as they offer a return that is uncorrelated to the performance of traditional financial markets.

Insurance-linked securities are now an important and growing part of the global specialist reinsurance market. As of 2017, more than $90 billion-worth of insurance-linked securities have been issued. By enabling insurers to access alternative sources of capital from the capital markets, this business has brought much-needed additional capacity to parts of the reinsurance market. However, despite the importance of London as a global insurance hub, the rapid growth of the insurance-linked securities market has taken place elsewhere.

The March 2015 Budget therefore announced that the Treasury, PRA and FCA would work closely with the London market to develop a more effective framework for insurance-linked securities business. The London market established an industry group, the insurance-linked securities task force, and over the past three years, the Treasury, PRA, FCA and insurance-linked securities task force have worked together to design the fit-for-purpose regulations that are before the House today. At its heart, therefore, the insurance-linked securities project aims to ensure that London and the UK maintain their position as a global insurance hub—and I am sure that noble Lords will agree that any attempt to increase the competitiveness of the UK’s financial services offer is welcome.

The regulations are split into four parts, and they achieve three broad aims. Part 2 implements a new authorisation and supervision regime for insurance-linked securities vehicles, which will be overseen by both the Prudential Regulation Authority and the Financial Conduct Authority. The PRA will be the lead regulator. By providing a robust and efficient framework for the supervision of insurance-linked securities, consistent with requirements set out in EU law, investors and protection buyers that use UK vehicles will benefit from the world-class financial regulation that the UK provides.

Part 3 ensures that only sophisticated or institutional investors can be offered insurance-linked securities in the UK. As I explained a moment ago, in an insurance-linked securities deal, when an insured event occurs, investors are liable to lose some or all of their capital. These are complicated financial instruments, and it would be wrong for public retail investors to be able to purchase these investments. That is why the regulations restrict the types of investors who can purchase insurance-linked securities; these investors will often hold investments in a number of different insurance-linked securities vehicles to both diversify their holdings and minimise the risk of losses.

Part 4 introduces a new form of corporate body called a protected cell company. A protected cell company allows multiple insurance-linked securities deals to be managed in a single company. Each new deal is held in a cell, and the structure of a protected cell company ensures that each deal’s assets and liabilities are ring-fenced from one another. This type of structure is already common in the insurance-linked securities market and allows for a more efficient management of risk than a new vehicle being set up for each individual deal. Protected cell companies will be carefully regulated by the PRA and FCA, with the PRA ensuring that each cell is fully capitalised.

Unlike conventional reinsurance, insurance-linked securities transactions do not pool risk. Indeed, the regulations require risk to be segregated: the transferred risk of one insurance or reinsurance entity cannot be combined with the risk of any other entity. Nor do these transactions lead to the leveraging or undercapitalisation of risk. They are not a way for insurers or reinsurers to avoid their responsibility of carefully ensuring that their risk is suitably capitalised.

In insurance-linked securities transactions, the transformer vehicle takes on a specific risk and must hold collateral that is at least equal to the risk that has been transferred to that vehicle. The Bank of England and Financial Services Act 2016, which amended the Financial Services and Markets Act 2000 to provide the enabling powers for the risk transformation regulations, defines risk transformation as the activity of assuming risk from an entity and fully funding exposure to that risk by issuing investments.

Regulations therefore ensure that each and every insurance-linked securities deal in the UK will hold capital that is at least equal to the risk that it has assumed. There can be no leveraging, pooling or undercapitalisation of risk in these transactions. This will ensure that insurers can rely on the protection they arrange through insurance-linked securities deals. That is an important point to bear in mind, considering the terrible impact of Hurricanes Harvey, Maria and Irma in the US and the Caribbean recently. These hurricanes represent some of the largest loss events that the insurance industry has seen and have tested the insurance-linked securities market’s capacity to respond and pay out on claims.

To summarise, the regulations before the House today are aimed at improving the competitive position of the UK insurance market by giving insurers and reinsurers a fit-for-purpose regulatory regime for insurance-linked securities.

We have heard that insurance-linked securities are a growing market—indeed, 2017 has seen a record issuance of insurance-linked securities, with more than $11 billion issued this year alone. EY has estimated that the market could grow to $224 billion by 2021, and the CEO of Securis, a UK-based insurance-linked securities fund has said that,

“the opportunity set for ILS has never been better”.

It is therefore the right time for the UK to improve its offer in this market. These regulations will be accompanied by new tax regulations that provide for a more competitive and straightforward tax treatment for authorised insurance-linked securities vehicles in the UK. The moves have been welcomed by the industry. I am pleased to say that the London Market Group, which represents London’s insurers and reinsurers, has welcomed this new framework for insurance-linked securities business. I beg to move.

Earl of Kinnoull Portrait The Earl of Kinnoull (CB)
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My Lords, I thank the Minister very much for his clear explanation of something which I suspect was not his home ground. It is, however, my home ground in some ways. This is an important statutory instrument, and I declare my interests as set out in the register of the House, in particular those in respect of the non-life insurance industry. I very much welcome the instrument, as it will allow London to take a full part in this extremely interesting new reinsurance market. I say a full part because London has been part of issuing and buying insurance-linked securities for some time, we just have not had the apparatus of protected cell companies, an apparatus which exists conveniently in Guernsey and very conveniently, in a market-leading sense, in Bermuda. I should also say that the first issuer in London of such a thing was my company in 2002, so since then, from a standing start, the market has got to the size that the Minister mentioned.

I very much congratulate the Treasury, which has slaved away for two years with a whole team of people, but I know that the London Market Group has been a particular part of that, and has shown considerable flexibility in changing a mindset, because protected cell companies are a very different structure to those we are used to in this country. It is a big market. I found some notes from when I was sitting on a panel discussing insurance-linked securities in New York in 2011. Then, the worldwide issuance was US$30 billion, and the London Market Group tells me that it is $89 billion—I am pleased to hear that it has grown by $1 billion overnight to $90 billion. The average maturity of the securities is under three years, which means that market issuance is about $30 billion a year, so it is a very big market for those who are going to run PCCs to have a go at.

There are one or two other benefits for London which were not mentioned in the introduction. First, these securities are listed—obviously, we have two very convenient stock exchanges here, which I hope are hungry for business. Secondly, the money in these structures has to be managed, and we have plenty of fund managers who are happy to do that. Also, being here in the London market will be of benefit because one is very close to innovation. There is a lot of innovation in London. The Caribbean wind storms that have gone through recently need a lot of innovation, because those islands do not have the wherewithal to buy traditional reinsurance—it is too expensive—and this may provide a route. I know that people are working on that. I know that a number of people who are working are assuming that we will approve the regulations, and their great hope is that the first transaction will be done before year end.

If I had any concerns, and purely to ask the Minister something—I do not really, because I think that we have taken the best of breed from all the PCC structural developments around the world—it would be that I note that the PRA is left with a couple of powers which if incorrectly exercised could lead it to deal damage to the market. The first is the cost of each cell and the costs of regulation. Of course, when you are deciding on the jurisdiction of your special purpose vehicle, cost is key. I hope that the PRA will think about that. Secondly, paragraph 63 enables the PRA to ask for information about each new cell when it arrives. Obviously, it could ask for a tremendous laundry list of stuff. I hope that it will be proportionate in what it does. Can the Minister confirm that the PRA intends to be pragmatic and proportionate in its approach to this new market in the UK?

Lord Tunnicliffe Portrait Lord Tunnicliffe (Lab)
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My Lords, I thank the Minister for introducing the order so thoroughly. As he outlined, the Risk Transformation (Tax) Regulations 2017 create the regulatory and supervisory framework for insurance-linked securities. ILSs allow companies to obtain reinsurance protection from a new pool of capital separate from traditional reinsurance, meaning the direct transfer of reinsurance risk to the capital market. The proposed framework is composed of three elements: the corporate structure for insurance special purpose vehicles or ISPVs, called protected cell companies or PCCs; an authorisation procedure for the PRA and the FCA; and the specific tax arrangements for ILSs.

Before I turn to some specific questions which arose from my reading of the regulations, impact assessment and consultations, I will say something about ILSs in general. The assumption—I use that word deliberately—is that they ought to have little or no correlation with the wider financial markets as their value is linked to non-financial risks such as natural disasters, and therein lies my concern. The Government have made no attempt to conceal the fact that the UK will be venturing into the unknown. Indeed, on the first page of the impact assessment the Treasury states:

“London would be the first major financial centre to offer ILS solutions and we think that a major and well trusted financial centre can help grow the global ILS market”.

This is not a statement of certainty. Given the admission that the UK is breaking new ground, I would have expected the Government to have been keen to assess the impact that the introduction of more risk to the market could have on the financial sector as a whole. An IMF working paper puts it well, stating:

“The growth in recent years of Insurance-Linked Securities has widened the exposure of investors (mostly hedge funds and specialist investment vehicles) to insurance risks originated and managed by insurance companies ... But the effect is that catastrophic insurance losses can now be transmitted directly to investors without the cushion of the insurance company's balance sheet”.

There seems to be an untested assumption, throughout the Government’s proceedings, that there is no correlation between ILSs and economic stability. Am I wrong? Have the Government carried out such risk assessments? If they have, I would be grateful if the Minister could publish them. If not, will he go back to his department and urge it to produce them? It is this lack of inquiry which makes me doubly concerned about the lack of a requirement for a formal review to take place.

The Government have stated that there are a number of issues they intend to review periodically, including whether protected cell companies could be used for other purposes and the untested authorisation and supervision of ISPVs and MISPVs. How did they arrive at the view that a formal review, perhaps within a year of these regulations coming into force, was not necessary? I suggest that there are plenty of measures which would merit review: the extent to which ILS shares are traded on a secondary market, the usage and impact of PCC gateways and the tax treatment. The noble Lord knows that conventions dictate that we do not test the opinion of the House on such matters, but let that not undermine the importance that I place on these questions.

I have a few specific points. The first relates to the tax measures. This third component is in separate regulations —the Risk Transformation (Tax) Regulations 2017 — which are not being debated today. Surely it would have made more sense for the two instruments to be debated alongside each other? Can the framework come into force without the tax elements in place? When does the Minister expect this House to debate the tax treatment for ILSs?

Moving to the insurance mechanisms, a PCC will comprise a core— which is the legal entity—and a number of cells. Will there be a limit to the number of cells each ISPV will be authorised to have? Has the department carried out any analysis on the estimated number of cells each company will run? I ask with particular concerns that an unlimited number of cells would increase the risk of instability in the market, especially if cells are grouped. I understand that this grouping of cells will be allowed in limited circumstances. The Government consulted on how the PRA may impose limitations on how PCCs use these gateways, so as to ensure that cells are used with care and are consistent with the EU Solvency II directive. Will the Minister outline the circumstances in which the PRA would enforce such restrictions?

My final point is about the Government’s decision, as a result of listening to consultation feedback, to change from a pre to a post-transaction notification period to the PRA for new multi-arrangement insurance special purpose vehicle cells, or any assumption of new risk. Why the change? What objections were raised to what sounds like a perfectly reasonable suggestion? As a result of this shift in approach, the Government have stated that the necessary safeguards are in place. Will the Minister outline what these are? The consultation response goes on to say that,

“it will be proportionate for the PRA to give permission to mISPVs to enter into specified kinds of risk transfer deals in the future without the need for further authorisation, provided that those future deals are in accordance with the limitations as set out in the mISPVs permission”.

Is it the PRA’s responsibility to monitor whether deals are in line with expectations or is the onus on the company to report it?

As I have made clear, although we will not vote against this order, I am deeply concerned that the Government are inviting further risk into an already unstable and uncertain market without fully considering the consequences. I hope that the noble Lord can relieve some of my worries in his response.

Financial Guidance and Claims Bill [HL]

(Committee: 4th sitting (Hansard): House of Lords)
Earl of Kinnoull Excerpts
Wednesday 13th September 2017

(3 years, 5 months ago)

Lords Chamber

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Cabinet Office
Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, this is not an area that I knew about before the noble Lord, Lord Hunt of Wirral, got to his feet, but he has thoroughly persuaded me and I hope that he has thoroughly persuaded the Government.

Earl of Kinnoull Portrait The Earl of Kinnoull (CB)
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My Lords, as usual, the noble Lord, Lord Hunt, is right on the money and I do not disagree with a word that he said. I would add one tiny little thing: the net effect of the MROs and the CHCs is that they add to the cost of motor insurance in this country so that poorer people who struggle to pay their motor insurance will find it further away from them. For that solid reason, I strongly support the noble Lord’s two amendments.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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My Lords, I, too, offer my support to my noble friend Lord Hunt. I agree with his two amendments, which seek to attack one of the major menaces of the spurious claims activity in our society at present. Does my noble friend the Minister think that the FCA is qualified and able to take on all these extra tasks? Will there be a new category of authorised person within the FCA? The skills required to regulate CMCs of various kinds may not be exactly the same as, for example, those required to give financial advice. It is also worth checking that there are not any other areas of spurious activity or the encouragement of spurious claims which are already being practised by unscrupulous people.

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Earl of Kinnoull Portrait The Earl of Kinnoull
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My Lords, again, I support the noble Lord, Lord Hunt of Wirral, and agree with every word he said. I thought it would be helpful to give a few figures for just how raging this fire is.

The first figure comes from CEHAT, the Spanish hotel and apartment trade body, which estimates that over the past three years the Brits have cost its members €100 million in claims. That is just Spain and just members of that trade body. The second is a wonderful statistic, which comes from an unnamed big tour operator in the Guardian on 31 July. It said that from July to August 2016 it took to Europe 750,000 British customers, 800,000 German customers and 375,000 Scandinavian customers. The Scandinavians lodged 39 claims, the Germans lodged 114, and the British lodged around 4,000. One can see just from those facts how much of a fire is burning here and what an important issue the noble Lord, Lord Hunt, has zeroed in on. I can say only that I support his thinking wholeheartedly and hope he is feeling very persuasive, providing he gets to see the Minister and the officials.

Baroness Altmann Portrait Baroness Altmann
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My Lords, I, too, support my noble friend’s Amendment 70A. He has highlighted a very important issue. It is right that in Clause 17 the Government are looking to cap the charges made by claims management companies, but this should apply to personal injury claims as well as those for financial products and services. The cap on charges is also important because there will be problems in future associated with the increased use of the small claims track when it is extended to cover cases up to £5,000 for personal injury claims.

I was going to quote the same figures as the noble Earl, Lord Kinnoull, but I have also heard from a number of holiday operators and other representatives of the travel industry that resorts are now threatening to sharply increase prices for British holidaymakers or even withdraw all-inclusive packages from the UK market altogether. This situation is damaging the reputation of British holidaymakers and I support my noble friend’s amendment.

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Earl of Kinnoull Portrait The Earl of Kinnoull
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My Lords, I declare my interests as set out in the register of the House, particularly those relating to the non-life insurance industry.

At Second Reading I commented on the vital nature of access to justice. It is of central importance that those who are not in a position to get legal or other assistance towards making valid claims can do so via no-win no-fee arrangements with professional firms and at reasonable cost. The very excellent claims management regulation review already referred to by noble Lords, led by Carol Brady, is very firm on this point. I remind the House that her executive summary says:

“The overwhelming majority of stakeholders, including the banking and insurance industries which have been hardest hit by CMC misconduct, argued that there is a legitimate need for CMCs and that the Government should not seek to regulate them out of existence”.

The central role of the FCA is clear. Its regulation must be proportionate and helpful.

Regulators in financial services generally charge the cost of their regulation back to those whom they regulate. So one way of assessing how heavily you are regulated in any jurisdiction, and the burden, is simply to compare the relative costs of the regulation. The British Insurance Brokers’ Association, using London School of Economics numbers, supplied me with some data earlier in the week. It reports that the UK—for insurance broking, which is just one of the very large number of areas that the FCA regulates—is more than twice as expensive as Ireland, Hong Kong and Bermuda, and that that multiple is bigger again for France and Germany.

It is not just the cost or weight but the fact that, in the insurance space at least, you cannot ring up the FCA and get help in interpreting what for our industry is 1,000 pages of regulations on a situation-specific basis. It simply will not answer the question but will refer you to the regulation and say, “Go and get some advice from somebody else if you need it”. That is completely different from how regulators in other jurisdictions around the world operate, as being helpful to those whom they seek to regulate helps a jurisdiction become competitive internationally. This amendment seeks to ensure that there is a cultural change for the FCA where the CMCs are concerned. I fear that an unhelpful regulator would act as a deterrent to the formation of new small CMCs. It is vital that new CMCs can be born to maintain that access to justice that I started with, just as it is vital that a proportionate regulator deals with unsatisfactory CMC behaviour.

I would point out one more thing—that if you get regulation wrong, the FCA can reach through the corporate veil and get at the regulated persons connected with the firm concerned. They can be fined and sanctioned generally in all sorts of ways. If a regulator is unhelpful it is quite a disincentive for individuals who might be thinking of forming a small charitable CMC to help people with certain things, and that disincentive would impede access to justice. I am concerned, accordingly, that good firms providing access to justice might be handicapped or worse, and yet the bad firms may be able to cope with the regulatory burden. In short, this is a vital role for the FCA. This amendment is aimed at ensuring a cultural change in the FCA, and helping CMCs to interpret what I am sure will be complicated and long regulations. I beg to move.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
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I rise briefly to support the noble Earl, Lord Kinnoull, in his quest for a more equitable arrangement with the powers that be in terms of the FCA. I think he would be the first to admit that this is a recurring theme in many of his contributions to debates around financial guidance and similar issues. On the surface, it seems extraordinary that a body so well resourced and organised as the FCA should be so diffident in coming forward with helpful advice to get people to work better and more constructively within the sector it is regulating.

This amendment has had to be framed to get it into a debate around claims management but it touches on a much wider issue about all the aspects of the FCA that we are talking about. Indeed, it is about an attitudinal and possibly a conduct approach, which is also part of it. I hope that there is a way to get this matter resolved one way or another because it is part and parcel of the other issues we have talked about in terms of duty of care and responsibility for consumers and the vulnerable. If the FCA—and indeed, by implication, the SFGB—took a more interactive and supportive stance, we would all be better off.

Baroness Buscombe Portrait The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
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My Lords, it is my turn to rise to my feet to support my noble friend Lord Young, who has been more than a co-pilot for this part of the Bill. Perhaps I see myself more as flight observer.

The amendment moved by the noble Earl, Lord Kinnoull, aims to ensure that the FCA helps firms to interpret the FCA rules. I absolutely accept and understand his reasons for tabling this amendment in terms of the importance of that interpretation and in order to be helpful. I agree that ensuring that firms understand the FCA’s rules will be vital to the success of this new regulatory framework, and I would like to draw the noble Earl’s attention to the steps the FCA already takes to ensure that firms are well informed of regulatory requirements.

The FCA undertakes a range of communications activities, including monthly e-newsletters summarising all the main changes that have taken place over the previous month and a programme of regional events across the UK for firms to discuss regulatory issues. The FCA holds round tables and other briefings on specific issues with trade associations and firms to help them better understand how new policy may impact their business models. It also maintains a smaller business practitioner panel which represents smaller regulated firms which may not otherwise have a strong voice in policy-making. I have noticed that the noble Earl has, quite rightly, throughout our debates in Committee focused on those smaller businesses that may not have their own strong voice.

On top of this, the FCA is aware of the need to engage with firms about new regulatory provisions. Building on the approach taken in the consumer credit transfer, the FCA will develop a clear communications strategy to engage with firms as a key part of the transition process. The FCA is committed to alerting firms to changes in regulation that affect them and has several well-established channels to support this—for example, in its regulation round-up, which is a monthly e-newsletter sent to more than 50,000 recipients summarising all the main changes that have taken place over the month. That will have links to further information on the FCA website. There is a programme of monthly regional events called “live and local”, across the UK, for firms to discuss the changes, and round tables and other briefings on specific issues. In addition, the FCA sends over 500 speakers each year to talk at industry conferences and events to discuss regulatory issues, and maintains regular relationships with trade associations.

These actions will help to support CMCs through the authorisation process as they work to meet the FCA’s regulatory requirements in the provision of claims management services. The FCA’s strategic objective is to ensure that the relevant markets function well, which will ensure that the market for CMCs’ services functions well. Communication on that basis is vital. The FCA also has a competitive objective, which requires it to have regard to the ease with which new entrants can enter the market. Of course, being able to understand the rules is critical to that.

I hope that the actions that I have set out help to support CMCs through the authorisation process. This short debate with the noble Earl and the noble Lord, Lord Stevenson, will, I hope, give a nudge to the FCA that it is of critical importance that it undertakes this important issue with care to make sure that the process works. For those reasons, I hope the noble Earl will withdraw his amendment.

Earl of Kinnoull Portrait The Earl of Kinnoull
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I am very grateful to the Minister for her words, which I shall have to read a bit more carefully in Hansard. I also thank the noble Lord, Lord Stevenson of Balmacara, for his generous words. I am sorry that he has had to listen to me a number of times on the FCA.

The list of things that the FCA is doing, which the Minister told us about, is much more to do with transmitting than receiving. You do not want to turn up to a round table as a business and talk about a new idea; you want to be able to talk about the new idea with your regulator and say, “Will this new idea work? I am thinking of doing it. Does it fall within section 772B on page 956 of your regulations?”. That is the sort of helpful thing that other regulators around the world have been able to do. In trying to fine-tune our honey trap for UK financial services, we are out of step with the rest of the world—and good regulation is one way in which we will attract more businesses in future to come to British markets.

I hear what the Minister says about that issue and wonder whether it might be possible for her to reflect a bit further about what I am saying, which is a different thing from all the various round tables and letters to 50,000 people and so on. It is about having the ability to have a hotline and to ring up and go to see your regulator to chat through a business issue in relation to the interpretation of blooming complicated regulations. It would be a great step change, and it would be a good opportunity to begin here; they will have to design a whole new system for regulating CMCs, and they could begin by building into the design from day one this element of something that would be very helpful to the small, good firms which I hope will grow up in the CMC space. I think the Minister is saying that she would agree to have a chat in the period before Report. If there were no progress, I might want to bring it back at Report. But on that basis, I am happy to withdraw the amendment.

Break in Debate

Baroness Altmann Portrait Baroness Altmann
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My Lords, I support this amendment and speak to my Amendment 73 on the same topic, which seeks to achieve the same aim as Amendment 72. The scale of nuisance calls is of great concern, as has been expressed in previous debates on this Bill from noble Lords on all sides of the House. The Association of Personal Injury Lawyers states that an estimated 51 million cold calls or texts are received each year from regulated claims management companies for personal injury claims. Although such nuisance calls are supposed to be prevented by existing regulations, current measures are clearly ineffective.

Reforms of claims management companies are clearly urgently needed. I congratulate my noble friend on introducing the Bill. Carol Brady’s excellent independent review of the regulation of claims management firms recommended moving responsibility to the FCA, which is what the Bill does, and I wholly support that. However, it is also important to protect the public from nuisance calls and texts, which the claims management companies often plague people with; to reduce the level of speculative and even fraudulent claims, which cause added costs for companies and end up costing other consumers extra money; and to stop customers being fooled into paying up-front fees to unscrupulous claims management companies, which they then never recover after they discover that they did not have a valid claim in the first place.

FCA regulation of CMCs will help toughen the oversight of nuisance calls, but that move alone is not sufficient to properly protect consumers. The FCA has powers of enforcement that are better than the current regime; it can strip those found to be flouting the rules of their ability to operate and can hold directors personally liable. But a ban on unsolicited approaches would add much more protection. It would be clear to consumers that they should not engage with firms which contact them and encourage them to make spurious claims. Currently, the claims management companies act with impunity to entice people to make easy money. But of course this has the effect of imposing higher costs on the wider public, as we have already heard this afternoon, because firms will charge more to cover the risks of such claims. We have seen this clearly with whiplash injuries and we are seeing this with holiday sickness claims. Indeed, the Law Society has also written to me to support the banning of cold calls. ABTA cites the problems that we have already discussed about the dramatic rise in speculative and fraudulent claims. This will cause detriment to the wider public if we do not make sure that we take the opportunity in the Bill to retain effective measures to address the issue.

The Minister has already said how much she wishes that she could ban cold calling for pension companies, and there was support across the whole House for that measure, but it is questionable; we hope that we might be able to find a way to get that into the Bill. However, cold calling for claims management companies clearly is in scope of the Bill. When defining “claims culture” in a Parliamentary Answer on 19 April 2016, my honourable friend in another place, Dominic Raab, said:

“The Autumn Statement referred to the cost to society of the substantial industry that encourages claims through cold calling and other social nuisances and which increases premiums for consumers”.

Therefore the Government have clearly equated claims culture with cold calling, and the logical and fair action would surely be to ban cold calling for personal injury claims rather than restrict the rights of people who have been injured through no fault of their own, which the Government are expected to do in the forthcoming civil liability Bill. These proposals perhaps aim slightly at the wrong target, but the Bill gives the Government the opportunity to aim at the right target and ban cold calling, which they state encourages a claims culture.

As the Government recognise that there is a problem, and there is both industry and public support, the Bill could be amended to include this ban on cold calling. Whether it is through Amendment 72, in the name of the noble Lord, Lord Sharkey, and the noble Baroness, Lady Kramer, or Amendment 73, in my own name and that of the noble Earl, Lord Kinnoull, I hope that we might take this opportunity to protect the public in this manner by banning cold calling.

Earl of Kinnoull Portrait The Earl of Kinnoull
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My Lords, I strongly support the noble Baroness, Lady Altmann, and I thank her for allowing me to add my name to her amendment. Obviously, I also strongly support the thinking behind the amendment in the names of the noble Lord, Lord Sharkey, and the noble Baroness, Lady Kramer, and I just wish to add one or two points.

There was a very helpful Which? report in November 2016 detailing the full horror of nuisance calls in the UK. For the report, telephone calls in 18 cities were sampled. In 17 of the cities—the survey took place over a long period—more than a third of all the private phone calls were nuisance calls, and in Glasgow, which topped this terrible table of nonsense, more than half of the calls in the sample were nuisance calls. The top type of nuisance call was about PPI, which of course is firmly a CMC nuisance. In commenting on the November 2016 report, Keith Brown MSP, the relevant Scottish Minister, was quoted as saying:

“These calls are a serious problem that can cause both emotional and financial harm, particularly to some of our most vulnerable citizens”.

A very horrible statistic in the report was that four in 10 people in Scotland who had received these calls felt intimidated by them. It is barbaric behaviour.

I was delighted to read in their manifesto what the Conservatives are going to do about cold calling on pensions. Like, I think, every other noble Lord in the House, I feel that we must use this opportunity to extend the ban to this area as well. I suppose that it is the businessman in me who does a quick upside/downside analysis. My upside analysis has a reduction of emotional and financial harm and intimidation, and my downside analysis has nothing. Perhaps the Minister could tell me whether she agrees with that analysis. I hope that she feels as I do—that it is a social necessity that we carry through one or other of these amendments and put it in the Bill.

Viscount Trenchard Portrait Viscount Trenchard
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My Lords, I too express support for both the amendment proposed by the noble Lord, Lord Sharkey, and that proposed by my noble friend Lady Altmann, supported by the noble Earl, Lord Kinnoull. I ask my noble friend the Minister to consider both amendments sympathetically. I expect that she is likely to say that she agrees with the amendments in principle but that this is not the time or the place for such a measure. However, surely it would be popular with the public to introduce a complete ban on unsolicited cold calling across a broad range of activities.

The Law Society and the ABI have both called for a crack-down on nuisance calling of all kinds. ABTA has also suggested that the Bill provides an opportunity to introduce an outright ban. As noble Lords are aware, solicitors, who are more tightly regulated than CMCs, are already banned from making unsolicited calls.

What I find particularly annoying is that if you answer your phone when you are overseas, you have to pay. I get so angry when this happens to me that I am sometimes more likely to start a conversation with the cold caller than I am to just hang up, which would obviously be the sensible thing to do. I say, “Do you know it’s three in the morning and I’m in Japan, and this is costing me money?”, but I find that the cold callers are not a very nice type of person in general and they are not sympathetic. My noble friend Lady Altmann mentioned that every year there are 51 million cold calls in respect of personal injury claims. In that case I am getting many more than my share, because I get about one a week.

It is a difficult area because, as noble Lords have pointed out in earlier debates, the FCA is not necessarily the most sympathetic regulator, and I agree with the noble Earl that we should look more closely at equivalent regulators in other countries. I had the privilege of serving under the noble Lord, Lord Burns, on the Joint Committee on Financial Services and Markets in 1999, which set up the FSA. We talked at great length about getting the balance right between protecting the industry and protecting the interests of the consumer. We did not necessarily get it right in the sense that the culture needs to evolve in a direction which is more sympathetic to the consumer.

Break in Debate

Earl of Kinnoull Portrait The Earl of Kinnoull
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My Lords, this is not really the final furlong but the final approach, I suppose, if we are to keep the metaphor going. I shall also speak to Amendment 76, which is connected. I begin by thanking the Minister, who has been very helpful to me on this. He was even sending me lucid emails at 7.21 am today. I also thank the Association of British Insurers, which has been extremely helpful in the preparation of my remarks.

These probing amendments address two issues that I perceive. First, Scotland has a separate legal system and major differences concerning no-win no-fee. There are major differences, too, in its regulation of CMCs. In Scotland, CMC activities are not regulated and referral fees are allowed—unlike in England, where CMCs are regulated and the paying of referral fees is an offence. How wrong it would then be if a substandard CMC could camp in Dumfries and aim at English consumers, free from regulatory control. I am certain that any form of cross-border arbitrage would be wholly against the admirable intentions of the Bill.

It appears, however, that this is exactly what is happening. DWF, the respected Manchester-head- quartered law practice, which has offices in Scotland and internationally, commented in February that,

“in recent years increased levels of fraud have been detected in Scotland, along with a significant rise in injury claims. In part, this is thought to be due to the effect of LASPO in England pushing claims management companies into Scotland, where their activities are not regulated and referral fees are allowed”.

There must be a general principle that businesses must not be allowed to arbitrage the UK’s regulatory and legal environments to the detriment of consumers. The FCA is, rightly, a UK-wide regulator in, for instance, non-life insurance. I feel strongly that it should be so here. Can the Minister comment on the position of the territorial scope of the Bill and whether this legal and regulatory arbitrage is acceptable to the Government?

My second point concerns CMCs in Scotland generally. I have already referred to the November 2016 Which? report and some of the rather horrifying position that it laid out. However, I note that three of the top five cities for nuisance calls were Scottish, and that in Scotland PPI calls were the number one type of nuisance call. In Glasgow, as I said, over half of the one million calls sampled were nuisance calls, according to the report.

This very week, Citizens Advice Scotland is running a campaign called Calling Time on Nuisance Calls to highlight the problem. I wish it well. It aims to reduce this pernicious problem, causing as it does, according to Keith Brown MSP, the responsible Minister, “emotional and financial harm” to Scottish citizens. This month the Scottish Government have put out a paper, A Response to Scotland’s Nuisance Calls Commission: An Action Plan. Keith Brown is behind the paper. On page 5, when referring to the statistics from which I have been quoting, he writes:

“Faced with these statistics, we must take action now that will make a difference, even as we press the UK Government to do more”.

What is that “more” where CMCs are concerned? Is the Bill not an ideal opportunity to deal with that and the regulatory and legal arbitrage problem to which I referred earlier? I strongly urge the UK and Scottish Governments to bring CMCs in Scotland under the experienced wing of the FCA. I beg to move.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
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My Lords, we have Amendment 75 in this group, and I shall speak to it briefly. It is a gentle prod to the Government that in the clause that deals with commencement there is an extensive list of the various sections that come into play. Then at the top of the next page is just a general provision stating:

“The other provisions of this Act come into force on a day appointed by regulations”.

No date is given for that. It would be helpful if the Government could urge themselves to do a bit a more than just leave it open that regulations will come forward at some future date. A lot of what we have been talking about in this area would be helped if there was urgent action, and the urgency should apply to the regulations that need to come forward as well. I hope that will be well received by the Government at this point.

The noble Earl, Lord Kinnoull, has done another good service to us in bringing forward a possible lacuna in the approach being taken by the Government. It fits in with the various sensible amendments that I have been tabling, asking the Government to look again at the way in which the financing arrangements for debt advice in Scotland, Wales and Northern Ireland operate. I sense that there is also an issue around CMCs that needs a response. I look forward to hearing from the Minister.

Lord Young of Cookham Portrait Lord Young of Cookham
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My Lords, Amendments 74 and 76, tabled by the noble Earl, Lord Kinnoull, seek to extend Part 2 to Scotland. I am grateful to him for the way he set out the case for this extension. The Government carefully considered the scope of claims management regulation during the development of this policy. The current framework for claims management regulation, set out in the Compensation Act 2006, limits the extent of claims management regulation to England and Wales only and this will remain the case as we transfer regulation to the FCA. The matter is currently reserved, so we cannot simply make regulations to devolve the matter to the Scottish Government.

In reaching this decision, the Government had a dialogue with the Scottish Government to establish their view. Their view, as outlined in correspondence from the Scottish Business Minister, was that there is limited evidence of malpractice by CMCs in Scotland, and they concluded that extending the scope of claims management regulation would be unnecessary and disproportionate. That view is clearly challenged, and is about to be challenged again.

Earl of Kinnoull Portrait The Earl of Kinnoull
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The Scottish Government have come out with a long paper—it is a dozen pages or so—in which they publicly state completely the opposite. We have been citing these terrific statistics from Which?. I do not know at what point in time their views are dated, but events have moved on and the old views are clearly wanting.

Lord Young of Cookham Portrait Lord Young of Cookham
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I am very grateful to the noble Earl, who has been very influential, as I will explain in a moment, in persuading the Government to think about this again. I will not quote it again, but what I just quoted was the view at the time we consulted. The Scottish Government concluded that regulation would be unnecessary and disproportionate. It may well be that, from the evidence the noble Earl referred to, since then they have changed their view.

As for regulatory arbitrage, it should not mean that a firm can evade regulation by moving across the border. The Bill gives the Treasury a power to define when a person should be treated as carrying on claims management activity in England and Wales, which gives government the flexibility to adapt the definition should the market change. When exercising this power, the Government intend to capture CMCs approaching consumers in England and Wales, and CMCs taking forward their claims should be subject to FCA regulation. This mirrors the current regulatory framework, in which the requirement to be authorised is not dependent on where the CMC is located but based on where it carries out the regulated service.

With regard to nuisance calls in Scotland, the Government continue to build on a package of measures to tackle this problem across the UK. We have already delivered a number of actions, including: a measure in the Digital Economy Act 2017 making it a requirement for the Information Commissioner to issue a statutory code of practice on direct marketing; requiring all direct marketing callers to provide caller line identification; and increasing the maximum level of monetary penalty the ICO can issue to £500,000 for serious breaches of the regulations. In the light of what the noble Earl has said, we will re-engage with the Scottish Government on this issue and keep our position on claims management regulation under review.

Amendment 75, tabled by the noble Lords, Lord McKenzie and Lord Stevenson, seeks to establish a timescale within which the Government will commence the legislation relating to the single financial guidance body. I am not sure the amendment would do what the noble Lord wants: these regulations would have to be made within 18 months of Royal Assent, but the regulations could then provide for these sections to come into effect after 18 months have passed. I am sure that was not the intention, but that is the reading of the amendment as I have interpreted it. As indicated in our response to the consultation on the single financial guidance body, the new body will come into existence no earlier than autumn 2018. We want to ensure that we provide for the best possible transition from the existing services to the new body. We are conscious, though, that the process has already created some uncertainty for existing services and for consumers. For that reason, as well as those given by the noble Lord, we would like to move as quickly as is practicable.

We also want to provide time for the chair and chief executive to assess and contribute to the key set-up arrangements. In line with Managing Public Money principles, the Bill must have passed Second Reading in the House of Commons before a recruitment exercise for the chair and chief executive can commence. We anticipate starting this recruitment exercise as soon as possible after that point. We are working with existing services and other key stakeholders to ensure that we remain on track to establish the new body. Although I sympathise with what the noble Lord is seeking to achieve with this amendment, I assure him we have every intention of establishing the new body as soon as is practically possible and ensuring that the body is able to deliver an improved, joined-up service to meet the needs of the public.

Against the background of the undertaking I have given to the noble Earl, and the assurances I have just given to the noble Lord, Lord Stevenson, I hope this amendment might be withdrawn and the others not pressed.

Earl of Kinnoull Portrait The Earl of Kinnoull
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I am very grateful to the Minister for his typically courteous response and the courteous way in which he dealt with my rather not-so-courteous interruption, for which I apologise. What he said about my point on arbitrage sounded very good, although I want to read it again in Hansard, as did the undertaking. I would like to see how things progress from here, to see if there is anything left on these issues to discuss on Report. But it sounds as if progress is being made, for which I thank the Government very much indeed. On that basis, I beg leave to withdraw the amendment.

Financial Guidance and Claims Bill [HL]

(Committee: 2nd sitting (Hansard - continued): House of Lords)
Earl of Kinnoull Excerpts
Wednesday 6th September 2017

(3 years, 5 months ago)

Lords Chamber

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Cabinet Office
Baroness Altmann Portrait Baroness Altmann
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My Lords, I will also speak to Amendment 42E. Effectively, these amendments would ensure that anyone who received an unsolicited approach about their pension would have to go to Pension Wise before they were permitted to do anything or receive the guidance if they did not have an independent financial adviser.

I admit that this amendment is the result of the fact that we were unable to find a way to ban the cold calling that leads to the scams that we are trying to deal with here in the Bill. I also thank the Minister for the recent statement from the department that it has decided that it will ban cold calling for pensions. However, I hope your Lordships will agree that this seems like an ideal legislative vehicle in which to carry out the Government’s wish to ban cold calling and to protect the public effectively. Banning cold calling effectively protects members of the public from scams. Scams that result in people losing much or all of their pension are almost always the result of an unsolicited approach. So this is a roundabout way of trying to achieve something which is clearly in the public interest and which the Government themselves would like to do.

We could require people who had an unsolicited approach either to have a financial adviser to ensure that what they were doing was right or to have a conversation with our guidance service to assess what they were about to do. Presumably, the first question from whoever was speaking to them from the guidance service would be, “Is this the result of an unsolicited approach—a cold call or an email from someone you did not know, or a text or whatever?”. At that point, it would be possible to protect the person before they could sign away their pension in a scam. There is a classic trick of rushing people into parting with their money or signing on the dotted line by saying that it is a limited offer which is available only today or is about to run out. That would not be able to happen if somebody had had to make an appointment with Pension Wise or the guidance body and had discussed it first.

I hope that we can discuss this issue. If this is not the best way of achieving the aim, I hope that the Government will consider introducing into this Bill another method of achieving it so that we can start the ball rolling on protecting the public and getting rid of cold calls. We have done that for mortgages. I know that the Minister has said that it is a complex matter, but I would be very grateful if she could explain the complexity which means that we should pass up this opportunity to do something that the Government themselves want to do when no other legislative vehicle in which to do so is in sight for the next couple of years. I beg to move.

Earl of Kinnoull Portrait The Earl of Kinnoull (CB)
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My Lords, I had not intended to say very much but, after discussing this issue with the noble Baroness, Lady Altmann, earlier, I thought that I should say a few words now. As I said at Second Reading, my interest is very much in Part 2 of the Bill—an area that is home territory for me and on which I have something to say. My drafting eye was caught by Amendment 42E. I feel that having a decent definition of “unsolicited communication” would be very valuable in legislative terms as we go through this process. It applies not just in this area, which has been very eloquently explained by the noble Baroness; it applies also in Part 2 and elsewhere. Therefore, I feel that it is worth debating it now.

As I see the definition, even simple things such as a letter or some sort of Facebook communication would not fall within it, so I simply say that it is worth having a good definition so that we know what a cold call is. It is not just a telephone call. I receive an awful lot of Part 2-type telephone calls at home, admittedly in Scotland, every single lunchtime, but there are other methods of cold calling. Certainly I have been shown very worrying letters by local vulnerable people in Scotland suggesting that they do something urgently about their pensions and so on.

Therefore, I think that we need that definition, and I strongly support the thinking behind these two amendments. I would be very happy to join a meeting to talk about how one might tweak definitions and whether a definition is needed here or elsewhere in the Bill, but I think that it would be very helpful to have a clear idea of what a cold call is.

Baroness Finlay of Llandaff Portrait Baroness Finlay of Llandaff
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My Lords, has the definition of cold calling been sought from the trading standards group of scambassadors who have been looking at all types of scams? It would be incredibly helpful to have that definition. I also wonder whether this amendment is too narrow as written. However, I congratulate the noble Baroness on using this opportunity to do something that desperately needs to be done. The amount of scamming is a scandal.

Trade Union Bill

Earl of Kinnoull Excerpts
Wednesday 16th March 2016

(4 years, 11 months ago)

Lords Chamber

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Cabinet Office
Baroness Symons of Vernham Dean Portrait Baroness Symons of Vernham Dean (Lab)
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My Lords, before the noble Lord sits down, I put to him the point that the noble Lord, Lord Burns, made in putting this amendment before the House. The argument is not about the principle of the opt-in process—it was clearly put in the governing party’s manifesto. The argument is about whether it is being done fairly. The noble Lord simply argued about the principle but the amendment is about the fairness of applying the principle. I am afraid that he did not listen to the clear argument put by the noble Lord, Lord Burns, and I am sorry that he did not.

Earl of Kinnoull Portrait The Earl of Kinnoull (CB)
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My Lords, I, too, had the great privilege of serving on the Select Committee of the noble Lord, Lord Burns. We were much heartened on the morning of 11 February, when Nick Boles, the Minister of State at BIS, came to give evidence. Amid that evidence he said:

“I know that Baroness Neville-Rolfe indicated yesterday in the debate that on questions of timing for transition and methods by which an opt-in could be declared she was very much open to arguments and would be reflecting on them before Report”.

Your Lordships can imagine that that was very heartening when we were struggling with precisely some of those issues in contemplating Clauses 10 and 11. I will take some transition period points first—I refer of course to the transition periods contained within the amendments and not to what would be included if paragraph 142(b) of our report had been taken up.

Three things made us feel that three months after the commencement date was not nearly enough. First, there were the union rules themselves. Here I am grateful to the noble Baronesses, Lady Dean and Lady Drake, and to the noble Lord, Lord Whitty, for educating us with great tact and patience on exactly how trade unions work and therefore how difficult it would be for unions to make changes to their rule books in a hurry without exceptional and unreasonable cost. Secondly, it was raised with the committee that each of the unions concerned would need to make changes to its IT systems. I can see a number of Members groaning at the thought of that. It was felt that each one would have to make changes to two IT systems, the membership system and the accounting system, and all of that would have to be done, no doubt, with considerable expense. Of course, such expense did not appear in the impact assessment.

Finally, the actual process of mail-out was assumed to be just a simple letter out and in. In fact, I know from experience that mail-out processes are considerably more complex than that. You have to answer questions from people who get letters, send out replacement letters and chase people up. That is why we came to feel that the absolute minimum period was 12 months and that the Government should certainly settle down with the unions and the Certification Officer to get that period right.

On the second bit, the methodology of the opt-in, the amendments include the Certification Officer so we could get the proportionality right where one is talking about an average political contribution of £4.84 a year. We felt that the Certification Officer, who was most impressive in evidence, would be able to find a way through so that opting in could be done on a basis that was not cripplingly expensive for the unions concerned.

Finally, on the point which the noble Lord, Lord Tyler, raised on the manifesto, I will not repeat what he said. However, one of the interesting things which we considered as a committee in trying to strike that balance between fairness and the manifestos was what would happen to the percentage of trade union members who, at the next election, were still on an opt-out basis. Basically, we took evidence from USDAW, which said that its turnover was about 20% of its membership per year. Therefore, even if the average was 10% for the whole of the union movement, at least 40% of that membership would have turned over by the next election. So in many ways the Government would already have achieved substantial progress toward their target, even if they go on the basis which we have recommended. As I said, I feel we have achieved a balance of fairness and manifesto commitments in the committee report.

Lord Sherbourne of Didsbury Portrait Lord Sherbourne of Didsbury (Con)
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My Lords, I served on the committee of the noble Lord, Lord Burns, which he chaired in a consensual, conciliatory and characteristically subtle way. I use those words in a complimentary sense, but I also think that his amendment is deceptively subtle. Ultimately, it is a wrecking amendment and I shall explain why I say that.

The background to the amendment is the report produced by the Select Committee. One of its conclusions—this was referred to by the noble Baroness, Lady Symons—was that the principle of opt-in should, in effect, be accepted for all members, the only difference being over when and how it should be introduced. A second conclusion was that we were very clear that the transition period for change was far too short and should be extended. The amendment extends the transition period, and I support that.

The amendment is 50 or so lines long and I agree with about 49 of them, but I disagree with the very first line because it takes out the new section that would extend opt-in to existing members. The amendment deals, quite properly, with the transition period for new members. But by taking out the new section that deals with existing members—a proposal which was a manifesto commitment by the Conservatives and was not dependent on party-funding reform—their position does not change and they continue to be able only to opt out. Therefore, although it is deceptively persuasive, it is a wrecking amendment because it strikes at the heart of the Government’s manifesto commitment and I am afraid that I cannot support it.

Break in Debate

Baroness Dean of Thornton-le-Fylde (Lab)
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My Lords, I support Amendment 13. Paragraphs 101 to 107 of the Select Committee report dealt with our unanimous concerns—this is one of the unanimous parts of the Select Committee report—that Clause 11 would be disproportionately burdensome, especially when considered in relation to the size of the political fund contribution from members, which is an average of 9p a week. This is particularly burdensome.

Paragraph 141(e) declares our unanimous view:

“The reporting duties in clause 11 should be revised after consultation with the Certification Officer, to ensure that they are not disproportionately burdensome”.

This amendment will give effect to that unanimous recommendation of the Select Committee—I look forward to noble Lords on the Government Benches supporting the views that they agreed to.

Looking at the evidence given to the Select Committee, the Certification Officer on 9 February said, in oral evidence:

“The impact of Clause 11 will cause me a great deal of work … I can see that it will cause unions quite a lot of difficulty, for very practical reasons”.

He goes on:

“Trade unions give money from their political funds at not only national but regional and branch level, and there is a job of collating to do. If there is sometimes use of a trade union room for general political purposes, who is the recipient? There is an issue of doubt there. Each payment has to be categorised under one of the six headings in Section 72 of the 1992 Act. A lot of those overlap, so which category is it put into? … In my experience, uncertainty gives way to litigation”.

Is that the intention of the Bill?

The impact assessment, which has come in for quite a bit of criticism, says at paragraph 266:

“We therefore assume it will take a day of a trade union official’s time each year to provide the details of the specific expenditure from the political fund”.

It is on that basis that this clause is in the Bill. It is completely disproportionate and not based on any kind of proper impact assessment. Yet the next government amendment ploughs on irrespective of that.

I wonder whether anyone associated with writing the Bill has any idea how trade unions work. Trade unions have external, independent auditors who ask questions. Noble Lords on the Benches opposite who have dealings with a company will know the kinds of questions; they do not ask any different questions when they are looking at the accounts of unions. Those accounts have to go to the union conferences. The members at the union conferences analyse and debate those accounts and when it comes to the political fund, they have to list the affiliations that the union has. They have to discuss the policies of support that the union has. So transparency is already there. I wonder on what the Government are basing their argument about transparency.

The government amendment, which I hope the House will not accept, has no relevance to dealing with the disproportionality and does not assist transparency. There has been no consultation at any point with the Certification Officer—he told us that in his evidence, in direct answer to a question. There has been none with the trade unions, to which this clause will particularly apply and for which it will cause problems. Yet the Government are trying to say, “We know all about how these funds work and we are trying to get transparency”. This is a very small amendment; it does not prevent the clause going through but simply asks for consultation with the Certification Officer. I hope that the House accepts the amendment.

Earl of Kinnoull Portrait The Earl of Kinnoull
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My Lords, I will not detain the House for very long. When the committee met we noted that this clause was not a manifesto commitment. Accordingly, there is not that complication as one seeks to apply common sense. The committee was lucky to receive a written submission from BIS as to what Clause 11 was intended to do. It stated:

“Clause 11 provides for additional transparency over the expenditure of the union’s political fund. It places a requirement on unions to provide more detail about political expenditure … This information will allow union members to make an informed choice about whether they wish to contribute to the fund”.

We were lucky also that Nick Boles in his evidence said several times—I have picked just one instance—that we must make sure that this is,

“not designed to trip people up”.

The difficulty—I think the Select Committee was unanimous on this—was that the current clause did not “scratch the itch” that was outlined by BIS but certainly amounted to “tripping up”, for the reasons that the noble Lord, Lord Burns, and the noble Baroness, Lady Dean, have just given. I feel that the amendment we have put forward does scratch those itches. I therefore urge the Minister to accept it as it is proportionate, effective and balanced.

Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe
- Hansard - - - Excerpts

My Lords, the Government are committed to greater transparency for union members in the use of political funds. Members can then make an informed decision as to whether they want to contribute.

I am pleased that the Select Committee has also endorsed the principle that the current level of reporting is insufficient and that union members are entitled to a reasonable amount of detail about political expenditure.

On the amendment tabled by the noble Lords, Lord Burns and Lord Tyler, the noble Earl, Lord Kinnoull, and the noble Baroness, Lady Dean, the aim of Clause 11 is to make sure that all unions meet a minimum standard of transparency. The current provisions in Clause 11 ensure that where unions spend more than £2,000 per annum from their political fund, they provide a breakdown of expenditure.

I do not believe that we should start from the position proposed in this amendment, which is to place all the detail on the level of reporting in secondary legislation. Placing these requirements on the face of the Bill helps to reduce uncertainty about what is intended—a consideration which often appeals to noble Lords.

As I said in the Select Committee debate last week, we will reflect on the technical recommendations of the committee in relation to Clause 11. The noble Lord, Lord Burns, pointed out that the provision could mean that a union would have to declare the reimbursement of a bus fare to one of its members who attended a Labour Party conference. That was never our intention. We are not trying to trip people up, as the noble Earl, Lord Kinnoull, suggested.

On the amendment of the noble Lord, Lord Stoneham, and the noble Baroness, Lady Burt, the Government have always been clear that the transparency requirements in Clause 11 are important so that members can exercise an informed choice. The proposal for a review would delay this transparency and I cannot see its rationale. However, I have said that I am open to continuing the conversation on how best to achieve improved reporting of political expenditure in the most proportionate way, and on making the requirements of the provision less onerous, with a view to coming back to this issue at Third Reading. As I said earlier, I am already planning to see the Certification Officer, which I am sure will be helpful.

Finally, I turn to the government amendment. I am grateful to the Delegated Powers and Regulatory Reform Committee for its careful scrutiny of this clause. It has noted that the power to substitute the £2,000 threshold in Clause 11 can be used not only to raise the amount but also to lower it again to an amount not less than £2,000. Raising the threshold would reduce the reporting requirements on unions. However, if, in the future, a Government wished to reduce the threshold back again, the reverse would happen and the reporting requirements on unions could increase considerably. I have listened carefully to concerns voiced by the committee. Our amendment ensures that any decision in future to lower the threshold would be subject to the affirmative procedure, and therefore subject to full parliamentary scrutiny. I do not agree with the noble Baroness, Lady Dean—if I have understood her correctly—that this would increase burdens. I hope that she agrees with me now that I have explained what is intended by this amendment.