Leaving the EU: Legal Services

Jonathan Djanogly Excerpts

Wednesday 21st November 2018 Westminster Hall

[Mr Jonathan Djanogly (Huntingdon) (Con)]

I beg to move,

That this House has considered the provision of legal services after the UK leaves the EU.

I am pleased to have secured this timely Brexit debate on the provision of legal services. This is a key moment for our country’s wellbeing and direction, and the implication for the provision of legal services is significant. I introduce myself as a non-practising solicitor and as chair of the all-party parliamentary group on legal and constitutional affairs, which produced a report in October that noted serious issues that merit further debate. I take this opportunity to thank the APPG’s secretariat from the Law Society for its assistance with the report.

Before I launch into Brexit issues, let me explain why the legal services sector is so important to our economy. The legal services sector is a great UK success story. The UK has the second largest legal services market in the world and the largest legal services sector in the EU. In 2017, it contributed more than £26 billion to the economy—equivalent to 1.5% of GDP—and was responsible for net trade of some £4 billion. It employs and trains over 380,000 people.

The jurisdiction of England and Wales is recognised as a global centre for legal services, particularly for international, commercial and corporate transactions, and dispute resolution and arbitration. In 2015, more than 22,000 commercial and civil disputes were resolved through arbitration, mediation and adjudication in the UK. In the commercial court, which is housed in its new, modern building, nearly 1,100 claims were issued, of which two thirds involved at least one party whose address was outside England and Wales.

Our legal services sector is a great international success story, but we have no natural right to retain that business. Indeed, over the past 10 years several jurisdictions have sought to compete with England and Wales. We keep the work because of the excellence of our professional lawyers and judges and because of foreign parties’ trust in our rule of law and our reputation for judicial efficiency and fairness.

[John Howell (Henley) (Con)]

My hon. Friend makes a very valid point. Surely one of the biggest threats to the UK comes from Singapore, which is developing a good range of courts to tackle commercial issues. I have raised the subject on several occasions, but there does not appear to be a united Government front to see off the threat from Singapore.

[Mr Djanogly]

My hon. Friend makes a very important point. Other jurisdictions are also mounting challenges. We must avoid doing anything that might impair the reputation of the sector.

[Robert Neill (Bromley and Chislehurst) (Con)]

My hon. Friend talks of the reputation of the sector. It is also about hard cash. At the end of the day, the legal services sector makes a contribution of about £25.7 billion per annum to the economy. It is really significant for our economic wellbeing.

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[Mr Djanogly]

My hon. Friend makes another very important point.

English law is the most widely used legal system in the world—27% of the world’s 320 legal jurisdictions use it. There are more than 200 foreign law firms with offices in the UK, from more than 40 jurisdictions. The UK legal services sector is forecast to produce turnover of £30.82 billion and net exports of £4.25 billion by 2025.

Brexit will be the largest ever change to the UK’s legal framework and it represents both opportunities and risks for the legal sector. The impact of Brexit on lawyers, law firms and legal practices will be significant. Negotiations around the UK’s withdrawal from the European Union and the transition period have been agreed, but questions remain, especially about the future relationship of the UK and the EU.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

Legal services amount to the equivalent of 1.5% of GDP. Both the Bar Council and the Law Society have issued warnings that any form of Brexit will have a significant impact on the sector. Does the hon. Gentleman not agree that it would be better for the legal services sector if we remained in a single market?

[Mr Djanogly]

Yes, and the hon. Lady is going to hear me explain how the post-Brexit situation that I want to see is as close to that as possible.

[Mr Jonathan Lord (Woking) (Con)]

I congratulate my hon. Friend on highlighting in this place the importance of the legal services sector to our economy and our justice system. Will he indicate what he believes the direction of travel for the legal services sector is in the proposed deal? We would all be interested in his initial reaction.

[Mr Djanogly]

That is exactly what I shall be doing.

The legal sector has broadly welcomed the Government’s negotiating stance so far. However, concerns remain that withdrawal from the EU and our future relationship will not deliver in a number of key areas for legal services. There are concerns over whether the Government’s current approach will deliver sustainable market access for legal services and flexibility for services. Unlike financial services, there is no in-depth common rulebook or Europe-wide regulator in legal services. Instead, legal services remain regulated autonomously by each EU member state, while functioning on the principle that an EU law firm should be treated as equal to domestic lawyers and firms. There is therefore no great benefit for the legal sector in maintaining regulatory flexibility when pursuing trade agreements with third countries.

I would point out, from my time on the Select Committee on Exiting the European Union, that that is the view of most service industries. They have every intention of following EU rules whether they are mandated to or not, because that is what their business dictates. Certainly, from a legal services perspective, the preservation of the present system should be prioritised, so that lawyers from EU member states, European economic area states and Switzerland can practise freely across the continent.

The APPG inquiry focused on mutual market access and on how legal services will be able to operate following the UK’s withdrawal from the European Union. We accepted written evidence and held sessions in Parliament to hear oral evidence from interested parties, including law firms and chambers, individual practitioners and other stakeholders. We sought evidence on the impact of Brexit on legal practices, the workforce, business structures and client bases. We explored how lawyers currently practise across borders, looking at everything from rules on immigration and practice rights to the recognition of professional qualifications, and how that is anticipated to be affected by Brexit. We sought to understand where contingency planning was taking place and what steps firms were already taking to mitigate any effect of Brexit on the sector. We sought to understand the key concerns of the sector about the effect of Brexit, and we published the final report in October—if anyone wants a copy, I have some. It explored the concerns and comments raised in the oral and written evidence.

We made 10 recommendations. First, the Government should ensure that mutual market access is retained, as currently envisaged, in any transitional arrangements. Secondly, we urge the Government to seek to retain mutual market access as far as possible in any future relationship with the European Union. Thirdly, the Government should ensure that UK lawyers are able to continue to serve their clients post-Brexit on what is called a fly-in, fly-out basis. Fourthly, the Government should ensure that any future relationship with the EU includes a mechanism for UK lawyers to practise EU law via the mutual recognition of professional qualifications and law firm structures. Fifthly, the Government should seek to secure the rights of audience in EU courts, such as the Court of Justice of the European Union.

Sixthly, it is vital that, following Brexit, the Government provides for the ability of the legal sector to easily recruit skilled individuals from outside the UK. Seventhly, the Government should ensure that our immigration system does not block lawyers from continuing to provide services in the EU. Eighthly, the Government and the EU should agree on the draft withdrawal agreement as soon as possible to ensure a transition period that provides legal certainty—that one, hopefully, gets a tick. Ninthly, any transitional agreement should replicate the current legal framework as far as possible to ensure legal certainty and prevent businesses and individuals from having to adapt to changes in their rights and obligations twice—once during a transitional phase and once upon implementation of a new UK-EU agreement. Tenthly, a no-deal scenario should be avoided at all costs.

Let me address a few of those points, taking first the ability to practise, mutual recognition of professional qualifications and rights of audience. Of key concern to the legal sector was the ability to practise in Europe. The current framework, which allows for the mutual recognition of professional qualifications, rights of audience and the ability to practise and establish firms in EU member states, has hugely benefited the UK legal services sector, providing a large net contribution to the UK economy, as was mentioned by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill). As far as possible, mutual market access should be retained.

[Ellie Reeves]

The withdrawal agreement does of course refer to mutual recognition, but only for the transition period. Does the hon. Gentleman agree that that creates further uncertainty for the legal profession, which, as has been pointed out, already contributes so much to our economy?

[Mr Djanogly]

I will be making the case that the hon. Lady has just put.

On labour mobility, the legal services sector has profited from the ability to attract talent from across the globe and the ability to work in the European Union. Frankly, many people going into the offices of a City law firm would be staggered by the number of nationalities and the depth of EU and world legal experience that we have in the UK. For instance, an American client would quite commonly run its European company acquisition strategy from London—because we speak English, yes, but also because they trust our jurisdiction and courts, and because we have European expertise here in London. We do not want to lose that. It is very important that a labour mobility framework that guarantees those abilities post-Brexit is put in place.

The legal services sector requires legal certainty throughout the UK’s withdrawal from the European Union. Law firms and their clients are already, sadly, beginning to implement contingency plans and move business elsewhere. We now have a draft of a detailed transition agreement, and the sector believes, as I do, that that agreement must be confirmed as soon as possible to ensure the sector has the legal certainty that it requires.

[Robert Neill]

Does my hon. Friend agree that having a swift and clear transition agreement is important not just, as he rightly says, to give law firms the certainty they need to continue their operations, but to ensure for their clients contractual continuity and, above all, the enforceability of contracts and judgments in commercial matters and a whole range of other matters?

[Mr Djanogly]

As ever, my hon. Friend makes a pertinent point. Avoiding a no-deal scenario and securing the right future relationship with the European Union is of the utmost importance. The APPG supports the view of the legal services sector that a no-deal scenario would be devastating to the sector and should be avoided at all costs. Of course, there have been significant recent developments. Last week, on 14 November, the Cabinet collectively agreed to the draft withdrawal agreement and the political statement on the future relationship. Following a special European Council meeting on 25 November, the Government intend to lay a final version of the agreement before Parliament for debate.

It needs to be recognised that the draft withdrawal agreement contains a number of positive elements for the legal services sector, including provisions on mutual recognition of professional qualifications and on lawyers continuing to obtain qualifications throughout the transition period, and clarity on continued recognition and enforcement of judgments and orders throughout that period. Lawyers will continue to have the right to represent a party in proceedings before the CJEU in all stages of proceedings where a case can be brought by or against the UK. The automatic transfer of an EU intellectual property right into an equivalent UK right before the end of the transition period is very welcome.

The non-legally binding declaration, however, is a work in progress. To be frank, it is worryingly brief and it is vague on services, especially legal services. The relevant part of the political declaration explains that the goal is to secure

“Ambitious, comprehensive and balanced arrangements on trade in services and investment, delivering a level of liberalisation in trade in services well beyond the Parties’ WTO commitments”.

It says that the Government will put in place

“Appropriate arrangements on professional qualifications.”

I have to say that this is pretty sketchy stuff, and so we continue to have concerns about the lack of detail contained within the political declaration between the UK and the EU.

First, it is pretty unambitious for the UK-EU agreement to say only that it will go “well beyond” the parties’ World Trade Organisation commitments, and it is likely to lead to significantly less market access for services. Secondly, like with the Government’s White Paper, there are concerns about the continued focus on regulatory flexibility, as I mentioned before. The preservation of the present system, whereby lawyers from EU member states, EEA states and Switzerland can practise freely across the continent, should be prioritised instead. Thirdly, it is good to see a reference to professional qualifications, but that only goes some way towards giving lawyers the ability to practise in the EU, and generally it is not their preferred route.

Fourthly, it is disappointing not to see a reference either to civil or commercial co-operation, unlike in the Government’s White Paper. The UK and the EU currently enjoy the gold standard in civil and judicial co-operation, which should continue. Fifthly, without an agreement on judicial co-operation, judgments made in UK courts might be unenforceable in EU countries in the cross-border settlement of trade disputes, which might result, for instance, in debts owed by EU entities to UK businesses not being recovered. It follows that uncertainty about whether judgments from UK courts would be enforced could make the UK less appealing as a jurisdiction of choice for contracts and dispute resolution, which would lead to the growth of competing jurisdictions.

[John Howell]

My hon. Friend is being very generous with his time. I am not sure that I heard him mention the family courts in his list of things that we need to establish good relationships over. The family courts are very important, because sadly the amount of work that they undertake—on both sides of the channel—is growing. There is enormous mutual responsibility for them.

[Mr Djanogly]

I agree with my hon. Friend, who makes an important point. The Brussels II regulation is a single legal instrument that helps families resolve disputes about divorce and the custody of children where they involve parties in more than one EU state. Under the regulation, EU courts automatically recognise judgments on matrimonial and parental responsibility that are delivered in other states. That will no longer apply to the UK when we have left the EU. Similarly, the maintenance regulation, which helps to ensure the payment of maintenance in cross-border situations, will no longer apply.

In a no-deal scenario, the UK and EU27’s trading relationships in legal services would be governed by the general agreement on trade in services, or GATS, which falls far short of replicating the current EU framework. UK lawyers would be subject to myriad rules and regulations in each of the 31 European Free Trade Association states rather than to a single legal framework. UK judgments are automatically recognised and enforced across the EU27, but they will not be in a no-deal scenario, unless the UK unilaterally signs The Hague convention.

At the moment, clients can receive UK law advice from UK lawyers however and wherever they want in the EU; in a no-deal scenario, clients in some jurisdictions might be limited in how they can receive UK legal advice from UK lawyers. Currently UK lawyers have the automatic right to set up practices in an EU host state with minimal bureaucracy; in a no-deal scenario, UK lawyers’ ability to set up practices in an EU27 jurisdiction will depend on local laws and regulations. If establishment is possible, permitted activities still might be limited.

Currently UK lawyers have the right to advise clients who are based in the EU27 on EU law, because their legal professional qualifications are automatically recognised. In a no-deal scenario, clients based in EU27 jurisdictions might no longer be able to receive EU law advice from UK lawyers, as UK legal professional qualifications might not be recognised. Now, law firms can set up in one EU member state and export their services across the EU by establishing branches of the same structure in other member states. In a no-deal scenario, legal entities would lose the automatic right to use their preferred business structures in certain EU27 countries, and the UK corporate form of limited liability partnerships might no longer be accepted in some jurisdictions. As can be seen, we must avoid a no-deal scenario.

Growing concern that the UK could exit the EU without a deal has led the Law Society to publish a series of papers that give solicitors guidance on how to take steps to mitigate some of the risks. Law cuts across every area of life, and often UK and EU lawyers work across borders and enforce and litigate on family, data or business disputes. The first tranche of Law Society papers gives advice on some of the potential rule changes where a deal between a business here and in the EU goes wrong, what happens in family law if a couple splits up, and how we should approach data sharing should we quit the EU without an agreement. There is another paper on providing legal services in the EU, and I understand that further papers are in production. Perhaps the Minister could take this opportunity to explain how her Department is preparing itself and the legal services sector for a no-deal scenario.

It is fair to say that services, including legal services, have not been given the same attention in the Brexit process as manufactured goods have. The sector wants a bespoke agreement that comprehensively covers legal services and is based on mutual market access, mutual recognition of regulatory frameworks, regulatory co-operation and continued mutual access to talent. I have high regard for the Minister, her understanding of this sector and her ability. I hope that she takes the opportunity provided by this debate to set out how she will champion the English legal services sector in negotiations on the future relationship with the EU, with the intention that legal services are not left behind and will be given the tools to maintain their world-leading reputation for excellence after Brexit.

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[Mr Djanogly]

It is not often that I get the chance to respond to the Minister, because normally so many people want to speak. I am pleased to do so. I thank my hon. Friends the Members for Henley (John Howell) and for Bromley and Chislehurst (Robert Neill), and the hon. Members for Paisley and Renfrewshire North (Gavin Newlands) and for Bolton South East (Yasmin Qureshi), for their contributions, and the Minister for her response.

I did not hear a lot of difference in the approach across the piece. We know the issues and what we want to get to. Interestingly, my hon. Friend the Member for Bromley and Chislehurst spoke about a Committee report from two years ago that dealt with the same issues. Two years later, we have come to the same conclusions in this report—it is not even as though this is a new finding. We all want mutual market access, we want the importance of a labour mobility framework and we see the need for legal certainty.

Several hon. Members said that if those things are not achieved and, as a result, English law clauses are included to a lesser degree in contracts, there is potential for very lasting damage to our legal services. That must be of great concern to everyone in this Chamber. Various treaties were mentioned—Lugano and so forth—but relying on those would be second best. We want the best for our legal services sector. I hope the message has been received and that, as we go into further negotiations, the Minister will bang the drum for legal services as I am sure she will.

Question put and agreed to.

Resolved,

That this House has considered the provision of legal services after the UK leaves the EU.

Civil Liability Bill [Lords]

Jonathan Djanogly Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 4th September 2018 Commons Chamber

[Mr Gauke]

Yes, it is a decision taken by the Lord Chancellor. I was in the Treasury at the time when the most recent change to the discount rate was made by one of my predecessors, and I can certainly assure my hon. Friend that it was very much a decision taken by the Lord Chancellor. [Laughter.] Perhaps I should leave it there.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

One of the key elements of stopping whiplash claims and so forth was the banning of referral fees. There are more and more reports coming in that, perhaps for the resilience reasons that my right hon. Friend discussed, we are increasingly seeing ways of getting round the ban on referral fees. This is of great concern to many. These people are of course breaking the law. Has he considered this situation?

[Mr Gauke]

Of course we continue to look at this area. It is worth pointing out not just what we are doing in this Bill but the measures and action taken in the context of the Financial Guidance and Claims Act 2018, and it is right that we continue to do so. As I say, the Government are determined to find out whether the use of PPOs can be increased. We are very pleased that the Civil Justice Council, which is chaired by the Master of the Rolls, has agreed in principle to consider this issue.

The Civil Liability Bill is an important piece of our wider work to reform the civil justice system, including through the Financial Guidance and Claims Act, which strengthens the regulatory regime for claims management companies and bans cold calling. These reforms are needed to put personal injury payments on a fair, more certain and sustainable footing for the future. In turn, they will save the NHS and consumers money.

Criminal Legal Aid

Jonathan Djanogly Excerpts

Tuesday 8th May 2018 Commons Chamber

[Richard Burgon]

I do agree. My hon. Friend makes a powerful point from his constituent’s experience. That is why I have been forced to bring this motion before the House to revoke the statutory instrument.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

Will the hon. Gentleman give way?

[Richard Burgon]

I will make some progress if that is okay.

The crisis in legal aid goes much wider than the civil sector, with criminal cases affected too. As I said, that has the gravest of consequences. We now have more people representing themselves, even in the most serious of criminal cases—those tried at the Crown court. I want to draw the House’s attention to Ministry of Justice research published last week. The summary paper —only a summary—was published only after dogged pressure from journalists like Emily Dugan. It highlights judges’ concerns about people representing themselves, referring to

“unrepresented defendants not understanding how to present evidence about their case at hearings, how to prepare defence statements, or how to ask questions in court.”

The obvious result of this is that some judges and prosecutors felt that those who appeared in court without a lawyer were more likely to be found guilty. The legal system should not be skewed towards wealthier people. Everybody who wants it should have access to proper legal representation if charged with a criminal offence. Justice should be blind. It should also not be based on the depth of people’s pockets. We now have criminal barristers forced to take co-ordinated action in refusing to take up legal aid work because of changes to the Government’s funding scheme.

Labour Members are proud to have submitted this motion to annul the legislation changing the scheme through which criminal defence advocates are paid for carrying out publicly funded work in the Crown court—the so-called advocates graduated fee scheme. The motion has now won the backing of over 130 Members of Parliament. We welcome the fact that, albeit belatedly, time was given for a parliamentary vote to annul this legislation.



I hope that Conservative Members who understand and respect our legal system and the importance to justice of proper access to criminal defence will not vote along party lines tonight. I hope they will help to forge a consensus that helps the Government to rethink this flawed scheme.

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[Mr Jonathan Djanogly (Huntingdon) (Con)]

I declare any interests that I may have as a non-practising solicitor. The criminal justice system in England and Wales faces many significant and structural problems, but placing all the blame on the regulations and tacking the Criminal Bar’s reaction to them at face value will not solve the underlying problems with which we need to contend. Having said that, my initial reaction to the current SI proposals was that, given the barristers’ strike and Opposition party protest in relation to alleged criminal legal aid cuts, I was somewhat surprised to read the impact assessment, which suggests no cuts and an increase spend on legal aid. That aside, the plans are, in themselves, positive and rational. The Minister has given a strong defence of them today, and they shall have my support.

We are tweaking a scheme that was put in place by Labour in 2007. Since then, effective case management has become rightly more of a priority. I can understand the desirability of unbundling the tasks in fee assessment and the key need to address huge increases in the amount of data now available through discovery. The Opposition and the hon. Member for Leeds East (Richard Burgon) are protesting too much. Labour in government repeatedly proposed reform of criminal legal aid and then repeatedly pulled back, instead resorting to fee cuts.

[Alex Chalk (Cheltenham) (Con)]

Does my hon. Friend agree that the Labour party does not come to this matter with clean hands? In 2007, at a time of rising budgets for health and education, there was never more money for the Bar, even though it needed it. The Opposition’s remarks do not hold up.

[Mr Djanogly]

My hon. Friend is quite right. In fact, many, if not most, of the post-2010 coalition criminal legal aid cuts had been put in place by the losing Labour Administration. Furthermore, during debates on the Legal Aid, Sentencing and Punishment of Offenders Act 2012, I recall the Labour spokesman saying that we should make required cuts to criminal legal aid, rather than to civil legal aid. Having engaged in the blame game, we could all just leave it at that, but that would be to once again avoid the harsh reality that we all now need to face up to, namely that this country’s criminal legal aid system is not fit for purpose and needs to be totally restructured.

While consultation with legal practitioners is important, we legislators need to be reminded that no significant reform to the legal professions has ever come about from the practitioners themselves. Someone in government, or indeed in opposition, is going to have to make a move on this. I will admit that the previous Labour Government made some useful justice reforms, much of which I had the honour to oppose from the Front Bench and on which we often worked co-operatively. Why are the Opposition not doing the same on criminal legal aid? Rather than just complain about it, why can they not offer an alternative? The hon. Member for Leeds East told us what the Criminal Bar Association wants, but he did not say what he wants or what he believes, and I think he should.

The fundamental problem is that the legal market generally, and criminal law in particular, is totally fragmented, under-capitalised, technologically semi-illiterate and structurally redundant. Criminal practice is characterised by large numbers of barely profitable firms that are all too often unable to properly serve clients through lack of manpower, inability to invest in training of staff and trainees, and a lamentable lack of technology. I recall trying to persuade criminal defence solicitors to take prosecution evidence online rather than in paper bundles, but the resistance was ferocious. Why? Because large numbers of solicitors were running their small practices from their homes and could not afford to invest in the required technology. That type of inefficiency also goes to the Bar, with advocates often getting court papers late, which may have worked for the single lever arch file deposited in times gone by, but with not the online data dump that can now be sent. As has been said this evening, young barristers will often effectively work for nothing, which itself is a barrier to diversity and to poorer people entering the profession. I could go on with such examples at length, but hon. Members will get the picture.

The answer to this situation, without any doubt, will involve consolidation of this fractured nineteenth-century legal services marketplace. Although the number of small firms has slowly reduced in recent times, the most practical way to aid the process would be a larger-scale system of contracting for legal aid work. That would involve fewer but larger practices operating over a larger area, resulting in fewer firms receiving a larger slice of the remaining pie on a single-fee basis. In turn, it would create firms that have the money to invest in training and technology, and with the size and depth required properly to cover the contract areas.

Yes, we have more data than ever before, but charging to read it on a per page basis is simply outdated. Most of the extra data is useless guff from, say, social media. The answer is to have firms of lawyers that are able to invest in the technology now available to sort the wheat from the chaff. That will only come from market consolidation, and a vital aspect of that will be to treat barristers and solicitor equally. If teams of barristers wish to compete for legal aid contracts, they should be free to do so, in the same way as sole-practitioner solicitors band together with other solicitors, or indeed with barristers, to bid for contracts.

The Legal Services Act 2007, brought in by the last Labour Government with Conservative support, provides the necessary mechanism—the alternative business structures—for that to happen. Solicitors and barristers could work together, and the alternative business structures could raise capital and employ non-legal executive managers to run an effective business. We would then start to see a sustainable market taking shape.

I have some sympathy with those who complain that the criminal justice system is creaking at the seams, but rather less sympathy with those who say that the answer is more of the same. We need to face up to the need to change the rules of the game and of the marketplace. The tools and answers are certainly out there if we are prepared to take the required steps.

European Union (Withdrawal) Bill

Jonathan Djanogly Excerpts

Committee: 7th sitting: House of Commons
Wednesday 13th December 2017 Commons Chamber

[Mr Grieve]

Yes, I think I agree with my right hon. Friend that the action of Parliament in triggering article 50 would do that. But it is not, I think, the intention of the Government to do any such thing, and never has been. Indeed, if it is the intention of the Government to do such a thing, I hope very much that they will tell me as soon as possible, because I think I might be withdrawing my support from them.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

Is not the point that, everything else being equal, even if nothing else happens, article 50 has been triggered so we are leaving the European Union on a set date, unless 27 other countries decide to extend the date? Therefore, this argument is about the UK’s internal process. It is not a question of the EU or anyone else holding things up.

[Mr Grieve]

There are a series of processes. I do not wish to get too diverted from my main point. We are intending, and will require, a further statute in order to achieve what the Government have set out. I hope very much that we do not leave with a no deal on anything, because we would not be able to fly off to Rome on the day after, we would have no security co-operation and we would, indeed, be mired in complete and utter chaos.

The reality is that clause 9 is incompatible with the programme that the Government have set out. At the time that clause 9 was inserted, I think that the Government had not yet fully worked out the implications of how withdrawal had to take place.

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[Sir Oliver Letwin]

There is no possibility of precluding Parliament from making such a resolution one way or the other. That is up to Parliament, and it is up to the Government of the day at that point to respond as they choose. No Government would sensibly respond in the way the hon. Gentleman describes, so I do not think that that is a realistic possibility.

[Mr Djanogly]

rose—

[Mr Baron]

rose—

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[Mr Djanogly]

My right hon. Friend will be aware that all parties are aiming for next October for the negotiation of the final deal, but the Secretary of State has said that he will keep negotiating until March 2019 and that, if necessary, he will go on after that into the implementation period, so there should be time one way or another.

[Sir Oliver Letwin]

I agree with my hon. Friend. There may well be time; I am not in any way denying that. The point I was trying to make is that Labour Members have alleged that it is proper for Parliament to be able to have what they have described as a meaningful vote. They have made it perfectly clear that what they mean by a meaningful vote includes the ability to tell the Government that they cannot continue to leave the European Union if the terms on which they wish to leave are not acceptable to Parliament. That is a logical fact, and people can agree with it or disagree with it. I do not in any way impugn the motives of Labour Members; it is a perfectly reasonable thing for them to think. It is just that we ought to be honest about the fact that that is the proposition they are putting forward, which is in marked contrast to the point made by my right hon. and learned Friend the Member for Beaconsfield in his amendment 7.

European Union (Withdrawal) Bill

Jonathan Djanogly Excerpts

Committee: 3rd sitting: House of Commons
Tuesday 21st November 2017 Commons Chamber

The proposals coming down the line at EU level are in step with the direction of travel that Parliament has indicated it would like to take, and Members have nothing to fear from this new clause. The family-friendly rights that come from Europe are not the bureaucratic, over-zealous red tape that some Members would have us believe. They encapsulate the idea that individuals can be employed without discrimination and treated fairly at work, and that expectant mothers can be given the right to maternity leave without fear of losing their job. At the general election in June, Members of this House stood on a manifesto that pledged to protect workplace rights, and I hope that we will consider those pledges. If I am not satisfied with the Government’s response, I will seek to divide the Committee on this issue later this evening.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

I believe that, taken as a whole, the Bill works and will do what it says on the tin. Indeed, I note that no one has come up with a better plan to extricate us from the EU. Furthermore, the recent Government announcement that we should have a Bill to set out the terms of withdrawal and the implementation period will provide a good opportunity to readdress any legal complexities and tweaks that become necessary—for instance, through the proposals on human rights changing due to EU negotiations. However, the detail is what counts, and I think that this legislation is still something of an unpolished gem.

Clause 5 would change the role of the principle of the supremacy of EU law post Brexit and act as a carve-out to the concept of having retained EU law. Many of the related issues were debated on day one of our Committee proceedings in relation to clause 6. With clauses 5 and 6 in place, once the UK leaves the EU, EU law will no longer be supreme over new laws made by Parliament, and the UK courts will not need to follow European Court of Justice judgments made after exit day. However, it is time for a gripe, Mr Hanson. Ministers’ decision to speak twice on different issues within the same group has been somewhat unhelpful, because it disconnects the various parts of what we are debating. I agree the two groupings might have been preferable, but that was not on offer from the Chair. Having had my gripe, I will now move on.

Amending clause 5 to deal with the requirement of the withdrawal agreement, or even an incompatibility with it, could be activated by use of the Henry VIII powers set out in clause 9, or alternatively by delaying implementation of clauses 5 and 6 using the power in the Bill—a power that the Government currently wish to amend, but which I hope they will not—to set different exit days for different purposes.

Of course, having the position ironed out in the newly proposed implementation Bill could also be an option. This is a likely issue to be considered, as the Prime Minister did, of course, on 22 September, support a transition period, noting that

“the framework for this strictly time limited period, which can be agreed under Article 50, would be the existing structure of EU rules and regulations.”

The Government have since complained that the EU has been slow to talk about an implementation period, which is certainly concerning. It has been described as a wasting asset, but this should not reduce our urgent need to consider how we would actually implement it.

There is no doubt, from reading the views of the significant number of experts, and from what the Exiting the European Union Committee has heard in evidence, that there is some level of confusion about the meaning of clause 5(1) to (3). I hope that the Government will clarify the position, although I have to say that much of the evidence that the Select Committee received was itself conflicting as to its importance. For instance, witnesses queried the intended effect of clause 5(1): is it only a declaratory statement, or is it setting out the position for the retention of the principle in clause 5(2)?

The point is that the relationship between the supremacy of EU law and retained law is not clear to a number of people. As Professor Mark Elliott noted,

“if retained EU law is domestic law, can it inherit the ‘supremacy’ of the ‘EU law?’”

Would retained law under clauses 3 and 4 benefit from the supremacy of EU law as provided for in clause 5(2)? Professor Syrpis backed that up in his written evidence to the Committee:

“The Bill may be handled in various ways; for example Clause 5(4) excludes the Charter, Clause 6(2) states that: courts need not have any regard to anything done on or after exit day by the European Court”

and schedule 1 excludes Francovich damages.

But it remains unclear whether these exclusions relate only to the retention of EU law in UK law, in clauses 2 to 4, and the interpretation of retained EU law, in clause 6, or whether they also apply to the principle of supremacy of EU law, in clause 5. In effect, I have seen enough indecision on this to think that the Minister needs to expand on his interpretation of the supremacy principle.

Of course, if domestic courts decide on the content and meaning of law post Brexit, domestic judges are going to have to respond to the challenge, as I am sure they are very capable of doing. Clearly we should help them on their way, so far as possible, by giving clarity on such issues as scoping the supremacy of EU law, although ultimately they will have to judge—

“judges will simply have to do their best”,

as Lord Neuberger put it. Frankly, I do not see what could be put in the Bill that would make this an easy process for judges in practice. However, as Sir Stephen Laws and Dr Charlotte O’Brien told our Committee,

“there is already an existing principle whereby, when deciding on law, the courts will look at foreign judgements and treat them as persuasive but not binding”.

Professor Richard Ekins took this a stage further and thought that the provision is only there

“to make it the case that no one thinks the judges are doing anything wrong if they read them”—

meaning Court of Justice judgments—

and that

“you could delete the clause and I think the judges would, properly, do the same thing”.

Clause 5(4) exempts the charter of fundamental rights from being converted into domestic law. The first point here is that, whether or not one agrees with the provision, one could ask whether this is the right Bill to insert it into. That argument was made by the hon. Member for Sheffield Central (Paul Blomfield). The Bill is about converting EU law into UK law in order to have a functioning rule book, rather than dealing with policy issues—providing legal certainty rather than reshaping rights. We could have had a stand-alone Bill to deal with that, but I am not convinced that it would have helped the process, or indeed the outcome. In fact, to the contrary, I think that having the benefit of the clause 5 debate running contemporaneously is helpful—if only Ministers had thought the same when grouping today’s amendments.

As for the charter itself, it is a matter of fact that it contains certain extra rights other than those that exist in the Human Rights Act, such as the right to dignity and, as the right hon. Member for East Ham (Stephen Timms) elaborated, the right to protection of personal data. There is also a wider class of potential applicants, because it includes anyone with a “sufficient interest”. Also, stronger remedies are arguably available in certain circumstances, but all that still has to be within the scope of EU law, and I agree with the Government that the charter will lose its relevance after Brexit. However, in the wider context and while it is important to debate the issue, I have strong doubts that we will be losing much by removing the charter if we get the drafting of this Bill right, because many charter rights will form part of the general principles of EU law, as has been explained, and will thereby be retained by clause 6(7) and schedule 1 for the purpose of interpreting retained EU law.

Retention of the charter would also go against the principle of English courts taking control. There may be initial teething problems, but I note that the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Wycombe (Mr Baker), told the Exiting the European Union Committee that an EU legal source exists for each charter right, such that judges will be required to look at the underlying source law or rights when considering cases post exit, rather than the charter. However, I am not sure that that is quite adequate, as it seems as though the Bill will contain no right of action in domestic law based on a failure to comply with any of the general principles of EU law and the courts will not be able to disapply any new law because it is incompatible with any of these general principles, including fundamental rights. Amendment 10, tabled by my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve), would address that by allowing challenges to be brought to retained EU law—law after Brexit—on the grounds that it is in breach of the general principles of EU law.

[Sir Oliver Letwin]

Does my hon. Friend agree that a different amendment—perhaps a Government amendment on Report—could achieve the same purpose by restricting that part of schedule 1 to dealing with non-retained general principles of law, so that retained principles could form the basis for a right of action?

[Mr Djanogly]

Yes, my right hon. Friend made that fair point in an earlier intervention. I am happy to say that I am open and willing to hear what the Government have to say on that, and I look forward to the Minister’s contribution later.

The concept of amendment 10 sounds reasonable to me—not least if we are to get rid of the charter—and I shall be listening carefully. However, I agree that the charter has significantly added to the complexity of human rights applications and that in removing the charter the Bill will provide an opportunity to simplify things outside the EU. The Minister has promised to deliver to the Exiting the European Union Committee a memorandum on charter rights, and I note the idea provided by new clause 16, tabled by the hon. Member for Nottingham East (Mr Leslie), of a report to review the implications of removal of the charter. I would happily accept Ministers’ assurance on that, rather than to legislate for it, and I hope that the document to be delivered to the Committee by 5 December will cover the two issues, as I think the Minister of State, Ministry of Justice, my hon. Friend the Member for Esher and Walton (Dominic Raab), said earlier.

My underlying acceptance of the Bill’s position is premised on there remaining, as now exists, a significant and meaningful body of human rights legislation in this country. That would include common law and the Human Rights Act and would be underpinned by the European convention on human rights. I am therefore pleased that the Minister took the opportunity to accept the need for retention of the ECHR in the post-Brexit period.

[Wera Hobhouse]

I rise to discuss new clause 78 and the amendments that are designed to retain the charter. I listened carefully to what the Minister said earlier, but if the Government are not inclined to retain the whole charter, I urge him at least to look again at new clause 78, because it would protect some equality rights.

Conservative Members like to argue that, when Britain decided to join the European Economic Community in 1975, what the British people voted for was an economic union—no less, no more—and that only afterwards the EU became a political union that we should now leave. However, if one looks at the fundamental role played by the British in drafting the European convention on human rights in 1950, this is not true. The convention aimed to protect fundamental freedoms for all Europeans and was driven by British values.

European Union (Withdrawal) Bill

Jonathan Djanogly Excerpts

Committee: 1st sitting: House of Commons
Tuesday 14th November 2017 Commons Chamber

[Mr Jonathan Djanogly (Huntingdon) (Con)]

Further to the point of my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) on the difference between transition and implementation, we know for sure that it will be an implementation period because we will have to implement the withdrawal agreement. We do not yet know whether it will be a transitional period because we do not know, and will not know at the point of Brexit, whether we will have any final deal to implement.

[Paul Blomfield]

The hon. Gentleman makes a fair point, and I will now make some progress.

I was at the point of talking about why closing down the opportunity for effective transitional arrangements would be deeply self-harming. As the director general of the CBI, Carolyn Fairbairn, said just last week,

“The message from us, from business, is more certainty quickly particularly around transition, particularly in the next four weeks”.

The Government amendments undermine the prospect of a transitional deal and create more uncertainty. The CBI, the British Chambers of Commerce, the EEF, the Institute of Directors and the Federation of Small Businesses came together to call for a transitional deal, saying:

“We need agreement of transitional arrangements as soon as possible, as without urgent agreement many companies have serious decisions about investment and contingency plans to take at the start of 2018”.

They continued:

“Failure to agree a transition period of at least two years could have wide-reaching and damaging consequences for investment and trade”.

It will also mean lorries backing up at Dover, because the adjustments necessary to avoid that cannot be physically put in place within 15 months, as I am sure everyone would agree. For the same reason, it will mean a hard border in Northern Ireland, with all the problems that that would create.

The Government’s approach is simply not in the national interest, and it closes down the flexibility that we might need. If negotiations go to the wire, both we and the EU 27 might recognise the need for an extra week, an extra day, an extra hour, an extra minute or even an extra second, as the right hon. and learned Member for Rushcliffe (Mr Clarke) pointed out, in order to secure a final deal. But that agreement would be thwarted by the Government’s having made it unlawful for themselves to do what they would want to do at that point.

The Prime Minister has consistently talked about parties working together in the national interest, and we are up for that—we have tried to be constructive; we have scrutinised and identified gaps; we have offered solutions; and on this crucial issue we seem to be in the same place as at least some members of the Government on the need for an effective transitional period. So let me make an offer to the Government. If they withdraw amendments 381, 382 and 383, and work with us on an alternative that affirms a departure date in line with the article 50 process but without destroying the chances of transitional arrangements, we are happy to look at that and work with them on it. If they do not—

--- Later in debate ---

[Tom Brake]

I thank the hon. Gentleman for that intervention. I think we may have the opportunity to put that to the test shortly.

In conclusion, the debate has unfortunately again revealed the obsession that Europe holds in the hearts of some Government Members. When it comes to Europe and our membership of the European Union, I am afraid that they have left their rationality at the door of the Chamber. If we do leave the European Union, they will be leading the country down a path that will, in my view and in the views of many Cabinet members, many Conservative Members and many Opposition Members, do long-lasting damage to our country.

[Mr Djanogly]

My concern is related to the timing issues of the phase 1 exit period and, by implication, of the transition period and, by extension, to how those periods link in to the proposed timing of the phase 2 deal on the future relationship with the EU following Brexit. That is the subject of a number of interconnected amendments.

The key point on timing is that, rightly or wrongly—probably wrongly—we have dropped our initial insistence that the terms of withdrawal, or what is known as phase 1, should be negotiated at the same time as the terms of our future relationship, which is known as phase 2. As things stand, the EU is saying that we should sort out phase 1—Northern Ireland, citizens’ rights and the amount of money—before we start scoping discussions on phase 2. The Government have said that the scoping of phase 2 should start in December, but the EU has threatened delay if we do not move forward significantly on phase 1 within the next couple of weeks.

Clearly, from the EU Commission’s perspective, and I believe from the perspective of British and continental business, the timelines are moving from tight to critical in terms of the need for a transitional agreement and a phase 2 outline. I separate the two because, of course, the transitional period is legally derived from and relates to the phase 1 exit date set out in article 50, providing time, for instance, to change over regulators and to allow companies’ systems to be changed over, too. Incidentally, it will also be used as a standstill period during which the Government can conduct their negotiations on phase 2.

Having heard the debate so far today, both in Committee and elsewhere, I am still unsure as to why we should fix an exit date that will thereby fix the date of the transition agreement. I can see only downside, with the Government losing control of one of the levers they could use to control the negotiations. Briefings I have just received also indicate that removing the flexibility of having different exit dates for different issues could undermine the ability of the banking and insurance sectors to amend their systems in time, risking financial instability.

The proposal to fix a date also possibly pushes us into a corner and unnecessarily increases the EU team’s leverage. Indeed, as has been said, when the Ministers came to the Brexit Committee, the flexibility to set multiple exit dates was described to us as a tool for setting different commencement dates for different provisions and for providing for possible transitional arrangements. What has changed in the Government’s approach over the past few weeks? That is something Ministers have to address.

It is now seemingly the Government’s intention to follow the Bill with further primary legislation to provide for an implementation period and the terms of the withdrawal agreement, along the lines of amendment 7 tabled by my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve), which he says he will now update. The amendment has received a lot of cross-party support, and we will debate it at a later date. The Government initiative is welcome, but it will not in itself protect us from the dead-end option of fixing the exit date, which seems to pander to those who would welcome a no-deal Brexit.

My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) tabled new clause 54, which provides for securing a transition period of at least two years. Although the amendment will be substantially debated later, I think it is conservatively worded. When the Brexit Committee went to Brussels recently, Monsieur Barnier talked of the adequacy of two years for negotiations, as has our Secretary of State for Exiting the European Union. However, nearly everyone else, including the European Parliament representative and the representatives of MEDEF—the French CBI—thought that three years, and possibly up to five years, will be needed.

Two years from the exit date may be enough time to settle the provisions of phase 1, but most experts are saying that two years is widely over-optimistic for negotiating an FTA. We need to consider what will happen if the Government do not reach certain targets by certain dates. For the Brexiteers, it may simply be that we go into hard Brexit mode. I personally think that would be extremely damaging to British business, but it is of course the default position under article 50. For those of us who want to have a negotiated phase 2 settlement, more Government attention is needed in this area.

The hon. Member for Feltham and Heston (Seema Malhotra) tabled new clause 69, a thoughtful amendment that asks what should happen if the Government do not secure a withdrawal agreement by 31 October 2018 or if Parliament does not approve the withdrawal agreement by 28 February 2019. Rather than jump off the proverbial no deal, hard Brexit cliff, there is a suggestion of ending the two-year period or agreeing a new transitional period. For that approach to work, we would have to ensure that we do not have a fixed exit date. It would, in effect, involve taking up the offer previously made by the hon. Member for Sheffield Central (Paul Blomfield) and the Government starting to talk to the Opposition. Given where we are, that is going to have to happen one way or another, and we should face up to it now.