Customs Safety and Security Procedures (EU Exit) Regulations 2019

Debate between Lord Bates and Lord Purvis of Tweed

Tuesday 26th March 2019 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, in moving these regulations, I will speak to the three statutory instruments that are part of the Government’s package to prepare for the possibility of the UK leaving the EU without a deal. The instruments are related to safety and security, cash controls and the Economic Operators Registration and Identification scheme—EORI.

EU law provides the legal framework for implementing these policies across the EU. By virtue of the European Union (Withdrawal) Act, this law will form part of our domestic law on exit day and will continue to apply as retained EU law.

The relevant EU legislation was drafted to apply to EU member states. Therefore, it will not work as effective legislation for the UK without amendments. These instruments ensure that the UK has a functioning legislative rulebook by replacing references and terminology that will no longer be valid in the event of no deal. This ensures that the UK will have effective safety and security, cash controls and EORI regimes after the UK leaves the EU.

First, allow me to set out the context of the provision we wish to introduce for managing the safety and security risk of goods entering and leaving the UK. The Union Customs Code sets out that the movement of goods into and out of the EU requires entry and exit summary declarations, also known as safety and security declarations. So, for example, shipments from the US or China require a safety and security declaration before entering the EU. If the UK leaves the EU without a deal, UK importers and exporters will be required to complete safety and security declarations for goods moving to and from the EU, as well as the rest of the world.

As well as making required changes to retained EU law, this instrument introduces a provision to phase-in the legal requirement for entry summary declarations on goods imported from the EU. The legal requirement to submit entry summary declarations for goods imported from the EU will apply from 1 October 2019.

HMRC has listened to industry concerns about ongoing uncertainty and the readiness of businesses to comply with safety and security requirements on UK-EU trade from day one. Therefore, we are taking this approach to give businesses more time to prepare to submit declarations to HMRC. This does not remove the requirement for declarations for goods imported from the rest of the world. Goods entering the UK from the rest of the world will still have to make entry summary declarations as they do now.

When the UK leaves the EU, a separate customs union will be created between the UK and the Crown dependencies—the Channel Islands and the Isle of Man. This instrument includes a provision to support the operation of the UK and the Crown dependencies, namely that the movement of goods between the UK and the Crown dependencies will not require safety and security declarations. This instrument does not apply to the movement of goods between Northern Ireland and Ireland.

The second statutory instrument we are talking about today relates to cash controls. The EU monitors the international movement of cash by requiring individuals who are entering or leaving the EU, and who are carrying €10,000 or more in cash, to make a cash control declaration. This declaration must be made to the customs authority of the member state into which they are arriving or leaving.

The UK is committed to continuing this practice. The declarations provide information about the international movement of cash and are one measure that assists in the fight against money laundering, the proceeds of crime and the funding of terrorism. If the UK leaves the EU without a deal, this instrument will require cash control declarations at the UK border, including the border between the UK and the EU. It does not apply to the border between Northern Ireland and Ireland.

The current practice, which requires these declarations between the UK and non-EU countries, will continue. This instrument extends those requirements to movements between the UK and EU. It makes the small change that we will require declarations on amounts of £10,000 or more, rather than €10,000.

The final change as a result of this instrument that I should draw to your Lordships’ attention relates to information sharing. Currently, details of the movement of cash are automatically shared between member states. This instrument removes the requirement to share information but permits sharing of information where it is in the UK’s interests so to do.

The third and final instrument we are discussing today is for the Economic Operators Registration and Identification scheme, EORI. An EORI is a unique registration number given to businesses that interact with customs authorities so that HMRC can identify them effectively. EORIs are necessary when applying for customs simplifications or facilitations, when making declarations or in other interactions with the customs authority.

All EORIs issued by the UK, known as UK EORIs, will remain valid for use in UK customs processes in the event of a no-deal EU exit. Following the UK’s departure from the EU, UK individuals and businesses that want to trade with the EU or other territories outside the EU and do not already have a UK EORI will need to obtain one. Persons who are not established in the UK but who wish to lodge a UK declaration will also require a UK EORI. This instrument ensures that the UK has a functioning EORI scheme by replacing references and terminology in retained EU law that will no longer be valid in the event of no deal. Traders whose only international trade is between Northern Ireland and Ireland will not be required to register for a UK EORI.

These instruments will ensure that the UK has independent customs processes that work after we have left the EU and will maintain the security of our borders while ensuring that traders are faced with as little change as possible and are given time to prepare for the new customs requirements after EU exit. I commend—

[Lord Purvis of Tweed (LD)]

My Lords, before the Minister sits down, can he tell the House how many businesses currently have an EORI? The last published information from the Government suggested that only one-sixth of businesses which trade exclusively with the EU and would require an EORI have one. What is the current position?

[Lord Bates]

The current position is that the largest number of businesses affected would be UK businesses. There are an estimated 245,000 traders who will need to register for an EORI. That figure comprises 145,000 VAT-registered businesses and 100,000 businesses below the VAT threshold. Overseas businesses will also require a UK EORI to make customs declarations for goods being imported into the UK after we leave the EU.

[Lord Purvis of Tweed]

I am grateful to the Minister for indicating how many businesses would be required to have one. How many businesses are registered for and have secured an EORI?

[Lord Bates]

The answer is 52,000. I beg to move.

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[Lord Bates]

Once they became aware of that situation, if that eventuality occurred, the remedy—to get the registration—is a fairly simple and straightforward process. We would like them to do it before then. That is why we have been encouraging them to do that—but we cannot force them to at this stage.

[Lord Purvis of Tweed]

Businesses cannot do it afterwards if they want to trade on day one of exit if there is no deal. A post-fact situation is irrelevant if they wish to trade without any obstruction on day one of a no-deal exit. Will the Minister confirm this or get information from the Box before he sits down? The information I have received is that HMRC can only process a maximum of 11,000 a day. I hear what the Minister is saying about the Government encouraging businesses to register and that it may take only a short period of time, but that depends on the complexity of the business they do. That is for them to have an EORI. Even if all the businesses wish to register, there is only a certain capacity at HMRC, as I understand. I would be delighted if the Minister can say that that is incorrect and that before exit day—on 12 April if there is no deal—all the businesses that can trade can conceivably be in a position where they can trade. If he is not able to give that reassurance, we are in a very difficult position.

[Lord Bates]

Let me clarify that, because I think we can be more helpful on that point. There is a lighter-touch element to this: businesses can trade but they need to give a name and address. That is the requirement. They need an EORI number when interacting with customers and HMRC. So when they are doing that part of the exercise, rather than the trading element—completing their VAT return et cetera—they will need that number when they interact, but to trade they would need simply to give their name and address. I hope that offers some reassurance.

[Lord Purvis of Tweed]

I am not sure that it offered the clarity we need. Is it the Government’s position that, in the absence of having an economic operator number to trade with others in the EU 27, businesses have only to state that they have a British-registered trading address? That is absolutely not the advice that HMRC has been providing British businesses that trade with those in the European Union.

[Lord Bates]

The reality is that we would prefer them to have an EORI registration number. It is a fairly straightforward process that takes five to 10 minutes. But we are talking about extraordinary circumstances. The advice I am given and that I am presenting is that they need to give just their name and address to be able to continue to do that.

The noble Lord asked about the limit on processing of 11,000 per day and whether HMRC had the capacity. The customs declaration service has the capacity to process significantly higher numbers than that.

The noble Lord, Lord Tunnicliffe, asked whether we would end up with a border down the Irish Sea. These non-fiscal statutory instruments will not create an east-west border between Northern Ireland and Great Britain. This will be a temporary measure until a permanent solution is in place. We will seek to discuss this at the first opportunity with the Irish Government and the European Union. However, until this point, this policy is necessary to avoid a hard border on the island of Ireland and to uphold the Belfast Good Friday agreement.

[Lord Purvis of Tweed]

I am grateful for the Minister’s patience on this. It is important. He said at the Dispatch Box that HMRC has a capacity much greater than for providing 11,000 registrations a day. On GOV.UK on 28 February 2019, HMRC announced:

“HMRC has the capacity to sign up 11,000 businesses per day for EORI numbers”.


What have the Government done since then to provide that extra capacity? Am I wrong in believing the Government on 28 February? What extra capacity is provided to offer this, other than what the Government themselves have said in their own statement?

[Lord Bates]

I am advised that the customs declarations service does have the capacity to process significantly more. I do not have a number. When I write on the other issues, I will include an update.

[Lord Bates]

The noble Lord may not have been present for a rather fascinating debate on Pepper v Hart, which took place on another Bill recently—the Trade Bill, I think—and my noble friend Lady Fairhead is here. I and the noble Lord, Lord Stevenson of Balmacara, are not going to rehearse that argument again, but a degree of clarity came through that. I do not wish to make light of a very serious point which the noble Lord is raising, that this is impacting on real businesses, real lives and real trading opportunities. What I am trying to do is give as much information as I can from the Dispatch Box in a fast-moving situation, and provide more information in writing. I hope that the noble Lord will accept that in good spirit.

The noble Lord raised the point about £10,000. I share his surprise. Like him, I am not used to carrying anywhere near that sum across borders. The Financial Action Task Force, an international government body, has identified this as a key risk. This requirement of declaration is set by each of the members; the EU sets the limit at €10,000; the USA sets it at $10,000. The Government chose their own limit, using a memorable round number. They did not want to use another state’s currency or alter the figure to reflect changes in the exchange rate.

The noble Lord also asked about existing risk profiles. In a no-deal scenario, we will continue to use the current risk profiles, updating them as needed.

The noble Lord, Lord Tunnicliffe, asked if we had asked the EU for a transitional period. After the UK’s exit from the UK, we will seek to negotiate a safety and security agreement with the EU, so that safety and security declarations are not required on imports between EU countries and the UK.

The noble Lord, Lord Purvis, asked for the Government’s estimate of when all businesses would have an EORI number. We are committed to making it easier for businesses to be ready. Information is clearly laid out on GOV.UK. I have said all that.

[Lord Purvis of Tweed]

I am grateful again to the Minister because this is a very important point. My question is a simple one. On 28 February, the Government released the information that 40,973 businesses have registered. On the same day, they said that up to 11,000 businesses a day could be registered because of the capacity. The Minister has said at the Dispatch Box that that capacity is now considerably higher, without explaining what has been done in the meantime to provide that extra capacity. Can he provide something simple? Is there sufficient capacity for all British businesses which trade with the European Union to be in a position, if they so choose, to be registered before 12 April?

[Lord Bates]

I am afraid that I cannot go further than what I have in front of me, but I will happily put an assessment of that question in writing. Of course the situation as it stands today is that, without the statutory instrument which may receive the agreement of your Lordships’ House tomorrow, we would leave on 29 March. This is one element where there is a real sense of urgency and a need for businesses to prepare for that.

I can save writing a bit of a letter here. The answer is yes; we can do that. Let me take the time over the next few days, before April 12, to go into a little more detail and set that out. I will write to all noble Lords who have participated in the debate and, as usual, place a copy in the Library. I hope that will be helpful to noble Lords.

I again thank your Lordships for their contributions and scrutiny. I think we have benefited from that process.

Trade Bill

Debate between Lord Bates and Lord Purvis of Tweed

Committee: 4th sitting (Hansard): House of Lords
Monday 4th February 2019 Lords Chamber

[Lord Bates]

Yes, except that the political declaration was of course part of the withdrawal agreement negotiated with the EU 27, so one hopes that it will form the basis of our future economic partnership.

[Lord Purvis of Tweed]

The noble Lord, Lord Lansley, and I have referred to the WTO. My understanding is that there have been objections to the UK’s submission of services schedules to the WTO and therefore they are unlikely to be certified if we leave at the end of March. We can still trade on them, but they are likely to be uncertified. Can the Minister give a little context about what concessions we might make or what discussions we would have with those countries that have lodged their objections? Clearly, they feel that we will not provide the same kind of market access to UK services as under the existing agreements. We could be starting from a situation that is much worse than simply carrying on with where we are at the moment at the WTO. If the Minister cannot respond at the moment, perhaps he could write.

[Lord Bates]

I am very happy to give further detail on that in the general update between Committee and Report, but, as the noble Lord knows, the schedules were tabled in December followed by a 90-day consultation period. There can be a variety of perspectives on them before they are finally adopted. I will get an update as to where we are on that before Report.

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[Lord Bates]

I may not be able to get a categorical answer on that, but I am happy to undertake to write to the noble Earl ahead of Report to clarify that point.

[Lord Purvis of Tweed]

The Minister said that perhaps this amendment would be better placed elsewhere, but I wondered why, in the sequence of events, the UK did not agree a temporary arrangement with Switzerland on continuity, for example, in the case that I raised earlier in Committee. Instead, the Government have agreed a permanent relationship arrangement with the Swiss for free movement of people for three months a year if they are providing services. Clearly, the Government thought it was not sufficient to wait until we debated the Immigration Bill, when we could have considered that aspect of our relationship with Switzerland and others. But the Government have made a decision. So as my noble friend Lord Fox indicated, it is right that we press the Government much more. Why did the Government make a case for giving Swiss nationals a permanent right of visa-free travel and work for three months a year, but are taking a distinct approach to other countries, including our EU partners?

[Lord Bates]

Obviously, those are discussions that will have to be concluded in the future framework. On the specific point about Switzerland, however, the noble Lord suggested that the services elements were additional to the Government’s policy on immigration as set out in the Immigration Bill. That is not correct; it is not inconsistent with the provisions in that Bill.

On the point made by the noble Earl, Lord Clancarty, on onward movement for EU nationals, the UK pushed strongly for the inclusion of onward movement rights during the first phase of negotiations on citizens’ rights in the withdrawal agreement but the EU was not ready to include them at that time. I made that point about reciprocity earlier. We recognise that onward movement opportunities are an important issue for UK nationals in the EU and we remain committed to raising this during detailed discussions on our future relationship. That is the latest position we have at the present.

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[Lord Bates]

My Lords, I rise more in hope than expectation of being able to persuade your Lordships. I pick up the sense from the Committee that this is probably something that your Lordships will want to return to in more depth on Report. Perhaps the best service I can offer at this stage is to put on record the Government’s position, respond to some of the precise points and then await further developments as they may unfold between now and Report.

Amendments 77, 78, 79 and 80 relate to changes passed in the other place during the passage of the Taxation (Cross-border Trade) Act 2018. This Act is important legislation as the UK leaves the EU. It enables the Government to create a stand-alone customs regime by ensuring that the UK can charge customs duty on goods, set and vary the rates of custom duty, and suspend or relieve duty in certain circumstances.

I turn now to the substance of the original amendments to the Act, which these amendments seek to remove. Amendment 77 relates to Section 31(5), which requires further parliamentary scrutiny in the event that the power under Section 31(4) is used to implement a customs union with the EU. The Government support the principle of further parliamentary scrutiny in this case. My noble friend Lord Lansley suggested that this was perhaps reflective of the politics of the movement. As a distinguished former Leader of the House in another place, he will be very familiar with how that side of things works. However, as this House is aware, the Government have made it clear that they are not seeking to be in a customs union with the EU as part of our future economic partnership—I say that without wishing to reopen the many debates we have had on “a” and “the”.

It is important to reflect why the Government have taken this view and to consider what leaving the EU means. It means the ability to strike out on our own to forge new trade deals. In order to do this, one important element is to have the ability to set our own tariffs. Being in a customs union would deny the UK this ability and fundamentally undermine our capacity to negotiate new trade deals with old friends and new partners.

The noble Lord kindly outlined, as he saw it, the way in which Amendment 78 arrived, referencing first the Bill and then the amendment. The Government have been clear in their White Paper that the arrangement they are seeking will ensure that both the UK and the EU get their fair share of the revenues from the rest of world trade. Section 54 of the Taxation (Cross-border Trade) Act is in line with the proposals that the Government set out with a view to achieving just that.

Turning to Amendment 79, Section 55 of the Taxation (Cross-border Trade) Act 2018 requires a single UK customs territory. This is a statement of government policy and ensures that the Government will not act incompatibly with the commitments made in the joint report of December 2017, where they committed to protect the constitutional integrity of the UK.

[Lord Purvis of Tweed]

I apologise for interrupting the Minister. I want to add perhaps another degree of lunacy to the several mentioned by the noble Lord, Lord Kerr. New Section 31 of the taxation Act, which Amendment 77 seeks to rectify, contains the following phrase:

“In the case of a customs union between the United Kingdom and the European Union”.


The Government said that that would not apply because the customs territory they are seeking to have will not be a customs union. So even if just to make the legislation neater, it should be taken out.

On defining the scope of the single customs territory, which we are seeking to do, the Government’s Legal Position on the Withdrawal Agreement, command paper 9747, says it is that,

“under which the UK aligns itself with the Union’s external tariff and there can be no tariffs or quantitative restrictions on imports and exports between the UK and the EU. The single customs territory therefore constitutes a customs union for the purposes of GATT19, but it is not the EU’s customs union as defined in Article 28 TFEU”.

It can either be one thing or the other, but the Government’s own document on the legal position says that the customs territory will be a customs union.

[Lord Bates]

I will make some progress, but I will come back to that point—when inspiration arrives.

No UK Government, regardless of their political leanings, could ever accept such a carving up of the United Kingdom—I am referring here of course to the division between Northern Ireland and the Republic of Ireland. Indeed, on 15 October, in another place, the Prime Minister said:

“We have been clear that we cannot agree to anything that threatens the integrity of our United Kingdom, and I am sure that the whole House shares the Government’s view on this. Indeed, the House of Commons set out its view when agreeing unanimously to section 55 in … the Taxation (Cross-border Trade) Act 2018 on a single United Kingdom customs territory, which states: ‘It shall be unlawful for Her Majesty’s Government to enter into arrangements under which Northern Ireland forms part of a separate customs territory to Great Britain.’ So the message is clear not just from this Government but from the whole House”.—[Official Report, Commons, 15/10/18; col. 410.]


Turning to Amendment 80—before I come to some of the points raised during the debate—the Government’s position is that they will not seek to be in a customs union with the EU. We have debated this issue in this House and in the other place throughout the passage of this Bill—leaving aside the very clear response that is on its way to the noble Lord; he should be prepared for that. As has already been highlighted to the House, at Report stage in the Commons, MPs rejected an amendment seeking to keep the UK in a customs union with the EU.

On the specific points relating to import VAT, it is clear that the Government are highly cognisant of the concerns raised. I will deal with that point now because the noble Lord asked some very good questions on VAT treatment, and it is good to have an opportunity to put the position on the record. Goods from third countries are treated as imports, with VAT due accounted for on import or by the 15th of the following month as duty of customs. This means that, unlike acquisitions, there is a cash-flow impact because traders have to pay the import VAT and potentially recover it later when they submit their VAT returns. It also means that there needs to be an option to pay import VAT on the border, as not all businesses have the necessary guarantee to defer payment until the following month. Generally, import VAT is paid sooner on goods from non-EU countries than on goods from EU countries. This provides a cash-flow benefit to companies importing goods from the EU compared to businesses that import from non-EU countries. Without an UK-EU agreement to retain this treatment, goods entering the UK from the EU would be treated as imports and would be subject to the same rules as businesses moving goods from non-EU countries. This would mean businesses paying VAT on imports from the EU sooner, affecting their cash flow. The Government published a series of technical notices in August 2018 to help businesses prepare for the unlikely event of a no-deal scenario. The VAT technical notice, “VAT for businesses if there’s no Brexit deal”, announced that the Government will introduce postponed accounting for import VAT on goods brought into the UK.

The noble Lord, Lord Stevenson, asked why we accepted Section 54—originally New Clause 36—of the Taxation (Cross-border Trade) Act 2018. The Government did so because it was consistent with our position. It requires the Government to negotiate a reciprocal arrangement for the collection and remittance of VAT, customs and excise duties. The Government have been clear that both the UK and EU should agree a mechanism for the remittance of relevant revenue. The Government set out in their July White Paper that they propose a revenue formula that takes into account goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.

The noble Lord, Lord Purvis, asked whether the customs territory is a customs union under GATT, and he deserves a full answer to his detailed question, so I commit to writing to him. That should be very clear to the noble Lord and all Members of the House—well worth waiting for.

Trade Bill

Debate between Lord Bates and Lord Purvis of Tweed

Committee: 3rd sitting (Hansard - continued): House of Lords
Wednesday 30th January 2019 Lords Chamber

[Lord Bates]

Yes, of course. I will probably miraculously sit down sometime around 10.39 pm. I think that is the convention. Let me go through as much as I can. I apologise to Members of the Committee and to the reporters of our proceedings for the pace at which I am going.

The noble Lord, Lord McNicol, and my noble friend Lord Lansley referred to the common transit area. As my noble friend hinted, this is an area where we have some good news, because the UK has agreed the common transit convention with the secretariat. Letters were received on 19 December 2018. That is taking shape.

The noble Baroness, Lady Kramer, talked about financial services. The Government are seeking a close future relationship on financial services with the EU that reflects our uniquely integrated markets and respects UK and EU autonomy. The political declaration includes commitments to close and structured co-operation on regulatory and supervisory matters, grounded in the future economic partnership. There will be a certain Groundhog Day feeling to the answers to a lot of these questions, because I will simply say that they are a matter for the future economic relationship, which we hope will be deep and extensive across all these headings. Of course, that is for another piece, or other pieces, of legislation.

The noble Baroness, Lady Randerson, spoke to her amendments. On haulage, the Government have been clear that we want to maintain the existing levels of access for UK and EU hauliers. A mutually beneficial road freight agreement with the EU will support the objective of frictionless trade. I very much take the point that the noble Baroness made about us often talking about Dover in the context of roll-on, roll-off, but there is strategic importance, particularly on the island of Ireland, for Holyhead and movements through there. However, we understand that we need the reassurance that we will have in place the arrangements needed to maintain continued access. On that basis, we welcome the contingency proposals being made by the European Commission on the basis that the Government are seeking a very close partnership based on reciprocal and binding agreements that protect the rights of road hauliers to access EU markets and vice versa.

The noble Lord, Lord McNicol, also talked about rail services, which are mentioned in Amendment 40. The Government are carefully considering the potential implications of leaving the EU, including implications for the continuation of cross-border rail. The noble Lord, Lord Fox, also referred to this through the Channel Tunnel and on the island of Ireland. I assure noble Lords that we understand the importance of maintaining the continuity of these important cross-border rail services, and we will continue to negotiate with our European partners to secure the best possible outcome.

In addressing Amendment 43, the noble Lord, Lord Fox, talked about open and fair competition. The Government recognise that commitments to open and fair competition are fundamental to all trading relationships; continuing the control of anti-competitive subsidies and creating a UK-wide subsidy control framework are crucially important. To support the desire for a future relationship, we propose rule alignment on state aid to be enforced by the Competition and Markets Authority, which already has a strong reputation in the UK. We also have strong proposals in other areas, including non-regression provisions for the environment, social issues and employment to ensure that we maintain the highest of standards, as my noble friend Lord Lansley requested.

Turning to Amendment 62, my noble friend Lord Lansley and the noble Lord, Lord Stevenson, said that it raised important issues for the future relationship with the EU, by providing that the patients should not be disadvantaged. We have given commitments that patients should not be disadvantaged; industry should be able to get its products into the UK market as quickly as possible, and we continue to play a leading role in promoting public health. The Government have already set out their aim to secure participation in the European Medicines Agency. The political declaration sets out the mutual commitment of the UK and the EU to explore working together in future medicines regulation and negotiating the UK’s ongoing co-operation.

[Lord Purvis of Tweed (LD)]

Will the Minister clarify what he said about seeking to participate in the European Medicines Agency? The noble Baroness, Lady Fairhead, in an earlier grouping, said it was the intention to remove Clause 6 from the Bill, or at least bring forward different language about what that participation means. It is pertinent to the point my noble friend Lord Fox made. If it is the Government’s intention to participate in many of these institutions, what do they envisage that participation mechanism to be? If the Government are seeking to change Clause 6, they have to be clear about how they intend that participation to operate.

[Lord Bates]

My noble friend Lady Fairhead made very clear our hesitation in the other place when this amendment was proposed, but it is now in the Bill. We see the commitment to all necessary steps in relation to the European Medicines Agency. We have been very clear that we do not wish to see that extended to other agencies, but it is there in the Bill at present.

[Lord Purvis of Tweed]

Just so that we know what might be coming on Report, is it the Government’s intention to bring forward amendments, as the noble Baroness, Lady Fairhead, said, to remove this?

[Lord Bates]

Our position is simply that we are committed to as close a relationship as possible with the European Medicines Agency. We see its value, we are committed to it, and it is in the Bill. We have made our positions clear on that, in terms of how we would view it if similar amendments were proposed for other agencies.

Amendment 39, on mutual recognition of professional qualifications, was spoken to by my noble friends Lady Hooper and Lady McIntosh and by the noble Lords, Lord McNicol and Lord Fox. The Government have clearly set out their objectives for mutual recognition of professional qualifications in the future relationship with the EU. We recognise the importance of mutual recognition for many sectors of our economy and the public sector. It offers all individuals working in regulated professions a means of having their qualifications recognised so that they can continue to provide valuable services. However, Her Majesty’s Government must be in a position to negotiate the best possible outcome. I note the risk that this amendment could undermine that objective and compel Her Majesty’s Government to reject highly beneficial agreements on mutual recognition simply because an agreement delivered its possible outcome in a way that differed from the detailed requirement set out in this amendment.

Trade Bill

Debate between Lord Bates and Lord Purvis of Tweed

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I need to manage noble Lords’ expectations as to what I am going to be able to say. The noble Lord, Lord Hain, has given a polemic based on his deeply held views on the situation in Northern Ireland, born of great experience and service. I do not think I will be able to persuade him on this issue and Amendment 46, so he will doubtless come back to it on Report. I will, however, put some important points on the record regarding where, as of today, Her Majesty’s Government stand on these crucial issues.

The noble Lord, Lord Grantchester, talked about the internal energy market. Again, I have to be careful: I am not able to give him an answer at this stage, beyond that set out in the political declaration. I know he has read that carefully, along with the explanatory note; section XI deals with energy co-operation.

Let me first put some comments on the record about the nature of the internal energy market, and then I will turn to the single energy market and north-south co-operation, addressed by the noble Lord, Lord Purvis. The Government continue to support the development of energy interconnectors—which bring benefits to countries at both ends of the cables, including improved security of supply and the lowering of prices for businesses and consumers—and support efforts to decarbonise. That is why we set out in the political declaration that both the UK and the EU should co-operate to support the delivery of cost-efficient, clean and secure supplies of energy and gas, and to ensure as far as possible that efficient trading over our interconnectors continues. Our aim is to secure the best possible future arrangements for trade in energy, and which achieve the objectives set out in the declaration, to which I referred.

On the effect of the shared wholesale market, the all-Ireland single electricity market provides significant benefits to consumers and the economy in both Northern Ireland and Ireland, as the noble Lords, Lord Purvis and Lord Hain, alluded to. It is also an example of north-south co-operation on the island of Ireland. The Government are firmly committed to facilitating the continuation of a single electricity market in any EU exit scenario. The agreement reached on the single electricity market annexe, as part of the Northern Ireland and Ireland Protocol to the withdrawal agreement, should ensure that the SEM is maintained. We also expect to reach an agreement with the EU on a future economic partnership that will maintain the SEM without engaging the backstop. As set out in a technical note on electricity trading, published in October 2018, which the noble Lord, Lord Purvis, referred to, we will take all possible measures to maintain the SEM in the event that we are unable to reach an agreement. Even in this scenario, which I stress—

[Lord Purvis of Tweed]

Perhaps I might add some clarification. The Minister has just said that not all of the Northern Ireland protocol is now up for renegotiation—as the Commons have voted for—only part of it. He said that the energy component of it is going to carry on. So which parts of the backstop are being renegotiated and which parts are not?

[Lord Bates]

I have been on the Front Bench long enough to see a curveball lumbering down the crease. If the noble Lord will forgive me for not taking a swing at it, at such a delicate time, I do that in all seriousness because I want to get the wording precisely right in relation to this. The noble Lord has heard the remarks that I made in relation to the annexe to the Northern Ireland protocol, and that is the position. If we have more to say, I will certainly say that ahead of Report, but even in the worst scenario—

[Lord Purvis of Tweed]

I did not intend to bowl a curveball or even a googly—or anything. It was a genuine point. The Government’s position now is that they are seeking to renegotiate the whole protocol, commonly known as the backstop. If that is not the case, Parliament needs to know, because we understand that the Government are now seeking a renegotiation of part of the agreement. We know that the European Commission has said that this is not up for renegotiation. If the Government are telling the Committee that only part of it is being renegotiated, that is really significant, because at the moment we understand that the whole element is being renegotiated.

[Lord Bates]

I am happy to put some additional comments on the record for the noble Lord, in that spirit. Last night, the majority of MPs said that they would support a deal with changes to the backstop, combined with measures to address concerns over Parliament’s role in the negotiation of the future partnership relationship, and commitments on workers’ rights. We will now take this mandate forward and seek to obtain legally binding changes to the withdrawal agreement that deal with concerns on the backstop while guaranteeing no return to a hard border between Northern Ireland and Ireland. We are keen to work with the Government of Ireland to ensure that the SEM will continue in any scenario, and welcomed their statement in December that they were engaging intensively with the EU to ensure that the single electricity market would continue. I hope that this provides some reassurance.

On the point made by the noble Lord, Lord Hain, we have been consistent in our commitment to avoiding a hard border between Northern Ireland and Ireland, upholding the Good Friday agreement and maintaining the conditions for north-south co-operation. We are delivering on those commitments. We negotiated a withdrawal agreement that delivered on those commitments in good faith; we have worked hard to build support for it in Parliament over many months. It was clear to the Prime Minister, having met parliamentarians from all parties, that a change to the backstop would be necessary to get the agreement through. The Prime Minister was clear that there are a number of ways to do that and that she will work with colleagues from all parties, and with the EU, to secure changes that command the support of Parliament. Although the Government will seek to secure legal changes to the backstop, their commitment to avoiding a hard border and maintaining the necessary conditions for north-south co-operation remains undiminished.

In a paper published earlier this month, the Government set out their commitments to Northern Ireland, including: a legal guarantee that the backstop could not be used to alter the scope of north/south co-operation; a role for a restored Northern Ireland Executive in UK-EU discussions, through the Joint Ministerial Committee, on matters concerning Northern Ireland; a commitment to seek the agreement of a restored Northern Ireland Assembly before new areas of EU law could be added to the protocol; and a legal guarantee that Northern Ireland businesses will continue to enjoy unfettered access to the entire UK market.

Let me be clear: the Government are committed to ensuring that any arrangements to avoid a hard border on the island of Ireland respect the devolution settlement in Northern Ireland. The UK recognises our unique relationship with Ireland. The UK-Ireland relationship should continue to operate through the well-established three-stranded approach set out in the Good Friday agreement. At this stage, I am unable to add to the remarks I have already put on the record, but I thank noble Lords for the opportunity to make them. I know that we will come back to this issue on Report, but in the meantime I hope that the noble Lord will feel able to withdraw his amendment.

Overseas Aid

Debate between Lord Bates and Lord Purvis of Tweed

Wednesday 30th January 2019 Lords Chamber

[Lord Bates]

Of course, Priti Patel, sadly, resigned as Secretary of State for Development a couple of years ago. However, Penny Mordaunt is absolutely committed to the 0.7%—delivered by his kinsmen in Abercrombie House up in Scotland—which is of crucial importance. We remain committed to it.

[Lord Purvis of Tweed (LD)]

I was the Member who took the Act through the House, and I was able to do so only because of the wide cross-party consensus in this House—including the Minister’s predecessor, my noble friend Lady Northover, the Labour Front Bench and the Minister himself in another capacity. That consensus had a core, which could be a component of British leadership. We are the only developed country in the world to meet this target and to enshrine in law that we will continue to do so. Therefore, language such as “unsustainable” raises questions as to whether other developed economies should seek to meet their obligations. The Minister and I are wearing our SDG badges close to our hearts. We know that under the current expenditure profile, those targets will not be met. British leadership in this area can be critical. Can the Minister say categorically that language such as “unsustainable to meet our obligations” will not be heard from a British Cabinet Minister?

[Lord Bates]

First, I pay tribute to the noble Lord for taking through that legislation, which I was delighted to support myself from the Back Benches; it was crucially important. We need to keep at the forefront of our minds that there is a huge need out there. We need to build on the commitments we have already given and the pledges we have made, but as he rightly points out, we also need to encourage others to step up to the plate. Increasingly, however, we see that Governments cannot do this alone. We need to leverage in trade and private investment to bridge that gap if we are to lift people out of poverty.

Trade Bill

Debate between Lord Bates and Lord Purvis of Tweed

Committee: 2nd sitting (Hansard - continued): House of Lords
Wednesday 23rd January 2019 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, it is welcome to move from the group of amendments that caused maximum divergence to the group of amendments after dinner where there is maximum convergence. I think we all side with the way that the noble Lord, Lord Stevenson, led this debate by pointing to the immense benefits in achieving sustainable development goal 1, the eradication of extreme poverty by 2030. We are not going to do that by aid—aid is around £1.5 billion a year. It requires significant trade flows and therefore this is crucial.

I will make some very brief general remarks. Around £20 billion of goods a year are shipped to the UK from developing countries, accounting for around one-third of our clothing, one quarter of our coffee and other everyday goods such as cocoa, bananas and roses. This trade also creates jobs, helping people to work their way out of poverty. Consequently, I am pleased to confirm to the Committee that this has already been legislated for in the Taxation (Cross-border Trade) Act. My noble friend Lord Lansley might still have been on vacation when on 4 September I took that Bill through this House. Although the debate on it was brief, it was very good. I shall come back to that point later.

The trade White Paper confirmed the Government’s intention to provide, as a minimum, the same level of import duty reductions to all current beneficiaries of the EU’s GSP scheme as we leave the EU. I am also pleased to assure the Committee that Section 10 of the Taxation (Cross-border Trade) Act enshrines in UK law the obligation to provide duty-free and quota-free trade access for least developed countries. The Government will lay secondary legislation to set out these details of the scheme before we leave the EU if needed by March 2019, or at the end of the implementation period. In the future, we will look to improve the UK’s trade preference scheme by making it even more generous, simpler to attain and capable of working better for the poorest people around the world. Alongside this, our aid spending will continue to provide support and expert advice to help break down barriers to trade and to promote investment so that developing countries can take better advantage of these arrangements.

As the noble Lord, Lord Stevenson, mentioned, I also have the privilege of being the Minister with responsibility for economic development in the Department for International Development. It may be of interest to my noble friends Lord Lansley and Lady Neville-Rolfe and the noble Lord, Lord Fox, that in that context I am undertaking a review of how we might approach the opportunities to look at more beneficial trade and tariff-reduction packages and economic partnership agreements in future as we leave the EU. I would be delighted to take this conversation into the Department for International Development, for those who are interested, to meet officials so that we can delve more into some of the great expertise and ideas that we have heard today.

[Lord Purvis of Tweed (LD)]

The Minister’s commitment is very welcome. We know that we can take him at his word on that because he is very open and a very responsive Minister who is respected across the House. I will follow up a point made by the noble Lord, Lord Lansley. With regard to the 49 countries under the EU Everything But Arms policy and, according to the OBR, the 27 other low-income countries that the EU has defined, if on exit we are going to replicate the EU system we would also have to replicate the rules of origin system that comes with GSP+. GSP+ has distinct EU rules of origin requirements for those countries that are part of it. Is the Government’s intention to replicate the rules of origin criteria that the EU currently operates for them?

[Lord Bates]

I am grateful for the noble Lord’s question. His precise point is that we are aiming to replicate what currently exists, so we would take across the current applicable rules of origin into what we would be laying in secondary legislation before we leave the European Union. Once we have left—without a deal or, we hope, after an implementation period—we could devise our own scheme during that implementation period and be aware of the EU’s thinking. I know from serving on the Foreign Affairs Council that it has done some tremendous development work, particular with the post-Cotonou negotiations, as to how we fit. The current plan is that what is presently the case will initially also be the case for these countries.

Trade Bill

Debate between Lord Bates and Lord Purvis of Tweed

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 23rd January 2019 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, I seek some clarifications when the Minister responds, broadly in response to the constructive contribution from the noble Lord, Lord Lansley. With the withdrawal Bill, there was much debate in Committee and this House regarding how existing EU law will be migrated into UK law. There were 12 competences the UK Government believed were reserved and would therefore be fully within the competence of the UK Government, but that the devolved Administrations believed were either devolved or had a direct impact on devolved powers.

State aid was one of those areas where there was no agreement. That means that if there continues to be no agreement, then the amendment in the name of the noble Lord, Lord Stevenson, is absolutely critical. It means that for regulations brought for the continuity agreements, there needs to be far more enhanced consultation with Administrations that believe this is touching on their direct competences. If there has been agreement, then perhaps the amendment is less necessary for the continuity agreements; but as we come to further amendments, this sets the tone for what will be necessary for future agreements. When the Minister responds to this group, I hope he will be able to provide clarification on where the discussions are, regarding whether there is agreement on where state aid lies within this area of competences.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join others in thanking the noble Lord, Lord Stevenson, for moving this amendment. In response to my noble friends Lord Trenchard and Lord Lansley, I think that the noble Lord intended this as a probing amendment, as he said, to give the Government the opportunity to put some issues on the record. It has been very timely, not least because under the EU withdrawal Act, mentioned by the noble Lord, Lord Purvis, on Monday we laid the regulations on state aid before the House. That 77-page document will now make its way through the rigorous scrutiny of the Joint Committee on Statutory Instruments and then the Secondary Legislation Scrutiny Committee. Then, of course, it will be subject—because it is by the affirmative procedure—to scrutiny later in this House. For that reason some of the specific issues referred to by my noble friend Lord Lansley and the noble Lords, Lord Purvis and Lord Lea, might be usefully dealt with in that area.

Clause 2 is not about making changes to existing agreements, and the regulations cannot be used for future free trade agreements, as my noble friend Lord Lansley rightly identified. In answer to the noble Lord, Lord Stevenson, we also need to recall that the Competition and Markets Authority has been given this responsibility domestically, across the UK jurisdiction. When it comes to free trade agreements and the EU, the Trade Remedies Authority would undertake that responsibility.

To provide further reassurance that we do not expect to need to use these powers to set up a domestic state aid regime, I can inform the Committee that we have laid the instrument I referred to. This instrument, the State Aid (EU Exit) Regulations 2019, will be made under the European Union (Withdrawal) Act 2018 and establish a domestic state aid regime that will work for the whole of the UK at the point that this is required. No doubt Noble Lords will be offered an opportunity to scrutinise this in detail.

Subsection (2) of the proposed new clause requires the Government to consult relevant stakeholders prior to laying implementing regulations under Clause 2 which make provision on state aid. We have been clear that proportional consultation is of the utmost importance to us. We have engaged with a large number of stakeholders through our programme of trade continuity. The Government will always consult stakeholders as appropriate, so to set out specific provisions concerning consultation on state aid is not needed at this stage. The Bill already requires the Government to lay reports before Parliament in which we will provide detail of any real-world changes to free trade agreements. These will be laid before the agreement is ratified or regulations are laid under the Clause 2 power in relation to that agreement, whichever comes first.

Any significant differences in agreements that are relevant to state aid would be identified in these reports and Parliament would then be in a position to take an informed decision in relation to the making of the regulations or the conduct of the ratification process. I say again that we do not expect to need to make regulations under this power in order to implement state aid commitments in existing free trade agreements.

I turn to some of the specific points that were raised. My noble friend Lady McIntosh raised the horserace betting levy and the tripartite agreement. This is something we will come to in Amendment 48 in a later group, so perhaps I can leave it to the lead Minister, my noble friend Lady Fairhead, to respond, but the relevant provisions of the horserace betting levy were notified to the Commission and approved by the Commission under state aid rules. I confirm that the TRA—the Trade Remedies Authority—will not be responsible for state aid prioritisations in FTAs. It will be a matter for individual free trade agreements to establish a dispute mechanism.

[Lord Bates]

That is correct. I am grateful to the noble Lord for setting that out. My noble friend Lord Trenchard mentioned the Government’s commitment to the state aid system. That point is contained in Command Paper 9593, The Future Relationship between the United Kingdom and the European Union, which says in section 1.6.1:

“The UK has long been a proponent of a rigorous state aid system—this is good for taxpayers and consumers, and ensures an efficient allocation of resources”.


Moreover, the political declaration which accompanies the withdrawal agreement points out in section XIV, paragraph 79:

“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards”.


That will all be fleshed out as the future economic agreement is worked on. Again, I thank the noble Lord for the opportunity to clarify some points on the record.

[Lord Purvis of Tweed]

Will the Minister clarify that since the Sewel convention continues to apply, the UK would not legislate ordinarily on devolved matters if the Government have brought forward this regulation? Last year, during the withdrawal Bill process, the devolved Administrations believed that this touched on their competences with state aid. Has there been agreement with the devolved Administrations that this is a fully reserved issue?

[Lord Bates]

Perhaps I could write to the noble Lord on that to make sure that I get that absolutely correct. I will write to him. Does the noble Lord want to come back on that?

[Lord Purvis of Tweed]

I wonder if the Minister is able to write before we get to the next grouping because this is going to be relevant. Whenever the Minister can provide clarification, it will be welcome to the Committee.

[Lord Bates]

I have a sneaking feeling that some clarification may be coming via my noble friend Lord Younger by the time we reach the next grouping. I am sure the noble Lord will have an opportunity to respond to that. Failing that, I will be very happy to write before Report. I thank the noble Lord and ask him to consider withdrawing his amendment at this stage.

--- Later in debate ---

[Lord Purvis of Tweed]

The Government’s position, already stated, is that they intend the future customs arrangement to be based on those aspects of the Northern Ireland protocol which require agricultural and goods regulatory alignment with the European Union.

[Lord Bates]

We have been very clear about this; we want a deep and special facilitated trading arrangement with the European Union which allows all the benefits of free trade while allowing us to take advantage of the new opportunities which are emerging. According to the EU’s figures, 90% of growth over the next 10 to 15 years will be outside the EU—in India, China and the United States. That is what we need to tap into. That is what we need to be focusing on. We need to have the freedom to negotiate those independent trade agreements. If you go for a customs union, you are going to surrender that opportunity, and we are not prepared to do that. You would also surrender the right to shape the rules that you are going to have to implement.

--- Later in debate ---

[Lord Bates]

Because 17.4 million people decided that they wanted to leave, and that is what the Government are committed to doing. I want to be careful not to be flippant about the subject we are dealing with; it is very serious, and the positions have been well argued. Nor do I want to be disrespectful to people for whom I have huge admiration, such as my noble friends Lord Patten and Lord Lansley, and the noble Lords, Lord Hannay and Lord Kerr, whose expertise I respect. But the position of Her Majesty’s Government is very clear. We have a deal. We should take advantage of that deal. A customs union would have all the disadvantages with few of the benefits. That is the reason we do not accept the amendment.

[Lord Purvis of Tweed]

Before the Minister sits down, I wonder whether he could advance this clarity. The noble Baroness, Lady Neville-Rolfe, states that we have now agreed with Israel to roll over our existing trading relationship with Israel. Israel does not have a free trade agreement with the European Union, or with us now. It has an association agreement, which has been in force since 2000. That is part of the pan-Euro-Mediterranean cumulation on rules of origin. This means that if we are replicating our existing relationship with Israel, we are replicating the rules of origin relationship that Israel has with the European Union. It also has common rules of origin procedures with Turkey, so if the Government’s position is that we are simply rolling over all of our current trading relationships through an association agreement with Israel, it means that we are now going to be bound by common rules of origin procedures with the western Balkans, the Faroe Islands and Turkey in the pan-Euro arrangement.

I am not sure why the Faroe Islands is part of that, but the reality is—and this is the point I was trying to make in my contribution—that we have to be open. If you want complete independence of trading relationships in the way the world trades now, that is impossible, so the Government have to have some limitations on it. If it is replicating the Israeli agreement, it is replicating exactly the same rules of origin alignment that we currently have with Turkey, and Turkey is part of a customs union with the European Union. That is quite simple, too.

[Lord Bates]

The Committee will come to rules of origin shortly, but on that point, that is the reason why, in the agreement that we are proposing—the deal that is on the table—we propose that to ensure that trading goods between the UK and the EU remains frictionless in the UK, there will be no routing requirements for rules of origin on trading goods between the UK and the EU. What we are talking about with Israel is consistent with that.

Taxation (Cross-border Trade) Bill

Debate between Lord Bates and Lord Purvis of Tweed

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 4th September 2018 Lords Chamber

[Lord Bates]

My Lords, this has been a good debate. I now have the challenge of trying to respond to, by my calculation, 33 specific questions in the time allotted; if I am to abide by the Companion I should not exceed 20 minutes for winding up.

Before I address the key themes raised, I will say that a lot of the debate centred on the constitutional nature of what we seek to achieve through the procedure by which we are considering the Bill. I want to set out the context. The proposition made was, effectively, that this piece of legislation was being railroaded through both Houses and on to the statute book without sufficient scrutiny. To that challenge, I point out that it was on 9 October last year that the customs Bill White Paper and the trade White Paper were published; that it was on 20 November last year that the Taxation (Cross-border Trade) Bill was introduced to the House of Commons in a Ways and Means debate; that it was on 5 December last year that both the trade and the customs elements were the subject of take-note debates in your Lordships’ House; that it was on 8 January this year that the Second Reading of the Bill was debated in the other place; that, during debate on the EU withdrawal Act in your Lordships’ House, customs and trade implementation issues were readily and frequently the subject of amendments and of debate; that on 12 July the Government published their White Paper on the future economic partnership, which set out in detail the proposal for a facilitated customs arrangement; and that on 16 July the Bill completed its Commons Report stage and therefore now comes to your Lordships’ House.

[Lord Purvis of Tweed]

The Minister is making the point that the Bill started so long ago that we have had sufficient time to consider it—but some fundamental changes were made a week before the House of Commons rose for its recess. There has been no other parliamentary time to scrutinise the amendments made by the ERG, which could fundamentally change the Government’s whole proposal for a facilitated customs arrangement. There has been zero opportunity to have that consideration, and there will now be zero opportunity for it in this House as well.

[Lord Bates]

The noble Lord says that, but I am not suggesting what he has just accused me of suggesting for one minute. I am placing this in context. There has been substantial scrutiny and time for debate on the issues. The Trade Bill will follow; it has its Second Reading on 11 September, as referred to by the noble Lord, Lord Stevenson. We hope that an agreement with our European friends will take place this autumn, and there will then be a meaningful vote. Following that, there will be an agreement and implementation Bill. Following that, a piece of legislation on the future economic framework will have to come before your Lordships’ House. Placed in that context, this Bill represents the fact that at the moment our customs, trade and tariff policies are hardwired into the European Union, so there is a legislative necessity for us to have a standalone trade and customs arrangement, legislatively underpinned, so that we can prepare for any eventualities that the negotiations throw up. We have been clear throughout that it is in the best interests of this country and of the European Union that we conclude in an orderly way, with an agreement, and that we move to frictionless trade as far as possible.

The debate has focused essentially on the following issues; I will summarise them as a way of trying to work through and answer as many questions as I can in the time available.

Overseas Development Assistance: Fossil Fuel Subsidies

Debate between Lord Bates and Lord Purvis of Tweed

Tuesday 15th May 2018 Lords Chamber

[Lord Bates]

Energy is critical. I want to make absolutely sure that I got out the last words in my previous answer. As I sat down, I referred to fossil fuel subsidies, which the overseas development assistance system does not deal with. The noble Lord is absolutely right: power is incredible. You cannot have economic development at the pace we want to see or, often, the healthcare systems that people need without access to energy. That is why the CDC is right to invest heavily in bringing extra power plants on line. Some 5,000 megawatts that the CDC has invested in is currently under construction or coming online. Overwhelmingly, it is in favour of renewable energy because we believe that, in terms of economic benefits and costs, it provides the best opportunity for developing countries in the future.

[Lord Purvis of Tweed (LD)]

My Lords, the UK’s shareholding in the Asia Infrastructure Investment Bank is scored from overseas development assistance funding from DfID. While the bank itself has a strategy of being lean, clean and green, it still invests in fossil fuel projects; granted, not coal, but nevertheless fossil fuels. What is the UK’s position in multilateral organisations that it directly supports where there could well be projects in which, as part of the finance mechanism, there is a subsidy element?

[Lord Bates]

It is a good point. The noble Lord points to the Asia Infrastructure Investment Bank, but there are some tremendous examples. For example, the African Development Bank lent 100% to renewables in 2017. Progress is being made. There is general agreement in the international community that we need to move away from fossil fuels to renewables because that is what the STGs call for—STG7 is about clean and sustainable energy available to all—and what the Paris climate accord calls for.

Development Aid Budget

Debate between Lord Bates and Lord Purvis of Tweed

Monday 3rd July 2017 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join other noble Lords in paying tribute to the noble Baroness, Lady D’Souza, for securing this debate. It has been extremely useful and one of those occasions when you look at the wealth of expertise both in and outside this House and are not quite sure whether at the end of it you are supposed to give a speech or should have been taking notes. Of course, it has been a combination of both as I have gone through this debate.

The noble Baroness, Lady D’Souza, has a distinguished track record in this whole area. She outlined, rightly, the need for evidence-based analysis of what is working here. We also heard during the course of the debate from my predecessor, my noble friend Lady Verma, who left a tremendous legacy from her time as Minister. I publicly thank her for that. Many of the areas in which I now deal simply continue excellent initiatives that she began. I also join others in welcoming my noble friend Lady Sugg to the Front Bench as Whip. She will be a tremendous support because, again, she has such experience and expertise in this area.

If I were to try and answer all the questions presented to me, we would exceed the two-and-a-half hour cut-off line—perhaps even the two-and-a-half hour cut-off line for my speech. I have a limited amount of time, but I am very keen that we are able to draw on the wealth of expertise in this House. I will look for an opportunity, I hope before the recess, to continue some of these discussions we have had today.

UK aid plays a vital role in helping the world’s poorest and most vulnerable. That is both morally right and in our enlightened self-interest, as we were reminded. One of the other themes of the debate has been that the world has changed. The noble Lord, Lord McConnell, referred to that in particular. We talked about the changing nature of some of the pressures. I want to dive straight in to the ODA issue mentioned by so many. It is an area of focus.

The rules of the OECD’s Development Assistance Committee were set up some 40 years ago, when the world was a very different place. They have been changed only once in the past 40 years. That process of changing them, once, in March 2016—as the noble Baroness, Lady Sheehan, and the noble Lord, Lord Collins, referred to—took a period of four years to agree. This is a slow-moving area because the Development Assistance Committee works by consensus. We have been very keen to say that we want to share our concerns with our friends. That has literally just begun through our communication process. At this stage, I cannot give a run-down of who our friends are in these particular areas or what each of them are coming to us to say are the areas they would like to see changed and improved.

However, they have looked at particular areas such as climate change. That is something on which 40 years ago there was perhaps not the same focus so we need to look at it. Some elements of research that you can do into climate change are not ODA eligible, yet they benefit, as many have mentioned, the poorest on the planet. There is also violent extremism and countering terrorism—the new threats we face. Do the rules allow and capture all that has been done in this particular area? There is migration on a huge scale around the world, almost unprecedented in our history—certainly post-war—and that raises new challenges. So when, for example, we deploy Border Force cutters in the Mediterranean to intercept the people-traffickers who make fortunes out of other people’s misery and put their lives at risk, and when we work with the Libyan coastguard to try and improve their security and safety, are these not areas that we ought to be able to consider as part of our overall effort?

There is also trade. We talk about trade and development. The only way we are able to achieve that aspiration set out by the former archbishop of not creating dependency—referred to by the noble Lord, Lord Judd—is by trade. Look at the number of people in extreme poverty, which reduced by 50% between 1990 and 2010. What was the reason for that—was it the levels of aid? No, it was the levels of trade, so those are very important to us. That is also the reason why the Secretary of State for International Trade and the Secretary of State for International Development jointly announced that one of our ambitions is to maintain and build upon the preferential trade arrangements for the 48 countries in Africa to be able to trade into the United Kingdom tariff-free. We recognise that that is incredibly important to us.

The noble Earl, Lord Sandwich, referred to the issues of monitoring. Many noble Lords referred to the level of monitoring that goes on. He referred to the possibility that there might even be an excess of monitoring in some respects. Of course, at the moment overseas aid is, in the UK, probably one of the most scrutinised of any spends that happen anywhere in the world. That is one reason the noble Lord, Lord Purvis, was right to point to the International Aid Transparency Initiative’s rating of DfID as world-class and world-leading in the way that it does aid. We have nothing to fear from transparency because that is part of the way we learn and gather information about this. I direct noble Lords to the website “devtracker”. It is a bit of a catchy name, but the Development Tracker is an incredible resource, enabling you to see exactly, in real time, what is actually happening on which programmes and who is delivering them. You can read the independent evaluation reports carried out and see how much money has been paid—as I say, in real time. These are ground-breaking methods of transparency that are recognised internationally. Of course, then we have our own quality assurance, and that has been added to a whole new—

[Lord Purvis of Tweed]

I do not wish to interrupt the Minister’s flow, but he has quite substantially moved on from the area of the DAC and OECD. With the greatest respect, I was waiting for him to answer the point that a number of noble Lords across the Chamber asked about the line in his party’s manifesto that, if there were no agreement within the OECD and DAC, the Government would propose unilateral action and bring forward legislation to change the criteria for ODA in the UK. All of us asked him to reflect on that and perhaps move away from it, especially in the context that he no longer has a majority in either House. This would be a good example of listening to a great deal of concern that moving unilaterally would not be in the best interests of the UK in this area.

[Lord Bates]

I do not want to parallel or parody debates taking place on other aspects of government policy and exiting the European Union, but I can assure the noble Lord that we have no red lines. We are still developing what the issues are that we would like to address. We began that process talking to the NGOs. I would like to continue by talking to Members of your Lordships’ House about what the issues are, citing some of the problems and talking it through with officials. Of course, then we need to present that to colleagues. So it is not a firm, baked plan, which we are demanding or otherwise we will go out on our own. We have said we are quite determined that there are some issues that need to be addressed and we want to share that with people and work together in a consensual way.

Returning to the point about examination and monitoring, of course we have our own internal quality assurance. We also have the National Audit Office. We have the Independent Commission for Aid Impact, which has been cited. The noble Baroness, Lady Sheehan, asked about the CSSF. That was one of the ICAI reports that the noble Earl, Lord Sandwich, referred to, where that scrutiny is beginning to happen. There is also the International Development Committee in the other place, of which the noble Lord, Lord Bruce, was a distinguished chair for 10 years. Again, we have a very good working relationship with that committee. It is rigorous, but there is a partnership because we all want the same thing—namely, to eradicate extreme poverty.

Then we have the sustainable development goals, which a number of noble Lords, including the noble Lord, Lord Collins, and my noble friends Lady Verma and Lady Jenkin, referred to. They are going to introduce a whole new level of scrutiny. Again, it comes back to the point about the Development Assistance Committee. Forty years ago, we did not have the millennium development goals, never mind the sustainable development goals. Now we have these new goals that introduce whole new categories—such as beneath the ocean or peace and conflict, which the noble Lord, Lord Alderdice, referred to—that we need to work on.

I was asked what the Government are doing in respect of the SDGs. We published our Agenda 2030 in March. That was the cross-government response to that. The Office for National Statistics has announced a consultation looking at the best way of producing data and statistics in these matters so that we can track our progress towards the SDG aims. It has some very important elements in it. The noble Baroness, Lady Warwick, was concerned about how those data might be connected. There is a huge new initiative taking place across the UN institutions about collecting data, particularly on the sustainable development goals—what actually works and how it should operate. That is being done by the UN Statistical Commission. We have representation on that and we will follow that, and publish routinely and regularly, in accordance with the requirements of the SDGs, how we are progressing. We will also be able to see online how other countries are progressing towards them. I think this is going to be a major step forward—to reassure the noble Baroness, Lady D’Souza, among others—because once we see countries’ own self-assessment of where they are lagging behind and where they are progressing, we will have an additional level of data to help us ensure that our resources are directed to those who are in greatest need.

The noble Lord, Lord Bruce, also asked why BEIS is the second-highest ODA spender. Of course, that is because the primary objective of BEIS ODA is research and innovation—to reduce poverty by generating and putting into use knowledge and technology to address development challenges and advance development for the poorest in the world. The noble Baroness, Lady Warwick, gave the example of King’s College working in partnership with the Government of Sierra Leone on Ebola. What has been achieved through this, and more widely through development, is incredible, but we still have a long way to go. We have rigorous ways of monitoring the impact and communicating the achievements.

I know that at this point the noble Lord, Lord Judd, will be flinching in his seat, but I ask him to bear with me on impact because it is leading to the subject of effectiveness. We can see that development aid is changing the lives of the world’s poorest. Just today we read about the outbreak of cholera in Yemen, and there is the World Health Organization with 1 million cholera vaccines, desperately trying to get safe access. It is true that you cannot separate the security elements from the humanitarian need in this respect. The noble Lord, Lord McConnell, referred to this as well. Without the security elements, we will not be able to get those vaccines to those who need them.

Just last week, I returned from South Sudan. I was delighted to hear the analysis and the experiences of the right reverend Prelate the Bishop of Truro. I saw the terrible situation there. Were it not for the World Food Programme and DfID’s contribution to that, 1.6 million people who are relying on airdrops of food, through a completely man-made conflict—this is not to do with climate change but entirely to do with the civil war which is raging on the ground—would have their lives put at risk. Therefore, to say that you can somehow separate the security dimension from the humanitarian dimension is not correct.

I will speak about other government departments. The noble Lord, Lord McConnell, referred to the Building Stability Overseas Strategy. Of course, we now have the UK aid strategy—Command Paper 9163—produced in 2015. I do not want to quote extensively from it but that is our new marching point for this and includes significant elements on how we are going to work with global peace, security and governance. I commend it to noble Lords. It says:

“All departments spending ODA will be required to put in place a clear plan to ensure that their programme design, quality assurance, approval, contracting and procurement, monitoring, reporting and evaluation processes represent international best practice”.


It is also right and absolutely fair to say that other government departments are not quite at the level of DfID at the moment. We do not want to crow too much about that because they have not been doing it for as long. My noble friend Lady Chalker is in her place. There is a long tradition and expertise in that area in government, which we want to retain. But that cannot be any reason not to aspire to the highest standards. We have said that we want all government departments that are delivering ODA to be rated either good or very good within five years. An ODA senior officials’ group now meets regularly across government to ensure that lessons are learned and we can assist other government departments in doing that.

The noble Lord, Lord Bruce, mentioned disability. Again, this is part of the SDGs and leaving no one behind, which is a key part of what we are doing. Looking again at our disability strategy is also something that the Secretary of State, Priti Patel, has made a personal passion of. We will be putting additional resources towards that.

The noble Baroness, Lady D’Souza, and the noble Lord, Lord Alderdice, mentioned small grants. I covered this subject in the exchanges in Questions about the small charities challenge fund.

The right reverend Prelate also spoke about what churches could be doing in this area. I will be meeting him tomorrow. Again, I turn to the example of South Sudan. When I was in South Sudan, I met Archbishop Deng—a very gracious man—the Archbishop of South Sudan and Sudan. There are 100,000 churches in South Sudan. What an incredible network that we could be using for peace and reconciliation. I also met Bishop Anthony Poggo, who I am sure is well known to the right reverend Prelate.

The noble Lord, Lord McConnell, mentioned the catalytic impact of private sector investment and the £2.5 trillion gap in private financing. We need to get much more private capital in there. Governments cannot do this alone through ODA. It needs to be through trade, private investment and, increasingly, government assistance providing a catalytic role in that.

Without doubt, UK aid is making a significant contribution to tackling the global challenges of our time. The Government agree wholeheartedly on the importance of measuring its impact so we can fully understand and continue to improve on the very significant contribution the UK is making to the world’s poorest, to stability and prosperity here and to eliminating extreme poverty by 2030. I look forward to continuing these discussions as weeks go on.