Brexit: EU Customs Union

Lord Callanan Excerpts

Wednesday 7th February 2018 Lords Chamber

[Baroness Ludford]

To ask Her Majesty’s Government what future relationship they plan between the United Kingdom and the European Union Customs Union.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, the Government made clear in the Prime Minister’s speech in Florence and subsequently that we will be leaving the EU customs union. In the Government’s customs future partnership paper published last August we put forward two possible approaches to the UK’s future customs relationship with the EU. The specific approach we take will of course be subject to the outcome of the negotiations.

[Baroness Ludford (LD)]

My Lords, I am grateful for the Minister’s certainty, but it does not seem to be shared by all members of the Cabinet who are speaking out. Indeed, when on Friday Mr Olly Robbins gives EU negotiators a,

“UK update on the future relationship”,

as the agenda foresees, I suspect that all he will really be able to tell them will be, “My political bosses are incapable of making up their minds. Can you please tell us what to do?”

[Lord Callanan]

Was there a question there? I am sure that, if Mr Robbins gives any kind of update, being the good, efficient civil servant that he is, he will want to reflect government policy.

[Lord Forsyth of Drumlean (Con)]

My Lords, will my noble friend confirm that when we leave the customs union we will be able to end the scandalous discrimination against developing countries and others where there are very high tariffs on food, clothing, textiles and other goods? Can he give an example of some of the high tariffs that we will be able to avoid, thus reducing the costs to British consumers?

[Lord Callanan]

I thank my noble friend for his question. He is, of course, right. Leaving the EU offers us the opportunity to have our own independent trade policy not contracted out to the European Commission. There are many opportunities that will present themselves, and eliminating some of the extremely high tariffs on agricultural products is one of them.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, in an open letter this morning the British Chamber of Commerce has almost begged the Government to spell out what they actually want from the relationship with the EU. It said quite bluntly that those who are elected to govern now have to make a choice—it is make your mind up time. Will the Minister send a little memo to the Brexit sub-committee which is meeting today to urge it, for the sake of the country’s economy and not just for party unity, to look at jobs first and decide that whatever is best to get jobs and the economy going will be what drives the negotiations?

[Lord Callanan]

I totally agree with the noble Baroness that of course we should have regard to jobs created in the economy. No doubt she will be delighted to know that last week we announced the lowest unemployment totals in the UK for 42 years. I am sure that the Labour Party will want to join us in welcoming that record.

[Lord Hannay of Chiswick (CB)]

My Lords, the Minister said, correctly, that in August or September the Government referred to two options. They did not describe them; they just referred to them. I think that one of them was called “blue sky thinking by the Secretary of State for DExEU”. With all the resources of the British Government behind them, what have the Government done to fill out those two options since then? Will the Minister perhaps share that information with the House?

[Lord Callanan]

As the noble Lord is aware, we published a future partnership paper and put forward two proposed options for the UK’s future customs relationship. The first is a highly streamlined customs arrangement consisting of negotiated and unilateral facilitations, aiming to simplify requirements on UK-EU trade. The second is a new customs partnership. They are both comprehensive options that will be studied.

[Lord Tomlinson (Lab)]

My Lords, if the Government have made their position so clear, why is not only the Cabinet meeting but the sub-committee on Brexit meeting twice this week in order to determine among themselves what government policy is?

[Lord Callanan]

The noble Lord will be aware that the Cabinet meets once a week and that sub-committees regularly consider all aspects of government policy. This is a particularly important aspect of government policy, so we will want to go through all the options in great detail

[Lord Pearson of Rannoch (UKIP)]

My Lords, are the Government aware of the Civitas research which shows that, if the Eurocrats force us to trade on World Trade Organization terms, EU exporters will pay us tariffs of some £13 billion a year, while ours will pay them only some £5 billion a year—a nice little profit to us of some £8 billion? So would it not be generous of us to offer to leave our free trade just as it is, while taking back our law, borders, fishing, agriculture and sovereignty generally?

[Lord Callanan]

I am sure that the noble Lord is a believer in free trade. Nobody on either side wants to get into paying tariffs. We want a bold and ambitious economic partnership, as the Prime Minister has made clear.

[Lord Wallace of Saltaire (LD)]

My Lords, will the Minister accept that some of us listening to the Government’s debate are getting a little confused about what the exact distinctions are between “the” customs union, “a” customs union and a customs “arrangement”? Since Ministers use the terms “a customs union” and “a customs arrangement” regularly to describe what we want, could the Minister help us by explaining exactly what the Government mean by them?

[Lord Callanan]

I can certainly agree with the noble Lord that the Liberal Democrats are confused, if that is what he is asking me to do. The term “customs union”, as he will know, has a specific legal formulation.

[Lord Low of Dalston (CB)]

My Lords, how is regulatory alignment between the Irish Republic and Northern Ireland to be maintained if we leave the customs union?

--- Later in debate ---

[Lord Callanan]

We are currently formulating the legal agreement implementing the phase 1 agreement, where we, alongside the EU and the Irish Government, committed to having no hard border in Northern Ireland. All of the options will be considered in the second phase, but we are committed to that option.

European Union (Withdrawal) Bill

Lord Callanan Excerpts

Wednesday 7th February 2018 Lords Chamber

Moved by

[Lord Callanan]

That it be an instruction to the Committee of the Whole House to which the European Union (Withdrawal) Bill has been committed that they consider the bill in the following order:

Clauses 1 to 5, Schedule 1, Clauses 6 to 9, Clause 16, Schedule 7, Clause 17, Clause 10, Schedule 2, Clause 11, Schedule 3, Clause 14, Schedule 6, Clause 15, Clause 12, Schedule 4, Clause 13, Schedule 5, Clauses 18 and 19, Schedules 8 and 9, Title.

Motion agreed.

Brexit: Transition Period

Lord Callanan Excerpts

Wednesday 31st January 2018 Lords Chamber

[Lord Lennie]

To ask Her Majesty’s Government what are their objectives for the Brexit transition period.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, both the UK and the EU are in agreement that a strictly time-limited period would be mutually beneficial. An implementation period forms a key part of a smooth and orderly exit from the EU. It would provide time for government, people and businesses to adjust to the new arrangements and prevent businesses in both the UK and Europe having to make decisions before they know the shape of our future partnerships.

[Lord Lennie (Lab)]

This not a bridge to a clear destination but a gangplank to thin air—I think that was the quote. Secretary of State David Davis said in evidence to the Lords European Union Committee this week that during transition things would not be exactly the same but very, very similar to what they are now. Will the Minister explain to the House what the very, very similar differences are that we can expect during the transition period?

[Lord Callanan]

The two main differences, and the reason that we need to construct an implementation period are, first, the ability for us to sign and agree trade deals with third countries, and, secondly, to agree and sign a trade deal with the EU, which is legally impossible as long as we are a member.

[Lord Bridges of Headley (Con)]

My Lords, I hate to say it but my noble friend continues to refer to this period as an “implementation period”. For there to be an implementation period there needs to be a treaty to implement. Under my reading of Article 50, it is impossible for us to negotiate a treaty during the process of Article 50. We can conclude that only after March 2019. Does my noble friend agree that that is the case and that we should stop using the phrase “implementation period”? It is a transition during which we will negotiate the final treaty.

[Lord Callanan]

I thank my noble friend for his helpful question. As he well knows, Article 50 makes it clear that the withdrawal agreement needs to take account of the future relationship so that we will know the terms of our new partnership with the EU by the time of our exit. This is the basis on which we have to work.

[Baroness Ludford (LD)]

My Lords, given that the Government do not have a clue where they are going, would it not be a lot less dangerous to seek to extend Article 50 and stay longer in the EU instead of sticking to a dogmatic target exit date? That would allow both Parliament and the people to take control and shape all stages of Brexit negotiations, including withdrawal, transition, implementation and any future relationships—giving them, of course, the choice of remain, which is the best.

[Lord Callanan]

The Liberals have obviously forgotten all about the referendum, but we will put that to one side. As an ex-member of the European Parliament, the noble Baroness will know that it is obviously illegal for the EU to sign trade deals with a country that is still a member. We need to be a third-party country, and we need also during the period to have the ability to agree and sign trade deals with other countries. That is why we need an implementation period. Article 50 says that we will leave the EU on 29 March next year. That is what will happen.

[Lord Hannay of Chiswick (CB)]

My Lords, will the Minister say what will happen if the period chosen by the EU and ourselves for the standstill period turns out to be insufficient for the negotiation of all the details and the implementation of the new partnership? Will that not simply postpone the cliff edge by 19 months or two years, and will it not then subject business to two wrenching changes, where one is the maximum that should be even thought about?

[Lord Callanan]

The reason that we are doing this is to have one set of changes. I totally agree with the noble Lord. It is very important that this period is strictly time limited, and both we and the EU agree that roughly two years is the appropriate period.

[Lord Tomlinson (Lab)]

My Lords, what part of the Question, “What are their objectives?”, does the Minister not understand? He has signally failed to answer the Question about the objectives of the Government. Would he agree with me that deliberately to continue not to give an account to Parliament of the objectives that we are supposed to be supporting the Government in is in fact a breach of the House’s right and amounts to a gross contempt of Parliament?

[Lord Callanan]

The Question was about the objectives of the implementation period, which I think I answered fully. If the noble Lord is referring to the objectives of the renegotiation, the Prime Minister set those out very clearly in her Florence speech and in her Lancaster House speech.

[Baroness Smith of Basildon (Lab)]

My Lords, I do have to press the Minister on this point. He referred again to the implementation period. The Question is more accurately about the transition period. I think that is understood by noble Lords. What are the Government’s objectives? The Prime Minister was quite clear previously when she said that access to one another’s markets will continue on the current terms, maintaining on current terms the customs union and single market, and that we will also continue to take part in existing security measures. Can he confirm that those are still the Government’s intentions and objectives for the transition period?

--- Later in debate ---

[Lord Callanan]

Yes. The Question was, “What are their objectives for the Brexit transition period?”. I answered what our objectives for the Brexit transition period were. The noble Lord then asked me about the wider renegotiation objectives, and I answered that—but of course the policy remains as set out by the Prime Minister.

[Baroness McIntosh of Pickering (Con)]

If we are leaving the single market and the customs union, as we have been consistently told by the Prime Minister that we are, at 11 pm on 29 March, how can we carry on trading on the same conditions as we currently do?

[Lord Callanan]

We are leaving the single market and the customs union on 29 March last year—I mean next year; I will have to do better in my speech later. That remains the position, but we have said that if we can negotiate an implementation period, then in the withdrawal agreement which will be put before your Lordships later this year, we will replicate the provisions of our current membership. So we will be out of it but we will replicate the provisions in an identical way for a strictly time-limited implementation period.

European Union (Withdrawal) Bill

Lord Callanan Excerpts

2nd reading (Hansard - continued): House of Lords
Wednesday 31st January 2018 Lords Chamber

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, the nature of the debate that has taken place over the past two days has shown the value of the expertise that this House brings to the legislative process. I totally agree with the noble Baroness, Lady Hayter, on this.

The legislation we have been debating is of great consequence for the country and is key to delivering a functioning statute book on 29 March 2019. It is therefore not only politically and constitutionally significant but practically essential, as many noble Lords have acknowledged. It is in recognition of the essential nature of the Bill that I want to emphasise my gratitude to all noble Lords who have contributed to this debate. The sheer number of noble Lords who took the time to attend and participate in the debate is a tribute to this House. Peers have excelled in their contributions, which have been—mostly—constructive and wholly befitting to the role of this House as a scrutinising Chamber.

I am sure noble Lords will understand that the late hour and time do not allow me to respond to each speaker individually—I am sure that noble Lords will be delighted to know that. However, it is clear that this debate has benefited from the extensive personal knowledge and professional experience in this place. Indeed, as the noble Baroness, Lady Smith, set out in her opening address, this Bill presents an opportunity for the Government to avail themselves of the genuine expertise on offer in this place.

I know that the noble Lord, Lord Adonis, has tabled an amendment, to which I will respond shortly. I should like to acknowledge at the outset the frustration and regret which many of your Lordships have expressed in this debate over the outcome of the referendum. But we are not here today to revisit the question of having a referendum, or to examine the reasons why people voted the way that they did. The withdrawal agreement and implementation Bill, which will come before Parliament, will be the opportunity to debate and scrutinise the domestic legislation implementing the final agreement we strike with the EU. Therefore, again in the interests of time, I will not address all those points today. Before I come to the noble Lord’s Motion, I will address the contributions made by other noble Lords on the subject of this Bill over the last two days. I will attempt to cover the main points but will also place a letter in the Library answering questions about the Bill that I have not covered in my answer.

There has been much discussion of the delegated powers within this Bill. I pay tribute to the noble Lords, Lord Newby, Lord Lisvane, Lord Strathclyde, Lord Bridges and Lord Tugendhat, the noble and learned Lord, Lord Falconer, the noble Baronesses, Lady Mallalieu and Lady Taylor, and many others who have spoken eloquently on this issue. I hope that noble Lords will agree that the power to correct deficiencies in retained EU law arising in consequence of the UK’s withdrawal from the EU is essential to achieving the core purposes of this Bill: to ensure that our statute book continues to function on exit, providing certainty and continuity for both businesses and individuals. The Government do not propose delegated powers lightly. We are committed to avoiding the twin spectres of permissions to do too much and permissions to do too little. The power is broad but limited and is, crucially, a time-limited solution to a unique problem. We want to strike the right balance between scrutiny and speed, and to ensure that the Government can complete this exceptional task in time for exit while tailoring the powers as tightly to their purpose as possible. It is important that there is no slack in a power of the exceptional type needed here. The Government do not ask noble Lords to accept on trust how they will be used. The correcting power was already adjusted in the other place to limit the scope and put the Government’s policy even more firmly in the heart of the power.

I have heard the concerns raised in this House. Be in no doubt that the Government are in listening mode and are willing to consider constructive suggestions for change. Many noble Lords have already made useful suggestions, including the noble Lord, Lord Lisvane, the noble Baroness, Lady Taylor, my noble friend Lord Hodgson, the noble Lord, Lord Butler, the noble and learned Lord, Lord Falconer, and many others, and I am confident that there will be further helpful suggestions to come in Committee.

I now come to the scrutiny procedures for the secondary legislation which will be made using the powers in the Bill. I of course recognise that the House has a strong record of scrutiny of secondary legislation under the auspices of the Secondary Legislation Scrutiny Committee. The Government have always wanted to ensure that there is sufficient scrutiny of the secondary legislation to come. While major policy change is for other Bills, the Government introduced this Bill with triggers for the affirmative procedure on all the key powers. There will be many SIs under the Bill which contain small and technical amendments which will not substantially change how the law operates for firms or individuals in practice. The affirmative procedure would be disproportionate in those cases.

To provide greater clarity on this point, the Government have published draft SIs to show the types of legislative changes that would be made under each procedure. We have always said that we would listen to Members of both Houses in the passage of this Bill. In that vein, the Government were pleased to accept the recommendation of the Procedure Committee in the other place. Those amendments ensured that Ministers must submit SIs that they are proposing to make under the negative procedure under the three principal powers in the Bill—Clauses 7, 8 and 9—to a sifting committee, which will consider the appropriateness of the procedure.

I know that noble Lords will want to ensure that the expertise of this House is properly brought to bear on secondary legislation. I share this view. As my noble friend the Leader of the House set out yesterday, we will bring forward proposals in due course following appropriate consultations.

I will briefly address the points raised by the noble Lords, Lord Wilson of Dinton, Lord Brown of Eaton-under-Heywood, Lord Howell and Lord Storey, the noble Baronesses, Lady Hamwee and Lady D’Souza, and many others regarding the Charter of Fundamental Rights. The UK has a proud tradition of respecting human rights. Leaving the EU does not and will not change this commitment. This includes children’s rights, which will of course continue to be protected under the Children Act 1989 and through our remaining party to the United Nations Convention on the Rights of the Child. I hope that this reassurance will aid the noble Lords, Lord Russell, Lord McConnell and Lord Storey, and the noble Baroness, Lady Massey, and I thank them for raising this important issue.

The Government have been unequivocal about this. Our intention has always been that, in itself, not incorporating the charter should not result in a significant loss of substantive rights. This is because the charter only reaffirmed the rights which were already protected under EU law, which will now be brought into UK law by this Bill. It is not, and never was, the source of those rights. The Government have also published a non-exhaustive memorandum setting out for each provision of the charter where the underlying rights will continue to exist as part of retained EU law or domestic law or the common law, but the simple fact is that leaving the EU will inevitably result in a change to the current arrangements. Therefore, it just does not make sense to retain the Charter of Fundamental Rights of the European Union. The clue is in the title; the charter applies to EU institutions and member states, but it applies to member states only when they are acting within the scope of EU law. We will not be a member state, nor will we be acting within the scope of EU law once we leave the EU. As such, the charter itself will not be converted into UK law, and I agree with the remarks made on the subject earlier in the debate by the noble and learned Lord, Lord Brown of Eaton-under-Heywood, and the noble Baroness, Lady Deech.

We have heard several contributions concerning the interpretation of retained EU law in Clause 6. This is not surprising, given the exemplary legal minds in this House, and I will endeavour here to speak to the concerns raised by the noble and learned Lords, Lord Judge, Lord Brown of Eaton-under-Heywood and Lord Falconer, and the noble Lord, Lord Kakkar.

I also extend my thanks to the Constitution Committee for its report, which many noble Lords have made reference to in this debate. This is a long and detailed report, and the Government will consider it carefully. From the beginning we have been committed to working collaboratively with parliamentarians to improve the Bill wherever possible.

The Government have heard the concerns raised in relation to whether and to what extent our UK domestic courts and tribunals should have regard to post-exit decisions made by the Court of Justice of the European Union, or to anything done by the EU and its other entities, when interpreting retained EU law. The UK is leaving the EU. This will end the direct jurisdiction of the CJEU. For our courts to remain bound to the future case law of the CJEU would be to undermine the clear position and ignore the reality of our withdrawal. It would also limit the discretion and independence of our courts, whose judicial authority we had sought to return.

We have a world-renowned judiciary, many of whose former members, I am pleased to say, are now in this House, and the Bill’s position in Clause 6(2) reflects the Government’s confidence in the judiciary’s independence and expertise. With this in mind, I emphasise that Clause 6(2) is intended to reflect in statute our strong belief that the courts are best placed to determine the right approach to questions of interpretation concerning retained EU law.

Clause 6 therefore provides that our domestic courts are not bound by post-exit decisions made by that court, as well as anything done by an EU entity or the EU itself, on or after exit day. The courts, however, may take such things into account if they consider it appropriate to do so.

We believe this provides a clear and certain position for our courts following our departure from the EU. Again, however, the Government have heard the concerns raised in this House over the last two days, and from other sources previously. I know that my noble and learned friend Lord Keen is eager to engage with your Lordships on these provisions over the coming months.

[Noble Lords]

Oh!

[Lord Callanan]

He told me to say that. The wealth of expertise and experience in this House is ideally suited to the task of considering and agreeing an approach which can command the broadest possible confidence. I hope that this leaves your Lordships in no doubt as to how seriously we take these questions, and I hope that we can continue to engage constructively throughout.

I know that devolution, perhaps more than any other issue, has featured in your Lordships’ contributions over the past two days. I pay particular tribute to the noble and learned Lord, Lord Hope, for his constructive remarks, of which I have taken careful note. I also thank my noble friends Lord Dunlop and Lord McInnes, the noble Lord, Lord Kilclooney, and many other noble Lords for their contributions.

Our priority is to ensure that our withdrawal from the EU is as smooth and orderly as possible for the whole of the UK. The Government remain committed to the devolution settlements. I agree with the noble and learned Lord, Lord Wallace of Tankerness, that this presents an opportunity—which the Government have seized—for sincere and mature co-operation to find consensus. The Scottish and Welsh Governments agree that there are areas where common frameworks are necessary. The Government agree that in areas where they are not necessary, those powers should and will be a devolved responsibility. I agree with the noble Lord, Lord McConnell of Glenscorrodale, that after we leave the EU they will continue to be able to do anything that is now within the competence of the devolved Administrations. There will of course be a need for common frameworks in some areas, as the noble Lord recognised, but the outcome of the UK leaving the EU means that more decision-making powers will be with the devolved Administrations.

As your Lordships are aware, we have made a commitment to bring forward changes to Clause 11, and this commitment remains absolute. We are engaging in intensive discussions with the Scottish and Welsh Governments on what those amendments will look like, and we are making good progress towards the right outcome. The Chancellor of the Duchy of Lancaster will travel to Edinburgh and Cardiff this week to further discuss our proposed amendments to Clause 11, which I hope will reassure the noble Lady, Baroness Finlay, and others, on her point about proper consultation with the devolved Administrations. Any such amendments to Clause 11 will of course need to speak to the concerns of the Scottish and Welsh Governments, while ensuring maximum certainty once we have left the EU. In the absence of a Northern Ireland Executive, we are working closely with the Northern Ireland Civil Service, and we are doing all we can to restore devolved government to Stormont.

Closely linked to these discussions is the work being carried out on future frameworks, guided by the principles agreed with the Scottish and Welsh Governments at the Joint Ministerial Committee. We will publish our analysis of where we expect there to be a need for legislative frameworks in whole or in part, for informal arrangements, and where we expect that no additional cross-UK mechanisms are required.

I also thank the noble Lords, Lord Luce, Lord Hoyle, Lord Kilclooney and the noble Earl, Lord Sandwich, for their remarks concerning Gibraltar. The Government are clear that Gibraltar is covered by our exit negotiations, and we have committed to fully involve it as we exit the EU. We will negotiate as one United Kingdom and will leave as one United Kingdom.

I turn to the Motion tabled by the noble Lord, Lord Adonis, for another referendum to be held. On this point, let me be completely clear. The result of the referendum held on 23 June 2016 saw a clear majority of people vote to leave the European Union. On this subject, as on so many others, I can do no better than to advise noble Lords to look at the comments of my noble friend Lord Hague, who wisely said that it cannot be in the national interest to participate in a referendum merry-go-round. In the European Union (Notification of Withdrawal) Act this Parliament overwhelmingly confirmed the result of the referendum by voting with clear and convincing majorities for that legislation. In the general election last year, both parties campaigned to take us out of the EU, as my noble friend Lady Pidding reminded us yesterday. Only last weekend I watched the leader of the Labour Party say that “that ship has sailed” and confirm that, “We are not asking for a second referendum”. You cannot go back to the people time and again in the vain hope that eventually they will give you the result that you wanted.

The British people can trust the Government to honour the referendum result. This does not mean that the process will be without scrutiny, and of course we will consult Parliament further. There will be a vote in both Houses on the final agreement reached with the EU. Then there will be a withdrawal agreement and implementation Bill that will give Parliament further time to debate and scrutinise the domestic legislation implementing the final agreement that we strike.

Any commitment to a second referendum would actively undermine our ongoing negotiating position. As the Secretary of State for Exiting the European Union noted:

“The consequence of putting a second referendum at the end of the negotiation is to invite every single member of the European Union who does not want us to leave to propose the worst possible deal, in the hope that we will change our mind”.—[Official Report, Commons, 24/1/17; col 176.]


This point was reinforced by many noble Lords, including the noble Lord, Lord Leigh of Hurley. We are not going to do that. We are seeking to get the best deal for the UK and we intend to negotiate under the best possible conditions. To do otherwise would be irresponsible in the extreme.

This debate has served to highlight the weight of the matter at hand and the importance of this House’s scrutiny. I look forward to the forthcoming Committee stage where we can enter into proper scrutiny and debate on the issues that have been raised over the past two days. I echo the words of noble Lords who have spoken of our constitutional duty to scrutinise this historic legislation. This place benefits from a wealth of experience and expertise, and I am confident that your Lordships will bring this to bear over the coming months.

Amidst some of the more colourful and entertaining rhetoric, metaphor and simile, a recurring theme has emerged in this debate: the Bill is necessary, the Bill is not perfect, and the Bill should be improved and strengthened but not obstructed. There was a visible and tangible consensus around these sentiments.

The people have spoken and this Government now have a duty to deliver a smooth exit. We owe this not only to those who voted to leave but to those who voted to remain. Regardless of how people voted, it is in the collective national interest to have a functioning statute book on the day we leave. This Bill delivers that by providing certainty and stability to businesses, consumers and citizens across the United Kingdom and I commend it to the House.

Brexit: Negotiations

Lord Callanan Excerpts

Tuesday 30th January 2018 Lords Chamber

[Baroness Walmsley]

To ask Her Majesty's Government who is conducting the negotiations for the United Kingdom leaving the European Union; and to whom that person reports.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, the Secretary of State for Exiting the EU, the right honourable David Davis MP, is responsible for conducting negotiations with the EU in support of the Prime Minister, including supporting bilateral discussions on EU exit with other European countries. DExEU supports this work by co-ordinating and overseeing negotiations and establishing a future relationship between the UK and the EU.

[Baroness Walmsley (LD)]

My Lords, is it not common knowledge that the Prime Minister has shifted the focus of negotiations to a competent official in the Cabinet Office, because she has lost confidence in a Brexit Secretary who complacently thinks the whole the matter is simple? His incompetence was proved by the shambles in the first stage of negotiations, which was only ended by a fudge on the Irish border. Will the Minister clear the matter up once and for all today, by telling the House how the Government plan to avoid a hard border while also leaving the customs union?

[Lord Callanan]

The first part of the noble Baroness’s question is totally wrong. The Secretary of State is doing an excellent job, and the Prime Minister is doing an excellent job in conducting the negotiations. We have said many times that we will avoid a hard border in Northern Ireland, and that remains the case.

[Baroness Rawlings (Con)]

My Lords, how many of the negotiations are now taking place with the Bulgarian Ministers, as it is their presidency at the moment?

[Lord Callanan]

We are conducting a wide range of discussions with all EU member states. I myself am visiting one on Thursday and Friday, and other Ministers are doing the same. We are advancing the UK’s cause and lobbying other member state Governments in advance of the full and special partnership that the Prime Minister has suggested.

[Lord Foulkes of Cumnock (Lab)]

Could the Minister help me? [Laughter.] Somebody might be able to. As well as reporting on all matters concerning his department to this House, what matters in the department are specifically devolved to him, for his responsibility?

[Lord Callanan]

I am always very happy to help the noble Lord, although I am not sure that my help is the help that he needs—but I shall do my best. I have responsibility for attending the General Affairs Council; for liaison for existing EU business; for the small matter of helping to get the withdrawal Bill through this House; and for liaison with the devolved Administrations in conducting ongoing EU business.

[Lord Wallace of Saltaire (LD)]

My Lords, given that the issues at stake in negotiating Brexit cover almost every department in Whitehall, is it not unavoidable that this has to be dealt with from the Cabinet Office, the co-ordinating department, and by the Cabinet itself, rather than DExEU? Is that one reason why there is apparently so much discontent within DExEU, and why it has four times the turnover of civil servants compared with the rest of the Civil Service?

[Lord Callanan]

I do not think that there is any discontent within DExEU. When the department was established, a number of officials were seconded from other government departments, and a number of them have returned to their original departments. But the noble Lord is right—these negotiations are complex and impact on a whole range of policy areas. Most departments in Whitehall are involved in one way or another, so of course it is important to co-ordinate that work, which is done both in DExEU and in the Cabinet Office.

[Lord Forsyth of Drumlean (Con)]

My Lords, how helpful does my noble friend think it is to the British national interest to have people sniping from behind the scenes at our negotiators at this crucial time?

[Lord Callanan]

Well, the noble Lord knows that I admire greatly his contributions on these subjects, but perhaps on this occasion he is not quite correct. The normal process of parliamentary scrutiny is appropriate. We, of course, as Ministers welcome the opportunity to account to your Lordships’ House; we will be doing that extensively over the next few months and have done over the last few months. Of course, it would be nice to see a bit more support of our position sometimes. Nevertheless, most people take a responsible attitude and want to question and probe us on the process, which is absolutely correct.

[Lord Stevenson of Balmacara (Lab)]

Can the Minister help us on the paper that has apparently been leaked? I know that he will not talk about the details of any leak—but on a paper that deals with the impact on GDP and various scenarios that affect us about Brexit, clearly, it would not be a leak if important documents like this were routinely made available to parliamentarians and others and we could then discuss them properly. I hope that there will be an opportunity for that.

Secondly, the paper apparently suggests that deregulating areas such as the environment, product standards and employment law could be an opportunity for the UK going forward. Who commissioned that paper? Is it true that it was his department and, if so, is that his negotiating position?

[Lord Callanan]

The analysis to which I believe the article refers is a preliminary attempt to improve on the flawed analysis around the EU referendum. It is there to test ideas and design a viable framework for the analysis of our exit from the European Union, and at this very early stage it considers only off-the-shelf trade arrangements that currently exist. We have been clear that those are not what we seek in the negotiations. It does not consider the desired outcome—the most ambitious relationship possible with the European Union, as set out by the Prime Minister in her Florence speech.

[Lord Watts (Lab)]

My Lords, is the Minister more worried about the sniping from this side of the Chamber or from his own?

[Lord Callanan]

I must apologise: I did not hear the question. Would the noble Lord mind repeating it?

[Lord Watts]

I asked whether the Minister was more worried about sniping from this side of the Chamber or from his own side.

[Lord Callanan]

One person’s sniping is another person’s constructive comments. I enjoy engaging with this House, sometimes on destructive comments, but we have considered appropriate contributions from all parts of this House.

[Lord Hamilton of Epsom (Con)]

The noble Baroness, Lady Walmsley, raised the issue of the Irish border. Is it not very difficult to get a solution to the Irish border issue that is separate from the trading relationship that we have with the rest of the EU?

[Lord Callanan]

We have made it clear that we do not want a hard border in Ireland. The exact structure of the border and customs arrangements will, of course, emerge from the end-state negotiations. Where we end up will clearly have an impact on the border arrangements, and we have made that very clear.

Brexit: Gibraltar

Lord Callanan Excerpts

Monday 29th January 2018 Lords Chamber

[Lord Laming (CB)]

My Lords, on behalf of my noble friend Lord Luce, I beg leave to ask the Question standing in his name on the Order Paper.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, the Government are clear that Gibraltar is covered by our exit negotiations, and we have committed to involve it fully as we exit the EU. We will not exclude Gibraltar from our negotiations for either the implementation period or the agreement for the future. We are taking Gibraltar’s interests into account, and the fifth meeting of the UK-Gibraltar Ministerial Forum on EU Exit took place in December, chaired by Minister Robin Walker.

[Lord Laming]

My Lords, I am grateful to the Minister for that reply. Can he enlarge on the principal mechanisms to assure the people of Gibraltar that they will not be excluded from any of the discussions? The Minister will know very well the sensitivity of this issue for the people of Gibraltar.

[Lord Callanan]

I totally agree with the noble Lord that these are sensitive matters. We regularly consult the Government of Gibraltar. It is also fair to say that we have excellent bilateral relations with the Government of Spain. We last met them on 11 January to take these matters forward, and so far the discussions have been constructive and helpful on all sides.

[Baroness Butler-Sloss (CB)]

My Lords, I am a vice-chair of the All-Party Parliamentary Group for Gibraltar. One thing that the Gibraltarians are particularly concerned about is the transition period and the real possibility that Spain will exercise its veto, which the EU countries have accepted, to prevent Gibraltar being involved in the transition discussions.

[Lord Callanan]

I thank the noble and learned Baroness for her question, but I really do not think that the word “veto” should be used in these circumstances. We have excellent relations with Spain and, as I said, we have been discussing these issues with Spain in a constructive and helpful manner. The discussions are going forward well and we expect a positive result.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, last week I met Sir Joe Bossano, the former Chief Minister, who stressed that not only does Gibraltar have a land border with what will be the EU 27 but that many Gibraltarians consider it to be a border with a potentially hostile state that has designs on their territory—and, of course, the ability to close that very short border. Given that, as we have just heard, paragraph 24 of the EU’s guidelines on the negotiations gives Spain an effective veto, will the Minister give an unequivocal pledge both to guarantee the Rock’s sovereignty and to make its future economic prosperity a priority in the negotiations?

[Lord Callanan]

Of course we can give a pledge to the people of Gibraltar on their sovereignty—we have done that many times—but I do not think that using the words “hostile state” is helpful in the circumstances. The discussions have been positive and cordial. We are engaging with the Government of Spain and trying to resolve the issues. The noble Baroness is right to point to the land border, but it is now a Schengen border. Many residents of Spain—something like 7,000 a day—cross that border to work in Gibraltar, so there is a desire on both sides to make the arrangements work as smoothly as possible.

[Baroness McIntosh of Pickering (Con)]

My Lords, as we have both served in the European Parliament, does my noble friend agree that Gibraltar has had good representation through a nominated Member of the European Parliament? That representation will presumably cease at the European elections next year. What discussions will there be and what mechanism will be in place to ensure that, at a crucial time for Gibraltar’s future, she will have representation in the European Parliament?

[Lord Callanan]

I think matters have moved on a bit since my noble friend was in the European Parliament. It is actually attached to a UK geographical area—the south-west region—and so it has a whole region of MEPs to represent its interests in the European Parliament. We will take Gibraltar’s interests fully into account. We consult Gibraltar regularly and will make sure that its interests are well represented.

[Lord Palmer of Childs Hill (LD)]

My Lords, Monsieur Barnier’s name was mentioned in response to Question 1 and Question 2 today. The same Mr Barnier told a Select Committee of the Spanish Parliament, on 23 January, that Gibraltar was not part of the negotiations. Is he misinformed in this respect? Will the Minister confirm that, if we make the mistake of leaving the EU, Gibraltar will be included not only in the negotiations but in the final settlement and agreement—because that is not clear?

[Lord Callanan]

I say to the noble Lord that I think it is clear. The Prime Minister said in Parliament on 18 December that,

“we will be … negotiating to ensure that the relationships are there for Gibraltar as well. We are not going to exclude Gibraltar from our negotiations for either the implementation period or the future agreement”.—[Official Report, Commons, 18/12/17; col. 758.]

It could not be clearer.

[Lord Wigley (PC)]

Does the Minister not accept that the predicament of Gibraltar would be largely overcome if we remained in the single market and the customs union?

[Lord Callanan]

I will repeat what has been said in the discussions we have had many times on this: we share the position of the Labour Front Bench that we are leaving the single market and leaving the customs union.

[Baroness Harris of Richmond (LD)]

Will the Minister tell me of any discussions the Government have had with the Government of Spain about all the long queues that there still are on the border between Spain and Gibraltar?

[Lord Callanan]

We are clear that queues are, of course, unacceptable and extremely inconvenient for anybody seeking to pass either into or out of Gibraltar. We discuss these matters regularly in our excellent discussions with the Spanish Government.

[Lord Grocott (Lab)]

My Lords, already today we have had two or three supplementary questions and three main Questions on the EU and withdrawal, and we have two days this week, Tuesday and Wednesday, scheduled for debate, and 10 days scheduled for Committee stage—so there will be no shortage of opportunity for Members of this House to quiz Ministers. But could the Minister reassure everyone that, despite the calls for us to ignore the referendum that have come from one or two questioners today, in particular from my very good and noble friend Lord Foulkes, he will be careful to keep in mind not just the 17.4 million people who voted as they did in the referendum but, more specifically—if I can be parochial about this—the 2:1 majority of voters in the West Midlands who were quite clear about the decision that we should leave the European Union?

[Lord Callanan]

I agree with the noble Lord that of course we will be taking their interests into account. There was a similar majority in my own region—but there were remain majorities in other parts of the country. We act as a nation, and it was a referendum of the United Kingdom as a whole. It was a clear decision to leave the European Union; that decision was confirmed in my party’s election manifesto and in the noble Lord’s party’s election manifesto; and we will proceed to implement that decision.

Brexit: Economic Analyses

Lord Callanan Excerpts

Wednesday 24th January 2018 Lords Chamber

[Lord Strasburger]

To ask Her Majesty’s Government what analyses they have carried out of the effect of the United Kingdom economy of the potential outcomes of the Brexit negotiations including (1) leaving the single market, (2) leaving the customs union, and (3) leaving the European Union with no deal, on the future trading relationship between the United Kingdom and the European Union; and when they intend to publish those analyses.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, the Government are undertaking extensive work to support our exit negotiations and to inform our understanding of how our EU exit will affect the UK’s domestic policies and framework. Ministers have a duty not to release information that could risk undermining our negotiating position. This is a position that Parliament has endorsed.

[Lord Strasburger (LD)]

My Lords, the absurd mantra that, “No deal is better than a bad deal” has now been replaced by, “We will get the best deal for Britain”. In the event that Brexit actually happens, the best deal is bound to be worse than our current arrangements with the European Union. The only issue is: how much worse? How bad will the deal have to be for the Government finally to face down the Brexit fanatics in their own ranks and exit from Brexit, as most voters now want?

[Lord Callanan]

My Lords, I think the Brexit fanatics are on the Liberal Democrat Benches. We on this side of the House believe in democracy and that the referendum result should be implemented, and we will negotiate a full and comprehensive partnership with our European partners.

[Lord Lea of Crondall (Lab)]

Will the Minister confirm, as will be confirmed by the Norwegian foreign office, that the EU EEA agreement provides not only for membership of the single market but of the EU/EEA agencies, and that it would be very foolish, given the 50% chance that that is where we will wind up, if we continue to wind down our involvement in these agencies, which is certainly not an automatic consequence of the referendum result?

[Lord Callanan]

My Lords, we are not winding down our membership of these agencies. We are members of the European Union until March next year, and we will continue to meet all our obligations and commitments during that period. I was in Brussels all day yesterday, consulting with the European Parliament on these issues. The Norwegian deal is not a superior deal, in my view. We want a proper, bespoke arrangement that will benefit the United Kingdom and respect the Brexit result.

[Lord Lamont of Lerwick (Con)]

My Lords, if the Government were misguided enough to initiate an inquiry into the three questions posed by the noble Lord, would they add a fourth, which would be a study of whether they expect European trade with Britain as a percentage of our total trade to continue to decline in the next 10 years, as it has in the last 10 years? If the Government were misguided enough to initiate such a study, would they ensure that it was not done by the same officials who made such misguided and wrong forecasts about the immediate impact of a Brexit verdict in the referendum?

--- Later in debate ---

[Lord Callanan]

My noble friend makes an important point. We are conducting a wide range of analysis on all possible scenarios, but we still remain of the view that a deep and comprehensive partnership between ourselves and the EU is manifestly in both our interests. Therefore, that is where we think we should end up.

[Baroness Meacher (CB)]

My Lords, the Minister will be aware that the Electoral Commission was undertaking an investigation into the role of Russia in the Brexit referendum. Can the Minister convey to the House whether the Government yet have the results of that investigation, or indeed, whether they are undertaking their own investigation? If Russia had a major impact on that referendum, it raises questions about how Parliament should react.

[Lord Callanan]

I am sorry, but I do not agree with the noble Baroness. It is the reddest of red herrings to try to cast doubt on the referendum result. I have no knowledge of what investigations the Electoral Commission is undertaking, but I am certainly not aware that the Government are undertaking any such studies.

[Baroness Ludford (LD)]

My Lords, in what way can this Conservative Government make the traditional, if often unjustified, Conservative claim to be pro-business and pro-jobs when they have slapped down a CBI demand to stay in the customs union, along with a TUC demand to stay in the customs union and the single market, and when they refuse to publish Brexit impact assessments or a position paper on financial services? When will they open eyes blinded by dogma to the real needs of the economy?

[Lord Callanan]

Well, this Government are pro-business and pro-jobs, and I can only assume that the noble Baroness has missed the unemployment figures this morning, which show that unemployment under this Government is at a 42-year low.

[Lord Garel-Jones (Con)]

My Lords—

--- Later in debate ---

[Lord Garel-Jones]

As the Minister has stated, is it not a simple matter of common sense that, while these negotiations are ongoing, anything that seeks to reveal the Government’s position on any issue whatever can only undermine the Government’s position?

[Lord Callanan]

My noble friend speaks great sense. It is a matter of common sense—but, apparently, it is not a common sense shared by the Liberal Democrats.

[Lord Davies of Stamford]

Did the Minister notice in this morning’s newspaper the report of a study produced by the Bank of England which estimated that 10,000 financial service professionals will leave this country between now and Brexit day? Goodness knows how many will leave after that. Are the Government entirely indifferent to news of that kind?

[Lord Callanan]

I have not seen that study. I shall go away and have a look at it, but I do not believe that it can be accurate. We have the best and most successful services industry in Europe, and we want that to continue. We will be negotiating with our European partners to bring that situation about.

Brexit: European Travel Information and Authorisation System

Lord Callanan Excerpts

Wednesday 17th January 2018 Lords Chamber

[Baroness Ludford]

To ask Her Majesty’s Government what discussions they have had with the European Union about British citizens being subject to the European Travel Information and Authorisation System for travel to the European Union if the United Kingdom leaves the European Union, and about the costs arising from that System that British citizens might face.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, the EU is discussing a proposal for a European travel information and authorisation system that will apply to third-country nationals. The final details of that system have not yet been agreed. It is still too early to say what procedures will be in place for British citizens travelling to the EU after we leave. We will discuss these matters as part of our future relationship discussions.

[Baroness Ludford (LD)]

I thank the Minister for that Answer. At present, all that a British citizen needs to do to go to Spain on holiday or to Germany on business is to present a passport at the border. If we Brexit, they will have to apply for an ETIAS, which is similar to a US ESTA. The fee could become significant and it could take four days for approval. It would require the supply of biometric data and details of health, criminal record and previous immigration history. When will the Government level with the British people about how this is another example of Brexit increasing costs and red tape? Is it not another reason why the British people should be able to exit from Brexit?

[Lord Callanan]

No, my Lords, it is not. The noble Baroness is making a whole series of assumptions in her question, none of which may turn out to be true. We are still to have the discussions with the EU on the future relationship in terms of how people will travel backwards and forwards. When we have had those discussions and reached a conclusion, we will be sure to let her know.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, yesterday we had a debate in this House about the question of deal or no deal—indeed, the Minister was here late last night to answer it—and the majority of speakers from the government Benches indicated that they were quite content with the no-deal option, which would mean abruptly crashing out from all EU arrangements and procedures at the end of March next year. Will the Minister confirm that Ministers really would jeopardise British citizens’ rights to travel on holiday visa free, and to work in the EU, as the price of their failure to agree terms with the EU?

[Lord Callanan]

I thank the noble Baroness for her question, but I am slightly surprised that she is coming back to this subject, as we spent about four hours debating it last night. Perhaps it would be helpful to read Hansard. No, we have been very clear that no deal is not an outcome that we want or expect. We are working to get a deal but, as a responsible Government, we have to be prepared for any eventuality. We discussed these issues in great detail last night.

[Lord Cormack (Con)]

My Lords, my noble friend said that the noble Baroness, Lady Ludford, was making assumptions. Indeed she was. What assumptions is he making?

[Lord Callanan]

I thank the noble Lord—my noble friend, I should say—for his very helpful question. We are trying to get a good deal and are not making any assumptions. We are negotiating in good faith with our EU friends and partners, and we are confident of obtaining that deal.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, what plans do the Government have for explaining to the British people the consequences of any eventuality that we may face?

[Lord Callanan]

Sorry, that is a very wide-ranging question. We communicate, through this House and frequent media and TV interviews, with everyone about the consequences of government policy. We are always keen to do better in terms of explaining that, but on all the consequences of the agreements that we reach we will report back fully to Parliament and to the public as a whole.

[Lord Green of Deddington (CB)]

My Lords, may I ask the Minister a more helpful question? Does he agree that the way forward here is for visa-free access between ourselves and the EU, and that we should join the 61 countries that already have such access to the EU? For our part, we should insist on visas only for those who wish to work, and those who wish to work should be invited to get a work permit on the same terms as non-EU. Is it not now time for the Government to look forward a bit, consider the slightly wider context and produce this sensible way forward?

[Lord Callanan]

Of course, all questions from your Lordships are helpful in this House. We have been very clear that we are going to have these discussions with the EU. We want to get an agreement and to make travel for EU citizens coming to the UK, and UK citizens going to the EU, as easy and painless as possible.

[Lord Paddick (LD)]

My Lords, at the moment citizens from the European Economic Area can use the electronic gates at UK airports. What contingency planning have the Government done should EEA nationals no longer be able to use the e-gates after Brexit? It is reported that, at one point on 29 December, at Heathrow terminal 4 non-EEA passport holders had to wait two and a half hours to cross the UK border.

[Lord Callanan]

I think that the Liberal Democrats are yet again making a whole series of assumptions about things that may not happen. If there are delays at the border, that is clearly unacceptable and I am sure that my Home Office colleagues are looking at that. We want people to visit the UK, we want the UK to be an open and welcoming place, the e-gates are one way that the Home Office is improving the procedures and we will want them to continue after Brexit.

[Lord Spicer (Con)]

My Lords—

--- Later in debate ---

[Lord Spicer]

My Lords, can I ask an even more helpful question than has come forward so far? So far, we have been discussing the signed agreements to the main treaty. Is it not becoming increasingly apparent that the real loser from not signing most of these agreements will be the EU itself?

[Lord Callanan]

My Lords, I think that no agreement would be bad for both sides; that is why we want an agreement.

[Lord Watts]

My Lords, is it not the case that, in this and many other areas in which we are negotiating with our present partners, we are nowhere near completion? Should we not be trying to talk to our partners about extending the time to allow proper negotiation and proper solutions to the many problems that we face with Brexit?

[Lord Callanan]

As the noble Lord will be aware, the Article 50 process sets out the timescale, and we are very confident that we can reach agreement in the timescale set out.

[Lord Wallace of Saltaire (LD)]

My Lords, perhaps I can help the Minister with his assumptions. Do the Government assume that, at the end of this process, we will have the status of a third country in our relations with the EU or an associated country? The noble Baroness who answered the first Question mentioned the parallels with Switzerland and Norway. Do we see ourselves as having a close association agreement, or are we content to be just one of the many third countries?

[Lord Callanan]

We will be leaving the EU next year; we will be outside the EU. The precise form of the arrangement, whatever terminology we attach to it, will be the subject of the negotiations.

Brexit: Deal or No Deal (European Union Committee Report)

Lord Callanan Excerpts

Tuesday 16th January 2018 Lords Chamber

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, I am grateful, as ever, for the opportunity to respond to the debate on the Select Committee’s report, Brexit: Deal or No Deal. We have heard a series of excellent contributions—some I agreed with and some I did not, but, nevertheless, virtually all of them have shown your Lordships’ House at its best. It has been an extremely good debate, even if all the positions outlined came as no surprise; nobody has changed their views, but it was interesting to hear the different opinions. I will refer to a number of the excellent speeches as I go on.

We have discovered a series of surprising facts, including that the noble Baroness, Lady Falkner, and my noble friend Lord True both enjoy Italian holidays. A vision went through my mind’s eye of the pair of them sitting on a lovely Tuscan terrace sharing a bottle of prosecco and exploring these issues, but I think it would probably take more than one bottle before they agreed with each other.

I thank the European Union Committee, chaired by the noble Lord, Lord Boswell, for producing this thoughtful analysis. I am pleased to hear that the noble Lord has now returned to his duties in the House. I pay tribute to the noble Lord, Lord Whitty, for stepping in for the noble Lord, Lord Jay. Incidentally, it occurs to me that being the chairman of your Lordships’ European Union Committee is a bit of a hazardous occupation: first, the noble Lord, Lord Boswell, is incapacitated, and then the noble Lord, Lord Jay, is incapacitated. I hope that nobody else suffers any unfortunate accidents during their time in this obviously dangerous position. Nevertheless, the noble Lord, Lord Whitty, stepped in very ably to introduce our debate this evening.

I can inform noble Lords that a formal response to the committee’s report is being prepared and is expected to be issued within the usual two-month response time. My department is working with officials from all departments and undertaking a wide range of work to support the negotiations. We recognise the need for businesses to prepare contingency plans, and we continue to engage with companies across sectors and regions to understand the challenges and opportunities that they may face. In November’s Budget, the Chancellor committed to ensure that departments and the devolved Administrations continue to have the resources necessary to prepare effectively for a range of exit scenarios, including that of no deal. Her Majesty’s Treasury has already given departments nearly £700 million to prepare for Brexit, and is making an additional £3 billion of funding available over the next two years.

Many of the points raised by the report relate directly to the second phase of negotiations, and, as such, I hope noble Lords will understand that I will not be able to go into great detail on some of those areas at this stage. However, as more of our contingency planning becomes public, this should not be interpreted as an expectation that talks with the EU will be unsuccessful but recognised instead as the actions of a responsible Government determined to ensure a smooth exit under any eventuality. A deep and special partnership, taking in both economic and security co-operation between the UK and the EU, is of such mutual importance—as my noble friend Lord Hamilton pointed out—that I am confident it can be agreed.

The noble Lord, Lord Whitty, and other noble Lords asked whether agreements to date will stand, what has been agreed in negotiations to date and whether we are still committed to the policy that “Nothing is agreed until everything is agreed”—that famous phrase. Of course both we and—let me emphasise this—the EU have been very clear from the outset that nothing is agreed until everything is agreed. However, we are clear that we want to honour the agreements that have been reached so far in the joint report, and we are proceeding with confidence that we can and will do so.

The noble Lord, Lord Whitty, and other noble Lords asked about the impact of no deal. The committee’s report and our debate this evening have focused predominantly on that scenario. Let me make it absolutely clear, as the Secretary of State did in front of the committee on 31 October, that this Government do not want or expect a no-deal outcome from these negotiations. We continue to seek a deep and special partnership with our European friends and allies as we leave the EU, and we approach the negotiations anticipating success.

In light of our successful phase 1 agreement, I am confident that the prospect of leaving negotiations with no deal has reduced significantly, as a number of noble Lords pointed out. While this progress is encouraging, the Government continue to act responsibly by preparing for a range of outcomes, including the unlikely scenario in which no mutually satisfactory agreement can be reached. Every government department continues to work to ensure a smooth exit from the EU in all eventualities.

Noble Lords have this evening expressed concern that the act of preparing for a no-deal outcome with the EU could act as a self-fulfilling prophecy, increasing the likelihood of this outcome. I do not agree that this is the case. The Government’s contingency planning should not be interpreted as an expectation that talks with the EU will be unsuccessful, but recognised instead, as I said, as the actions of a responsible Government determined to ensure a smooth exit in every eventuality.

Noble Lords have spoken about potential no-deal scenarios. As we enter the next phase of talks, we do so optimistically and fully committed to the Article 50 process. Through the process we have already reached agreement on a number of the critical separation issues, including citizens’ rights, judicial and administrative co-operation and the Ireland-Northern Ireland border. We have consistently called for flexibility, imagination and a willingness to make progress in every stage of the talks.

As I have noted, we are planning for a range of exit outcomes but our focus is concentrated on achieving an ambitious and positive deal. Such a deal is of mutual importance and beneficial to both parties in negotiations. We are therefore confident that such a deal will be agreed.

The noble Lord, Lord Whitty, asked about implementation periods, as did my noble friend Lord True in his excellent contribution—I particularly enjoyed the “fat yellow line” argument. Noble Lords have spoken about the implementation period aspect of the UK’s exit from the EU, which was also considered in the committee’s report. As part of a deal on the UK’s future relationship with the EU, both parties agree that a strictly time-limited period would be mutually beneficial. Such an implementation period has been clearly set out by the Prime Minister in her Lancaster House and Florence speeches. It forms a key part of a smooth and orderly exit from the EU. An implementation period prevents businesses and Governments in the UK and Europe having to make decisions before they know the shape of our future partnership. It also provides individuals and citizens on both sides with time to adapt to the new relationship between the UK and the EU. We have been clear that during the implementation period access to one another’s markets should continue on current terms.

My noble friend Lord True also said that the implementation period must be for implementation. Other noble Lords spoke about the timing and purpose of an implementation period; I agree that it must be time limited and used for implementation.

The Prime Minister has indicated that the duration should be determined by how long it will take to prepare and implement the new processes and systems that will underpin the future partnership. There is broad consensus between us and the EU on the duration of such an implementation period. Our current assessment points to a period of around two years, and the EU has suggested that it could be slightly shorter. Both the guidelines published by the Council and comments made by President Tusk point to the shared desire of the EU and the UK to make rapid progress on an implementation period, with formal talks beginning very soon. I can confirm for the benefit of the noble Baroness, Lady Falkner, that the Prime Minister has said that we want to reach an agreement on the implementation period by March. This will help to give certainty to employers and families as we work to deliver a smooth Brexit.

[Baroness Hayter of Kentish Town]

Could the Minister please clarify one thing? If agreement is to be reached by March, the idea of an implementation period is that you are implementing something. I still have not quite understood—maybe the Minister can help the House—what we could decide by March of this year that could be implemented from March of next year. Is he saying that the whole of our final agreement could be agreed by this March so that we will be implementing that?

[Lord Callanan]

No. As the noble Baroness understands very well, we can agree the principle of the period of implementation by March and we will then go on to the further agreements on the various issues that we have set out.

The noble Lords, Lord Whitty, Lord Butler and Lord Kerr, and the noble Baronesses, Lady Falkner and Lady Ludford, all asked about the legal basis of the implementation period and raised questions over that legal basis. Such an implementation period would be agreed under the Article 50 process, and would be enshrined in the withdrawal agreement, and implemented in this House under the withdrawal agreement and implementation Bill. The EU has been clear on this in its Article 50 guidelines and draft negotiating directive, and the UK Government agree with this approach. The desired implementation period will allow a period of smooth transition to the terms of a new relationship.

The report claims that the implementation period could be used as a mechanism to extend the negotiation period beyond March 2019. The noble Baroness, Lady Falkner, also suggested a method to extend the negotiation period using Article 50. On 29 March 2017, the Prime Minister notified the EU—

[Baroness Ludford]

On the legal basis for the transition, surely when the Commission says that it thinks that Article 50 is the legal basis, it is talking about a standstill transition. Is it really agreeing with the Government that it would be the legal basis for the implementation of a trade deal, which would be based on another article in the treaty? Is the Minister asserting that the Commission agrees that Article 50 could be the legal basis for a genuine implementation period for a future deal—a roll-in of a future deal?

[Lord Callanan]

Clearly, the noble Baroness will understand that I cannot comment on what legal advice the Commission has received. But as I said, the Commission has agreed with us that the implementation period can be implemented under Article 50. We agree with that position.

On 29 March 2017, the Prime Minister notified the EU of the UK’s decision to withdraw under Article 50, following consideration of the issue in both Houses of Parliament. As a matter of policy our notification will not be withdrawn. The British people voted to leave the EU and we will deliver on their instruction. There can be no attempts to remain inside the EU and no attempt to rejoin it. I emphasise for the benefit of the noble Lord, Lord Kerr, and others, that we will leave the EU on 29 March 2019, after which we will no longer be a member state. That is a matter of law under the Article 50 process.

My noble friend Lord Hamilton asked me what provisions we were making for no deal even though that is not the outcome we seek. As well as the EU withdrawal Bill, which will ensure that we have a fully functioning statute book on the day that we leave, the Government are already bringing forward other legislation as required. Our Trade Bill will give the UK a foundation for an independent trade strategy. We will create a world-class international sanctions regime through the Sanctions and Anti-Money Laundering Bill and we will deliver an effective customs regime through the customs Bill. Our Nuclear Safeguards Bill will ensure that we can deliver a domestic nuclear safeguards regime. This legislation will support the future of the UK in a wide variety of outcomes, including one where we leave the EU without a negotiated outcome.

Alongside bringing forward necessary legislation, we will be procuring new systems and recruiting new staff where necessary to ensure that we deliver a smooth exit, regardless of the outcome of negotiations.

[Lord Hannay of Chiswick]

In the Minister’s enumeration of the legislative programme, he seems to have lost one or two rather important parts: the agriculture Bill, the fisheries Bill and the immigration Bill. Where have they gone?

[Lord Callanan]

It was not an exhaustive list, rather a few examples. I think that the noble Lord will find that those Bills will be coming through.

My noble friend Lady Wheatcroft asked whether we have a Minister responsible for no deal. The answer is yes. Steve Baker is the Minister responsible for our preparedness in all circumstances, including those of no deal. My noble friend Lord Trenchard and others asked about financial services. We will be seeking a bold and ambitious free trade agreement between the UK and the European Union. This should be of greater scope and ambition than any such agreement before so that it covers the financial sectors of both the UK and EU economies; financial services is one of those sectors. This will require detailed technical talks, but as the UK is an existing EU member state at the moment, we have identical regulatory frameworks and standards which already match those of the EU. Both sides have said that they want to protect financial stability and we remain committed to reaching the best possible outcome for the sector and indeed for the UK as a whole in our negotiations.

My noble friend Lord Trenchard also asked how confident we are that we can attract trade deals. Leaving the EU offers us an opportunity to forge a new role for ourselves in the world to negotiate our own trade agreements and to be a positive and powerful force for free trade. Since 2005 the UK’s non-EU trade has grown from less than 48% of UK exports to 57% in 2016. The noble Lord, Lord Taylor, asked about the appointment of more trade envoys. The Prime Minister has made it clear that one of the benefits of leaving the EU is the ability to develop our relationships with countries outside the EU in new ways, including through our own trade negotiations. The PM’s trade envoys engage with emerging markets where substantial trade and investment opportunities have been identified by the Government. There are currently nine African Commonwealth countries covered by the programme.

My noble friend Lord Cavendish and others referred to the phrase “nothing is agreed until everything is agreed”, but I have already covered that. The noble Lord, Lord Bew, talked about the very important issue of the Northern Ireland border. As I have mentioned, we have already reached an agreement on a number of the critical separation issues, this matter being one of them. In the event of a no-deal scenario, the Government would continue to adhere fully to the Good Friday agreement, its successors and the institutions that they have established. The Government are committed to protecting north-south co-operation and to avoiding a hard border on the island of Ireland in all circumstances.

The noble Lord, Lord Blair, raised the important issue of security, and I am grateful to him for the opportunity we had to talk through these matters personally before Christmas. We are confident that a future security partnership between the UK and the EU is in the interests of both sides. The UK’s current participation in EU law enforcement and criminal justice measures is based on our membership of the EU. Our relationship with the EU will change as a result of leaving, but we remain committed to ongoing co-operation now and after we leave. However, rather than go into a lot more detail on this, as the noble Lord suggested, I am happy to write to him on the points he raised.

I conclude by reiterating what I said at the beginning of my speech. We are seeking a deep and special partnership with the EU in the second phase of the negotiations and we neither want nor are expecting a no-deal scenario. However, it is the duty of a responsible Government, which we are, to prepare for all possible outcomes, and that is what we are doing across government. We are working to formally publish our response to the committee’s report as soon as possible.

I am immensely grateful to all noble Lords for their contributions over the course of what has been a fascinating debate. We will continue to meet our commitments to keep Parliament fully informed on the UK’s exit from the EU, and I am sure that this House will continue to play a valuable role in the work of the Government to secure a deal that works for everyone.

Brexit: Reports to Parliament

Lord Callanan Excerpts

Monday 8th January 2018 Lords Chamber

[Lord Spicer]

To ask Her Majesty’s Government when they next plan to report to Parliament on Brexit.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, we are committed to keeping Parliament informed on the UK’s exit from the EU. The Government have provided regular Statements to update Parliament, which have been repeated in this House. There have also been 23 occasions when DExEU Ministers have given evidence to a wide range of committees in both Houses. We will continue to uphold this commitment and will update Parliament at the next appropriate moment.

[Lord Spicer (Con)]

Is my noble friend aware that the British people are now much tougher in their attitude to the negotiations going on in Brussels? They are tired of seeing arrogant and rude officials speaking on behalf of the EU. They want full details of what is now proposed from Europe, as opposed to what they are getting at the moment.

[Lord Callanan]

They are certainly getting full details from us. The noble Lord makes a point that I am not sure I necessarily agree with. All our dealings with our interlocutors in the European Commission have been courteous and civil.

[Lord Watts (Lab)]

My Lords, it has been widely reported that the Prime Minister is going to appoint someone as a “no deal” Brexit Minister. Will that person have the same responsibility to report back to both Houses as other Ministers?

[Lord Callanan]

My Lords, I am always suspicious of a question that starts off, “It has been widely reported”. The noble Lord will know that ministerial appointments are a matter for the Prime Minister; I am sure he will be the first to know if she decides to make such an appointment.

[Baroness Smith of Newnham (LD)]

My Lords, in light of the speculation about a “no deal” Minister, what calculation are the Government making about the likelihood of a no-deal scenario? Have they—in the form of any new Minister or the Secretary of State for DExEU—thought about writing a report on the impact of no deal; or is that just to be left to your Lordships’ excellent EU Select Committee?

[Lord Callanan]

I totally agree with the noble Baroness that the EU Select Committee is an excellent grouping. We report to it regularly and I am sure we will be doing so in future. There has been a wide range of discussions with all sorts of parties about what might happen. We already have a Minister in the department—Steve Baker—who is planning for a no-deal scenario, but we hope that will not be the case. We want a full, fruitful and special partnership with the EU and we are continuing negotiations to that effect.

[Lord Hamilton of Epsom (Con)]

My Lords, following my noble friend’s intervention, does the Minister agree that if we have no deal on the table, we are much more likely to get a good deal?

[Lord Callanan]

It is important to bear in mind any possible outcome. We plan for all eventualities, but of course we are planning for a full and special partnership and we hope that will be the outcome.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, discussions are meant to be taking place within the UK as well as with the EU 27. Indeed, the Government promised back in March that there would be “intensive discussions” with the devolved Administrations, but at the moment we know that they are not minded to pass the consent Motions on the withdrawal Bill. Can the Minister undertake to update the House on those discussions before we get to the withdrawal Bill, when, obviously, we will want to know whether consent is likely to be given or withheld?

[Lord Callanan]

As the noble Baroness correctly observed, we have regular discussions with the devolved Administrations; I myself chaired a meeting with the devolved Ministers from Scotland and Wales and officials from the Northern Ireland Office in December, when we discussed ongoing EU business. Separate discussions take place with them on the withdrawal Bill and its implications. Those discussions are detailed, and I am sure that we will want to update the House as soon as we have a conclusion.

[Lord Cormack (Con)]

My Lords, as we begin a new year, which we hope can be slightly more harmonious than the last, is it not important that, while we all recognise that the verdict of the referendum was that we should leave, it was decided by a very narrow majority? It is therefore important that those who were on the winning side demonstrate a degree of understanding and magnanimity, so that we get a proper deal and a real compromise that preserves the stature and economic prosperity of this country.

[Lord Callanan]

My noble friend makes a good point. We want a Brexit that will command the maximum possible level of support across this House and—I am not sure that the two things are related—across the country as well. We will want to involve as many people as possible, and of course we want to try to make that process as harmonious as possible, involving all different shades of political opinion.

[Baroness Ludford (LD)]

My Lords, instead of planning for no deal, should not the Government be trying to get a coherent, unified position on the kind of deal they are aiming for? Once they have reached that coherent, unified position, will they report back to Parliament to allow us to debate that proposition before it is put to Brussels?

--- Later in debate ---

[Lord Callanan]

We will want to do both things. We want of course to plan for the—hopefully small—likelihood of there being no deal, but we also want a unified government position going forward. The Brexit Bill will shortly arrive in this House and I am sure we will have many hours of debate on the important issues contained in it. I am sure the noble Baroness will make lots of contributions to that.

[Lord Hain (Lab)]

My Lords, given that the Government were forced to accept regulatory alignment in December to resolve the impasse on the Northern Ireland border and to keep it open, which everybody says they want, how does that differ from staying in the single market, and is that possible unless membership of the single market is retained?

[Lord Callanan]

It is perfectly possible and we have made statements to that effect. We are leaving the customs union and the single market. At the moment, of course, our regulations are identical to those of the European Union. In the future we will need to manage the process of divergence if we want to go our own separate way. Those issues will need to be discussed fully.

[Lord Foulkes of Cumnock (Lab)]

My Lords, has the Minister noticed that Mr Nigel Farage is meeting Mr Barnier, purporting to represent the views of the British people? Will the Minister make it absolutely clear that even though some of us do not have much faith in the Conservative Ministers who are negotiating on our behalf, at least they were elected to the House of Commons, unlike Mr Farage?

[Lord Callanan]

I see that this week Mr Barnier is having meetings with a wide range of people, one of whom is Mr Farage. I do not think that Nigel would ever say that he represents the people—

[Lord Foulkes of Cumnock]

He did.

[Lord Callanan]

Okay—the noble Lord has an advantage over me; I have not seen the interviews. However, Mr Farage is the leader of a group in the European Parliament and I suspect that that is the basis on which Michel Barnier is meeting him. Mr Barnier has met Peers from this House and Opposition and Back-Bench MPs from the House of Commons, but he is very clear that he will negotiate with only one party.