Spring Statement

Lord Davies of Stamford Excerpts

Wednesday 20th March 2019 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, it is a pleasure to follow the noble Lord. What he said about the transfer of businesses from the City to the European Union is absolutely right, and very worrying indeed. It is a very extraordinary situation today, something that I have never seen before or even dreamed of. Governments all over the world, generally speaking, like to present themselves as enhancing by virtue of their wise policies the prosperity and incomes of their citizens. Today in this country we face the fact that the Government admit, very honestly—I pay tribute to their transparency in making this quite public and not hiding it—that their policies are directly bringing about a very substantial reduction in our national income, from 6% to 11% depending on which part of the country you live in. It has never happened before that we have had such a massive reduction in our income, even during the 1973 oil crisis, which I remember very well. It has certainly never happened before that a Government have had to quantify the negative impact of their own policies in this dramatic way.

The Government have found that it is very easy to destroy value in life and to destroy income. We are currently in the largest and purest single market in the world—purest in the sense that there are the minimum number of obstacles to trade. If you leave a large market, what happens? You lose all its benefits. A large market gives you a much greater opportunity for specialisation, competition and economies of scale. Those are the drivers of productivity. If we are interested in productivity increases in this country—we ought to be, because several participants have reminded the House how we have a chronic problem with our productivity—it is impossible to imagine anything more damaging than leaving the single market.

We have generated a great deal of uncertainty. Everybody in financial or business circles knows that uncertainty is a risk. If risk rises, the cost of capital rises. If the cost of capital rises, investment automatically falls. We have heard it referred to several times this evening, although no one dwelt on the point, that investment spending in this country has fallen over four quarters consistently every year. That is an extraordinarily serious situation. I do not think that anyone who knows the first thing about economics could fail to be extremely worried about what that says about the temperature of the patient and the prospects for our economy and prosperity. Something very urgently needs to be done.

Then there is an aspect that the noble Lord and other colleagues have referred to, although no one has taken it up to the extent to which it deserves to be emphasised. There has been a very distinct movement of businesses out of this country, particularly in manufacturing. The Government are aware of that, and they have responded by trying to bribe—perhaps I should say providing subsidies to—the companies concerned. The Government know all about the Japanese motor industry, but you cannot subsidise everybody because one person’s subsidy is another’s tax rise. That really has not worked. As far as I can see, the Government have not taken any notice of the warning they have had from EADS, which is of course now called Airbus—a key figure in British manufacturing. It would be very worrying if it moved to the continent, as it could well do and as it has said it could.

Then there is financial services, which the noble Lord referred to. I was particularly worried to see that Bank of America, the biggest bank in the world, has decided to move its European operations elsewhere. I think that the trading is going to Paris and the other operations to Dublin. Ernst & Young has been referred to once or twice. Together with Deloitte and KPMG, it is the largest accountancy firm in this country and one of the largest in the world. Of course, these days it does not spend most of its time doing audits. It is in a very big way in corporate finance, management consultancy, and, indeed, consultancy to Governments. The British taxpayer pays an enormous amount to these companies. Ernst & Young is leaving London as well. Goodness knows how many high-powered jobs earning more than £100,000 a year—real prosperity—is being shifted in this way as we speak day by day. Of course, if finally we do leave—some people are desperately hoping we find a way to avoid leaving, although they do not want to take a final decision until they have to—I am afraid there will be quite an exodus and we will suffer from it greatly. It could be that the Government’s projections will actually be proved too optimistic. This is extremely worrying.

What is to be done about it? If there is a problem one should always ask oneself what the solution is. Clearly, the solution is to allow the British public to take a view on the present situation and all the policies the Government are pursuing, all of which involve costs of some kind or another and none at all involve gains. There are no benefits. There are no gains. The other day I dealt with the problem of the Government keeping on saying that there are gains because there are going to be opportunities for new trade deals around the world. I think I demonstrated to the House that that is complete illusion.

Day after day over the last 12 months we have been debating here the problems we will have with leaving Euratom, the European Medicines Agency, Europol and the other security institutions involving automatic transfer of information from British police forces to continental police and intelligence forces and vice versa. They are enormously important. We need to turn to the British public and say: “You are now in a position to make your own balance sheet. You can see whether you think it is a good idea or not”. If the British public are allowed to take a second, more informed look at this matter—all of us on all sides of the debate must be more informed as a result of what has happened over the last two years—I think a whole dam of investment that is being held back would be released and we would greatly benefit.

If that does not happen, the Government have some much less attractive choices. We certainly will need some kind of countercyclical stimulus. Most participants in the debate this evening have urged a fiscal stimulus. The noble Lord, Lord Macpherson, and my noble friend Lord Hain spoke in favour of that. I ask them to hesitate a little before they come to that final conclusion. The history in this country of discretionary stabilisation through fiscal measures is not a happy one. Generally speaking, by the time the bureaucracy has got its act together, gone through all the planning inquiries, gone through all the tendering procedures that it has to do, the world has moved on and the cycle has turned. All the public spending contributes perhaps to overheating in the next economic phase, destabilising the economy rather than stabilising it.

Unless the Treasury is convinced that it has solved this problem—I see no evidence of that at all—I would be very hesitant indeed at placing the main burden for countercyclical stabilisation on fiscal measures of that kind. Nor can you use tax reductions. Cutting income tax or VAT is a very good way of stimulating consumer demand but that would be very irresponsible. Anybody knows that no Government can put those taxes up within sight of a general election or within two or three years of a general election. They would not be put up when they needed to be, so that would not be an honest or an effective policy to pursue. It is very dishonest and very irresponsible, in my view—not that anybody has actually suggested it, I am glad to say.

What remains is to rely on the Bank of England—on the Monetary Policy Committee. The noble Lord, Lord Macpherson, was concerned about inflation if monetary policy is relaxed in any way. We are so far from inflation at the moment. All the pressures are contractionary so I do not think that we should worry too much about that. If perhaps because of a concentration of increases in prices—because we were imposing new tariffs on ourselves—momentarily the inflation rate goes above 2%, the Bank of England MPC will always write a letter to the Treasury to explain it. I think that explanation would be accepted by the markets in present circumstances. I would be very cautious indeed about going down the fiscal route unless there are some assurances for the problems I have just listed.

We obviously have to do something and must try to restore some confidence in this country. At the moment I would say that almost any kind of fiscal or monetary stimulation would be relatively ineffective. We would need an awful lot of it to achieve any result because the confidence factor is lacking. It is lacking above all because the Government are so incompetent and the Prime Minister has now become worldwide a kind of legend of incompetence. In our country’s interest none of us should allow it to continue for too long.

Brexit: Economic Impact

Lord Davies of Stamford Excerpts

Wednesday 20th February 2019 Lords Chamber

[Lord Bates]

My noble friend puts forward an interesting idea. Of course, the tariff schedule has not been published yet. It will be published shortly, and I am sure the Financial Secretary to the Treasury and others will have heard my noble friend’s suggestion.

[Lord Davies of Stamford (Lab)]

My Lords, if the Government seriously wanted a deal, they would be able to conclude one very easily in a matter of days on several bases—for example, on the basis of remaining in the customs union indefinitely. I am quite certain they could get it through the House of Commons as well. If the Government stopped listening slavishly to and taking orders from the ERG, and instead interrogated the national interest, that problem would have gone away years ago.

[Lord Bates]

The solution the noble Lord proposes would necessitate our signing up to a common external tariff barrier, which would mean we could not negotiate our own trade deals; we would not have control of our borders in terms of free movement; and we would still have our laws dictated by the European Court of Justice. That is what was rejected and what we are trying to negotiate an alternative to.

Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019

Lord Davies of Stamford Excerpts

Monday 18th February 2019 Lords Chamber

The situation that we are in at the moment is deeply unsatisfactory. We are imposing significant burdens on companies—burdens that extend to millions of pounds according to the Government’s own impact assessment, which they themselves admit is conservative. We are doing so in pursuit of a no-deal Brexit, which almost nobody who has been engaged with it—to use the noble Lord’s expression—finds satisfactory and almost all of whom would wish to rescind if they were given the opportunity. There has been no consultation in defiance of all the established rules of the Government and Parliament. This is unsatisfactory and therefore I beg to move.

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord, Lord Bridges, has told the House, quite correctly, that at present he has a role with Banco Santander. Although in my case there is no possible financial interest and the relationship occurred 30 years ago, I ought, in order to be completely transparent, to reveal that when Banco Santander initially installed itself in this country in the 1980s, I was its financial adviser. I am very pleased that at that time I was connected with a transaction that has proved to be extremely fruitful for Banco Santander and the British economy. Therefore, I genuinely wish the noble Lord every success in the role that he is currently playing for this distinguished financial institution. It has expanded over the decades in this country and I hope that that happy position will continue, although all of us—at least, on this side of the House—have some fears about that at present.

There is no doubt about the importance of this issue. We are talking about financial transparency and disclosure. Anyone who knows anything about the financial markets knows that, together with the avoidance of conflicts of interest, those are the most important foundations of a successful financial marketplace. When either of those two foundations have been weak, the human race has invariably ended up substantially regretting it. People have been ruined and even economies have, sadly, been seriously affected.

The European Union now has a good system. Together with the United States, the European Union has the longest experience of successful financial regulation in this area. People come from all over the world to discuss with us how we do things here and very often they follow our example. That is very sensible and desirable for things such as the prospectus directive, which has been imitated around the world. The whole business of regular financial disclosure—annual reports, interim reports and so forth—have, again, been very widely imitated around the world. Everyone knows that if you want to have a financial market where companies can raise serious sums of money, these things are essential.

I have always had a strong feeling that the scrutiny of secondary legislation, both in the Commons and in the Lords, is the most dubious and problematic area of parliamentary activity and the one most in need of reform. Like everybody else in the two major parties, when we were on the Back Benches in the Commons we were regularly press-ganged—I do not think that is too strong a word—by the Whips to sit on statutory instrument committees. They were absolutely deplorable occasions. They were a real travesty of good parliamentary scrutiny. I used to hope that the public would never come into the sessions because they would be horrified at what we were doing. In fact, I never saw a member of the public there, although occasionally one would see lobbyists of some kind. However, the fact is that we had no opportunity to brief ourselves, no opportunity to question Ministers—although of course in the Lords we do have that opportunity, which is a great improvement—and we had the system that we have here, which was that we could not modify these instruments if we thought it necessary to do so.

How can Parliament possibly do its job, or make a contribution, if it cannot modify a proposition for a statute or Bill by amendment? This is quite extraordinary—complete rubbish—and we should do something about it. It results in an enormous amount of legislation going through that is not properly scrutinised. In this series of statutory instruments, we see literally hundreds of important statutes supposedly being renewed—although whether they are renewed or modified is something one can never be quite sure about—and going through at a rate of knots. No one can judge the pace at which this is happening other than negatively; it is quite frightening, and a very bad moment for Parliament.

The situation is made much worse by the absence on these occasions of proper consultation or, in most cases, of impact assessments—as it happens, there is an impact assessment on the statutory instrument before us but, mostly, there are not. I want to clear up the controversy that exists between my noble friend Lord Adonis and the noble Lord, Lord Bridges. Consultation is an important term; it implies a set and standard process for consulting those likely to be impacted by legislation, and passing on to Parliament before it legislates—that is, before it is too late—the results of the interchange that has taken place with the stakeholders or parties who have an interest in the sectors of activity being regulated. This should be a standardised practice; we ought not to have to ask in each case, “What kind of consultation did you have? How many banks did you speak to? Who did you speak to: the directors, compliance officers, researchers, parliamentary affairs departments—a lot of companies have these kinds of things—or PR people?”

We should not need to ask these sorts of questions because we should know exactly what a consultation exercise involves. There should be—I am sure there is—a template in the Treasury and other serious departments, which indicates what you need to do to meet your obligation for a proper consultation when proposing legislation. A proper consultation has not been done here. What has happened here is engagement. The noble Lord, Lord Bridges, is proud of the distinction he has made but, frankly, engagement can mean what you want it to mean. No one knows, unless they have specifically asked the question, what it has actually involved, or indeed whom it has involved and not involved—who has been left out, perhaps deliberately, because the Government or department concerned did not want to hear some people’s negative views.

All these things are possible if you do not have a standardised system of consultation. It should be a permanent part of parliamentary procedure that you expect that consultation has been carried out and that everybody knows the principles under which it has been conducted. That does not happen here, and so we face this situation where we are being asked to vote through a whole lot of legislation at great speed. We do not know whether the impact will be what the Government say it will be; we do not know whether other people have been asked their opinion, or who has been asked. That is a very unsatisfactory situation. Has there been no consultation in the way that there normally would be? Let us be honest about it.

I come to my final point. The reason why there has been no consultation in the way that ordinarily there would be is, we are told, that we are under tremendous pressure. I say to the noble Lord, Lord Bridges, and others on that side of the House that that is a form of blackmail. I would not dream of listening to blackmail, whether about my business life, my past, my private life, or my political or governmental responsibilities. Anybody who attempted to blackmail me would be thrown out of the door; there is no question about it—I would not be interested. The Government are saying, “You have to pass these things or there will be terrible consequences for British industry and all these different sectors. You will be at fault if you haven’t done what we have told you to do”. That is no good; we should not listen to such nonsense. This is the responsibility of the Government. They got us into this mess and they should be expected to do their best to get us out of it, or at least to minimise the damage that there certainly will be.

As my noble friend Lord Adonis has said, it is entirely the Government’s fault that we find ourselves in this position. Any day they like, the Government could withdraw their notice to quit under Article 50. They could negotiate. We have been told by the continentals that any such request would be positively considered—that we could, if we wished, negotiate an extension to that date. More than that, the Government could have conducted these negotiations very differently. Unless I am very much mistaken, the Prime Minister accepted in December 2017 the idea that we would be permanently part of a customs union with the Republic of Ireland and therefore with the rest of the European Union. Then when she returned to the UK, she was rapped over the knuckles, or worse, by both the ERG and the DUP—two groups of extremists who have an unfortunate hold over British politics at the present time. She had to go back to the EU pathetically and say, “I am sorry, I thought I could agree that but actually I can’t”.

That is the whole history of this negotiation. It is deplorable. It has made us look idiotic across the world and, of course, has created a climate of uncertainty that is doing palpable, concrete economic damage to this country. This is a very important matter. We should show that we mean seriously what we say on the subject of consultation. It should be a standard provision—a right, if you like—which is respected, and always expected, in the case of new legislation put forward on a statutory instrument basis. Such is the importance of this matter and of recording our feelings on it that, if my noble friend feels moved to put his amendment to a vote, I will certainly support him.

[Lord Sharkey (LD)]

My Lords, I can be very brief. I declare an interest as chair of the Hansard Society, which is almost as obsessed with the effective scrutiny of secondary legislation as the noble Lord, Lord Adonis, is. I agree with everything that the noble Lord, Lord Davies of Stamford, has said about scrutiny, but I also have no objection to this SI per se. After listening to the exchanges, I understand the difference between consultation and engagement, and I support the view of the noble Lord, Lord Adonis, that there should have been consultation as well as engagement on this SI and the other SIs that we are considering today.

--- Later in debate ---

[Baroness Bowles of Berkhamsted (LD)]

I declare my interest as a director of the London Stock Exchange, the relevance of which I am sure your Lordships can appreciate. I sometimes stop and wonder, “Okay, what would actually happen if we didn’t have one of these SIs?” Prospectuses would not go away; we would just have some annoying things to do with the EU and our regulators having to deal with it that would be single-ended, and I am not sure how it would all work. I am not suggesting that that is a solution but I am not sure that we would entirely be falling into a bottomless pit.

I have two fairly generic comments to make about this SI. First, in paragraph 92—I am not quite sure of what; I think it is the impact assessment—there is quite a good explanation of the transfer of functions that has been going on for loads of the statutory instruments that quite often have been debated in a much more lonely way in the Moses Room. As has been said, the Treasury takes over the powers of the Commission and then the binding technical standards go to the regulators. By and large that means that we are not really going to see a great deal of detail because the basic legislation is already done and in our legislation, and from now on significant changes are probably going to come in the technical standards. Of course, we do not have an entirely equivalent position with the EU here because we do not get a vote on the binding technical standards, whereas the European Parliament gets a vote, as indeed does the Council, if it wishes to negate the equivalent standards that come from the European supervisory authorities. From that point of view, it is sad that there has not been some kind of public consultation because it might have been the only sniff that they will ever get at it, unless there are more people like me, who make a nuisance of themselves by responding to the stakeholder consultations that regulators put out.

That was a general statement. There are two asymmetries in this piece of legislation that illustrate what is going on quite a lot of the time. One is that we will continue to recognise EU international financial reporting standards. That is a good thing in terms of openness and the ability and ease with which a prospectus can be done in the UK, but the other side of the coin is that the EU has said that it will not recognise, for example, audits done according to UK IFRS. I do not know whether it will continue with that as a generic ploy—I think it hurts the EU rather than us—but it illustrates the difference in openness and the position that the UK is taking on these things. A similar asymmetry occurs with grandfathering. We are saying, “Okay, if the prospectus has already been agreed before we leave the EU, it will be honoured for the 12-month duration that it’s allowed”, whereas I am afraid the EU has said that it will be cut off at the time of Brexit.

I do not think that those asymmetries harm us at all, but there are quite a lot of them spread throughout and some do operate in a harmful way. There are some of these—what was it?—“distinguished” lawyers who advise companies that they are better to operate out of the EU because the EU will not recognise us, whereas we will recognise the EU. I am not suggesting that we could necessarily operate in a different way, but industry has not always got what it wanted out of these engagements and would have sometimes preferred the Government to be a little more equivocal and to have waited to see on one or two of these things, so that, if you like, the balance of lack of knowledge was roughly the same.

[Lord Davies of Stamford]

I am most grateful to the noble Baroness for giving way. She just said something that alarms me greatly, which is that there will now be two forms of IFRS, one for the EU and the other for the UK. That seems to be a matter of enormous significance, and extremely undesirable. It means that you will not be able to make exact comparisons between potential investments in the UK and the rest of the EU.

Let us suppose you are doing a study of the pharmaceutical industry and you find that, in earnings per share, Glaxo or AstraZeneca has been progressing at a certain rate over the years, and German equivalents such as Bayer have different figures for growth of earnings per share. You are making comparisons, but the comparisons are falsified because of the different accounting conventions. Some of them might be very substantial. For example, if you change the conventions on amortisation of good will, that can be a very substantial figure in a balance sheet in a profit and loss account; it has a bearing on how you account for it. This is very serious, because it would be a serious reduction in the transparency of the financial markets, which would be of great disadvantage to individual investors, of course, but ultimately to firms themselves and their ability to raise money, and to the health of the financial markets, which we all depend on.

[Baroness Bowles of Berkhamsted]

I thank the noble Lord for that intervention. A statutory instrument on the endorsement of IFRS will be coming along from BEIS—I am already taking an interest in that. IFRS will still be a global standard, but I think there are now 144 countries that adopt and endorse them, in their own particular way. They normally go straight through, but there is sometimes a certain amount of adjustment; the Japanese have made some adjustments, as have the Australians. In fact, the EU has also done so here and there. I do not think the intention is that the UK-endorsed IFRS will differ from the EU ones, but—I say this with regret—that does not stop the EU saying that it will not recognise as equivalent those that are endorsed in the UK.

Recognising the need for continuity and stability in the financial markets, although the UK might have made rather a mess of it at the Brexit negotiation level, we probably have the high ground when it comes to how we are dealing with the conversion of legislation, given that it has to happen. However, I am just pointing out that some of the asymmetries—not these two, particularly—cause some difficulty. I think the IFRS one, such as it is, will cause more difficulty to the EU than to the UK.

--- Later in debate ---

[Lord Bates]

If that is the case, it is happening under the existing rules. All we are doing is replicating those rules to avoid a cliff edge.

[Lord Davies of Stamford]

The Minister’s description of the position is not at all what I understood. As I understood it from my noble friend Lord Tunnicliffe—who spotted this, to his great credit—at present the prospectus directive provides that certain state bodies within the EEA do not have to produce a prospectus. So the Government of France do not have to produce a prospectus if they go to the markets and seek more money. That is a reasonable situation. Far from not changing the substance when they switch from an EU directive to an SI affecting only this country, it appears that the Government have made a significant change in the wording. It no longer says “any EEA sovereign body”—or words to that effect—but “any sovereign body anywhere in the world”. So, as the noble Baroness, Lady Kramer, pointed out, you would have a situation where the Government of Venezuela—if there is one—or of Eritrea, or wherever, could issue a prospectus in London. I cannot believe that that would really happen, but if it did it would be an invitation for the most appalling financial crisis. People would lose all faith in the whole system and the credibility of the prospectus arrangements that we have here.

[Lord Bates]

In those circumstances, we would be dealing with a third country. We would not be part of the EEA, so we could not give them the terms that apply within the EEA at the moment. We had quite a bit of debate on this last time. They would be a third country like any other. We want to develop a very close relationship, but that is a matter for negotiation and discussion.

Trade Bill

Lord Davies of Stamford Excerpts

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

[Baroness McIntosh of Pickering (Con)]

My Lords, I follow the noble Lord, Lord Liddle, in pursuing the aspect of services, and I have a specific question for my noble friend Lord Bates, who I think will be summing up. This debate is not dissimilar to the one that we had on the free movement of professions, and I am mindful of the fact that my noble friend Lady Fairhead has said on a number of occasions that the Bill before the Committee today is all about continuity. I also have regard to what my noble friend Lord Hamilton said—that there has been precious little reciprocity in terms of setting up and establishing services elsewhere in the European Union to date. So that does not fill me with confidence about what the legal position will be going forward.

There are some very helpful pages on the European Commission website about what the position will be as regards professions after 29 March and in the longer term, but there is precious little about establishing companies. This is becoming a matter of increasing urgency because we can see, in particular if we look at financial services, that the issue is not just free movement of people but free movement of services and capital. We have recently seen an increasing exodus of capital and people moving from the City of London to bases in Dublin, Frankfurt and Holland—and even Paris and Copenhagen are pressing for people to go and set up businesses there.

I would like to ask my noble friend the Minister how we are pursuing this on a reciprocal basis. We saw with professions, in the case of lawyers, that we have adopted the statutory instrument and the necessary regulation. What is the legal position of a UK company that wishes to establish itself and offer its services, first in the event of no deal after 29 March, secondly in the event of a deal during the transition phase, and thirdly at the conclusion of the transition period, whether it is as planned or extended? It strikes me that many of us are focusing on businesses already established in the UK and providing services. My concern is how much the ability of those looking to set up and establish themselves will depend on the right of residence, either now or at some future date in what will be a third country after 29 March.

[Lord Davies of Stamford (Lab)]

My Lords, I think that this is a very good amendment and I will come to the substance of it in a second. I just want to make two points by way of introduction. First, here we are at the beginning of February—a new week and a new month—and we are still in an absolutely ludicrous position, presenting an almost unbelievable picture to the world of a country with a Government doing their best to damage their own economy. Every day we have new evidence of this. Today we had the worrying story from Nissan. Many of us who have focused on the mess the Government are in could speak on the subject for hours.

There is another example from the last few days. We say that when we leave the European Union we want to sign trade agreements with those countries which currently have trade agreements with the EU. One of those countries is Japan. Japan has just signed a trade agreement with the EU. At the very best, I suppose, if the Japanese were to give us exactly the same terms—which is unlikely because our bargaining power vis-à-vis Japan is nothing like the power that the EU has—it would take a minimum of five years, and probably nearer 10, to conclude this deal. So the Government are saying that we are walking away from a trade agreement in order to spend a vast amount of time and money and suffer a lot of uncertainty before perhaps, in many years’ time, finally reaching another trade agreement that may not be as good as the one we now have. I put it to the Government: what kind of reason or logic is that? What a way to run a state. What a way to look after not only this generation but future generations of British people and make sure that they have a viable economy on which they can actually base a reasonable standard of living and a reasonable level of public services.

The Government are already under attack in this place, quite rightly, for their delivery of public services. We had a very interesting series of Questions earlier about the health service. The Government are undermining the future ability of the British economy to deliver the wealth we need to maintain our public services at acceptable international levels. This is quite apart from the impact of their policies on individual wealth and prospects for individuals who want to travel or study abroad or benefit from all the other freedoms we will be giving up. It is a very serious matter. The muddle the Government are in about the damage that is being done makes the whole picture even more disgraceful—that is the only word I can use.

I think my noble friend’s amendment is excellent. I agree with everything he said when he introduced it—and that noble Lords on both sides of the House said—about the importance of services. We all know that they are 80% of the British economy. But I have one question. Why has he not put goods in there as well? It seems to me that exactly the same principles apply to goods. I just looked at the amendment, and if you were to add the words “goods” wherever “services” are mentioned, you would not produce any particular anomalies or logical or linguistic problems. I do not know why goods have been left out of this particular picture. As I said, exactly the same principles apply. We want there to be no new barriers—that sums up everything. “Barriers” includes tariffs, quotas and non-tariff barriers, so the ground would be covered quite well by doing that.

My noble friend rather implied that he was putting forward this amendment in order to have a debate on an important subject—which is a very worthy thing to do in this place. Perhaps I have that wrong, but it sounded as though that was what he had in mind, and we are of course having that debate at the moment. However, it seems to me that it would be even better if we got this proposed new clause on to the statute book. We would be doing a very good day’s work for the country if we could manage to do that. Therefore, I ask my noble friend why he came to his decision. I am sure that there must be a very good reason, which perhaps I am being foolish in not anticipating, but I do not understand why we do not include goods.

These debates are becoming extremely unreal. One likes to think that one’s service in Parliament, whether in the Commons or in the Lords, is based on being clear in one’s mind and discussing and working out with colleagues what is the best policy for this country. But we have a Government who are not pursuing the objective of the best policy for this country. We have a Government who are destroying British industry and commerce where they can—so it is a very unreal situation. I do not know how much longer this country can go on in the hands of people who take that attitude when they have in their charge the very considerable, and in my view very important, responsibility of governing the United Kingdom to the benefit of our citizens both of today and of tomorrow.

[Lord Lansley (Con)]

My Lords, in following the noble Lord’s remarks, perhaps I may say that the unreality of debates in Committee on this Bill will be exacerbated if we not only have amendments that, quite properly, raise relevant issues that are not presently included in the Bill but we then use them as the basis for a wide-ranging debate on every occasion. Let us not do that. On occasion, we in this House look broadly at what the resolution to our current impasse might be, but we also have a responsibility to use our time well on this Bill to try to ensure that it is effective legislation, because we might need it.

In that context, there is a very simple reason why trade in services is not in the Bill: the General Agreement on Trade in Services is multilateral, not plurilateral, so there is no need to legislate for this as it is something we are a party to only by virtue of our membership of the European Union. That is why the government procurement agreement has got into the legislation. If that were true for the General Agreement on Trade in Services, that would have to be included as well, but it is not; every member of the WTO is a member of the GATS.

However, the question is: do we want to legislate to mandate the Government in the negotiation on a future free trade agreement to seek to provide for a continuing and complete reproduction of our current relationship with the European Union, or at least to the extent that the amendment asks for that? As far as I can see, it asks for it up to mode 3—it does not include mode 4 arrangements, which allow for natural persons to be present in other member states—thus excluding the free movement of individuals for the purpose of the delivery of services in other member states. Therefore, it is not a continuity amendment, or at least it cannot be presented as such.

From the point of view of Ministers, broadly speaking at the moment it is important for us to understand to what extent free trade agreements that might be reproduced by way of continuity agreements in the event of a no-deal exit might lead to the perverse situation whereby we have greater service sector access to third countries than we do to the European Union, which would mean considerable dislocation for service industries in this country.

Finally, much as I wish that we were staying in the European Union and continue to argue that we should be in a customs union with a degree of regulatory alignment—we will come on to that briefly later—I certainly would not go as far as the amendment implies, which is that effectively we should be rule-takers on services with the European Union. That could be a very unhappy place for us to be, given that services make up 80% of our economy, as has been said. The fact that we are in a customs union for goods will therefore not preclude us from engaging extensively in discussions on trade in services with third countries, which is where much of the action may well be in future trade negotiations.

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

My Lords, on behalf of all those who have spoken, I thank the noble Lords, Lord Stevenson and Lord Purvis, for bringing forward Amendment 45, the purpose of which is to provide an opportunity for the Government to put some remarks on the record about our approach to services which, as we all agree, is of crucial importance. So, before coming to some of the specific questions that have been raised during this short debate, I will take advantage of that opportunity to set out the Government’s position as it now stands.

As my noble friends Lady McIntosh and Lady Neville-Rolfe, and indeed the noble Lord, Lord Stevenson, said, the UK’s services economy is a global success story. Our internationally competitive industries play host to world-leading firms as well as thriving small and medium-sized enterprises, and we have undertaken significant engagement with the sector on issues related to EU exit.

I would like to reassure the House that the Government are seeking arrangements for services and investment that cover all modes of service supply—my noble friend Lord Lansley correctly referred to the variations; that provide substantial sectoral coverage, including measures on professional business services, which my noble friend Lady McIntosh referred to; that go well beyond both sides’ WTO commitments as set out in the General Agreement on Trade in Services, which my noble friend Lord Lansley also mentioned; and that build on the provisions in existing EU agreements.

Moreover, through the political declaration we have secured a commitment from the EU 27 that our future trading relationship will be ambitious, comprehensive and balanced, and will include market access commitments to ensure that service suppliers and investors do not face quantitative restrictions such as monopolies, economic needs tests or joint venture requirements, which my noble friend Lord Hamilton expressed concern about; national treatment commitments, to ensure that UK service suppliers and investors are not discriminated against by the EU 27 and vice versa, as my noble friend Lady McIntosh referred to; new arrangements on financial services, grounded in economic partnership, providing greater co-operation and consultation than is possible under existing third country frameworks; appropriate measures on the recognition of qualifications, as referred to by the noble Lord, Lord Purvis, to support UK professionals practising in the EU 27 and vice versa; arrangements that allow for temporary entry and stay in each other’s territories for business purposes, including visa-free travel for short-term visits, as the noble Lord, Lord Liddle, rightly identified from his extensive work examining the internal market as a member of the Select Committee; and mechanisms to promote voluntary regulatory co-operation to guard against the introduction of unnecessary barriers to services, trade and investment, to which my noble friend Lady Neville-Rolfe referred. I pay tribute to the work that she did at BEIS in seeking to remove those barriers.

We have also been clear that after we leave the EU, the UK will have an independent trade policy covering all aspects of goods and services. To deliver that objective, it will be important to retain regulatory freedom where it matters most for the UK’s services-based economy.

I turn to some of the points that have been raised.

[Lord Davies of Stamford]

Before the Minister moves on to detailed points, perhaps this might be a good moment for him to tell the Committee, out of all the countries with which we would like to have our own free trade agreements after we leave the EU—if we leave it—how many have indicated that they wish in principle to negotiate and sign such an agreement with this country; how many have said that they would do so on terms identical to their existing free trade agreement with the EU; and how many have indicated that they would not want to pursue such a negotiation at all?

[Lord Bates]

The noble Lord will remember from day three of Committee last week that one of the questions asked was whether we could provide the Committee with some running status on where we are with all those free trade agreements. That is a perfectly reasonable approach and it is something that my noble friend Lady Fairhead agreed to take back to look at and come back on ahead of Report. Rather than using this opportunity to rehearse that, I will say that it is something that we are looking at. Specifically on the EU and Japan, I was going to come to that topic and say that there is a working group with Japan to seek to replicate its effect as part of the continuity arrangements.

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[Lord Lansley]

I am grateful for this opportunity to raise the issue of free zones. I thought I was likely to end up moving this amendment at about 10 pm last Wednesday, so it is a pleasure to have it on in prime time but, recognising the value of this time, I will be as brief as I can.

The point about this amendment is that free zones were legislated for way back in 1979. Indeed, they featured, not least during the 1980s, as part of a broader industrial strategy. I do not propose today to debate the merits or otherwise of free zones, because there are arguments that cut both ways. They are, by their nature, a distortion: they distort the customs and regulatory framework in favour of specific geographical locations. None the less, there can be significant benefits associated with that happening in circumstances where one needs to advantage certain geographical areas. That is why, for example, they have been used in the past, and are used widely around the world, in relation to some more disadvantaged economic areas, and specifically in relation to ports of entry—not just seaports but airports and the like. The reasoning there is that the ports of entry to an economy are often in competition not so much with other parts of the geography of that country as with other ports in neighbouring areas.

The European Union has a general disinclination towards free zones because the single market effectively creates one single customs territory. Arguing against myself, if we were to be in a single customs territory with the European Union, the question of free zones would probably not arise at all—but if we are not to be, it ought to arise. Under these circumstances, it would be good to legislate in the Bill to encourage Her Majesty’s Treasury to bring forward both a consultation allowing the merits of free zone designation and its use in this country to be debated, and proposals to Parliament about how that designation might be deployed.

There are ports that are interested in this, and the Treasury’s approach—that it is happy to consider free zone designation under the 1979 legislation—is understandable. But it is for the ports themselves to decide whether they wish to do this. I understand some ports may wish to; Teesport and Humberside are interested, and Associated British Ports is interested. If we leave the European Union and do not form part of a customs territory with it, they may well bring forward proposals. In the interests of the legislative approach to this, we should have something that encourages that to happen as quickly as possible in an ordered way. That is why the deadlines in the amendment are swift: to initiate a consultation within three months, and to report on that consultation within six months. In quite short order after exit day, we in this country could see to what extent our ports would need and benefit from free zone designation to enable them to compete more effectively with other ports—not least those on the other side of the North Sea or the English Channel.

That is the reason we should think about this. Those bringing their goods to Europe have never previously had to think about customs or other formalities, or the imposition of duty on those goods if they are brought to the United Kingdom and then re-exported elsewhere in Europe. Unfortunately, they may have to think about that.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. As he rightly says, free ports are distortionary by definition. If you create a free port close to another port, one will survive and the other will probably disappear altogether. Does he think his Government would be tempted by the thought that they could say, “If we have a local MP who votes for us and supports this Government, we will make the port free; but if we have an MP who dares to vote against us, we will make the port unfree and ruin it”?

[Lord Lansley]

The noble Lord will observe that the amendment seeks a consultation on the part of the Treasury, and that consultation would undoubtedly enable these issues to be explored on an even-handed basis. In the scenario I was describing, any port would be free to come forward and seek designation. It is not something that would be handed out on the basis of any partiality; rather, it would be done by examining the cases made by those ports. The point is that whereas in the past we may have concluded that there was no basis for introducing such a distortion into our economic activity, if and when UK ports are principally having to compete in international trade with other European ports, we may conclude that it is not a distortion to trade inside the United Kingdom. Actually, it is an aid to competitiveness for the United Kingdom in relation to ports elsewhere in Europe. I beg to move.

Counter-Terrorism and Border Security Bill

Lord Davies of Stamford Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 29th October 2018 Lords Chamber

I expect that my noble friend the Minister will seek to allay our concerns by pointing out that journalistic activities are not the target of this clause and that prosecutors would not press charges in such cases. However, these are serious, arrestable offences and it would be easy for law enforcement officials, who are not perfect, to get confused between journalistic activities and those that we seek to prohibit. This could result in a journalist being wrongly arrested or just harassed. How would it be if, at the very point that we are trying to convince a foreign leader such as President Erdoğan of Turkey to respect the rights and role of journalists, we in the UK accidentally arrest a journalist over a mix-up? Of course, law enforcement officials do make very serious mistakes. Your Lordships need to think only about the cases of Lord Bramall or Sir Cliff Richard. For this legislation to work as intended, we must have a carve-out for journalists.

[Lord Davies of Stamford (Lab)]

My Lords, I did not take part in the Second Reading debate because I was not able to be at the wind-up, although I heard a great deal of it. I am very concerned, as I believe everybody ought to be, about this matter. I cannot think of anything more important in a free society than freedom of speech, which should be tinkered with or eroded with the very greatest reluctance, if we do it at all.

I am concerned about a number of things in the Bill. One is the issue of recklessness, which has already been debated. To bring recklessness in here seems extremely dangerous. I know that I am about to be told by somebody that recklessness already exists in the criminal law in different contexts, but it exists in such a way that it is easily definable. Reckless driving of a motor car involves driving it too fast or taking no account of the traffic on the road, or not having one’s car checked and so forth. There are specific ways in which you can say that is reckless and define “recklessness” in such a way as to create little difficulty for judges or juries, or indeed for one’s general sense of justice. That is not the case here.

The idea that every word one speaks and every sentence one enunciates might be looked at with a view to whether it could have been reckless is quite alarming. It opens up the prospect which concerns me: that one might say something which happens to agree with something that is in the platform of a proscribed organisation and, as a result, find oneself indicted under the Act, if the Bill becomes one, without having the slightest notion that one had committed any offence, or necessarily that some terrorist or proscribed organisation shared one’s view on a matter. I am really concerned about it.

It seems to me that we should have the good old concept of intention here. Intentionality should automatically form part of the criminal law, except in special circumstances. In strict liability, intentionality does not apply, but intentionality is a principle very much bound up with the criminal law in almost all contexts, and I think that is the right way to go. That is much more specific. We would therefore not be doing violence to the precious principle of free speech if we adopted the intentionality route. I very much agree with those in the debate who have taken that line, and I very strongly disagree with those who have not.

There is another matter which I am very concerned about, and I dare say I shall make myself very unpopular by saying this. I do not for a moment think that we ought to have some privilege for journalists in the matter of free speech. I will not only speak against that but will use any opportunity I can to vote against any such Motion. Freedom of speech belongs to every citizen in a free society. Of course journalists must not do dangerous things, any more than anybody else must not do dangerous things, but the idea that journalists have a special form of free speech which is not available to the rest of us is quite absurd. If there are indeed proscribed terrorist organisations and journalists can legitimately report on what they are saying or what they stand for, it should be equally up to any of us. I am thinking not particularly of parliamentarians. Parliamentarians and other people should be able to report on that and talk about that. A free society consists of people being able to express views or refer to views, however awful they may be, without committing a criminal offence. The suggestion is obnoxious. I understand why it has been made. It has been made for the most honourable and pure reasons, but it would not be a good idea.

I also see some difficulty in definition. Who is a journalist? If a journalist leaves a newspaper or the media channel for which he or she is working, does he or she cease to be a journalist? Does he or she cease to be a journalist after five years or 10 years if he or she ceases to practise that profession? What does “practice that profession” mean? Some of us write articles for the press from time to time. In the old days, in my case it was for money, but not at present. Does that make us journalists? If we create a special right and privilege for so-called journalists, obviously a lot of people would like to define themselves or their activities in such a way as to get the benefit of the franchise that has been created. That is an undesirable development.

[Earl Attlee]

The noble Lord raises an extremely good point about who is a journalist. When I was being briefed by the media, I asked that very question. The answer is that traditionally we do not define who is a journalist, but I am confident that it does not cause a problem in the way my amendment works.

[Lord Davies of Stamford]

I have great affection and respect for the noble Earl, but that is no good at all. The idea of creating a special category of people in the key sensitive matter of free speech is bad enough but if you then say that you do not need to define it—in other words, you do not need to restrict in any way the benefit that is being accorded or the possibilities of its misuse—you are on a hiding to nothing. I do not agree with the noble Earl on that subject.

[Viscount Hailsham]

The noble Lord’s anxieties may be further compounded by looking at the terms of the amendment, because the reference is not to journalists but to “for the purposes of journalism”. What is journalism? It is writing in a newspaper—neither more nor less. That is all it is.

[Lord Davies of Stamford]

The noble Viscount has reinforced my point with greater eloquence than I could have done.

[Lord Anderson of Ipswich (CB)]

My Lords, it is an uncomfortable fact that the law as it stands has not been as effective as it might have been in prosecuting radicalisers who have stopped short of inviting support for a proscribed organisation but whose words have none the less been instrumental in encouraging others to support terrorist groups, often by actions, not just words. I shall not rehearse the saga of Anjem Choudary and the many unsuccessful attempts to prosecute him over the years. Clauses 1 and 2 attempt to fill a gap in our law by extending the proscription offences. For that reason I look sympathetically on their general thrust although, like the noble Lord, Lord Carlile, I support Amendment 5.

For my part, I could not vote for an extension of the already strong proscription offences in circumstances where substantial numbers of proscribed organisations— 14 by the Home Office’s own admission, and no doubt more in Northern Ireland—are proscribed despite failing to satisfy the statutory condition for proscription, which is being concerned in terrorism. That would expose people to the risk of long prison sentences for expressing opinions supportive of organisations that have long since laid down their arms and committed to peaceful engagement, but which however remain proscribed because no one associated with them has been willing to go to the expense, or indeed attract the associated publicity, of going to court to get them de-proscribed. My support for Clauses 1 and 2 will therefore depend on the outcome of Amendment 59, which would introduce the meaningful review of proscription orders and which noble Lords will consider on another occasion.

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[Viscount Hailsham]

I wondered that myself but came to the conclusion, having weighed up the language, that to argue that something should not be proscribed probably does constitute action supportive of the proscribed organisation. Even if I was wrong about that, though—in this context my views are shared by the noble Lord, Lord Carlile—it is certainly an arguable position, and I am in favour of clarity in law. That is why I would go with Amendment 5 in the name of my noble friend.

That brings me to Amendment 6, where I am afraid I part company with my noble friend.

[Lord Davies of Stamford]

My Lords—

--- Later in debate ---

[Lord Davies of Stamford]

I know that the noble Lord will be very familiar with the quotation I was mindful of in what he just said, which was Voltaire’s great phrase: I disagree totally with what you say but would defend with my life your right to say it. In that situation, you might disagree totally with what an organisation stands for. I greatly disagree with what a lot of organisations stand for but would defend—I think to the death—their right to say it. Does this not resolve the matter that the noble Lord has just put to the House? You can at the same time urge the decriminalisation of an organisation that has up to then been regarded as a terrorist organisation while not agreeing whatever with the views that it holds.

[Viscount Hailsham]

I shall respond to that intervention and then revert to Amendment 6. I have a lot of sympathy with what the noble Lord, Lord Davies, has said. I have always been on the fairly extreme end of libertarianism when it comes to free speech—and, indeed, in many other aspects of life. As a general proposition, it is much better to know what your enemies are saying, not to ensure that they say it covertly. I like to know who my enemies are and what they are saying: it is then much easier to combat them than if you create a context in which everything is done covertly. In principle, I agree with his position.

Brexit: Border Control

Lord Davies of Stamford Excerpts

Monday 29th October 2018 Lords Chamber

[Lord Wigley (PC)]

My Lords—

[Lord Davies of Stamford (Lab)]

My Lords—

[The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)]

My Lords, we will hear from Plaid Cymru.

[Baroness Williams of Trafford]

I certainly appreciate any concern that we have sufficient numbers of staff to meet demand at the border. People coming from Ireland are often not subject to those sorts of checks but it is important that we have the right number of border staff in place as we leave the European Union.

[Lord Davies of Stamford]

My Lords—

[Lord Paddick (LD)]

My Lords—

Brexit: European Union Police Databases and Extradition Arrangements

Lord Davies of Stamford Excerpts

Wednesday 20th June 2018 Lords Chamber

[Lord Anderson of Swansea (Lab)]

My Lords—

[Lord Davies of Stamford (Lab)]

My Lords—

[Lord Morris of Aberavon (Lab)]

My Lords—

--- Later in debate ---

[Baroness Williams of Trafford]

I am sure that what is at the forefront of the European Parliament at this point in time—and I am talking about the politicians, not the bureaucrats—is the sometimes fragile security situation that we have had in Europe over the last two years. I will come on to the legal point. None of the things that we have talked about today are insurmountable. I am not arguing against a legal framework, but none of the issues are insurmountable legally.

[Lord Davies of Stamford]

My Lords—

[Lord Morris of Aberavon]

My Lords—

Brexit: The Future of Financial Regulation and Supervision (European Union Committee Report)

Lord Davies of Stamford Excerpts

Wednesday 6th June 2018 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I served on this committee in the last Parliament and I was delighted to do so. I was not at all surprised that the noble Baroness who chairs the committee has received all these compliments from the current members because she really was a formidable chairman in my time and I am sure she has remained so. I do not think I have ever seen a chairman of a committee in either House who does his or her homework quite so thoroughly, and that starts the committee off on exactly the right foot because everyone else feels they have to live up to that kind of example, which probably none of us did. Her direction and leadership were always stimulating and sometimes very demanding. As the noble Baroness, Lady Falkner, also knows, I am very blunt, and I am going to be quite blunt about this report. I hope I shall be forgiven by colleagues but I think it is important to have a frank debate on these occasions so that we expose different perspectives to any members of the public who might be interested in our proceedings or our views on these subjects, rather than just the perspective that is enshrined in the report.

The report contains a lot of very good work. I found most interesting the examination of the costs to us of Brexit in the financial services area, which I think is in appendix 4 of the report and is something that should be widely read. However, I have three problems with it. First, on the whole it tends to be too kind to people. I was very amused to see that Prudential apparently got away with arguing that it left the annuity market because of Solvency II. It is nothing to do with that; it is because the fall in interest rates means that annuities are an even worse deal than they ever were in the past. People are better advised now anyway, thank God, so a much lower number of people have been inclined to put their savings into that particular form, and very happily so. Solvency II has actually been a considerable success; the general insurance field is not complaining about it. Both the companies and the Lloyd’s market are generally overcapitalised in terms of Solvency II. It would not make any sense at all to revise the Solvency II criteria as the committee has suggested.

Secondly, and more significantly, I thought the report was far too kind, dangerously so, to the financial regulators in this country. It said what a wonderful reputation we have and that our financial regulators are respected worldwide and so on—I paraphrase because I do not have the exact words in front of me, but they occur several times in different contexts in the report. Historically, that was probably true, but sadly that reputation was eroded about 20 years ago by a series of banking scandals such as Barings and BCCI, and there is very little left of it at all after what happened during the Lehman Brothers collapse, when we had the notable collapses of banks that obviously had not been properly supervised either on the liabilities side of their balance sheet, like Northern Rock, or on the assets side of their balance sheet, like RBS and Lloyds.

What happened in the RBS case was an appalling failure of elementary supervision. Mr Hector Sants at the FSA had all the power required to stop the AMRO transaction. He never used it: he was out to lunch. How he has managed to make a continuing career for himself in the field of financial supervision and regulation, I do not know. That itself worries me, and is not a commendation of the British financial supervisory and regulatory system. One needs sometimes to be quite harsh in examining our treasured institutions in the hope that they will, over the long term, improve their performance. They certainly need to in this respect in this country.

What a contrast between us and France. The British love to run the French down, but BNP Paribas, Société Générale and other big continental banks—German banks and Spanish banks such as Santander—sailed through the crisis. We literally had the worst record of anyone. That is my first problem with the report.

My second problem with the report is that a fundamental contradiction runs through it. At times, it says that it is in the self-interest of the continentals to accommodate us, to have mutual recognition, and so forth; at other moments, that it is in their selfish interest—but I suppose that that is the same thing as self-interest—not to accommodate us but to keep us out. We must make up our mind what is in the mind of the people who we are dealing with.

I will give my answer to that question. I think there are two fundamental motivating views on the part of our counterparties in these negotiations. One is the sense that if you have a club and someone wants to leave it, that is fine: they leave it. If they want to leave it, remain fully engaged but somehow juridically leave, that is problematic but something that you can talk about. If they want to leave it but actually want to keep all the benefits but not have any of the disciplines or costs and have special new rules crafted for them, that is insufferable. That is ridiculous. I think that we would react that way if the boot was on the other foot.

The second thing which has not come out in the report, which I think is the major motivating factor on the other side of the table, so it is important to consider it, is the issue of financial stability. If, as a banking regulator or supervisor, you are concerned about financial stability, as you must be, you want to be in control. You want to decide who is a fit and proper person to be dealing in your markets. If you have a crisis, you need to give orders to people and tell them to change their behaviour rapidly. You cannot have people who operate in your market, creating assets, lending money or whatever—perhaps contributing to the crisis, who knows?—who suddenly put their hands up and say, “We’re British. We have special rules. We have a different adjudication procedure. We do not have to obey your demands”. That is a hopeless situation. If you were Mario Draghi, I think that you would reasonably not want to accept it.

I come to my third difficulty with the report, which is most fundamental. It is far too optimistic and sanguine. It starts off by saying, “We need to continue to do our financial services business”. Quite right: of course we do. “Equivalence is certainly not sufficient for our needs”. Quite right: I totally agree. “Therefore we need mutual recognition”. But it never says that mutual recognition is fairyland, cloud cuckoo land—what other cliché can I use? It is absurd. It will not happen. I am happy to put money on that if any Member of the House on either side wants to take me up on it. We are not going to get passports unless we stay in the single market, when of course the whole range of activities will be open to us.

Of course it is true that during the transition period, we continue to have full access, as we do today. That is not that much of a help, you know. What does it mean? It means that until the end of 2020, we can carry on with the false—self-deceiving—situation in which we think everything is all right and nothing will change. It means that we postpone the so-called cliff edge for 12 or 18 months, or whatever. Perhaps we can negotiate a longer period. It now looks as though we will go into this transition period not knowing what its terminal date will be.

Europhiles such as me would be happy for it to go on indefinitely, if we cannot go back fully and juridically into the European Union, which I would like to do and which is far and away the best solution. Of course the Eurosceptics in the Tory party will fight like cats about that and threaten to overthrow Mrs May if she does that, so what she will do if she is running into the deadline of next March and does not have an agreement on the terms of transition nor the period of the transition, heaven only knows. When the period of the transition is known, we are heading for another cliff edge, and the uncertainty which businesses in the City are complaining about now, which is well recorded in the report, will simply be carried forward for a little longer. That is unhelpful. We will have had a major structural uncertainty in this country for three, four or five years. That is not a very clever thing to do. I think that that is my understatement of the evening.

I am worried, because I fear that anyone reading the report will get a false impression of the situation into which we are headed. Barnier is quoted as saying that we cannot get financial passports unless we stay in the single market—and if people do not listen to Barnier, they are unlikely to listen to Quentin Davies; I quite understand that. It is no consolation when you think that we are walking into potential disaster that we have a blindfold over our eyes for the time being.

Gaza

Lord Davies of Stamford Excerpts

Wednesday 21st February 2018 Lords Chamber

[Lord Green of Deddington (CB)]

My Lords—

[Lord Davies of Stamford (Lab)]

My Lords—

[The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)]

My Lords, it is the turn of the Cross Benches.

Middle East and North Africa

Lord Davies of Stamford Excerpts

Wednesday 16th September 2015 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, it is a pleasure to follow the noble Baroness, who always comes to this House well prepared with facts and figures. She usually goes out of her way to try to defend the Government, but she said this evening that our present policy in Syria is not working. That undoubtedly qualifies as the understatement of the evening. Our policy in Syria has been extraordinarily inept and extraordinarily unedifying.

As soon as the insurgency against the regime of Bashar al-Assad started, for some extraordinary reason the Government were determined to get involved with it, and the Prime Minister personally so, it appears. We sort of more or less declared war on Bashar at that point, and we have been in a state of war with him ever since. At the time I thought—and I continue to think—that it was a very bizarre decision. There does not seem to have been any particular national interest of ours in doing that; we should not deploy our forces frivolously. Of course, Bashar is an unpleasant dictator with blood on his hands, and much more blood now as a result of the insurgency against him, of course. But if that was a criterion for taking military action against a regime, we would be involved in at least a dozen wars overnight—all the way from Equatorial Guinea to North Korea—so that cannot be the explanation. We cannot say that we got involved because we wanted to avoid a refugee crisis, because it was the fighting that produced that crisis.

Most peculiarly of all, the decision flew in the face of all the lessons that I thought any sensible person would have learnt from Iraq and Libya—that trying to change regimes in other countries is always a problematic exercise and should never be embarked on unless one has available a viable and credible alternative regime to impose. That was clearly not the case in this situation, so I remain mystified as to why we did it. What is clear is that, as the noble Baroness, Lady Helic, has just said—in words softer than mine, but the meaning is exactly the same—it has been a complete failure. The Government also made series of mistakes in political analysis and seriously underestimated the resilience of the Bashar al-Assad regime. We now find ourselves continuing to fight a war on two fronts in Syria, one a voluntary war started quite gratuitously by ourselves and the other an involuntary war, declared on us and the rest of the western world by Daesh. That is a very serious matter, but it cannot be very clever to engage in two wars at the same time, when one was inevitable.

That is the inept part of the story; the unedifying part of the story is the way in which we have handled the refugee crisis over the past few weeks and months. Until the PR agenda changed—because that is what changed everything, when the picture of the dead child on the beach was all over the newspapers—the Government were taking a very tough line, saying that they were not going to have any significant numbers of Syrian or other refugees here at all. The Government were completely obsessed by maintaining their arbitrary 100,000 person a year immigration total. Then suddenly, because the PR equation changed, they started making all sorts of declarations about receiving refugees and doing something for them. We have actually discovered that what they are doing, which the Prime Minister described as extraordinarily generous, was extraordinarily ungenerous, taking 10,000 or at most 20,000 over five years when other countries, as has already been said in this debate, are taking far more. What is more, as the noble Lord, Lord Ashdown, pointed out very well, we are not actually taking the refugees who are most vulnerable, those who are on the road and have no accommodation or food and are in serious danger of dying on their travels. The refugees in camps are obviously not very comfortable in them, but at least they do not face those threats quite so immediately.

One has to wonder why we have not taken up our quota under the EU system. The noble Lord, Lord Ashdown, said that he thought it was because the Government could not bear to do anything that looked like co-operation with our EU partners, because it would be unpopular with the Eurosceptics. I have to tell him that that is an appalling suspicion to have—that in a matter of life and death a Government would be influenced by party-political considerations of that kind—and I am very sorry to have to say this, but in my heart I cannot think of any other explanation for their conduct.

It is a very unedifying situation, and one in which we have no influence with anybody. We lost a lot of influence with the Americans because the Prime Minister was foolish enough to say to Barack Obama that we would get involved in Syrian operations without mentioning that he needed a House of Commons vote that he was not likely to get. We clearly do not have any influence with the EU now, with the way we have behaved, and we do not have any influence with third parties. That is very important as it is very important in this crisis that we encourage the Gulf states to take refugees from Syria. That is the most obvious solution because those economies are systematically dependent on immigrant labour and they are common cultural and linguistic areas, so it would be an obvious thing to do. But they are not taking any refugees; they are just paying cheques to keep people in camps, just like we are doing. Since we are doing that, we have no influence with them whatever. That is the situation we now find ourselves in.

I do not want to come before the House and just criticise. I want to say a couple of words about what I think we should be doing instead. First, we should regard the Daesh problem as a completely unique situation, which it is. People are fleeing a murderous horde of fanatics who will kill them if they can. We must open our doors and prevent that happening. Secondly, we should under no circumstances allow this to be a precedent, so that anybody who comes from a civil war or an area where there is a lot of violence can immediately claim asylum in the European Union or this country. It is not a realistic possibility. Thirdly, we must look again at the need to co-operate with our European partners. I think Mrs May has learnt the lesson that we cannot just say, “That’s all right—we aren’t in Schengen. We’ve got the Channel, so we don’t have to worry about people in Sangatte”. She has now belatedly realised that Sangatte is a problem for us.

Actually, it is a problem for us if these refugees come into southern Europe or the Balkans. We need to make sure that there are proper controls on the common external frontier. We have every interest in making sure that there is a robust common external frontier. I believe we, together with our EU counter- parts, should invest considerable naval resources in patrolling the Mediterranean to make sure that these poor people coming through on boats run by criminal organisations—criminal gangs in many cases—do not get through to the mainland of the European Union. They are of course rescued and given food and water when necessary, but they are towed back or taken back to Libya, where they mostly come from. We should negotiate, which I am sure is feasible, with the various warlords who now govern the Libyan coastline to enable us to do that. We need to have robust measures where they are required. We need to have a humanitarian response to this completely unique and horrifying Daesh phenomenon, and we need to make sure that in future we have well-thought through and coherent policies in these areas, which we certainly have not had up until the present time.