5 Lord Davies of Stamford debates involving the Department for International Trade

Wed 20th Mar 2019
Trade Bill
Lords Chamber

3rd reading (Hansard): House of Lords
Wed 6th Mar 2019
Trade Bill
Lords Chamber

Report: 1st sitting: House of Lords
Wed 30th Jan 2019
Trade Bill
Lords Chamber

Committee: 3rd sitting (Hansard): House of Lords
Mon 21st Jan 2019
Trade Bill
Lords Chamber

Committee: 1st sitting (Hansarad): House of Lords
Tue 11th Sep 2018
Trade Bill
Lords Chamber

2nd reading (Hansard): House of Lords

Trade Bill

Lord Davies of Stamford Excerpts
3rd reading (Hansard): House of Lords
Wednesday 20th March 2019

(5 years, 9 months ago)

Lords Chamber
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Baroness Fairhead Portrait Baroness Fairhead
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My Lords, this group covers Amendments 5 and 6. I will speak first to government Amendment 5. I will then respond to any additional points that the noble Lord, Lord Pannick, makes on his Amendment 6.

We had a valuable discussion in this House on Report on 6 March about what the powers in Clause 2 can and cannot be used for, prompted by the amendment proposed by the noble and learned Lord, Lord Judge, and the noble Lords, Lord Pannick and Lord Beith. That amendment was withdrawn, and I subsequently wrote to and met interested Lords to clarify the matter further and to consider how their concerns could be addressed without casting doubt on the meaning of other powers across our statute book.

Before addressing the detail of the Government’s amendment, it might assist the House if I confirm for the record that the Government entirely agree that it is not appropriate for Explanatory Notes to be used as a means to confine broad ministerial powers. Furthermore, the Government agree that the rule in Pepper v Hart cannot and should not be relied on to clarify unclear drafting. As I think one noble and learned Lord said in our meeting, Pepper v Hart is a judicial solution to legislative failings and should not be used to justify those failings. I am happy to have this opportunity to put on the record, for the avoidance of doubt, that the Government do not seek to rely on Pepper v Hart in the context of Clause 2. I was happy to confirm this in the letter that I wrote to the noble and learned Lord, Lord Judge, and other noble Lords who took part on Report. I have placed copies in the Libraries of both Houses.

Lord Davies of Stamford Portrait Lord Davies of Stamford (Lab)
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The noble Baroness said that the Government did not intend to rely on Pepper v Hart to deal with any issues that arise from the Trade Bill, which is very welcome indeed. Do the Government intend to use Pepper v Hart in other areas to clarify legislation in a way that they particularly want?

Baroness Fairhead Portrait Baroness Fairhead
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My Lords, I hope that the statement I made is entirely clear—we accept that Explanatory Notes should not be used to clarify legislation in that way.

Lord Davies of Stamford Portrait Lord Davies of Stamford
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I asked a question about Pepper v Hart, not about Explanatory Notes. They are two different issues.

Baroness Fairhead Portrait Baroness Fairhead
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I can confirm that the Government do not intend to use Pepper v Hart in the way that the noble Lord suggested we might. I hope that is clear to noble, and noble and learned, Lords.

I turn now to Amendment 5 and the considerations behind it. The power in Clause 2 cannot be exercised to create or extend criminal offences, impose fees, amend primary legislation—other than retained EU law—or create new public bodies. This is based on long-standing principles about the statutory construction of powers and on well-established legislative presumptions. These make it clear that certain things cannot be done by secondary legislation, unless they are expressly provided for in the enabling Act.

However, on the point about criminal offences, I am grateful for the very constructive discussions with noble Lords. These have led the Government to bring forward an amendment that would improve this Bill in a way that does not cast doubt on other powers in existing enactments. The Government’s amendment is simple but, we believe, effective. It inserts the word “civil” into Clause 2(5)(d) so the text means that this power to implement continuity trade agreements may be used only to make provisions for civil penalties for failing to comply with the regulations. The explicit reference to civil penalties, without mention of criminal offences, makes it clear that the power may not be used to make or extend criminal offences. I trust that these words, alongside the government amendment, will provide reassurance to your Lordships.

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Lord Wakeham Portrait Lord Wakeham (Con)
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Perhaps I might say a word, because I was the Chief Whip in the Commons when the Pepper v Hart decision was taken. What the Minister has said is of great advantage to her, because the difficulty I had then was that Ministers were being inhibited from giving proper explanations of Bills, because their advisers were telling them they might be infringing on Pepper v Hart and doing all sorts of things. So the fact that this matter has been cleared up after many years is a great advantage and I congratulate the Minister on doing it.

Lord Davies of Stamford Portrait Lord Davies of Stamford
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My Lords, I think the whole House—and indeed the country—should be very grateful to the noble and learned Lord, Lord Judge, and the noble Lord, Lord Pannick, for having raised this important matter, the effect of which goes way beyond this Trade Bill. I am very concerned that the assurances that have been given this afternoon by the Minister apply generally to all legislation and not just to this Bill. Perhaps I misunderstood the way that the Minister expressed herself on that: perhaps when she sums up she can once again make it absolutely clear.

Obviously, if it were the case that Explanatory Notes or ministerial Statements under the Pepper v Hart doctrine could be interpreted by the courts as being the equivalent of legislation, two appalling things would happen. One is that the Government would become extremely lazy in their drafting of legislation, because they could say, “Well, we can get it all right in the ministerial Statement in the House”, or something of that sort. The second, even more serious issue would be that a lot of legislation—the Explanatory Notes concerned or the ministerial Statements—would not be subject to analysis, debate and amendment by the two Houses of Parliament. That would be an absolutely disgraceful and tragic end to this particular tendency. So what has happened this afternoon is extremely important.

It is very important that what the Minister has said to the House this afternoon should be brought to the attention of all members of the Government. Once again, I would be very grateful to her if she would just repeat that these statements—I asked her specifically about the Pepper v Hart issue, but it applies to Explanatory Notes as well—apply generally to all legislation and are not tied in any sense to this particular Bill. This just happens, by accident, to be an occasion when we have two very distinguished noble and learned Lords taking part in the debate who spotted this issue, which if it had not been dealt with could have led to very serious consequences.

Lord Mackay of Clashfern Portrait Lord Mackay of Clashfern (Con)
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My Lords, as I think the only person in the Chamber who participated in Pepper v Hart, it is right to say that the decision of the majority in that case was that statements made by the mover of an amendment or a provision explaining how that provision was supposed to operate could be referred to in a case of ambiguity in order to resolve the true meaning of the phrase. I did not agree with that for reasons which I set out and with which I will not bother your Lordships now. The decision in Pepper v Hart still stands as the legal decision. I venture to hope that it will not be used very often because it is only in a case of ambiguity that it should be used at all. If you look at the detail of Pepper v Hart, you will see that statements relied upon as being explanatory leave a certain amount to be desired.

Trade Bill

Lord Davies of Stamford Excerpts
Baroness Henig Portrait Baroness Henig (Lab)
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My Lords, I hope that my amendment will prove a little more straightforward than the one we have just debated. When the issue of parliamentary scrutiny of trade agreements covered by this Bill was discussed in Committee, the Minister made much of the issue of speed. Speed, she argued, was of the essence in rolling over these agreements. She said that the Government were opposed to any detailed scrutiny arrangements which might slow the negotiations down and delay conclusion of the deals. Since then, it has become increasingly clear that, whatever the Government’s intentions, these deals will not be speedily concluded. Indeed, it could be two or three years before they are all finalised. This being the case, we surely need to put in place some clear scrutiny arrangements. At the very least, these should replicate the information that the EU Commission regularly supplied to us. They should keep parliamentarians and, more importantly, businesses and their customers informed about what is being discussed and the timescales envisaged for the conclusion of deals, so that they can plan effectively for the future.

I am sure I am not alone in having been shocked at the level of secrecy imposed by the Department for International Trade with regard to its progress on trade talks during the last 18 months. In 2017, the Secretary of State for International Trade made his much quoted promise about having up to 40 trade deals,

“ready for one second after midnight”,

at the end of March 2019. Businesses would have assumed with some confidence that all was going well and that, in the course of 2018, progress was being made in rolling over the deals. It was only through a leak in the Financial Times in January of this year that we learned that, in fact, only a handful of deals was going to be finalised by the end of March. Not surprisingly, this has caused great consternation among business leaders and companies, great and small. Now we learn, through a second leak—again in the Financial Times—that the Department for International Trade’s consultations with business representatives have been suspended because information was being passed out of the meeting, allegedly in an unauthorised way.

Where is this obsession with secrecy coming from? Is it from the Department for International Trade or from 10 Downing Street? Whatever the source, this cannot be a recipe for successful trade negotiations, either now or in the future. Both Parliament and businesses have a need and a right to know what is being negotiated, what stage discussions have reached, and when they are likely to be concluded. Successful trade negotiations require consensus—from business groups, sectors of industry and wider stakeholders about the interests that are being pursued and the goals that are going to be set. This requires extensive consultation and collaboration between the Executive, Parliament, businesses and stakeholder groups. The reality is that the secrecy demanded by the Department for International Trade is counterproductive to successful trade negotiations, both in relation to those being rolled over and to future deals.

Lord Davies of Stamford Portrait Lord Davies of Stamford (Lab)
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I am most grateful to my noble friend for giving way. I know that she is an expert in the subject. Does she agree that when the European Union has been conducting trade negotiations with a view to reaching trade agreements with third parties, it has always set very high standards of consultation and transparency, reporting regularly to the European Parliament as well as consulting business interests that might be at stake, trade associations and other potential stakeholders? Does she further agree that it is a terrible pity that the British Government do not seem to be following that excellent example?

Trade Bill

Lord Davies of Stamford Excerpts
Committee: 3rd sitting (Hansard): House of Lords
Wednesday 30th January 2019

(5 years, 10 months ago)

Lords Chamber
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Are we able to use EU content as local content, and does the Minister accept that the EU has to have given at least tacit permission for that to happen for this arrangement to be viable? This is one of the reasons why the amendment from the noble Lord, Lord Purvis, is important: it asks for a reciprocal arrangement, where we give our permission to the EU to use UK product as local content in any trade deals it wishes to pursue. That creates a problem: does the EU have to now renegotiate most of its free trade deals if it wishes to continue to use UK content in order to meet the benchmark? If that is true, there is a great advantage for companies inside the EU to divert away from UK suppliers in order to pick up EU suppliers whose content can qualify under rules of origin.
Lord Davies of Stamford Portrait Lord Davies of Stamford (Lab)
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My Lords, the fact that, if the Government have their way, in two months’ time we shall be dragged out of the single market is a tragedy of great proportions which will affect everyone in this country with not the slightest doubt. That is particularly sad and ironic because of the great efforts that were put into the creation of the single market, particularly by this country. There is no question that the major movers were not Lord Cockfield and Margaret Thatcher. What is more, the single market has been an inspiration around the world. As others seek to imitate the achievement and derive the great benefits that we have had, the British Government can think of nothing better than to take us out of the original single market.

This raises many practical problems, as we have seen. We have heard three extraordinarily well-briefed, considered and well-informed speeches on this subject by the noble Lord, Lord Lansley, and by the noble Baronesses, Lady McIntosh and Lady Kramer. The noble Lord spoke particularly about the difficulties which will arise in connection with the definition or redefinition of rules of origin; and the noble Baronesses spoke extremely well about the threats and complexities we shall face because of the rules of the WTO and the possibility that we will suffer considerable perverse costs as a result of leaving the single market. These have never been properly considered in this country by the Government and, therefore, private individuals, trade associations and businesses up and the down the country have also not had enough time or opportunity to consider and reach a conclusion as to what the concrete impact will be in all probability on their own businesses.

That is the point of my intervention. It is not reasonable to ask tens of thousands of businesses which may well be affected by the changes that the Government are trying to enforce on the country in this regard to pick through all the volumes of Hansard in the House of Commons and the House of Lords where these matters have been debated, even supposing—which was not the case on the last occasion we debated this matter—that the Government give informative answers to the questions that have been raised.

My question to the Minister today is: does she propose, or has she already perhaps set in motion, an effort to inform businesses directly about these matters; to set out for the benefit of British business in different sectors the potential threats—or indeed the opportunities, if there are any—from the policies that the Government are pursuing in this area; and to answer definitively the questions that have been raised today about rules of origin, the impact of the WTO non-discrimination rule and principle, which has been set out so well, and any other WTO rules which may have an impact on the trading conditions for British companies which are trading with either the European single market after the end of March this year or with countries which currently have trade agreements with the Union?

In that latter context—my final remark today—can we please have some absolute clarity about what is happening to those countries which currently have free trade agreements with the European Union and where we have the ambition to roll over those free trade agreements? How many countries have accepted in principle to roll over the agreement as it currently exists without any substantive change? How many countries have expressed the willingness in principle to roll over an agreement but are asking for substantive changes?

Most people, I suspect, will ask for a particular concession of interest to them. They will take the opportunity to get something if they can. At the very least, this will result in many months of discussion and negotiation. In some cases, it may require us to make concessions that will be expensive for British industry or business. We need to know exactly where we stand here. I hope the Government themselves know the answers to these questions—I sometimes get the feeling that they do not. If the Minister thinks that that is unfair she has the opportunity this afternoon to make the position absolutely clear to the House and the whole country.

Lord Lilley Portrait Lord Lilley (Con)
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My Lords, I congratulate the Minister on introducing this debate and focusing on rules of origin, which is the main complexity that will arise with trading goods. I suggest that this should not be exaggerated. It is the big difference between free trade areas and customs unions but I note that the Swiss, who have a free trade agreement with the EU—not a customs union—do not seem to be too upset about that. They do not seem to be calling for a customs union. They seem to be coping with all the problems that noble Lords have told this House are insurmountable; the Norwegians likewise.

The Canadians have a free trade agreement with America but are not calling for a customs union. Even our Canadian Governor of the Bank of England, when he returns to Canada and joins in the political process there, is not going to call for Canada to have a customs union with the United States to overcome all these supposedly insurmountable difficulties. They are not insurmountable and they are going to get somewhat simpler.

The EU is bringing in the REX system for self-declaration of rules of origin—you will have to do the calculations but you will not have to buy a certificate; you will just declare the origin of the goods. Of course, you will have to get it right; as with any self-declaration, you will be open to investigation and checks if there is any reason to suppose you are cheating, but it will simplify the process greatly.

Can the Minister confirm that we will be able to join the pan-Euro-Med convention on rules of origin if we have a free trade agreement with any member of that convention—for example, Israel? I believe that when you belong to it you can begin to assess diagonally, as they say, the components of your goods when you export among them. If that is open to us, it will ease things as far as we are concerned for a large group of countries.

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Lord Lilley Portrait Lord Lilley
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Perhaps the World Customs Organization knows nothing about customs, but we have to reach the judgments that we can, and certainly under the REX system the fees that the noble Baroness referred to will not have to be paid, as I understand it. However, again, I ask the Minister to confirm that.

Finally, the noble Lord, Lord Davies, waxed eloquent about the single market. I take that as personal praise, as I had to introduce the whole single market legislation back in the early 1990s and spoke eloquently about how it was going to boost our trade. How sad we, and he, must be that in the ensuing 25 years our exports to fellow members of the single market have risen by just 18%. It did not have quite the big and wonderful impact that I hoped it would have and which he in retrospect believes occurred. Our trade with the rest of the world rose by 72%, so let us get these things into perspective.

Lord Davies of Stamford Portrait Lord Davies of Stamford
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The noble Lord is, once again, moving into the dangerous business of making elementary errors in the interpretation of statistics. Quite clearly, where we had a relationship with mature markets, as we did when we joined the single market, we were not going to have the same rate of growth in trade as we had with countries that were still very poor and were maybe just beginning to embark on international trade. A mature economy is not going to have the same rate of growth in trade as a newly emerging economy. It is an absolute falsehood to try to compare the two and draw the conclusions that he has drawn.

Lord Lilley Portrait Lord Lilley
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It is always a pleasure to be patronised by the noble Lord, Lord Davies. As someone who passed only parts 1, 2 and 3 of the Institute of Statisticians exams, I suppose that I must give way to him if he passed part 4. I fully know the difference. If he looks, for example, at a group of countries which are at a similar level of development to ours and which trade with the EU single market, he will see that their exports rose significantly more than ours did over that 25-year period. I do not know quite why that is but it is clear that trading within the single market has not had such a big impact on our exports to the rest of the EU as I certainly expected it to have at the time and as he believes in retrospect it has had.

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Lord Davies of Stamford Portrait Lord Davies of Stamford
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I am sorry to interrupt the noble Lord again, but I will just correct him on this matter. If he looks at the figures, he will see that France and Germany have increased their trade at a much faster rate than we have while being in the single market. The reason is that, sadly—we know that it is a big handicap for us all—productivity in this country has risen much less fast than that of Germany, France and other members of the EU.

Lord Lilley Portrait Lord Lilley
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It is quite true that other countries within the single market have increased their exports to each other more than we have—but that is not purely because of differences in productivity. Indeed, our GDP over most of that period has grown rather more rapidly than that of many other members of the single market. I do not know what the factors are but I would not just assume that it is all due to the wonders of the single market that somehow have not yet reached us.

Trade Bill

Lord Davies of Stamford Excerpts
Committee: 1st sitting (Hansarad): House of Lords
Monday 21st January 2019

(5 years, 11 months ago)

Lords Chamber
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Lord Davies of Stamford Portrait Lord Davies of Stamford (Lab)
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My Lords, I think it is the turn of this side of the House—

Baroness Evans of Bowes Park Portrait The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
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My Lords, it is the turn of the Conservatives.

Lord Naseby Portrait Lord Naseby
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My Lords, it was my privilege for five years of my life to be Deputy Speaker in the other place. In that time, I took through the Maastricht Bill with 28 days and five all-night sittings for five clauses. I submit to your Lordships that we should not be trying to filibuster in this area. As far as I can see, if I were sitting in the other place this has all the signs of a filibuster if I ever saw one. With due deference to those who have spoken already and to the Leader of the Opposition, I say: let us proceed with today’s business, and for the next three days or whatever it may be. None of us in this Chamber knows what is to happen in the next two weeks or whether there will be a normal pause between Committee and Report. Why do we not just wait and see what happens, and then act accordingly? It is not for this House to try to take the initiative away from the Government of the day.

Lord Davies of Stamford Portrait Lord Davies of Stamford
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My Lords, it is quite unjustifiable that anybody should accuse people in this House of filibustering on this matter. One can see that we have taken only 35 minutes on a very important matter and I do not think that a single intervention has lasted for more than three minutes. By no stretch of the imagination can that be regarded as a filibuster; it is quite possible that, given the gravity of the situation in our country, the public may well feel that we have spent too little time so far on this Bill.

It has already been said that we live in exceptional circumstances. Is it not exceptional that, over two and a half years, we have had a negotiation with the EU about our future relationship with it and have just decided by an enormous majority that the whole of that negotiation has to be terminated? It was the right decision, but it is the most extraordinary situation. Equally, on the matter of trade agreements, Dr Fox has been happily running around the world for the last two and a half years, no doubt at the taxpayer’s expense, and achieving precisely nothing.

This country’s handling of the whole Brexit issue has been marked by the most extraordinary incompetence; the whole world knows that. That incompetence has often consisted of a quite extraordinarily naive tendency to overestimate our own bargaining power and underestimate the intelligence and bargaining power of other people. That is the very basis of incompetence in a negotiation, but that is the way this has been handled.

If you go to any country and say, “I am afraid we have just walked out of the trade arrangements that we have had for many years. We are in a bit of a mess and would like to negotiate a trade agreement with you. We would like to roll over the existing agreement you have with the EU and have the same benefits as we had when trading with you under it”, they will naturally say, “We will be interested to talk to you about that, but we have a number of points ourselves that we would like to settle on this occasion”. You have somebody else with an agenda, seeking advantages, and it takes a long time for the negotiation to come to any conclusion. That is the rule of business throughout the world. I do not think that Dr Fox has much experience of international business, so he might be surprised to find that is the case, but it would not be a surprise to anybody with the slightest experience of the field.

This is a serious matter. Is it really true, as the noble Lord, Lord Strathclyde, said, that if the Government are completely paralysed and completely fail in achieving their purpose after two and a half years, Parliament should do nothing about it? Of course it should: we exist to make sure that there is a proper balance in the constitution. If one part of the constitution is obviously not performing as it should, the other parts should do something about it. There is no question of filibustering on the Bill. It is an extremely urgent matter. All noble Lords should be paying attention to it and deciding what the country needs to do about it. Under no circumstances should this House abdicate its responsibility for doing that in this crisis.

Lord Taylor of Holbeach Portrait Lord Taylor of Holbeach
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My Lords, I rise to respond to the amendment in the name of the noble Baroness the Leader of the Opposition and to subsequent speakers. I note what the noble Baroness, Lady Taylor, said about the roles of the usual channels and the Government, and the relationship between the two. I also note the comments of my noble friend Lord Strathclyde. However, I cannot allow the speech of the noble Lord, Lord Reid, about the Good Friday agreement, to go without comment. I have no hesitation in saying that what he reported to the House was completely untrue.

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Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe
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My Lords, I am a huge supporter of the small business sector and its growth. Indeed, some of the issues raised in Amendment 4, moved by the noble Lord, Lord Stevenson, are also important. However, like other noble Lords, I am not sure that they should be written into the Bill. I want to take this opportunity to ask the Minister a question, which she may prefer to answer in writing. Essentially, I want to pick up on the points about the importance of small businesses made by my noble friend Lord Livingston —who, as has been said, did so much as Trade Minister—and my noble friend Lord Risby.

My noble friend Lord Lansley is right that some countries try to discriminate in the procurement process in various ways. He rightly quoted the US Small Business Act. What can we do about that in policy terms? In particular, can we improve the process facing SMEs trying to win contracts either internationally or here in the UK? From my own experience, including a period serving on the Efficiency Board in the Cabinet Office, bidding rules are complex and vastly expensive—as a result, it is said, of European Union laws and requirements. Is work in hand to simplify our rules as we leave the EU to help SMEs win a bigger share of procurement, as I think we would all like?

Lord Davies of Stamford Portrait Lord Davies of Stamford
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My Lords, I have been listening to the debate with great interest, but I am worried that the House may be making a technical mistake that could have wider implications. With the best intentions in mind, many noble Lords have spoken in favour of the suggestion to place quotas on companies to do with the beneficiaries of public procurement for the portion of the contract supplied by small businesses. It has been said that the small business share in defence procurement is much lower than it ought to be. The House should be very careful about that. It is probably not possible to increase that greatly; I speak as a former Defence Procurement Minister, as the House will know. If we send our young men and women into battle, we must give them the very best equipment money can buy. There can be no compromise on that. In my view, we cannot under any circumstances accept something second-best when the best is available.

Defence equipment generally involves a great deal of research and development; the products are often high-tech, modern and unique, designed to our specifications and not for anybody else, so there are not the economies of scale that are generated with substantial sales. That is a problem because most of the big defence contractors have an overwhelmingly large share in this country’s defence business. When I was the Defence Procurement Minister, the five big defence procurement suppliers included BAE Systems, Thales, Lockheed Martin—which is American, of course—and Boeing. They are large companies, some of which are supplied with components and parts by small businesses, to a considerable degree. However, some of them are not and, in practice, it is impossible to force them to do that.

We must buy the best, which is often very expensive. We cannot place such conditions on its procurement. Let me give an example. Of course, we spent billions of pounds buying the F-35, which is a wonderful aircraft. We buy it from Lockheed Martin; it is built and assembled in Fort Worth in northern Texas, close to Dallas. I have been there many times. The British share in its procurement project is considerable: about 15% is produced by BAE Systems, but that is not a very large company. One would have to look at the extent to which BAE Systems procures from small businesses. In the United States, to some extent—but, again, to a limited degree—Lockheed Martin buys goods, equipment, services or software from small companies, but they are American small companies, so they do not help us to reach that particular kind of quota.

In some cases, like the Boeing contract for the Chinook helicopter—I once placed an order for 24 of them, so that was a very substantial contract—again the suppliers are largely American. It is not possible to insert British suppliers into the chain because they do not produce what is required for that particular aircraft. It was designed in America according to specifications set down by the American Department of Defense. I do not want to go into too much detail on this; rather, I want to give the Committee an indication that it might be worth thinking carefully about these matters before defence procurement is automatically considered as being part of the desirable targets for increasing the share of the market for small businesses. I fear that almost certainly the only sensible solution would be to leave defence out of this altogether. I started off by mentioning the fact that life and death issues are involved, and we should not be imposing any additional constraints on our defence procurement.

Baroness Fairhead Portrait Baroness Fairhead
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My Lords, we have discussed a number of elements of the GPA, but at its heart it opens up mutually a government procurement market among its parties. That has come about as the result of a number of rounds of negotiations. As I stated earlier, the parties to the GPA have now opened up procurement activities worth an estimated £1.3 trillion annually. This benefits UK businesses and the public sector, as well as our consumers.

Amendment 4, tabled by the noble Lord, Lord Stevenson of Balmacara, seeks to make provision for regulations to be made when implementing the UK’s accession to the GPA that would compel procurement entities which are part of Her Majesty’s Government to include various standards and obligations in their GPA-covered contracts. I understand the reasoning behind the amendment, but the Clause 1 power in the Bill is to implement our current accession to the GPA on the basis of our current commitments, rights and obligations. This is to ensure—I beg the leave of the noble Lord, Lord Fox, once again—continuity for UK businesses, public entities and our partners. We are not seeking to change any of the rights and obligations that procuring entities currently have, nor are we seeking to implement new or future changes to the procurement rules, which is what this amendment seems intended to do.

The Government have been clear that they will maintain the current levels of protection. Indeed, my right honourable friends the Prime Minister and the Secretaries of State at Defra and the DIT have made public commitments to this end. Section 8 of the withdrawal Act will bring all existing regulations into UK law, and our commitment to international standards remains unchanged. These standards include those on the environment through multilateral environmental agreements; labour rights through the International Labour Organization fundamental conventions; and human rights and equalities legislation. The noble Baroness, Lady Young of Old Scone, discussed some of these standards and I believe that we will consider them in more detail in the fifth group of amendments. I will say only that standards are important and that we are aiming to maintain them.

Procuring entities are able to apply their own additional measures of environmental, social and labour standards to contracts, and in fact they do so regularly. Membership of the GPA does not prevent standards being applied to contracts. The Public Contracts Regulations 2015 allow such standards to be applied where they are relevant, proportionate and consistent with the GPA; for example, a recent contract for the refurbishment of Quarry House, the home of the Department of Health and Social Care, included a requirement for sustainably sourced furniture.

There are other means available to the Government to achieve the effect that the noble Lord is seeking. The Chancellor of the Duchy of Lancaster announced in June that the Public Services (Social Value) Act 2012 will be extended in central government to ensure that all major procurement projects explicitly evaluate social value. We will require all departments to report on the social impact of major new procurements. We will train 4,000 commercial buyers on how to take account of social value. The Government are already able to issue public procurement notices which set out our policy on certain aspects of procurement, and these are binding on all government departments. I hope that the noble Lord will be reassured to hear that.

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Lord Davies of Stamford Portrait Lord Davies of Stamford
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I want to be absolutely clear about something. I did not suggest for a moment that SMEs do not have a valuable part to play in defence procurement. I said simply that it may be impossible or expensive in terms of the risks for our soldiers and other servicemen and servicewomen if we insist on a particular quota of procurement from small businesses. We should first of all decide what is necessary to procure for our Armed Forces, then we should procure it. We should hope that as a result SMEs have as large a part as possible, and we should encourage the major contractors to have as large a number of small suppliers as possible, but we should not take any risks to meet some arbitrary quota.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
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I fully accept what my noble friend has said, and I am sorry if I misrepresented him. I think he has the right point there. It picks up what I was going to say about the point made by the noble Lord, Lord Lansley, that contracting is often seen in terms of large contracts issued by central government to very large manufacturers, and of course it is not like that. The work of the BEIS department in setting up not only the industrial strategy itself but the way it will roll out to the smaller end of the market is a very important element of that. I am sure we all accept that there is a future there for a much broader engagement with big and small projects, but also for a wider range of activity where innovation, skills, flexibility of movement and the ability to adapt to new environments—such a hallmark of SMEs—are used and capitalised on for the benefit of our public good.

In a sense, it is good to hear from the Minister the progress in setting and achieving high standards in our procurement arrangements. The points that need to be brought forward are not just the range and need for these issues to be picked up in all our consideration of contracting; we must not be left behind if other countries are using the GPA, or indeed other measures, to achieve change in their environment and economies, and benefiting from it. We must not miss out on that; we need to have a strategy for it.

The points made about the SME end of the market, particularly in relation to making sure—

Trade Bill

Lord Davies of Stamford Excerpts
2nd reading (Hansard): House of Lords
Tuesday 11th September 2018

(6 years, 3 months ago)

Lords Chamber
Read Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 17 July 2018 - (17 Jul 2018)
Baroness Fairhead Portrait The Minister of State, Department for International Trade (Baroness Fairhead) (Con)
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My Lords, I am pleased to open this debate, with so many vastly experienced and distinguished Members on the list of speakers. I particularly look forward to hearing from my noble friend Lady Meyer, who is making her maiden speech today. I warmly welcome her to the House.

Let me start with some background. This Bill is fundamentally a pragmatic and, in most parts, technical Bill. It is about continuity and about certainty—continuity of the existing trade agreements that we already have through the EU, and the certainty that this gives to businesses and our trading partners. It may be a pragmatic Bill, but it is no less important for that. Before we sign any new trade agreement, we need to maintain the effects of our existing ones. Whatever the outcome of our negotiations with the EU, our current trading partners have made clear that they do not wish to lose access to our market—that of the fifth-biggest economy in the world—and nor do we to theirs.

Britain has always been a natural trading nation. We pioneered the global trade in mass manufactures at the start of the nineteenth century and globalised financial services towards the end. It is a deep part of our heritage, leaving its mark everywhere you go. Trade is more central to our economy now than it has ever been. In fact, it represents 60% of GDP, with exports making up 30% of that. It maintains jobs and touches almost every job up and down the country.

Of course, as we look to the future, we can be certain that the shape of the economy will change, just as it has in the past, whether it is from demographic shifts, artificial intelligence or anything else. Government has a duty to prepare the country for those changes. But one thing that we can be sure will not change is that trade will continue to be an important part of our economy and critical to the people of our country, which is why it is right that we now have a department dedicated solely to increasing international trade, and why we are supporting trade through our export strategy and our more than 200 recent ministerial visits from DIT alone overseas.

We can also be sure that the countries with which the EU has existing trade agreements will be a crucial part of that trade. Those agreements—the subject of this Bill—are with more than 40 non-EU countries. They represent 12% of our trade. We must ensure that we can replicate the effect of those agreements in UK law, with a transparent and timely process. Parliament, and especially this House, has a particularly crucial role here, because getting that right—the details, the technicalities, the practicalities—has always been where this House comes into its own. That is something this Government genuinely do value.

I am clear that this Bill has been improved by scrutiny in the other place. As a result of that input, the Government have made amendments to increase scrutiny, so that the Government would have to lay a report in Parliament setting out changes to existing trade agreements when they get transferred and use the affirmative resolution procedure where appropriate, not the negative; and by reducing the sunset period by two years. The amendments also give certainty that the new Trade Remedies Authority can be up and running on day one by letting us set up the TRA in shadow form without risking staff employment rights. They also iron out some technical consequences of machinery of government changes for the agreement on government procurement, so that we do not just have certainty, but are seen by our trading partners to have certainty.

So what, moving to the detail, does the Bill do? In short, the key elements are, first, as I have said, to seek the powers to ensure that we can implement existing continuity agreements with trading partners, both full free trade agreements and other agreements relating to trade. Secondly, it seeks the powers to ensure that we can become an independent member of the WTO’s agreement on government procurement, so that UK businesses do not lose access to a £1.3 trillion market. Thirdly, it seeks powers to establish the Trade Remedies Authority, to protect domestic industries from unfair and damaging trade practices. Fourthly, it lets the Government gather and share information on trade.

On the first of these, the Bill provides for the legal power to continue the trade agreements that the EU currently has with third parties, such as those with South Korea and Canada. Of course, once we have left the EU, the Government will not require additional powers to continue the trade agreements themselves—the power to negotiate and sign treaties is a prerogative power and always has been. Agreements concerning trade are no different. International agreements, once signed, are then ratified subject to the process set out in the Constitutional Reform and Governance Act 2010 and laid in both Houses alongside an Explanatory Memorandum to give Parliament oversight.

This Bill instead concerns the domestic implementation of those continuity agreements, where domestic law is required. Again, in many cases, this will already be preserved through the withdrawal Act, but it is essential that we have the legal power to make such agreements operable under UK law. The Bill will make sure that they can be. We should remember that many of the agreements are ones that the UK itself pushed for as a member of the EU and that all of them are bringing jobs across the country.

From preliminary discussions, the Government are confident that other countries want to be able to continue these existing agreements. Many of these countries have already said as much publicly. We are the world’s fifth-largest economy, its sixth-largest importer and its 10th-largest exporter, so even outside the European Union we will be one of the world’s most significant markets in our own right.

The second function of the Bill is to allow the UK to implement the changes required so that we can remain a party to the Agreement on Government Procurement—known as the GPA. This agreement, covering 19 parties and 47 countries, operates under the structure of the World Trade Organization. Although we are a member of the World Trade Organization in our own right, our GPA membership is through the EU.

The Government already have the power to accede to the GPA, subject to the Constitutional Reform and Governance Act. The power in this Bill will allow the UK to make the necessary changes in domestic legislation to reflect that accession. Being in the GPA means letting businesses from overseas compete in some of our procurement markets on level terms with domestic firms, with guaranteed reciprocated access. Around one-quarter of UK procurement contracts are opened up to foreign providers under both UK and EU rules—that is £68 billion—though in practice the vast majority are still won by British companies. In fact, only around 2.5% of the larger contracts go to foreign suppliers. In return, the Government get better value for money through more competitive tendering and our own businesses can sell into the world’s largest public procurement markets. Last year, British firms won contracts abroad that secured thousands of jobs. As I said, the opportunity is estimated to be worth £1.3 trillion a year.

To be clear, there is no requirement, and it is certainly not the policy of this Government, to open up the NHS or any other public service to international private sector competition. Nor will the Government put our own businesses at a disadvantage. We currently apply GPA rules through our EU membership; this clause simply lets us continue with the status quo. Our market access offer to the GPA remains completely in line with what we currently offer as an EU member state. Our schedule will be replicated. Continuity and reassurance are what this clause of the Bill provides.

The UK will continue to decide, at its sole discretion, which services to open up to competition, not our trading partners. The Bill will allow us to make necessary changes to our domestic legislation to reflect our independent membership of the GPA. In addition, it will allow for further limited changes; for example, to account for other countries joining or leaving the GPA.

The Bill’s third purpose is to let us set up a new public body, the Trade Remedies Authority, or TRA. This will allow the UK to investigate and, where appropriate, take action against unfair trading practices such as dumping and subsidies or unexpected surges in imports where they cause injury to UK industry, in line with WTO rules. This action usually takes the form of an increase in duty on imports of specific products; these are known as trade remedies measures. Such measures are key to ensuring an effective, rules-based system for international trade by levelling the playing field and restoring the competitive balance. They allow us to protect UK businesses and UK jobs.

Currently, the European Commission is responsible for undertaking trade remedies investigations and imposing measures on behalf of the UK. Once we are operating our own independent trade policy, that responsibility will be ours. That is why we have set up our own trade remedies framework, through the Taxation (Cross-border Trade) Bill, which noble Lords debated last week. This will ensure that the UK can continue to provide a safety net to domestic industries after the UK has left the EU. It is vital that this Government can continue to protect our businesses from unfair or injurious trading practices by other states.

Lord Davies of Stamford Portrait Lord Davies of Stamford (Lab)
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Have the Government heard from any of the countries currently enjoying free trade agreements with the European Union, or do they know by any other channel that any of those countries are going to propose, or have proposed, any changes in the provisions of those treaties when they apply simply to the United Kingdom and the country concerned as a new, bilateral agreement?