Freedom of Establishment and Free Movement of Services (EU Exit) Regulations 2019

Lord Duncan of Springbank Excerpts

Wednesday 23rd October 2019 Lords Chamber

Moved by

[Lord Duncan of Springbank]

That the draft Regulations laid before the House on 11 July be approved.

Relevant document: 58th Report, Session 2017–19, from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, I stress at the outset that a deal with the EU would render the provisions of this instrument unnecessary until the end of any agreed implementation period. The regulations are required only in the event of the UK leaving the EU without a deal, a reality which the UK cannot guarantee unilaterally but for which it must necessarily prepare.

A number of noble Lords have raised concerns with me over whether these regulations will remove the rights of EU nationals to establish a business or provide services in the UK. I am grateful to the noble Lord, Lord Stevenson, for meeting me earlier today to discuss this issue and those that he will raise in moving his amendment. I take this opportunity to put on the record that these regulations do not impose any new restrictions on EU nationals or EU-based businesses, or the nationals or businesses of countries with associated agreements, at the point at which we exit the EU. This is because the UK’s underlying legislative framework is compliant with these rights and, importantly, because EU retained law under the withdrawal Act will also apply.

The regulations do not impact on the immigration regime applying to the EEA or to Turkish and Swiss nationals in the UK. Indeed, they explicitly carve out any potential impact on the immigration rights of Swiss nationals and Turkish nationals to ensure that any changes come into force separately via primary legislation, which will be scrutinised in the normal way.

The regulations do not impact on the rights of EU citizens resident in the UK at the point of exit; those are protected separately. All EU citizens resident in the UK by exit day will still be able to work, study and access benefits and services, whichever scenario plays out.

The instrument addresses the reality, once we leave the EU, of reciprocity and necessary legal certainty affecting EU states and those states with which the EU has association arrangements. It covers the definition of “services”, rights of establishment and the provision of services, free movement of services, and the prohibition of non-discrimination, as set out in the relevant articles of the Treaty on the Functioning of the European Union and similar provisions contained in EU association agreements.

The Treaty on the Functioning of the European Union provides rights for nationals of member states and is founded on the principle of reciprocal rights, including in the areas of services and establishment. If the rights were not disapplied, this would create certain legal issues for the UK. Going forward, the UK could be in breach of the WTO’s General Agreement on the Trade in Services—the most favoured nation principle.

Unilateral provision of the measures could be interpreted as granting EU nationals additional rights to challenge the UK’s laws and decisions in the future, and could restrict the Government’s ability to regulate in the future. It would also create an uneven playing field in which EU nationals benefited and UK nationals in the EU did not.

The Government have sought the widest scrutiny of this instrument. The necessary consent of the devolved Administrations in Scotland and Wales was sought and secured, and the Northern Ireland Civil Service has been notified.

The Joint Committee on Statutory Instruments considered these regulations but chose not to report them to either House. The Secondary Legislation Scrutiny Committee chose to draw the instrument to the attention of the House, noting, in particular, compliance with WTO law and matters relating to satellite decoder cards.

To reiterate, the regulations impose no additional restrictions on EU nationals or EU-based businesses, or the nationals and businesses of countries with associated agreements, when we exit the EU, as the UK’s existing legislation is compliant with these rights. All relevant Whitehall departments have examined UK legislation to identify where direct impacts might arise from the regulations and underlying UK legislation is not already in line with the treaty rights. I am satisfied that UK legislation is compliant with the rights.

The regulations will impact on the use in the UK of satellite decoder devices intended for EU audiences—that is, dishonestly receiving programmes without payment. In essence, it brings the law into alignment with the rules for non-EU satellite decoder devices.

All EU citizens resident in the UK by exit day will still be able to work, study and access benefits and services, whatever the scenario. Further, the regulations will have no impact on the immigration regime applied to EEA, Turkish and Swiss nationals in the UK, save to ensure that changes to the immigration regime applied to Swiss nationals and Turkish nationals will come into force separately via primary legislation.

These regulations are necessary. They ensure the UK’s compliance with international law and protect the UK’s right to regulate in the future. On that basis, I commend them to the House.

Amendment to the Motion

Moved by

--- Later in debate ---

[Baroness Bull (CB)]

My Lords, the House has heard from many noble and noble and learned Lords. I rise briefly to add my support to this amendment and to put on record that the concerns set out by the noble Lord, Lord Stevenson, and which have been elucidated by so many distinguished and legal brains, are shared more broadly across the House. Those of us without legal backgrounds rely on the expertise of the House’s Secondary Legislation Scrutiny Committee, which has highlighted that removing treaty rights means that EU-plus citizens will no longer be able to use these rights to challenge new restrictions. It describes this as a, “significant reduction of rights”—yet, as we have heard, there has been no impact assessment, so we really do not know the scope and the extent of the impact of this reduction in rights.

I have two very simple questions, and they echo questions which have already been asked. First, what will be the impact of this on reciprocity and on the livelihoods of UK citizens who have established businesses in or provide services across other EU countries? Secondly, can the Minister clarify whether this does in effect apply retrospectively? As the noble Lords, Lord Oates and Lord Greaves, pointed out, paragraph 2.12 of the Explanatory Memorandum uses phrases such as, “It is anticipated” and “it is not expected”. To this non-legal brain, that does not seem very decisive.

Similarly, in paragraph 2.17 we read:

“This Instrument ensures that Swiss nationals operating a business or providing services in the UK immediately before exit day will not lose residence rights by virtue of the disapplication of the directly effective rights”.


That clarifies residence rights, but I would be grateful if the Minister could confirm that this extends to the right to carry on owning or managing businesses or providing services, because it is not clear.

Like the noble Lord, Lord Oates, I heard the Minister twice repeat that these groups would be able to live, work, study and access services and benefits, but he specifically did not say that they would be able to continue to be self-employed, own and manage companies or provide services. Can he clarify whether this will be the case?

None of this is particularly clear, and it is not surprising that I, like other noble Lords around the House, have been written to by members of the public asking, for example, whether this means that Turkish nationals will no longer be able to own and run a Turkish restaurant.

If there really is no problem here, perhaps the Minister might agree that the Government could be a little clearer about this and clarify the intention behind the SI and its impact on EU nationals who have made their home here. The memorandum says:

“Individuals and businesses will be able to check published no deal planning guidance on gov.uk”—


which is not particularly reassuring to the people around the UK who are concerned.

The Prime Minster has made much in recent speeches and statements about the contribution of EU nationals to the UK and its prosperity, success, culture and economy. This SI seems rather at odds with this newly warm and welcoming tone.

[Lord Duncan of Springbank]

My Lords, this has been a complicated debate, but I am drawn to the remarks by the noble Lord, Lord Campbell-Savours, as a way of helping us step into the debate. Tam Dalyell was absolutely right: it is the person who will help us understand the reality who we need to hear today. The individual spoken of by the noble Lord, Lord Campbell-Savours, has lived in the UK for 24 years, has two children and is a photographer and athletics coach. He is an important citizen in this country. There will be no diminution of his rights—not just to study or live, but to be self-employed, to offer services or, indeed, to operate as he currently operates—as a consequence of this statutory instrument. The noble Baroness, Lady Bull, at the end mentioned Turkish people who may feel that they will have their rights to operate a Turkish restaurant in some way curtailed; that is also not true.

The noble Lord, Lord Purvis of Tweed, spoke of 2.3 million EU citizens in this country. A number of noble Lords have asked why, when so many people seem to be affected by this, the impact assessment has not been provided and has therefore not given due consideration to something that will impact 2.3 million people. The important thing to remember here is that the 2.3 million people derive their rights from that element of retained EU law that we have brought across in the previous withdrawal agreement. Each of the elements that enshrine their right to the employment they enjoy is contained not just in our domestic law but in our retained EU law.

The important thing to stress here is that there will be no impact on individuals such as the gentleman raised by the noble Lord, Lord Campbell-Savours. I am fully aware that my department has not been successful in making this clear. It is perfectly obvious that a number of noble Lords have received a number of letters stating these concerns. The very fact that my department has allowed that state to exist is a failing of my department. We need to be better at making sure that not just the legislation but the Explanatory Memorandum is adequate to ensure that people reading it—not just eminent lawyers but others—are able to understand. This is too important a moment to get this wrong.

It is a difficult piece of legislation in one respect only. There are a number of conditional elements contained within it, but they refer to future situations in which something might happen. I was going to say, “If we leave the EU”, but let me put that the other way around and get my tenses right. When we leave the EU, if there is no deal the reciprocity we enjoy today would simply fall away and not be there. Our courts would still be able to draw on the body of law that exists inside the EU, but the actual reciprocity element would not be there. Going forward, because we have retained the EU law into our own corpus of law, the reality would be that certain EU nationals might be able to invoke their existing—previous—rights as a means of confronting the Government as they sought to move future policy forward. Future policy, however, would not be determined on a whim, nor would it use a Henry VIII power. It would be determined by this House and the other place in the traditional way. That is how future policy in this area will happen.

This is the important thing to stress in talking about the impact this will have on WTO rules or the question of reciprocity. As regards WTO rules, the suggestion is that individuals in that situation, without this disapplication within this body of retained EU law, would still be able to draw on those rights in the retained EU law to challenge the UK Government. Some noble Lords may think that that is not a bad thing, but that alone is the reason for the disapplication.

--- Later in debate ---

[Lord Pannick]

I am very grateful to the Minister. I ask him a question out of genuine puzzlement, in the sense of my noble and learned friend Lord Brown of Eaton-under-Heywood. His argument to the House, as I understand it, is that there is no need to worry because the individuals concerned will continue to enjoy the directly effective rights which are being brought across into our domestic law by the 2018 Act. My puzzlement is because Regulations 2(1) and 3(1) both say that any,

“rights, powers, liabilities, obligations, restrictions, remedies and procedures”,

which continue by virtue of Section 4(1) of the 2018 Act,

“cease to be recognised and available in domestic law”.

I am puzzled because I am concerned that the read-across is being disapplied by this very regulation.

[Lord Duncan of Springbank]

It is quite clear that we have not succeeded in convincing the noble Lord that the reality is that the retained EU law, which this House fought so carefully over and which was enshrined in the withdrawal agreement, sets out the rights of individual EU nationals in this country with regard to their ability to be employed or self-employed, to offer services and so on. That is contained in retained EU law and will become operational and functional at that point in the future.

Here we are talking about making adjustments to that retained EU law for certain rights to invoke the previous entity of the EU as a means of engaging directly with the Government as a challenge. It is that part we are talking about today.

[Lord Greaves]

My Lords—

[Lord Purvis of Tweed]

Would the Minister give way?

[Lord Duncan of Springbank]

No, I will make some progress if I may. This is complicated enough, and I fear I have to answer noble Lords’ questions before they ask new ones.

The noble Lord, Lord Oates, was very clear in some of the points he raised. That is why I am trying to be as unambiguous as I possibly can. He sought explicitness, and I am trying to give that. The self-employed will be unaffected if they are EU nationals. Those providing services will be unaffected, and their continued ability to provide those services will go undiminished. Those operating businesses will be able to do so going forward undiminished. The laws that underpin them remain as they are, both in our domestic law and in the retained EU law. There are no new restrictions whatever placed upon these individuals in this. That is why I am trying to point out that the limited impact is just that—a limited impact.

This will have no impact on the settled status of anybody coming in; for those noble Lords who are concerned about migration, this suite of statutory instruments explicitly carves out any issues of migration to ensure that they are considered carefully during the passage of the immigration Bill, which is primary legislation and will afford this House and the other place the full rights and abilities to inquire into that. So again, there is no attempt to pull the wool over anyone’s eyes—quite the reverse. In seeking to move this into primary legislation where it touches upon immigration, we are ensuring that this House has the full panoply of opportunity to explore this, as it will need to do going forward. That is why I refute the point of the noble Lord, Lord Oates, that this is a clear breach. I do not believe that it is.

The noble Lord, Lord Pannick, is quite right when he says that this places upon us no new obligations. There are no new obligations which rest upon EU citizens; they can enjoy the rights that they have been able to do so to date. The question is whether the disapplication materially impacts on, for example, the ability of the gentleman mentioned by the noble Lord, Lord Campbell-Savours, to do his business. It does not. The noble Baroness, Lady Bull, raised the question of the restaurateur who operates a Turkish restaurant and whether it places material changes upon them. No, it does not. It is important to stress that we are not seeking in any way to erode the rights currently enjoyed by these EU citizens. However, I should say that this would be far better addressed through an implementation agreement, and ultimately by that future relationship, whereby we can put to rest any suggestion that this Government are seeking to undermine the rights of EU individuals to undertake their legitimate exercises.

The question of what happens for UK citizens who work abroad is more challenging. Again, we cannot insist upon such reciprocity, since it rests with each individual member state, and we cannot offer guarantees on their behalf.

[Baroness McIntosh of Pickering]

I did ask my noble friend to put our minds at rest and specify what talks are happening at this time with other member states.

[Lord Duncan of Springbank]

I wish I could give my noble friend the reassurance she seeks, but these elements remain part of the future relationship negotiations and there has been unwillingness on the part of individual member states to discuss these matters. Much as I would like to be able to give her confidence on that matter, I cannot. That will be part of the future relationship negotiations, and I hope we can move on to that as swiftly as we can.

[Lord Bassam of Brighton (Lab)]

I have listened very carefully to everything the Minister has said. He seems to be saying that nothing changes. That being the case, why are these regulations required or necessary at all, if they change nothing?

[Lord Duncan of Springbank]

I did not say that. What I said was that these regulations have no impact upon the ability of EU nationals resident in the UK to operate, full stop. Going forward, they seek to disapply—bugger!

[Noble Lords]

Oh!

[Lord Duncan of Springbank]

Sorry about that; that was a big fly—bigger than normal.

[Lord Stevenson of Balmacara]

It was a big fly, not a big lie.

[Lord Duncan of Springbank]

Goodness me, such words. I like a pun at this time.

We seem to be caught in a situation in which a number of noble Lords believe that this is of significance to the extent that it impacts upon 2.3 million people. It does not. However, if individuals affected by future changes in policy wish to confront the Government, they may be able to use elements of the existing corpus to do so, unless we disapply them. It may seem modest—I am sure the courts will be able to address this and many lawyers will make a great deal of money—but the point I am trying to make is that the change should, in the future, not happen. But it might happen. It is a relatively small adjustment we are talking about here, and it has had no impact assessment because the impact is de minimis.

[The Earl of Clancarty]

I understand that some countries are drawing up legislation to protect the rights of British citizens in those countries. That includes employment rights. Will the Minister comment on that?

[Lord Duncan of Springbank]

Those countries are, at present, unwilling to open discussions with this country and will not do so until the withdrawal agreement has been accepted and we move on to the future relationship negotiations. I hope that not just individual countries will seek to do this but the EU itself, collectively, to protect the rights of British citizens resident abroad—just as we will do exactly the same. I hope we would do so in the spirit of our withdrawal agreement’s evolution into that future relationship that delivers the very thing that each individual here would wish. However, at present, I cannot offer any guarantees in that regard.

[Baroness Bull]

To follow up the question of the noble Baroness, Lady McIntosh, we are looking today not at the scenario of a future agreement but at no-deal legislation. Surely reciprocity cannot be dependent, in this legislation, on the future relationship documentation because this is no-deal legislation. I echo the question: where is the conversation about reciprocity, should the unfortunate thing happen and we leave with no deal?

[Lord Duncan of Springbank]

The noble Baroness will be aware that the Government’s policy is to secure that deal. That is why we are here. The reason this has had to come forward in the manner in which it has is that, although this House and the other place have been clear that they do not wish the UK to leave with no deal—which I wholeheartedly share and endorse—that is not in our gift alone to ensure. The unintended consequences of actions that may unfold over the next few weeks could lead us into a scenario in which a no deal does emerge, and that scenario is the one we are touching on here. If it does not emerge, we will not have any of the risks we are touching on here because we will continue, I hope, to move into an implementation period during which we negotiate that future relationship. That is the point. This instrument is here because, in a scenario in which we end up outside the EU, these elements will be deemed necessary. As I said, the purpose is to ensure that in those small areas this aspect of the law is addressed.

I think I need to write—and am willing to do so—to every noble Lord who has received letters raising these concerns to set out the situation, in language clearer than my department has thus far achieved, to ensure that those individuals have confidence that they will not find themselves in any of the darker scenarios of which they may be fearful. That is critical and I give that commitment here at the Dispatch Box. If noble Lords will contact my office, I will write to every individual to ensure that they fully appreciate exactly what this suite of statutory instruments means and, in particular, what it does not mean. It is critical that that is done.

[Lord Pannick]

Perhaps I may suggest to the noble Lord that a more sensible approach would be to withdraw these regulations and redraft them so that they say precisely what they are intended to achieve and what rights are preserved.

[Lord Duncan of Springbank]

I disagree with the noble Lord for one simple reason. This is the moment when we face the question of whether we shall exit the EU with or without a deal. The purpose behind my offer is to reassure those individuals who fear that they will be in some way undermined in their rights in this country. They need to be reassured and I would much rather do that today. I am not sure I can sign all the letters in one go but, over the next few days, I will be keen to write to all those individuals affected. In so doing so, I hope to reassure them that this instrument does not do what they are fearful of. That is the most important aspect: this does not do what they fear it does. It is critical that it is taken from this debate, however it resolves itself, that there will be no impact on the 2.3 million EU citizens residing here; they will be in no way affected. They will be able to do their business, be it in self-employment, the operation and delivery of services or any other aspect. That must be taken from the debate today, irrespective of how we get to that conclusion.

I hope that in so doing I can not only give confidence to the noble Lord, Lord Stevenson of Balmacara, but, more importantly, give the individuals who have approached him and a number of other noble Lords the confidence that they need right now. On that basis, I beg to move.

[Lord Anderson of Ipswich]

The Minister has addressed a good number of questions but I raised one relating to the legal basis for these regulations, which is said to be a power to prevent, remedy or mitigate deficiencies in retained EU law. Deficiencies are precisely defined in the 2018 Act, but I have not heard from the Minister what provision of Section 8(2) or 8(3) these regulations purport to be made under, and I do not understand at the moment what the deficiency is said to be. There is some reference in the Explanatory Memorandum to the WTO but, as I understood what the Minister said earlier, the Government take no position on whether there is an incompatibility with the WTO.

[Lord Duncan of Springbank]

I am very grateful to the noble Lord, who has given me the opportunity to find the other pieces of paper that I did not get to in answering his question.

With regard to which provision, it is a deficiency specifically envisaged by Section 8(1)(e) of the European Union (Withdrawal) Act 2018, which covers the reciprocal arrangements that no longer exist on EU exit. That is the specific element that I think the noble Lord is looking for. In extension to that, on why this has a limited impact—on which a number of noble Lords have taken the view that I am wrong and that it has a much bigger impact—I hope we can correct that today, irrespective of how we do it. The important thing is that the practical impact of these regulations is limited because UK legislation is currently compliant. That is the important part. However, should a future Government wish to amend the ability of EU nationals to provide services, that would be debated in this House and in the other place in the normal manner. This suite of statutory instruments is designed to address future Governments making future legislation by the established mechanisms in this place and the other place—not, as I hope we can take from this, the impact on the 3.2 million EU nationals who reside in the UK.

[Lord Greaves]

At a less erudite level, what advice is currently given to these people on GOV.UK?

[Lord Duncan of Springbank]

GOV.UK is a resource which I hope helps people address their questions. Part of the difficulty with GOV.UK is that it is very hard to anticipate questions that have not been set out in government legislation. We did not anticipate that individuals who have written would be fearful of what had been done. That is why I say again that we must be better at how we explain this in all our communications, whether online or on paper, and in the Explanatory Memorandum. The important thing for individuals to take from this debate is that the impact on them is not what has been explored or explained by others but rather a restricted aspect of future issues that concern future government policy or the ability of the WTO and the UK going forward to agree on most favoured nations.

[Lord Stevenson of Balmacara]

My Lords, as I have been sitting and enjoying this debate, I have been reflecting on why the other 582—is it?—SIs on a no-deal Brexit did not attract audiences of this size and did not give rise to a debate of such excitement. I have reached no firm conclusions, but it is possibly because we as a House are reaching the end of our patience with the Government in how they use these regulations at a time when it is patently clear that we are moving on to different ground.

Having said that, this has been an extremely good debate, and I thank all noble Lords who have contributed. The right reverend Prelate the Bishop of Salisbury got it right in his contribution: while we are talking about important and possibly quite narrow legislation, this is really about trust—whether we feel we can place our trust in the Government to get this right in the wider context that we have been discussing. Although the Minister made a valiant attempt to persuade us of the correctness of his position, in his arguments, explanations, apologies for not making it more easily available to people outside and apologies for the drafting, he covered all the possible grounds for attack, but did not really answer the two or three main questions.

As the noble Lord, Lord Pannick, said, we are disapplying one set of regulations and relying on what has already been brought in under a different piece of legislation. You cannot have it both ways. Either you are losing the rights that applied under the original position, in which case there is a deficit, or different sets of relationships are being brought in by the new corpus of law, which has drawn on EU and UK national law. There might be no threat in that, but we simply have not had the opportunity to discuss it. At the end of the day, the lasting feeling, I fear, is of people’s frustration. The points that have been raised around the House from reading these documents at very short notice—in some cases, the shortest possible notice—have been significant and substantial, and they deserved a better and wider hearing in front of a greater and more expert group, such as would have been provided by primary legislation.

Therefore, my three main points are as follows. First, were the Government right to use the EU withdrawal Bill? I do not think that we have been persuaded on that: there would have been a better way of doing it through primary legislation. Secondly, will there be a diminution in the rights currently enjoyed by people affected by this SI? The Minister is probably right that there are no direct changes, but it is the fear of those changes and the fear of the possible consequences once the law has changed that is not being addressed properly. As I said, I do not see how we can balance the two things. Thirdly, in our earlier meeting, the Minister’s officials were keen to make it very clear that these regulations deal only with movement under the EU legislative framework; they do not deal with immigration rights that will be coming forward. At the end of the day, this is about the gap between what it is being said will change and what might change under the immigration Bill, of which we have no knowledge because it is not in front of us.

The Government have not been successful in the court of public opinion, and we owe it to that public opinion to test the opinion of the House.