British Steel

Debate between Lord Fox and Lord Stevenson of Balmacara

Wednesday 22nd May 2019 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for repeating the Statement on British Steel made in the other place by his right honourable friend the Secretary of State for BEIS. It rather neatly demonstrates that there is a bit of a gap between what is happening in Parliament, with our discussions on Brexit, and the real world, in which our current political difficulties are causing real and lasting damage to our economy and to our country. If I may say so, the noble Lord rather gave the game away yesterday when his response to the Urgent Question on this same issue contained no information whatever about the state of play in what were ongoing negotiations with the company at the time and merely repeated the hollow sounding platitudes even he must get tired of hearing himself say about how, “Global economic conditions continue to be challenging for the industry”, and that the Government, “are working with the sector, unions and the devolved Administrations to support a sustainable, productive and modern UK steel sector”. Indeed, today’s Statement is almost a repeat of yesterday’s speech with a few added platitudes.

This is absolutely devastating news for the workers, their families and the communities who rely on British Steel directly in Scunthorpe, Skinningrove and on Teesside, and all the way through the supply chain. At least 25,000 people will have been worried sick this morning, wondering whether they will have a job this time next week and what the future holds for them. What plans do the Government have to support the 4,500 people employed directly by British Steel and the 20,000 or so employed by companies in the supply chain?

British Steel is our second-biggest steel-maker and one of only two integrated steel-making sites in the UK. It is the only UK steel plant that produces the rails we use on our tracks, providing almost all those procured by Network Rail and supplying ScotRail, TfL and Translink in Northern Ireland. It also exports a large volume of products across Europe. Surely, in any industrial strategy worth its name, British Steel would be one of the main pillars of our manufacturing capacity and the department would have detailed knowledge of its business plans, finances and operating strategy. Does the Minister agree that it seems to have been blindsided on this?

Yesterday’s UQ response was largely a rehash of an earlier Statement on how BEIS has put £120 million into the company as part of the ETS bailout. We have heard the same story again. The only question the Minister answered yesterday was the one I asked about whether the ETS bailout money would be at risk in an insolvency; he said that the money would be repaid. What due diligence did the Government carry out before agreeing that bailout? Were they really unaware that there were likely to be cash-flow problems in the company sufficient to cause it to go into administration within three weeks of this deal? Does he want to reflect on what he said yesterday?

Secondly, it is surely imperative now that the Government ensure that this business is stabilised and that confidence is given to customers, workers and businesses right across the supply chain. In this context, can the Minister tell us whether the Government have considered taking over the company? My understanding of the situation is that, given the strategic importance of the sector, this would almost certainly be allowed under state aid rules. It would be a good deal, given that it has been estimated that allowing British Steel to collapse could lead to about £2.8 billion in lost wages over a 10-year period and cost the Government about £1.1 billion in lost tax revenues and increased benefit payments.

Thirdly, it is reported that the owner, Greybull Capital, was asking the Government for a loan of £30 million, although there have also been reports that it wanted £75 million. The Minister refused to name a figure yesterday. Can he confirm today what the asks of British Steel were in the negotiations? Was it just the reported £30 million or more? Was a wider package of measures requested, including government action to support steel production? If so, why was that refused?

Finally, Greybull Capital acquired the asset now known as British Steel in 2016 for £1. It is reported that the plant returned to profitability within 100 days of that sale. Of course, the directors of Greybull Capital owe a duty of care to the company and its creditors in an insolvency. Can the Minister confirm whether it is likely that an investigation into possible wrongful or fraudulent trading under the Insolvency Act 1986 will be considered, with particular reference to the substantial management fees paid to directors since 2016, the accrued interest charged at 9% on £17 million of loans made by Greybull to the company, and the £42 million acquisition only last week of a company based in France?

[Lord Fox (LD)]

My Lords, I too thank the Minister for repeating the Statement made in the other place. Yesterday, we talked about the environment of uncertainty around Brexit, which has put pressure on this business. It certainly cannot have helped it in its struggle. I will not repeat those points today, because they have been well made.

Yesterday, the Minister stood at the Dispatch Box and metaphorically tapped his nose and said, “Wait and see”. We did not have to wait long, and what we see is really pretty terrible—for the employees and subcontractors, for Scunthorpe and the other areas in this business and, frankly, for the country. The Government can trumpet the proportion of British steel each department buys, but if this company goes down, there will be a significant lack of steel for these departments to buy.

The Minister says that the Government seek “the best possible outcome”. The best possible outcome for this business is the continuing making of steel in these furnaces. As I am sure the Minister acknowledges, the first job of the receiver is to do everything possible to keep this business going for future use. The priority is to keep the furnaces burning; once the furnaces go cold, the hope for those factories goes cold as well. Can the Minister confirm that this is the number one priority the Government have given the receiver? What other assistance will be available from the Government to keep those furnaces burning?

The Statement alludes to a sticking point around what future aid could be given and EU state aid rules, and reference was made to a letter from the accounting office. Can the Minister tell us what consultation has gone on with the European Union and the Commission, what response they have had in those discussions, who they talked to and when? I am slightly concerned that there is a level of scapegoating going on here.

As the noble Lord, Lord Stevenson, pointed out, there are a number of questions around Greybull Capital. I shall not repeat them, but there are suggestions that the private equity owner of Greybull was unwilling to play ball when it came to the amount of money required to show its commitment to this business. Perhaps the Minister would like to set the record straight on that.

Just up the road from where I live, there is an empty former My Local convenience store; some of my friends were stranded when Monarch went bust; and today, we have British Steel. What is the link? The link is that they all went down on Greybull’s watch. That might be unfortunate, it might be a coincidence, or it might be a pattern. Some would say that these kinds of businesses come with an attendant risk and that sometimes, because of that risk, they fail. But who is taking the risk? Is it Greybull, the private equity owner of this business, or is it the Government who are actually absorbing the risk? We heard yesterday and today about the £120 million granted as a bridging loan. We have heard that the negotiations to rescue this company failed. How much risk are the Swedish and Turkish owners of this private equity company prepared to take? For there to be reward, there should also be risk.

Yesterday, the Minister said that no stone would go unturned. Today, he talked about remorseless activity. Could he tell us which stones are being turned? What actions are open to the Government to make sure that they continue to make steel in those blast furnaces?

Insolvency (Amendment) (EU Exit) Regulations 2018

Debate between Lord Fox and Lord Stevenson of Balmacara

Tuesday 15th January 2019 Lords Chamber

[Lord Fox (LD)]

My Lords, in addition to the concerns which were very importantly raised on the nature of the drafting involved here and the use of powers, I have a couple of major technical quibbles. At the risk of treading into what may be the patented territory of asymmetry, which was just discussed, we seem to be back in an asymmetrical relationship here. We are changing our rules in the hope that Europe will reciprocate. That is my interpretation; if it is wrong, perhaps the Minister can update me. How forlorn or optimistic is this hope? What hope do those employees have of their rights and benefits being preserved—the Minister rightly highlighted that we need to have these processes in order to preserve them—for businesses which cross not just into the United Kingdom but into the rest of Europe?

The Minister’s point about courts was very interesting, because that of course was what the European Court of Justice was for: dealing with cross-border disputes over a similar group of rules. What the Minister describes is complicated, expensive and fraught with the possibility of failure. Perhaps the Minister can explain what benefits we will reap from substituting what we have today with what his department has set in front of us. So I have serious concerns that there are major problems with this SI.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for introducing this issue. The SI seems to be welcomed by many in the industry and deals with a particularly difficult issue in a very constructive way, according to reports from those who have written to us. I agree with the points made by the noble Lord, Lord Fox. When the Minister responds, it would be interesting if he could be quite clear about whether the SI covers the minimum necessary to get the statute book in order if there is no deal, or whether, as he suggests, the Government will go a little further and lay out some sort of attractive regulatory pas de deux for the EU post Brexit which would make it easier to legislate for an asymmetrical solution. That is probably not quite what is happening here, but it would certainly be interesting to get the Minister’s response.

Given that the results are coming in of the vote in another place in which the Government’s proposals have been roundly defeated, we may be witnessing a transition to a slightly different arrangement, which we do not need to comment on just yet. In the circumstances it would perhaps be best to let the Minister respond to the points made. I hope to hear from him very shortly.

Accounts and Reports (Amendment) (EU Exit) Regulations 2018

Debate between Lord Fox and Lord Stevenson of Balmacara

Tuesday 18th December 2018 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Henley, and his department for innovating and delivering two SIs in one package. I am not sure that this has been done before, but it is perhaps appropriate that the department that spearheads innovation should be leading on this.

I did a quick count back and I think that over the course of my career I have been responsible for 18 reports and accounts, all of which, I should say, were for UK-domiciled and listed companies, so many of the issues here do not apply. The Minister will be pleased to know that I will not be regaling your Lordships’ House with the benefit of that experience, because it is clear that there are many things that can be improved around financial reporting. There are an awful lot of deficiencies around reporting, but these are not the vehicles by which that improvement should be delivered, so the Minister can be pleased that I will not be using that for a long discourse.

I have two or three points on the annual reporting side and one very important problem that I think we have around the audit area. On the reporting side, the Minister mentioned the reporting protocols around payments to Governments for logging and mining activities. Will the Minister write to me and say what those are and underpin that there is no change planned between the two regimes as we move from one to the other? This is an area where a little more clarity would help.

Paragraph 7.12 of the Explanatory Memorandum covers where this instrument applies and when the change comes. I note that if a business is called on to restate its chart of accounts—which has happened in my knowledge, and happens from time to time—it has to go back through time and restate its accounts. I have to say that this change will make it an extraordinarily difficult activity in the event that any business needs to do that.

The Minister said that the Government have been working closely with business, but when we look at the consultation outcome we see that they have not been able to consult in order to minimise sensitivities in advance. It is not clear to me why they were not able to consult—perhaps the Minister will explain why it was felt not to be appropriate.

I turn to the audit side. This could hardly come on a more auspicious day, when we have the CMA making its comments about audit companies and we have the Kingman report with reflections on the fitness for purpose of the FRC. The Minister mentioned the FRC at least a dozen or 15 times. The role of the FRC in managing this rollover between the two regimes is crucial, yet we have, in the words of a very experienced practitioner in Sir John Kingman, the finding that the FRC is essentially unfit for purpose in how it is operating today, never mind with the extra responsibility that this SI puts on it. I would like to understand how the Minister thinks that this is going to be enacted by an FRC which is short of a leader and clearly short of the resources to manage its day-to-day job, without giving it extra responsibilities. I look forward to his response.

[Lord Stevenson of Balmacara (Lab)]

My Lords I am very grateful, as was the noble Lord, Lord Fox, to the Minister for giving a very concise and important overview of these two SIs. We are trying out a slightly different method here—trying to cut down on the amount of speaking that the noble Lord has to do at the Dispatch Box. I think that it has worked, so I hope it will be a model for others to come.

The three points I wanted to make have been covered by the noble Lord, Lord Fox, so I will not repeat them, but I want to say one thing in relation to scrutiny. The Secondary Legislation Scrutiny Committee has asked us to look at both these SIs with regard to a couple of points. I am happy that the Minister covered the points, so I do not need to delay the House on those matters. For the completeness of the record I also wanted to ask about extractive industries and whether there would be any impact in the way that those accounts will be treated consequent on the introduction of these SIs, if they are required. Again, a letter will be sufficient on that.

The noble Lord, Lord Fox, is right. It is a bit intriguing to find that the principal body which would have been responsible for this is going to be abolished before it has the chance to implement the changes made in the statutory instrument. I would be grateful if the Minister could confirm that, as I understand it, the independent review of the FRC, which I read with interest—it is a very good read indeed, full of spicy and rather spiky comments—is suggesting that the FRC needs to be replaced by a new, independent statutory regulator with stronger powers. Is that right and, if so, will it be completed in the timescale that is envisaged for this statutory instrument?

There is a letter—which is not the same as the report—which was sent to the right honourable Greg Clark MP by Sir John in parallel with his report, which looks at whether there is a case for a fundamental change in relation to who appoints company auditors. There are a number of extremely interesting ideas, particularly for PIEs—again, accompanied by well-phrased and rather pointed comments about the current state of play. They suggest quite strongly—although it is not clear whether the Secretary of State is going to accept this—that there would be a case for moving away from companies having responsibility themselves for appointing their auditors to a situation in which an independent, strong regulator, presumably the new body replacing the FRC, will have a probably quite significant role.. I assume that this decision will be undertaken by the new review, building on the work on the FRC, and of course the CMA review, which is rather surprising because that was only an interim report. I am a bit surprised that that is being taken forward already. If it is, fair enough—but will that review being undertaken by Donald Brydon, the chairman of the London Stock Exchange and Sage, take on the letter element of the Kingman report we have received today?

I have also looked at the CMA report. There is a considerable interest in how that might work. Obviously, it will considerably affect the viability, profitability and operating activity of the large companies that have been very successful in building up accountancy and audit-related functions in this country. It may not be a fatal change—it may be a necessary change—but, again, I would be grateful to get a steer from the Minister as to what exactly is going on here and what the pace of that would be, if it was decided to move forward.

Good Work Plan

Debate between Lord Fox and Lord Stevenson of Balmacara

Tuesday 18th December 2018 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for repeating the Statement made yesterday by his right honourable friend the Secretary of State.

Taken together, the Good Work Plan and the response to the first full strategy from the Director of Labour Market Enforcement make a very good start to putting flesh on the bones of the aspiration in the industrial strategy to put good work and developing better jobs at the centre of the vision for a full employment Britain. There is a lot to welcome in these documents. However, I venture to suggest that the most important decision announced yesterday was to accept the Taylor recommendation that the Secretary of State should take responsibility for promoting the quality of work. That should transform policy in the department, and we will be keeping a close eye as things go forward.

Indeed, Matthew Taylor should be very pleased that the Government have accepted the vast majority of his recommendations, and Sir David Metcalf ought to be similarly delighted that most of his 37 recommendations have also been accepted. Something must be happening in the water that they are drinking at 1 Victoria Street—or maybe that is the result of all this good news.

It is worth remembering, however, that nearly 4 million people are in insecure work in this country and 1.1 million work in the gig economy. At a time of low wages, stagnating productivity and growing insecurity because of Brexit, families across the country need reassurance and action so that our workforce feels valued and secure.

Some of the decisions announced yesterday—the introduction of labour market enforcement, abolishing Swedish derogation and ensuring that workers keep their tips—were originally Labour Party policies, but we welcome them without quibbling. We still have concerns about a number of points, which I hope that the Minister will be able to deal with when he responds.

First, although there has been some movement, can the Minister confirm that the question of abolishing the absurd difference between workers and employees in their employment status has been kicked into the long grass? If so, why? On zero-hours contracts, the Government will apparently legislate to allow workers to request a more predictable and stable contract, but the ability to request more stable hours exists already. Will the Government commit to placing an obligation on the employer to meet this request and, again, if not, why not? The agreement to the labour market enforcement recommendations is very welcome, but there is very little detail. Can the Minister confirm that the enforcement agency has the necessary powers and resources?

Finally, we welcome the increased penalties for successful employment tribunal claims, but these will make no difference if the current system for enforcing awards is not also strengthened. Some 35% of successful claimants currently do not receive their compensation. What additional action are the Government going to take to address the efficacy of tribunal award enforcement?

The Statement contains a very large number of instances of proposals for primary legislation to bring these announcements into being. I would be grateful if the noble Lord will confirm that, welcome though that is, realistic time will be made available for this in the near future. If so, can he give a recognised timetable?

[Lord Fox (LD)]

My Lords, I join the noble Lord, Lord Stevenson, in thanking the Minister for repeating the Secretary of State’s Statement. There is perhaps an inverse law here. We are at the end of a long day in a long Session and very few noble Lords are left in the Chamber. Despite that fact, this stands to affect more people than anything else the House has debated this week. It is important and it will genuinely help to improve the lives of millions of UK citizens. For that reason, we welcome the Government’s response to the Taylor review. We welcomed the review when it came out and the Statement sets in motion a number of important steps in the right direction. This has been a long time coming and it is unfortunate that the Minister’s department, along with every other part of government, has a lot of things to do around Brexit, meaning that important work such as this takes too long and is slow to come out.

The Government are right to reject open hostility to flexibility in the job market. Many people want and need the right sort of flexible job environment. Hopefully, these steps will move that forward. Flexibility should not be open to abuse. Workers need real control and choice over the work they take, which means giving them new rights and enforcing existing ones more stringently. The Government’s response has been a bit underwhelming in some cases. If the Minister will excuse me, I will go over a few areas where we think more work should be done.

The Government have said that they will bring forward legislation clarifying employment status and aligning tax and rights, but there is scant detail. Will the Minister fill out the detail or, if not, the process by which it will be forthcoming? The Government have also failed to genuinely address the need for a “dependent contractor”, set out as an employment status for people within the gig economy. The existing status of “worker” needs to be updated and redefined for the sort of 21st-century work that the noble Lord, Lord Stevenson, referred to. We need that status to guarantee gig economy workers minimum earnings, sick pay and holidays. The Government have ruled out a higher minimum wage for hours not guaranteed as part of a contract, and are now going through lengthy consultation. We welcome consultation and, in other environments, the Minister has been criticised for not consulting sufficiently—but it needs to be quick and direct and it needs to get to the point. Action to stamp out abuse of zero-hours contracts must be swift rather than convoluted and kicked into the long grass.

Ministers have refused to rule out reintroducing fees for employment tribunals after the Supreme Court ruled them illegal. They should take that step immediately and rule out reinstating those charges. The Government must show how they will help gig economy workers access occupational pensions. That does not seem to have been addressed and I will come back to it in a moment in relation to sexual equality.

To close, I have three other questions. The Taylor review said that those working in self-employment should receive the same state benefits as those in employment. Why, then, are self-employed workers with fluctuating incomes punished by universal credit? In a good month, their benefit is cut, but in a bad month, their benefit does not rise as much because the minimum-income floor kicks in. Therefore, will the Business Minister undertake to work with the Work and Pensions Secretary to ensure that universal credit is responsive to this kind of fluctuating income, perhaps by measuring incomes over a rolling 12-month period rather than on a month-by-month basis? This unfairness needs to be addressed.

Secondly, around 55% of workers on zero-hours contracts are female. The trade unions warn that the gender pensions gap now stands at about 40%. That means that disadvantages to pensions for zero-hours employees disproportionately affect female workers. Therefore, to avoid further disadvantaging women, the Government must act on Taylor’s recommendation to improve pension provision among the self-employed. What will the Government do to ensure that women in less stable forms of employment will be able to enjoy a secure retirement?

Finally, the University of Greenwich study from 2016 found that disabled workers on zero-hours contracts were often unable to get their bosses to make reasonable adjustments required by the law. They were often afraid to raise the issue because they felt that it might endanger their employment prospects and put them back on to benefits. What are the Government doing to protect disabled people in insecure forms of employment? How will they ensure that the 21st-century economy works for disabled people and not against them? I look forward to the Minister’s response to those questions.

Trade Barriers (Revocation) (EU Exit) Regulations 2018

Debate between Lord Fox and Lord Stevenson of Balmacara

Wednesday 28th November 2018 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for her presentation. I shall try to be brief but I do not want her to interpret my brevity as meaning that I think this is a well-presented policy. There are problems, and the problems are magnified by the nature of the challenge we will face. Assuming that Brexit happens—which these Benches do not—whatever the arrangements, non-tariff barriers will be a real issue for many businesses, big and small, across the country. So it is right that we are having this discussion.

I assume—because the Minister has not said otherwise—that, with or without an agreement, whether we crash out or agree, the Government intend that this is the direction we will travel in in dealing with non-tariff barriers. That is unusual because, in many of the other SIs we have discussed, we have tried to roll over or reproduce in British law things that exist now. That is a change.

The Minister mentioned the necessity of primary legislation if the statutory route were to continue. That pre-empted one of my questions. She then went on to make a virtue of a necessity—or a necessity as far as the Government are concerned—by justifying why a non-statutory route is preferable to a statutory one. We can perhaps come back to that.

The Explanatory Memorandum does a great job of explaining what we are not going to have any more. It goes into great detail about what the TBR does and then offers us eight lines on the proposal. If the Minister, in another life, was sitting on the board of directors of a large company and was presented with a paper making a big, important proposal that used eight lines of a full-page document, she might think that that was a little sloppy, a little cursory and lacking in detail. To some extent, it takes us for granted. There was more detail in the Minister’s presentation, however, and I thank her for that.

The Minister set out some reasons for the infrequent use and for some of the barriers and other issues. To some extent, as she said, we could have debated this in primary legislation and improved the system that we have now. However, it is not clear what is replacing it. It looks like a relatively informal system that is lacking in process. It is not clear how much resource the Government are prepared to put behind it or how individuals will operate within it.

The Minister has given a number of reasons and explanations and yet in paragraph 10 of the Explanatory Memorandum we see that there was no formal consultation. There are six paragraphs of anecdote. If you do not have a formal consultation process you are merely choosing the results; it is not a consultation. Essentially, the argument against a rolling-over of the TBR process is based on a series of anecdotes and not on a formal consultation. This lacks detail about what is to replace it, as well as a formal consultation.

As for what this process may or may not be able to achieve in the event that it is resourced, has a process and all the boxes and wires—which are not set out here—are joined up, we need to remember that the influence that we will be able to exert, compared with the influence that the European Union was able to exert, will be less because our market is smaller, about one-10th the size. So in dealing with the challenge of non-tariff barriers that our companies will definitely face, we might end up with a system that people have access to, but we will have a weaker punch and less of an opportunity to make anything happen. We will ultimately have a system where there is more friction, more problems for our businesses and a weaker way of resolving them. That is why I find this SI disappointing.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for her detailed introduction to the SI. I agree almost entirely with the approach of the noble Lord, Lord Fox, and will follow a number of his points.

I am intrigued by this SI. The noble Baroness was right to point out that it does not do what the other SIs are trying to do, which is to replicate in a UK context what is currently happening because of our membership of the EU. I do not quite follow the logic. We are considering these SIs today in such large numbers because they transpose whereas this SI dismantles. The Government’s argument is that we cannot amend it but we can dismantle it. I do not get the logic of that. It seems that the Government could not do anything about it because anything they wanted to do would require primary legislation. That rather suggests that the Trade Bill, which is in limbo, is not appropriate for that. However, it seems to me to fit entirely within the parameters of the Trade Bill. I understand what the noble Baroness is saying but I do not get where we are going.

My second complaint is that the figures I have do not square with the figures that the noble Baroness used. I have just looked at the list of trade barriers which are currently reported to the Commission and, on a quick count, there appear to be about 1,000—there are 116 in agriculture and fisheries alone. If you count them by country—which I can do even as I speak—you will find that many of them are interesting countries, including the USA, which have a substantial number of trade barriers.

I am hearing a different story from the other side of the Dispatch Box about a pathetic structure which is hardly used and has industry turning away in droves. As the numbers show, however, that is not what seems to be happening; there are live cases covering a range of issues that play to this question of non-tariff barriers. It seems rather odd that we are trying to dismantle it. Those are my opening points. It is a system which the Government have taken against. They have decided in principle, for reasons I do not follow, that it would be much better if we were not part of the TBR scheme, or any TBR scheme, as we leave the EU, if we have to, on 29 March.

As the noble Lord, Lord Fox, said, there are clearly issues about trade barriers and how we are going to resolve them. Surely it must be the objective of the Government to make sure that we have a robust system in place to support our businesses and workers, who will otherwise be affected badly by countries which have decided, for reasons best known to themselves, that barriers should be erected. Given the new world order, in which might is right and where protections and tariffs are rife, we verge on the prospect of a very dangerous set of trade wars. It therefore must be appropriate for the UK Government to think hard about this, and it is not obvious that the right way to do it is to dismantle something that has some merit.

Why would the Government decide to replace the present statutory scheme, without formal consultation or proper notification, with a non-statutory reporting mechanism, which seems at its heart to simply rely on emails sent to local ambassadors in the hope that they will be able to do something about it? That does not seem to pass the test of a serious approach to supporting exporting.

I am intrigued why this responsibility—which clearly is not the flavour of the month within the department—is not given, to be beefed up and made more effective, to one of the two bodies that the Government will rely on if the Trade Bill ever goes forward. The Trade Remedies Authority deals with exactly these issues. Why does it not have this responsibility? If there is some doubt about whether it has the range or the skills to do it, the CMA will also be looking, through its state aid function, at similar areas. There is a perfectly good way of taking on this responsibility outside the department. Taking it outside the Department for Trade will give hope to those industries that do not naturally relate to BEIS or other departments such as Agriculture that the new body will set up expertise.

The Minister said that feedback on the effectiveness of the trade barriers regulatory system has been mixed. Without a formal impact statement being available—or maybe an informal one, as we have heard in other SIs—and without knowing what an adequate definition of “mixed” is, there are rather confusing messages coming back. “Mixed” does not mean a unanimity of views, so I take it that there were some dissenting voices. Would it not be sensible to set out clearly what the objective of the trade barriers system should be, what system is required to countermand these things, and to set up a proper consultation to come up with a solution that will command the support of those who have to be involved in it?

The argument seems also to rely on the fact that even though there is this system, it does not achieve very much and has rarely been used. The information I have—I do not know whether it is true—is that when the Confederation of European Paper Industries lodged a complaint that measures imposed by Turkey on the imports of certain varieties of paper were inconsistent with both the WTO and the EU-Turkey customs arrangements, Turkey immediately withdrew the unfair measures because of possible action through the statutory system. Even though it does not have a set of sanctions or a court behind it, the fact that this was formal and statutory-based was sufficient to get action. I do not understand why what might be a developing, long-term programme will be abandoned when the UK might have need of it.

If we are to get rid of it, what about the things that are present and still of value? The Minister did not give any detail. There is a market access advisory committee which monitors arrangements and puts forward recommendations, and there are lists published. Who will do that when we move into this new, semi-informal system? In particular, how will we organise in the UK the variable geometry that arises when different departments have responsibilities here? I do not think the issues that will be affecting Defra—such as the transport of live animals—will be in any way cognate with some of the other issues that have been raised. How will that be managed? In particular, in the future we will have a situation where the devolved Administrations—Scotland, Wales, and Northern Ireland if ever re-formed—will have direct trade responsibilities. How will their complaints be organised? Will that be done on an informal basis, and has that been cleared with the devolved Administrations? I suspect that they will have concerns about that. While we are on the topic of consultations, in the absence of a properly constituted market access advisory committee, where in the system will representatives, consumers, trade unions and businesses be able to feed in views and advice about this non-statutory system? Will this be done in some informal way, through Facebook perhaps?

The trade barriers regulations are only one area of EU legislation that deal with trade barriers and dumping. This SI before the House is part of a process, so where are the other pieces of EU legislation that deal with dumping and other matters? Specifically, what about Regulation (EU) 2016/1036 about protection against dumped imports and Regulation (EU) 2016/1037 on protection against subsidised imports? Can we expect those, and, if so, roughly what is the timescale?

There is also a transitional issue. There are a number of complaints apparently already in the system from the UK. What will happen to those if they have not been completed by 29 March 2019 and we have to leave the EU with no deal? What happens if there is a transition period? These are two separate issues. I put it to the Minister that the department should be issuing advice about those currently engaged. Even though they are small numbers, the issues are substantial.

I end by suggesting to the Minister that, rather than revoking the regulation, it might have been a good idea to make a greater effort to investigate whether the current system was truly effective and whether the fact that the statutory element was not used very often was a sign that it was working rather well, rather than the opposite. I generally agree with the noble Lord, Lord Fox, on this: this SI is somewhat undercooked.

European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018

Debate between Lord Fox and Lord Stevenson of Balmacara

Monday 25th June 2018 Lords Chamber

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Whitty, was right to highlight consumer and voter concerns about such matters—but I should point out that there are also business concerns about the Government’s stature in the trading environment. It is not just the content but the body language that goes with it. At the weekend we saw some appalling body language from senior Ministers about business and some of our most important exporters, so it is good that we can ameliorate that at least in some way with some positive body language here. It is good for us to be discussing this. Perhaps it is churlish of me to point out that the reason why we are discussing it is that we are in the EU, which has worked hard to deliver this treaty.

It is also heartening that we are discussing something that fits within the WTO legislative procedure rather than—sadly, and increasingly—within a worldview that is moving outside the WTO. So it ticks a number of multilateral boxes. As we have heard, Canada is of course an important current trading partner, and one that we hope to make larger. So CETA and its ratification are to be welcomed. It is a good arrangement and, clearly, as the Minister pointed out, the Canadians have made it clear that this is a framework by which a transition in the event of Brexit can be moved into a bilateral agreement between ourselves and Canada.

As the noble Baroness who spoke before me pointed out, it is clear that this does not include services—that is my understanding. I see that the Minister is shaking her head. Perhaps she might indicate which services are in and which are out. My sense is that very few are in. What would be the attitude towards a bilateral agreement on services between our two countries?

The Minister also pointed out that a working party to transition this has already been set up. Perhaps she could give us some sense of how long “swiftly and seamlessly” really means in terms of moving from one to the other. She used some examples; quite a lot of them were agricultural and food products. Clearly, Canada has a very strong agricultural industry. I would be interested to know what impact analysis has been done of the relative flows in both directions of agricultural and food products between our two countries. The Minister talked about growing trade—I think she used the phrase “hundreds of millions” in extra trade. What kinds of targets do the Government have for increasing the flow between the two countries?

It is all good—except the context in which CETA could be transitioned between our two countries really does depend on the nature of the arrangement we have with the European Union. Canada has already made that clear and has expressed unhappiness on, for example, the division of quotas and other such issues. Perhaps the Minister can tell us how these kinds of things feed in to our negotiations with the European Union.

The investment court system—ICS—has already come up. The Minister mentioned it, as did both the previous speakers. This is clearly an area that has raised people’s concerns. There is a perception that large multinationals will have an advantage in such a system. It is easy to understand that perception because this will be a complex and expensive process. How can the Government allay the fears of smaller traders and individuals that this will not be a charter for the larger, deeper-pocketed companies to play the system? Can the Government confirm that the ICS will be rolled over into any bilateral agreement should CETA be transitioned post Brexit?

Finally, the major exports between the two countries are in the engineering sphere, specifically nuclear reactors, boilers, machinery, vehicles and aircraft. I note that all these sectors could suffer severely under Brexit; for example, due to border friction, the restriction of movement of people, and exiting Euratom. There will be pressure on those businesses, so what assurances can the Minister give them? I note the particular importance in the aircraft industry of the Anglo-Canadian relationship at Bombardier in Belfast. Again, what assurances can the Minister give the workers there?

It is good that, instead of attacks on business by the Foreign Secretary or the Health Secretary, we are having a positive debate about business. CETA adds a long-term view to things, in respect of which business is desperately looking for stability. Within the context of those questions, we welcome this statutory instrument.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for introducing the draft Order in Council which classifies CETA as an EU treaty, and to the others who chipped in to this debate. It is the second week running we have had a debate on trade. Let us keep the momentum going and have more of this. It is a good topic and will become even more so as we get on to the Bill that has been prefigured. This debate is important in itself but, as my noble friend Lord Whitty said, it is also a harbinger of how we might do deals in the future; in particular, how the Government might bring Parliament into the process.

It is interesting and therefore a bit ironic that this order is a draft of an Order in Council—one of the most obscure aspects of our legislative structure—and does not actually deal with the content of CETA at all. The Minister was kind enough to go over some of the main points in it, but of course, as the noble Baroness, Lady McIntosh, said, we lack an opportunity to discuss in detail some of the ways in which this framework agreement has been created. I hope that by the time we get to a rerun of this, or to any other free trade agreement that will be brought forward, we will have a much more substantial, engaged and expert debate on the mechanisms being created, the detail of what is or is not included in the free trade agreement and some idea of the process that we will be involved in.

US Imposition of Steel and Aluminium Import Tariffs

Debate between Lord Fox and Lord Stevenson of Balmacara

Monday 4th June 2018 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for repeating the Statement and I welcome her to the Front Bench—I think it is the first time we have had a chance to speak directly across the Dispatch Box. That was three pages’ worth and quite long on description but there was not very much on achievement. I wonder whether the balance was entirely right, given that it was mostly about the difficulties that firms and others will experience in the new situation and very little about what will happen to our own British firms and employees. I have to say that if the Government have been spending the last month seeking to change minds in the United States Government, it has been a spectacular failure, apart from making it very clear that they can do little themselves and that much has to be done in co-operation with the world’s larger trading blocs, including the EU.

The House of Commons Library briefing paper on the industry shows that the steel sector accounted for £1.6 billion of the UK’s economic output. Some 330,000 tonnes of steel are exported annually by British producers, roughly 15% of which are to the United States, so we are talking about a very substantial hit on the industry. The industry has about 600 businesses and 32,000 people are currently employed there. On this side, we make it very clear from the beginning that our concern and support is there for the employees of British steel firms, and their communities, which must be very worried about this questionable and ill-judged unilateral decision by the USA. What assessment have the Government made of the impact of this decision on jobs in the steel sector and the aluminium sector and the economic hit that will be felt, particularly on communities outside London? What representations had the Government made to the White House prior to this announcement, and what assurances were sought that these tariffs would not apply to the UK? Will the Minister put any documents relevant to that in the Library for us to look at?

Secondly, what other sectors of the economy are the Government concerned about? The President has mentioned in passing additional protection for intellectual property. Given the strength of our creativity industries, have the Government taken up that issue in particular? If so, will the Minister give us some detail? The Secretary of State announced the establishment of a US-UK trade and investment working group in July last year. What discussions have been had about steel and the other new tariffs at these meetings? Has it been convened to discuss this issue?

Turning to the Statement itself, I note that half way down page 2 it says that before the EU can take any direct action on countermeasures to come into effect, it has to consult member states. Will the Minister confirm that Parliament will have a chance to discuss these when this second round of discussions is requested? Secondly, although the Minister made it clear to the House that the department had been in regular contact with the UK steel and aluminium industries throughout all this and the Business Secretary had convened a steel council, will she give us details on who actually attends that council and what exactly are its programmes? What concrete steps, in short, will it take to help our industries?

[Lord Fox (LD)]

My Lords, I too welcome the repeating of the Statement in your Lordships’ House. I would not normally be speaking across the Dispatch Box and normal service will be resumed when my noble friend Lord Purvis is available. The noble Lord, Lord Stevenson, makes a good point in that this is very long on adjectives and very short on hope. He set out a very good analysis of the UK steel market. My understanding is that a large proportion of these exports are at the high-technology end of steel, so in a sense the bulk numbers we use for the amount of the total industry affected by this blind us to the fact that the high-technology end of our industry is disproportionately affected. I would like to understand the Government’s analysis of how this will hit that particularly important part of the UK steel offering, because this is an area in which we have excellent businesses and a recovering economy and this could be a very serious blow going forward.

The Statement says in robust terms that the tariffs have weak foundations in law. Elsewhere, Secretary of State Liam Fox is on the record as saying that they are illegal. Do the Government stand by the view that they are illegal, or are we going to continue to tiptoe around this issue?

The noble Lord, Lord Stevenson, also mentioned the US-UK trade working group. If it has not been discussing this issue, what is this group for? While the Minister is on her feet, can she tell us under what mandate this group operates? I am not aware that there has been extensive discussion in Parliament about the basis for future trade with the United States, so what is this group’s mandate and what has come back on steel?

It is clear from the Statement that if the EU decides to trigger its punitive measures, the Government will be part of that because we are part of the EU. If the WTO is brought in on a legal basis, it will be a drawn-out affair, going well past March next year. Assuming that the Government get their way and we exit the customs union, HMT will have a decision to make: will it continue to maintain the robust measures that we have talked about and sit in solidarity alongside our largest trading partner, or will the Government decide to side with the United States? Perhaps the Minister can talk us through that process.

Finally, Prime Minister Trudeau of Canada has been the most articulate in setting out how Trump’s use of the national security justification has been most hurtful and corrosive to the closest military allies of the United States. To some extent, that is alluded to, in a softer way, in the Statement. Can the Minister tell us if and when the UK will raise this in NATO and with NATO allies? If it has already been discussed, what was the result of those discussions?