(3 years, 10 months ago)
Grand CommitteeMy Lords, I have added my name to Amendments 61 and 62, spoken to so excellently just now by the noble Baroness, Lady Ritchie of Downpatrick. It is a pleasure to follow other noble Lords. These amendments are also supported by the noble Baroness, Lady Suttie, and the noble Lord, Lord Hain. I also support the general aims of the other amendments in this group.
This Bill is particularly concerned with non-tariff trade barriers. Nowadays, regulatory barriers to trade are often the most crucial parts of free trade agreements. When introducing this Bill, my noble friend talked about strengthening and protecting the devolved Administrations. I wholeheartedly agree with these sentiments, and that is indeed what these amendments aim to achieve.
As other noble Lords have said, the Westminster Government have the reserved power to negotiate and sign international trade agreements. However, while standards for manufactured goods may also be reserved, powers over implementation of regulations in areas such as agriculture and food products are matters for the devolved Administrations. In order to be able to implement newly negotiated free trade agreements, the Government surely have a direct interest in including the devolved Administrations, as these amendments seek to introduce into the Bill. Failing to do so could clearly put the union at risk.
Of course, the Westminster Government could ultimately get around refusals by devolved nations to implement the agreed terms of an FTA by coercion. But, if free trade agreements result in battles between London and the devolved Parliaments—with Scotland, Wales or Northern Ireland taking the English Government to court over terms of a trade agreement to which they had not agreed—it is likely that our ability to strike further deals would be called into question. Surely there would be a far greater likelihood of success in future if the devolved Governments were involved at an early stage. I urge my noble friend to take note of how Canada operated when negotiating the CETA deal. It included its provincial Governments in its negotiations, which ensured that any commitments they made were more credible and more easily accepted across Canada.
As the noble Baroness, Lady Humphreys, said, the UK is a “family of nations”. Absolutely. In the modern era, a family is considered to function best when all its members are involved in decision-making, rather than the dictatorial senior parent ordering everybody to obey their wishes and do what they are told. This causes particular strife when, for example, another family member is promised control over certain decisions which affect their daily life and well-being, but then finds that they were misled. Westminster must surely accept the need to include the devolved Governments in areas of such significance. Respecting their needs at an early stage and including them as soon as possible will ultimately result in better agreements.
Can my noble friend explain the Government’s thinking in resisting these amendments? Specifically, in relation to Amendments 61 and 62, reserved powers over international trade are limited by two constraints. I have already mentioned that the implementation of trade agreements for agri and food is devolved. The second is the Northern Ireland protocol. According to this protocol, EU regulations on goods—whether manufactured or agricultural—are supposed to continue to apply in Northern Ireland for the duration of the protocol. Annexe 2 includes the whole EU acquis for product standards. If the EU amends these rules, Northern Ireland is supposed to change, too.
We will come back to the position of Northern Ireland in a later group, but I hope my noble friend will consider these amendments carefully—or his own wording to achieve these aims when we reach Report.
My Lords, I echo the words in particular of the noble Lord, Lord Wigley, and the noble Baroness, Lady Ritchie. The noble Lord, Lord Wigley, spoke eloquently about the situation in Wales and the noble Baroness, Lady Ritchie, about Northern Ireland.
Amendments 61 and 62 are also in the names of the noble Baronesses, Lady Ritchie, Lady Altmann and Lady Suttie. I also support Amendment 57, tabled by my noble friend Lord Stevenson of Balmacara. I want to focus on the appalling record which this current Administration have in their approach to the elected, devolved Governments and legislatures of Wales, Northern Ireland and Scotland.
The United Kingdom is currently engaged in what are without doubt the most crucial trade negotiations of the last 50 years: the negotiations about our future trading arrangements with the EU, our largest trading partner. But, unlike most such negotiations, these are not about securing additional benefits for our businesses from a liberalisation of trade: no, the stakes are even higher, because these negotiations are about preventing the introduction of new barriers to trade which all have the potential, even if an agreement is reached, to cripple our manufacturing industry, with a loss of jobs in sectors which are particularly important—for example, to Wales, aerospace and automotive—leaving the devolved Governments with their responsibility for economic development to pick up the pieces.
The negotiations with the EU will also directly impact on issues wholly within devolved competence, such as health and education, since a failure to negotiate mutual recognition of our medicines licensing regime, for example, will lead to increased costs and delays in accessing new treatments, while the failure to secure continued participation in the Erasmus+ programme will impoverish the educational experience of thousands of young people in Wales and indeed across the United Kingdom.
What opportunity have the devolved institutions had to influence, let alone shape, these negotiations? Mike Russell, the Scottish Government’s Constitution Minister, pointed out in June that
“we had virtually no involvement in producing”
the negotiating guidelines or legal text published by the Government,
“and indeed only saw the legal texts—with no possibility of changing them—24 hours before they were published.”
Jeremy Miles, the Minister for European Transition in the Welsh Government, has talked about the
“absence of meaningful Ministerial engagement, where UK Ministers discuss and seek to agree with us not just their formal starting position but the approach they expect to take as the negotiations evolve.”
The Joint Ministerial Committee on European negotiations, whose terms of reference are to “seek agreement” on the approach to the negotiations, did not meet at a key time for preparing for these negotiations between 28 January and 21 May of this year. On top of this frankly insulting approach, the Government have now published their internal market Bill, which not only threatens to break international law—and is proclaimed as doing so—but is an outrageous and outright attack on the very basis of the devolved settlements in this country. That is why there is a great deal of concern in all the devolved Administrations.
In this context, it is surely for us, above all in your Lordships’ House, to stand up for the rule of law and the rights of political institutions that were put in place over 20 years ago to protect and promote the interests of those parts of the United Kingdom, each with a distinct identity and social and economic needs, which had been marginalised by the preceding majoritarian political system. That is why my amendments and others which I shall support, such as Amendments 26 and 50, seek to entrench the role of the devolved Governments and legislatures in future trade negotiations that will inevitably shape, and potentially restrain their freedom to exercise, their powers in respect of issues such as food standards and environmental regulation, which sit squarely within their competence.
The devolved institutions are, quite rightly, obliged to implement international agreements which are entered into by the UK Government, even where the matters involved are otherwise under their control. It cannot be right that they are bound in this way without having any rights to influence the outcome of the negotiations that result in such obligations being imposed on them.
Underlying these constitutional issues is the kind of state the UK wants to be: either one run by diktat from the centre, as Boris Johnson’s Ministers are doing over trade negotiations with the European Union and in this Bill—and especially in the internal market Bill—or one run on the principle of democratic consent and mutual respect for all the Governments: the UK’s and those of the devolved Administrations.
But there are practical policy issues at stake as well, and here are my main concerns. Trade deals today, perhaps with the exception of a future UK-EU one, if there is one at all, extend into a wide range of social provision and domestic policy issues, such as workers’ rights, environmental protection and safety, product and food safety regulations, and procurement. As a result, trade deals are often politically contentious: the more comprehensive they are, the more they are likely to be seen as leading to a loss of regulatory autonomy and democratic accountability. As such, it is wrong to see free trade agreements as purely “business” or “trade” concerns: they reach right to the core of responsible government and public welfare. Many of the areas covered by free trade agreements—for example, agriculture, the environment, forestry, health and economic development —are within the competence of the devolved Administrations.
(4 years, 2 months ago)
Lords ChamberMy Lords, I echo the words of the noble Baroness, Lady Bowles. I welcome the recognition by the Government in the amendments laid by the Minister of the importance of ensuring that a company pension scheme is not disadvantaged and that the Pensions Regulator and the Pension Protection Fund are given rights in circumstances where there is a moratorium or negotiations regarding saving the ongoing business.
As the noble Baroness said, Amendment 15 provides the sort of reassurance that not only a pension scheme and its trustees might need but that the entire defined benefit pension system might require should there be the sort of emergency problems that we are passing this legislation to cope with. The assets of a company are sometimes pledged to a pension scheme in order to reduce the amount of cash that the sponsor needs to pay into the scheme. The types of these so-called contingent assets that we are concerned about in this amendment are Type B(ii) and Type B(iii). Type B(ii) are rights over real estate owned by the company and Type B(iii) are securities that have been pledged to the pension scheme. The scheme’s funding will have been based on following significant negotiations over the years to fix funding shortfalls.
What has happened recently gives rise to enormous concern. In 2007, schemes in deficit had a total deficit of around £20 billion. By 2008, that had risen to £100 billion or more. In March 2009, it was £220 billion. At the end of last year, it had fallen to around £165 billion, but the latest figures from the Pension Protection Fund show that the total deficits of schemes in deficit have now reached £290 billion. There is a major shortfall across the defined benefit pension scheme universe. After many years of trustees agreeing with sponsors to allow deficit repair payments, I have significant concerns that these contingent assets could be at risk, given the amendments that have been laid. They give the Pension Protection Fund and the regulator the right to be notified and to participate in such negotiations, but if that will require court challenges rather than being ruled out without Pension Protection Fund permission, there is an ongoing risk that such assets could be approved for sale by the court. That would not only materially weaken the pension fund itself but, should the company then fail, the PPF will have many fewer assets than is currently assumed by its levy calculation. The system itself could then be at risk.
Scheme funding has been agreed over many years. In light of the other measures in this Bill, which could see bank lenders and even intracompany loans accelerate ahead of the pension scheme in an insolvency, there is likely to be a material weakening of DB scheme funding and potential recoveries on insolvency. Therefore, I am concerned that all other DB schemes and their members will be at risk and that the PPF lifeboat may not be secure in the way we currently believe that it is. I wonder whether the Minister might be able to confirm that the Pension Protection Fund will have the necessary powers to prevent the courts selling assets, should that be under consideration. Without that power, it may be too late once those assets have been sold. I agree with my noble friend that these measures improve the situation, but just allowing the PPF and the Pensions Regulator to have appropriate information, the same as other creditors, and the ability to challenge in court in certain circumstances leaves a question mark in one’s mind about how secure the contingent assets pledged to a pension scheme will be after this Bill, as it is currently worded, passes.
My Lords, I was very happy to add my name to Amendment 15, which has been spoken to so eloquently and with unrivalled expertise and authority on this matter by the noble Baroness, Lady Altmann. I am very concerned about the threat to the Pension Protection Fund. I am proud to say that it started life under the last Labour Government in 2005, and I was subsequently Secretary of State for Work and Pensions. It is an important lifeboat, but it could be threatened if the consequences of insolvency, particularly with defined benefits, rebound into the PPF.
Although I welcome the concessions and responses that the Minister has made through these amendments, and what he has said as a result of the arguments put by the noble Baronesses, Lady Altmann and Lady Bowles, and others, including my noble friends Lady Drake and Lady Warwick, I still think there is a real risk involved. I hope that today, he will give greater recognition to that fact and that he and the Secretary of State will be vigilant in ensuring that the Government are fully cognisant of their concerns about the future viability of the vital Pension Protection Fund.
(4 years, 2 months ago)
Lords ChamberMy Lords, I will not detain the Committee for very long. I add my support for the protection of workers’ rights that would be achieved by the amendments in this group.
Current UK company law prioritises the interests of company shareholders over those of anyone else with an interest in the company, such as employees, suppliers and subcontractors or local communities, but everyone involved in a firm in financial distress has something at stake, not just those in the boardroom or whose names appear on the company’s share register. This includes each and every member of the workforce. Whatever happens, they deserve to have their tax, national insurance, redundancy and pension rights and responsibilities acknowledged and protected.
Amendment 112 recognises that pensions are really postponed pay packets and seeks to protect workers’ deferred earnings. Workers who may have invested much of their working lives in the company and thereby have accumulated pension rights vital to the future of their family must not face losing some or all of those rights while shareholders and secured or unsecured creditors help themselves to whatever of value remains in a company that is facing failure.
Amendment 115 requires collective agreements to be reached between firms seeking a compromise or a reconstruction arrangement and representatives of employees affected by such a compromise or arrangement.
Amendment 116 makes it a condition for companies to receive state support under the Bill that they give priority to rebuilding their finances, ruling out for three years dividend payments, share buybacks or payments to any director of more than 10 times the rate received by the company’s lowest-paid full-time equivalent employees.
Amendment 111 provides for any compromise or reconstruction arrangement for a firm in financial difficulty to provide immediate redress for past breaches of the sex equality clause under Section 66 of the Equality Act 2010 or of the sex equality rule under Section 67, and for the possibility of future such breaches to be eliminated.
Amendments 114 and 115 on elected workers on boards and requiring agreements with trade unions seek to take a leaf out of Germany’s book by giving a voice to workers via elected seats on company boards. In Germany, about 90% of private sector workplaces with more than 500 employees elected works councils in 2011. This system of making co-operation at work between unions and employers a matter of routine has helped to deliver high living standards, unparalleled export success, strong manufacturing, world-class training and skills, and social cohesion.
So that we can decide what to do on Report about these issues, I appeal to the Minister to give strong and unequivocal guarantees on the issues we have raised in Amendments 107 to 117.
Finally, my Amendments 120, 121 and 122 on restructuring propose lowering these thresholds from the proposed three-quarters to two-thirds to make it quicker and easier for distressed companies to apply to the court for the approval of their restructuring plans. This would provide greater certainty for all stakeholders in those businesses, including employees. It would reduce the cost to businesses of restructuring negotiations, helping return more value to stakeholders, and would lead to quicker resolutions of corporate restructurings, helping to protect jobs. While the interests of minority creditors and shareholders are important, it cannot be right that their interests can prevail over those of a majority, exposing all to greater likelihood of the business subsequently falling into administration or liquidation.
I therefore hope that the Minister will accept these amendments, or, if he has technical or drafting quibbles, at least come back on Report to amend the Bill as I intend with these amendments.
(5 years, 5 months ago)
Lords ChamberPerhaps I may say to the noble and learned Lord that, while we may all want it—in fact, we all say we do—unless we will the means we cannot actually ensure and guarantee it. That is what the amendment does in respect of future trade agreements. The same wording was accepted by this House and by the Government in the other place, and has become part of the withdrawal Act—but that is part of, if you like, the divorce settlement. What we need to do is ensure that the same principles apply to our future trading relationship.
My Lords, with apologies to the House, we are on Report and we should get on with it.