Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

Committee stage
Tuesday 14th May 2024 Lords Chamber

It is also the case that many foreign Governments have big stakes in listed companies, so any express concerns about those companies could be litigated on the basis that they were influenced by the disapproval of a substantial fellow investor. If pension schemes became open to legal challenge in the way that I have described, it would have a chilling effect on the high standards of corporate governance and corporate responsibilities, which the Government claim to support. I hope the Minister will therefore accept this simple amendment to allow proper stewardship by local government pension funds without the threat of litigation hanging over them.

[Lord Hannay of Chiswick (CB)]

My Lords, I will speak in support of the noble Baroness who has just spoken on Amendment 45, as well as Amendment 27 in the name of the noble Baroness, Lady Drake. As the noble Baroness, Lady Noakes, has eloquently drawn to the attention of the Committee, this is another of the points at which this legislation’s handling of Israel arises. The issue is the elision that has been made by the Government between the State of Israel and the Occupied Territories—the West Bank, the Golan Heights and east Jerusalem. Within the Occupied Territories there is a mass of illegal settlements, which the international community and the British Government regard as illegal. A whole rash of outposts have now been established from those settlements, which are also illegal. The elision between the State of Israel and the settlements is causing infinite trouble to this Bill, and I hope that the Minister will find some way to sort this out, because it really needs to be sorted out.

There is no disagreement, between the Government and those of us who wish to see this sorted out, about the settlements in the West Bank, Golan and east Jerusalem. We all agree that they are illegal under international law. I think we therefore agree—the Minister was very clear about this at Second Reading and when it came up in earlier amendments—that for British companies, pension funds or whatever else to invest in those illegal settlements, even unwittingly, would be to create an illegality. Presumably, the Government do not want a British company or a British pension fund to do that—and I hope that we would not want it either.

These amendments would make it somewhat easier for the bodies covered by the Bill to make sure that they were not being drawn into illegality in any way and thus acting in a way that would be contrary to government policy. I hope that the Minister will give careful consideration to the issue, because I am afraid that the elision between the State of Israel and the Occupied Territories is really damaging to the Bill’s prospects.

[Lord Davies of Brixton (Lab)]

I have made no secret that this is a bad Bill that is badly drafted, and I spoke against it at Second Reading. In this debate, my suggestion that we should not agree Clause 12 is narrowly focused.

Local government pension schemes should be treated in exactly the same way as every other funded occupational pension scheme—the point made by my noble friend Lady Blackstone. I agree totally with the amendments tabled by my noble friends, and I certainly support their proposals, but my question is: do we need separate legislation to cover the local government pension schemes? My strong view is that we do not; the schemes should all be treated the same. They should come under the same rules as the fiduciary duties on trustees or committees —whoever is responsible for taking the decisions—and they should be the same across the board.

I tabled my clause stand part notice just to ask what the effect would be of not having this provision. Would it mean that I achieve my objective and that, should the provision be removed from the Bill, the local government pension schemes would be treated like other pension schemes? I suspect not. I suspect that I would need a more detailed amendment that would place local government pension schemes under the same responsibilities and law as occupational pension schemes more generally. That is my objective, and I hope that we can have this debate again on Report so that all pension schemes are treated the same.

I listened carefully to the remarks from the noble Baroness, Lady Altmann, but I think her argument fails. First, there are private employers whose employees are within the local government pension scheme. Equally, there are public bodies whose pension schemes are not covered by this legislation, most obviously the universities superannuation scheme. So the division between the sheep and the goats in this respect is arbitrary. There is no consistency about—

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[Lord Hannay of Chiswick (CB)]

I am slightly puzzled by the Minister’s statement that the Government wish to avoid any territorial connection, since the Government themselves have placed large chunks of territorial description in the Bill. Could the Minister enlighten us on that? After all, it is the Government who have put down a Bill that talks about Israel and elides Israel with the Occupied Territories, the Golan Heights, east Jerusalem and the West Bank. Although they have confirmed their view that the settlements in all those areas are illegal, and therefore that investment in those settlements would be illegal too, it is the Government who are specifying this matter territorially. By all means, take the whole lot out—that would be fine.

[Baroness Neville-Rolfe (Con)]

As I was trying to explain, the important point is that it depends on the motivation for the decision. The Bill would prohibit only investment and procurement decisions that would appear to a reasonable observer to be influenced by moral or political disapproval of foreign state conduct, and have a territorial element. It would not prevent public authorities making any other kind of territorial or practical business considerations. I have been trying to clarify this.

As I am conscious of time, perhaps we could turn finally to—

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

Committee stage
Tuesday 7th May 2024 Lords Chamber

Clause 3(7) is deeply damaging, because it suggests to Israel that its conduct in the Occupied Palestinian Territories does not matter and that it is immune from any criticism from its friends, whatever it does and however it acts. That is not a demonstration of friendship; it is the encouragement of a dangerous delusion that will lead the region to ever greater disaster. We should cease encouraging that delusion. A good place to start would be to delete Clause 3(7) or, better still, to dispense with the Bill altogether.

[Lord Hannay of Chiswick (CB)]

My Lords, I support the amendment introduced by my noble friend Lord Warner. It is conceivable that the Government’s objective of exempting the State of Israel—I say that carefully, the State of Israel—from the imposition of BDS, which I do not support, could be achieved with different drafting. However, to have introduced it in the way that it is introduced in Clause 3(7) is a mistake, and the mistake is compounded by mixing up completely different things: the State of Israel and the Occupied Territories, which certainly include the West Bank, east Jerusalem and the Golan Heights. They should not be treated in the same way. They are not part of the State of Israel in the view of the British Government, though they are in the view of the present Israeli Government. I repeat, they are not in the view of the British Government part of the State of Israel. Within those Occupied Territories—Golan, east Jerusalem and the West Bank—there are internationally illegal settlements. Illegality is another category on which the British Government’s policy is quite clear—just read the Security Council resolution, which has been quoted. Mixing these things up together is, frankly, a solution of disaster. It will just doom this legislation by including it.

I am not trying to suggest that it would not be possible to do something, though I doubt very much whether specifically mentioning Israel is a wise thing in the first place. I agree with the Government that public bodies should not be making foreign policy, but I am not sure that specifying one country out of 194 where they particularly should not be making foreign policy is a very clever way of setting about that. If you took that away and tried to sort out these unhelpfully mixed-up elements, there might be a better chance of this Bill making progress. So long as they are all mixed up together, we will have a cat’s cradle of contradictions.

[Baroness Noakes (Con)]

My Lords, the noble Lord, Lord Warner, said that this Bill will increase anti-Semitism. That is one view. I prefer to observe what is actually happening. We only have to look at what is happening in universities at the moment; we will come on to universities in a later group.

If we look at what has been happening with the encampments that have been springing up in the UK following what has been happening in the US, they are vocally calling for boycott and divestment in relation to Israel—and, indeed, quite a lot worse. This is a very live issue. It is causing much harm on campuses for Jewish students, who are clear that there has been a significant increase in anti-Semitism since this has started. This is not theory; it is actually happening.

Israel is always the focal point for BDS campaigns. The BDS movement itself came into being to attack Israel. I am glad that we are aligned with the noble Lord, Lord Collins, on the need to protect Israel from those activities. From my perspective, if the Bill does nothing else, it should try to protect Israel from boycott and divestment activities. That is why we need Clause 3(7): it underlines the importance of Israel and the particular attacks on Israel.

I accept that the Occupied Territories raise much more difficult issues. In line with the international community, the UK recognises the settlements as illegal, but the practicalities are that this will not be settled conclusively until there is a two-state solution. This is something that cannot be imposed; it will have to be agreed, but that is unlikely to happen very soon. Anyone who has been to Israel or has been in touch with people in Israel will know that the attacks by Hamas on 7 October have left a traumatised Israeli people, for whom the possibility of discussing a two-state solution seems almost unthinkable at this point in time. That is not to deny that that is the right solution in the long term but simply to say that it does not appear to be an immediate, practical problem.

The reality on the ground is that, in the meantime, the unsatisfactory nature of the Occupied Territories is likely to continue. Even if we thought that boycotts and divestments in relation to the Occupied Territories would punish Israel, this ignores the simple fact that there is economic activity in those settlements. Anything that harms that will almost certainly harm Palestinians as much as it harms the people of Israel. We only have to look at what happened when SodaStream, an Israeli company, was forced to withdraw from its activities in the occupied West Bank. The people who really lost out were the Palestinians who lost good, well-paid jobs when that facility had to close.

On our last day in Committee, the noble Lord, Lord Collins, pointed me to the FCDO guidance, which I duly went and read; he has read much of it into the record today. The important thing about that guidance is that, although it highlights the risks involved, it does not prohibit anyone in the UK from investing or dealing with those who are active in the Occupied Territories. I believe that this Bill reflects that pragmatic position—that the Occupied Territories are a fact of life—and that, until there is a two-state solution, trying to eliminate it from the Bill does not reflect the practical politics we are facing.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

Tuesday 7th May 2024 Lords Chamber

[Lord Wolfson of Tredegar (Con)]

My Lords, it is a pleasure to follow that speech, although I respectfully point out that groups such as Diaspora Alliance hold the same sway and weight in the Jewish community as, for example, Gays for Trump would in the homosexual community in America. You can always find a Jew or Jewish group who will say whatever you want; going back to the Talmud, we are a disputatious people. I would gently warn noble Lords against picking people in the Jewish community who happen to agree with what they say. The two main communal bodies, the Board of Deputies of British Jews and the Jewish Leadership Council have been forthright in support of the Bill.

Let me turn to Clause 3(7), which is what this amendment focuses on. As we know, the way in which the Bill works is that unless a country is added to the Schedule by the Secretary of State, a public body cannot discriminate against it on essentially political grounds—I paraphrase. Clause 3(7) provides more procedural protection to Israel and to the territories listed in it because its effect is that a future Secretary of State cannot add Israel or those territories to the Schedule—that can be done only by way of primary legislation, as the noble Baroness just pointed out.

The purpose of this amendment is obvious although I note that, perhaps wisely, its proposers were neither able nor willing to say so in terms in a Member’s explanatory statement. Its purpose is to strip Israel of that procedural protection to make it easier procedurally, and therefore also politically, for a future Secretary of State to give a green light to a boycott of Israel. That, in terms, is what this amendment is designed to do and what, if it became part of the Bill, it would do.

Two main arguments have been made in support of removing Clause 3(7) from the Bill—let me say a word or two about each. The first is that Clause 3(7) does not distinguish between Israel and the Occupied Palestinian Territories, as it is said the UK is required to do. There are two points in relation to that: first, what is the source of this supposed obligation?

I referred in an earlier group to the opinion from Richard Hermer KC. I declare an interest: he is a friend, but the fact that he is will not stop me saying that I think he has got it hopelessly wrong on this point. His opinion says that there is a

“wider international law obligation on all states to ensure that impediments to Palestinian self-determination are brought to an end”.

To support that proposition, he cites the 2004 ICJ advisory opinion on the separation wall. That, of course, is an advisory opinion and, in terms, is limited to the separation wall itself, which the ICJ refers to as an “impediment” to Palestinian self-determination

“resulting from the construction of the wall”.

We could mount a very good argument, and I would, that it is the construction of that wall which advances Palestinian self-determination because without it, there would still be suicide bombings and people blown up on buses and in cafes, but let us put that to one side.

[Lord Hannay of Chiswick (CB)]

I just want to correct the noble Lord. The judgment did not say that the wall was illegal; it said that it was placed illegally because it was placed in the Occupied Territories, not on the boundary between the State of Israel and the Occupied Territories.

[Lord Wolfson of Tredegar (Con)]

That is not the point I was making, but the noble Lord is absolutely right. My point was whether there is in that judgment some sort of obligation on us not to impede the construction of a Palestinian state. However, the noble Lord is absolutely right in his characterisation of that part of the advisory opinion.

The only obligation the judgment refers to, therefore, is an obligation not to recognise the Occupied Palestinian Territories as part of Israel. That is in the advisory opinion as an obligation. UK government policy does not do so, and this Bill does not do so either.

Then we look at the other supposed source of this obligation: UN Security Council Resolution 2334, mentioned by the noble Lord, Lord Warner, in moving the amendment. That goes no further. That, in paragraph 5, “calls on states”. Let us just be clear: that is not an international law obligation. With the greatest respect to the noble Baroness, Lady Bennett of Manor Castle, who characterised that as a UK commitment, it is not. As other noble Lords will know much better than I do, the use of words such as “requires,” “obliges” and “calls on” are important distinctions—we will come later to what distinctions are—in UN Security Council resolutions. In any event, that only “calls on states” to distinguish between Israel and the Occupied Palestinian Territories, and not to lump them together.

Secondly, in so far as there is any legal obligation, which there is not, it would only be one to distinguish between Israel and the Occupied Palestinian Territories. Clause 3(7) does that. It does distinguish: you distinguish between things by treating them distinctly. You do not need to treat them differently. Those are two distinct, or different, things. This Bill is therefore entirely consistent with UK government policy and with UN Security Council Resolution 2334. That is a complete answer to the first point.

Let me go to the second point, which is the question about why Israel is treated differently. That is the main question underlying much of the debate on this clause. I have already explained that the differential treatment is procedural and not substantive; so why, asked the noble Lord, Lord Warner, in moving his amendment, is Israel treated differently in this Bill? I answered that question in my speech at Second Reading. The short answer—and I will not repeat it—is that Israel is constantly subjected to differential and discriminatory treatment, both by international bodies such as the UN and its rather unhappily named Human Rights Council, on which sit some of the world’s biggest abusers of human rights, and by some public authorities in this country. However, as the noble Lord, Lord Warner, has asked the question about why Israel is treated differently, let me answer it by reference to his oral contributions in your Lordships’ House.

Over the past 10 years, the noble Lord has—and I have benefited from them—contributed to many debates on many topics in your Lordships’ House. I thought I would have a look at some of his contributions relating to some of the countries set out in the list from the noble Lord, Lord Hain, in his Amendment 49. I know he is now no longer going to move that amendment, but it is a useful list because it sets out those countries that have poor, or worse, human rights records.

On the basis of my researches in Hansard, the current position is as follows. I am not going to go through them all, but here are some. The number of times in the last 10 years that the noble Lord, Lord Warner, has referred to Saudi Arabia is zero; Yemen, zero; Myanmar, zero; Sudan, zero; the Uighurs, zero; North Korea, zero; Congo, zero; Venezuela, zero; Iran, zero; China, one, in the context of a speech on the West Bank; Syria, one, in the context of a speech on Gaza; Ukraine, one, to ask why we do not treat Israel the same way we treat Russia; Israel and Palestine—nine.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

Committee stage
Wednesday 20th March 2024 Lords Chamber

[Baroness Noakes (Con)]

My Lords, it seems to me that there is a bit of confusion going on. Amendment 7, which takes out the words in Clause 1(7), relates only to who is carrying out the disapproval. It is just amplifying those people whose disapproval is taken into account, to see whether or not the clause is engaged. It is not trying to add different categories of decision-maker, because the reference to decision-maker is clear in Clause 2, which we will come on to in another group. It is that definition that then drives enforcement, et cetera.

I was interested in Amendment 55 of the noble Baroness, Lady Chapman—although I think it is actually the wrong amendment asking for regulations—because it highlights that decision-makers might be individuals under the Bill, which they can be. As I understand it, the definition of “decision-maker” in Clause 2 encompasses some individuals being the decision-maker from whom all these consequences might flow. That was a complete surprise to me because the Bill is titled the Economic Activity of Public Bodies (Overseas Matters) Bill—a manifesto commitment related to public bodies. I was completely amazed to find that individuals might be public authorities within the terms of Clause 2, and therefore decision-makers.

I was interested in the noble Baroness’s probing amendment, because I hoped that she would be using that to ask the Minister what kinds of individuals could be decision-makers under the definition that we are using—the Human Rights Act definition. The limited research I have done produced the example of a doctor. When a doctor is carrying out his NHS work, he could be a public authority for that purpose, but when carrying out his private work, he could not be. I did not find much more than that, and I am rather hoping that the Minister will be able to explain to us in rather more detail precisely which individuals are decision-makers within Clause 2.

[Lord Hannay of Chiswick (CB)]

My Lords, I, too, will speak to this amendment and do so, like the noble Lords, Lord Wallace and Lord Johnson, in relation to universities and higher education. I had some experience of that: I was on two university councils—those of Birmingham and Kent—and I chaired the Birmingham council for five or six years in the early part of this century.

I have to say to the Minister that, as a result of a lot of extremely desirable reforms, the decision-making at universities was concentrated quite heavily on the council. The council did not micromanage every decision, but it was responsible for every decision taken at the university. That responsibility was clearly focused on a much-reduced size of council, down from the 30s or 40s to the 20s, and it meant that a quite a lot of responsibility came on to its members, who were a combination of academics and lay persons—with a majority, on the whole, of lay persons. The lay persons on the council were volunteers and were not paid a penny. Now, if the vagueness in this bit of the legislation is retained, I would not like to be out there trying to recruit new members to university councils, if they thought they were going to be liable for any of the sorts of problems that could arise under this legislation.

I suspect that this is just one of many pieces of this legislation that reinforce the case for simply taking higher education and universities completely out of it. I think that is what we will come to when we get to Report. This is just the first illustration that it will have a remarkably chilling effect on the conduct of councils and the way in which people are prepared to serve—for nothing and as volunteers—on university councils, giving up many hundreds of hours of their lives to making sure that the university is properly administered and decisions properly taken.

[Baroness Randerson (LD)]

My Lords, I preface my remarks by declaring an interest as chancellor of Cardiff University. I apologise that my duties at Cardiff University prevented me attending the whole of Second Reading—so I could not speak, although I attended a significant part of it.

Before I was chancellor of Cardiff University, I was a member of the council of Cardiff Metropolitan University, so I have a background in both executive and non-executive roles at universities. What I have to say very much follows neatly from the noble Lord. My experience is that university councils—and other bodies doing the same job but sometimes with different names—are very highly regulated already. They involve a great deal of training and responsibility and absolutely no financial reward—but there is great satisfaction for those who participate.

In both universities I have mentioned, our problem is always trying to get the suitable range of highly skilled, highly experienced people to participate. If you add another unnecessary layer of responsibility on to those people, you will deter very worthwhile recruits and you will make life more difficult again for our higher education sector. So can the Minister give us examples of universities—and individuals within universities—that have made these inappropriate decisions, so that we can see why universities are included? Otherwise, if there are no examples at the Minister’s fingertips, could the Government give further thought to whether they should be included at all?

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

2nd reading
Tuesday 20th February 2024 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, the Bill to which this House is being asked to give a Second Reading today is, in my view, both ill-timed and ill-conceived. It singles out Israel for special protection over any other country in the world in a remarkably discriminatory way—positive for Israel, negative for everywhere else—which, important though the preservation of Israel’s security and democracy undoubtedly is, can hardly be justified. Is it really that much more important to us than the countries of the Commonwealth?

The Bill is ill-timed in the sense that, while many will assert and defend Israel’s right to act militarily in self-defence in response to the onslaught unleashed against it by Hamas on 7 October, as does the present speaker, this is hardly the appropriate moment to bring forward a piece of legislation which appears to give Israel a blank cheque for whatever it does in Gaza and the other Occupied Territories.

It is ill-conceived because it would appear also to override some of the formal international positions taken by successive British Governments with respect to the West Bank and the settlements established there, to the Golan Heights and to east Jerusalem. Can the Minister confirm whether it remains the Government’s position, as set out in paragraph 5 of UN Security Council Resolution 2334, for which the UK voted, that the status of these territories can be determined only by international negotiations and agreement between the parties to the dispute between Israel and Palestine—and not, as is the view of the present Israeli Government, by the unilateral action of Israel—and that those settlements are illegal and that the assertion of Israeli sovereignty over the Golan Heights and east Jerusalem has no basis in international law? If so, and given that that view is shared by the vast majority of the members of the UN, why is that distinction not recognised in the present Bill? Why, indeed, is it not recognised as being an obligation on public bodies in this country, just as they are not permitted—rightly, in the view of the present speaker—to try to impose their own trade sanctions on Israel?

Let us reflect for a moment on where we would have stood in the early 1990s with respect to investments in apartheid South Africa, had a Bill of the sort proposed been on the statute book. I listened with great interest to the reference made by the noble Lord, Lord Hain, to that issue. Do we really wish to tie the hands of public bodies in matters of investment, should such breaches of customary international law occur in the future?

The objections I have referred to relate to the international dimensions of this Bill, which seem far-reaching and undeniable. How do they respect the Government’s championing of the rules-based international order, of which the provisions relating to the status of the territories concerned are surely an integral part?

Other considerations, referred to by other noble Lords, such as whether it makes any sense to deprive public bodies of powers they would appear to possess, are matters for others with more expertise than me on such aspects of the legislation. The negative implications for the autonomy and freedom of speech of universities has been referred to by noble Lords and must be a matter of real concern.

The noble Lord, Lord Willetts, did us a favour by reading out the relevant passage from his party’s 2019 manifesto. The Salisbury/Addison convention is highly relevant to the Bill. There is no mention in the manifesto of Israel, and no mention of universities, which are not public bodies. This will be relevant as we look, as I believe we should, to produce some fairly radical amendments to the Bill in order to avoid setting off in quite the wrong direction.

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[Baroness Neville-Rolfe (Con)]

We will move on. Obviously, I agree that the history of—

[Lord Hannay of Chiswick (CB)]

On that point, if can help the Minister, I represented this country at the United Nations at the time and what the noble Lord, Lord Boateng, says is totally accurate.

[Baroness Neville-Rolfe (Con)]

We will move on. I was just going to say that it was amazing that the change happened in South Africa. I remember visiting it in the 1990s, after the change.

UK-EU Relationship (European Affairs Committee Report)

Lord Hannay of Chiswick Excerpts

Wednesday 20th September 2023 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, the report we are debating, so admirably introduced by the noble Earl, Lord Kinnoull, who contributed to great effect to its production, is quite simply the first overall analysis of the future development of the UK’s post-Brexit relationship with the EU by either House of Parliament since we left the EU in early 2020, more than three years ago, so it deserves to be taken seriously. It will not be the last word on a subject which, whatever side you voted on in the 2016 referendum, will be prominent in our politics for the foreseeable future, but its long list of suggestions for developing that relationship deserves careful scrutiny and response.

First, it is a great pity that the Government have yet again rejected the idea of negotiating an SPS agreement with the EU, when it has the wholehearted support of the agri-food industries in all four nations and of most parties in Parliament. That industry, which has benefited to an increasing degree from its access to continental markets, is being sacrificed on the altar of sovereignty—that imprecise and poorly understood concept which is trotted out whenever needed to reject a well-argued proposition.

Secondly, the report’s proposal that the UK should establish a structured framework for co-operating with the EU on foreign and security policy issues has been supported strongly by all previous speakers in this debate. It was a concept endorsed by both parties in their joint political declaration, negotiated and ratified in 2019 and 2020, and then dropped by Prime Minister Johnson. Whatever the rights and wrongs of that decision at that time, the case for such a framework has been greatly strengthened since then by the need to respond effectively to two major challenges: Russia’s aggression against Ukraine and the rising assertiveness of China worldwide. The Government say that we are getting along just fine by co-operating with the EU on an ad hoc basis on those and other issues, but that demonstrates a not-unprecedented misunderstanding of the way the EU best responds, which is through frameworks for co-operation laid down in advance, while leaving each party autonomy in its own decision-making. Surely this is a moment for a rethink on that issue.

Thirdly, there was the Government’s response to the report’s proposal that the UK and EU should develop the closest possible co-operation on their climate change policies, in particular linking their emissions trading schemes and ensuring that any cross-border adjustment mechanism did not get at cross purposes and give rise to further friction in their mutual trade. To say, as the Government do, that they agree with the report’s views in part, without saying which parts, is just a curate’s egg reply. Every single professional witness who gave us evidence urged the need for the closest possible co-operation on those issues, but in the real world the UK’s emissions trading scheme is now drifting away from the EU’s and the Government have not yet decided even whether to have a CBAM scheme, let alone what relationship it should have with the EU scheme that is already taking shape. What will the Government do if the EU imposes a CBAM on Chinese steel and cement? Will they just sit back and allow the trade to be diverted here?

The section in the Government’s response on the report’s conclusions on school visits and many other forms of cultural and educational co-operation is, frankly, shameful. The Prime Minister and the French President agreed last March to remedy the free fall in UK-France school visits since Brexit. What has happened since then? Precisely nothing is the answer; something might happen by the end of the year, we are told. Meanwhile, successive generations of schoolchildren are missing out on those formative experiences, and what could be more self-defeating than refusing to make the Turing student exchange system one which operates mutually and opens up possible co-operation with the EU’s Erasmus scheme? There is narrow-mindedness here which is quite shocking.

There is much wrong with the Government’s response so far to our report. How best could that be remedied? First, we should open discussions with the EU on how to strengthen the framework for our co-operation on foreign policy and security issues, as we foresaw doing in the 2019 political declaration. At the same time, we should begin exploratory talks with the EU about how to put to most effective use the 2025-26 review of the trade and co-operation agreement, which is provided for in its terms. None of this will be easy or straight- forward, so the sooner we begin the better. It will be important for both parties to work for ways to strengthen our co-operation to their mutual benefit, as we emphasised and underlined in our report. That should help to answer silly criticisms of cherry-picking, which are bound to surface from some quarters in Brussels.

The first few years following Brexit have hardly been a happy experience. Now we have a real opportunity to get on to the front foot and treat the existing skimpy system as a floor and not a ceiling. The Windsor Framework and the deal on Horizon are a promising beginning, but we need to be more systematic and determined about the next stages. That is the challenge this report makes to Parliament and to all parties represented here. Let us hope they will rise to it.

EU–UK Partnership Council

Lord Hannay of Chiswick Excerpts

Thursday 16th December 2021 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, would the Minister not agree that a slightly more proactive approach to holding meetings with the TCA might be better than simply standing at the Dispatch Box and saying that we have fulfilled the minimum requirement under law? Would he perhaps answer the part of the Question from the noble Baroness, Lady Hayter, that related to matters which might be discussed at such a future meeting? Has he given consideration, for example, to raising the issue of performing artists so that the work that the Government are doing bilaterally is supplemented by work with the EU where the EU has competence in these matters—for example, with cabotage?

[Lord Frost (Con)]

My Lords, the Partnership Council is, of course, the highest body of the governance structure created by the TCA, and as such it does not need to meet very frequently. That is why the treaty commitment is to once a year. However, the specialised committees are important and look through the detail, and those have been running since June. As I said, all of those will shortly have met. So the governance structures are working well. We obviously have been giving thought to the agenda of the Partnership Council; it will no doubt take the issues that are of highest priority at that point. We touched on the question of touring artists at the 9 June meeting, and I imagine that we will do so again at the next meeting.

Beyond Brexit: Institutional Framework (EUC Report)

Lord Hannay of Chiswick Excerpts

Monday 6th December 2021 Grand Committee

[Lord Hannay of Chiswick (CB)]

My Lords, this triple debate surely falls into the “better late than never” category, being nearly a year after the reports were published and with none of the committees and sub-committees who authored them still in existence. However, I am delighted that we have today been addressed by some of those former chairs. Fortunately, their successor committee, the European Affairs Committee, on which I have the privilege to sit, is still chaired by my noble friend Lord Kinnoull, who led off our debate so admirably.

Looking first at the matter of trade in goods, about which our European Affairs Committee is on the point of publishing a further report, the issue that stands out, to me at least, is SPS—sanitary and phytosanitary controls. This is resulting in much lost or delayed trade and substantial increased costs on business, in the absence of an agreement between the UK and the EU. These controls are also an important element in the problems which have arisen over implementing the Northern Ireland protocol, about which my noble friend Lord Jay spoke so powerfully. Such agreements between the EU and a third country on SPS do exist. They exist between the EU and Switzerland and the EU and New Zealand. The Commission has indicated, so I understand, that it could contemplate a time-limited duration for an agreement with the United Kingdom, which would meet the eventuality of that agreement conflicting with any free trade agreement that the UK might want to enter into.

Why do the Government not use the trade and co-operation agreement machinery to explore the possibility of an SPS accord, given that several options are available? It is simply not a convincing answer to say that this was considered during the pre-Brexit negotiations and discarded. That was then and this is now, as the noble Lord, Lord Frost, is fond of saying in a different context. Nor can it reasonably be answered that the absence of a SPS agreement was endorsed by the result of the 2019 election. I doubt whether many people down at the Dog and Duck would be aware of what the acronym “SPS” means or entails, let alone that they were voting to do without it without an agreement with the EU.

On the report on trade in services, there seem to be two issues that stand out, both of which have been referred to by previous speakers: performing artists and Erasmus. The committee on which I serve now is already in correspondence with the Minister over performing artists, but so far this feels more like a dialogue of the deaf than a constructive and concerned response to the dire situation into which one of the most vibrant and profitable sources of our invisible exports has been cast following Brexit. The Government’s reliance on bilateral contacts with individual member states to seek remedies to the sector’s problems has so far borne absolutely no fruit and is unlikely to resolve the cat’s cradle of problems over visas, cabotage, carnets and activities involving several member states at a time.

The evidence we took revealed the sector’s impression of the Government’s complacency and obfuscation at the damage caused by Brexit, not simply that due to Covid, as it became daily more evident. Here too I suggest that it is not enough simply to say that the EU rejected our preferred solution in the pre-Brexit negotiations and we rejected theirs. Sure, but it is surely time now to go back to the negotiating table, bilaterally and with the EU as such, and through the TCA’s machinery to explore alternatives to those two failed attempts. I hope the Minister will now say that the Government are prepared to do that.

The decision to drop the UK’s involvement in Erasmus+ has never been properly explained, let alone justified. It looks like an act of vandalism that has brought to an end a process of co-operation that benefited hugely generations of students on both sides, and, of course, generations who have yet to get to university. The Turing Scheme is no substitute since it provides for no reciprocal access to our universities. It would surely make sense now to explore whether some basis for co-operation between Turing and Erasmus+ can be worked out. Again, I hope the Minister will undertake to explore the potential for that.

The final recommendation of the report on the UK-EU institutional framework reads as follows:

“What is vital … is that both sides approach the new relationship constructively, in good faith, with the aim of rebuilding the trust that has been so undermined in recent times. Liberal democracies are precious, and they should work together, not pull apart.”


One can say only ditto to that, and deplore how far short of fulfilling those worthy objectives the actual conduct of the relationship has fallen in the intervening period.

--- Later in debate ---

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, perhaps I may say in preamble that it is never, and certainly is not, the intention of this Government to be triumphalist, aggressive or divisive on these questions. That has always been the position of Her Majesty’s Government. We see the European Union as a close friend and partner, as the Prime Minister repeatedly states, and we wish for nothing other than good relations with our partners. I hope that I can disabuse the noble Lord, Lord Desai, of his fears on that count.

I thank all noble Lords who have spoken for the contributions made today. As noble Lords will know, parliamentary scrutiny is invaluable and essential in my judgment. The Government remain fully committed to ensuring that this House can play a full role in making this new relationship with our European partners a success.

These reports were published in March and have all been responded to in writing by the Government, but it is welcome that the Committee has had this opportunity to debate them. I have found it a fascinating debate. Progress has been made since the reports were published, even in the face of a global pandemic and the resulting international economic downturn that has affected our partners and ourselves in different ways.

First and foremost, the trade and co-operation agreement has been fully ratified, both in the EU institutions and in the UK by this House and the other place. This landmark moment fulfilled our promise to take back control of our laws, borders, money, trade and fisheries. The importance of this crucial first step was rightly highlighted in the reports debated today. I therefore thank noble Lords on all sides of the argument for their efforts, which ensured that ratification occurred as swiftly as possible in what were challenging and unprecedented conditions.

I also place on record my thanks to the then European Union Committee of this House, along with its sub-committees, which duly scrutinised the trade and co-operation agreement in its series of Beyond Brexit reports. I am grateful to the committee for its valuable work on each of these. Equally, I thank the successor committees—the European Affairs Committee and the Sub-Committee on the Protocol on Ireland/Northern Ireland—for continuing the work of scrutinising our new relationship with the European Union. I hope that it will not be invidious or embarrassing if I express what I think is the sense of all noble Lords who have spoken: that is, the affection, respect and gratitude that we all feel for the noble Earl who initiated this debate for his leading role in all these fora.

On trade in goods, the trade and co-operation agreement was the first free trade agreement that the EU has ever reached based on zero tariffs and zero quotas. This is in line with our aim to provide liberalised market access for goods. I remind noble Lords that the intention on our side was not to seek fully frictionless trade, as the EU was clear that this would require regulatory alignment with its rules. Instead, a balance was struck that safeguarded the UK’s regulatory autonomy and sovereignty as an independent trading nation.

The report notes the importance of establishing the governance—I will return to this—that underpins the TCA as a route to improving UK-EU trade. I am therefore pleased to confirm that, immediately following ratification of the TCA, the Government have established the committees that support the agreement. With one exception, all those committees have already met, including the Partnership Council chaired by my noble friend Lord Frost. As I say, I will return to this point, but the UK and EU have already begun to discuss shared objectives and address the agreed commitments made in the TCA that will help to promote trade in goods between us.

The report also reflects on how important support and good communication between government and industry is; I agree with what many noble Lords said on that. The Government have committed significant funds and resources to supporting and listening to industry and others, and will continue to do so. We are also ensuring that they have a formal voice in the implementation of the TCA, through the civil society forum and the domestic advisory group. The noble Lord, Lord Kerr, asked about them; I will return to them later.

On trade in services, the Government welcome the report’s recognition of the unprecedented and highly liberalised provisions in the TCA for digital services and professional and business services, which will help to ensure that these important UK sectors continue to thrive. The Government also agree that UK businesses need our support to maximise the opportunities of our new relationship with the EU as they recover from the impacts of this pandemic. That is why we have provided extensive guidance for those exporting services to the EU and introduced the new Professional Qualifications Bill, which will provide certainty to business and help to maintain the incoming flow of professionals by giving more autonomy to UK regulators to tailor recognition according to the needs of their profession.

The noble and learned Lord, Lord Thomas of Cwmgiedd, made important points about the law. The Government recognise the importance of the legal services industry in the UK and the role that it plays in facilitating professional services generally. That is why we fought hard for this sector in last year’s negotiations to secure unprecedented provisions regarding the right of UK solicitors, barristers and advocates to practise in the EU using their UK title in both UK and international law. This will be key in ensuring that the UK remains an attractive and competitive trading partner in professional services with the EU, and that, as the noble and learned Lord hopes, UK law remains popular as the governing law of choice for commercial contracts worldwide.

The Government recognise the major contribution that the financial services sector makes to the UK economy. We took swift action to ensure a smooth end to the transition period and have since set out the forward path for the UK’s regulatory landscape in financial services. The UK remains committed to world-leading regulatory standards and has been clear that it stands ready to work with the EU to promote important emerging sectors such as green finance and fintech.

I turn to the report on institutional frameworks. As it helpfully sets out, there is a wide range of supporting governance that underpins the agreement. The breadth of this institutional structure and the mechanisms that it contains are designed to reflect the significant breadth of the agreement, the wide range of areas of co-operation that it covers and the unique nature of the agreement itself. This is only right. As I set out a few moments ago, the UK and the EU are now using these channels to implement the agreement and improve the trade between us. I assure noble Lords that the reports being debated today have contributed significantly to the helpful discussions being had in these fora.

The noble Baroness, Lady Armstrong of Hill Top, made an interesting and penetrating speech about UK-EU trade in goods. She referred to a number of factors, most notably Covid lockdowns across Europe and businesses adjusting to our new trading relationship, which made it inevitable that exports to the EU would be lower at the start of this year than they were at the start of last year. Indeed, the Office for National Statistics cautions that it is difficult to disaggregate the various factors and identify the underlying causes at this point, so we cannot yet draw any clear conclusions. Despite this, overall freight volumes between the UK and the EU were back to their normal levels by February 2021, and we are seeing food and drink exports grow. Exports increased in seven out of 10 of the UK’s leading export markets during the first half of 2021.

As I said, the deal maintains zero tariffs and zero quotas on trade in goods between the UK and the EU. This is the first time that the EU has ever agreed to complete tariff-free, quota-free access in an FTA. It provides for streamlined customs arrangements, including recognising our respective trusted trader schemes, to support the smooth flow of goods at the border and reduce administrative costs for traders. I agree with the noble Baroness on the need to improve, for example, conditions for road hauliers.

The noble Lord, Lord Hannay, and others said that sanitary and phytosanitary checks were creating difficulties for some sectors exporting to the EU. We proposed equivalence commitments in line with the WTO SPS agreement and the EU’s past FTA practice during the TCA negotiations. Given this, the EU’s refusal to include equivalence mechanisms was, to us, surprising. Nevertheless, the TCA contains provisions to co-operate with each other to review our respective SPS measures to avoid unnecessary barriers to trade.

The EU is applying a number of trade restrictions on UK exports. Some of these are due to blanket bans in EU legislation, such as the prohibition on the import of live bivalve molluscs from class B waters from third countries. Others are due to the EU not granting the UK full listed status, such as the ban on the import of seed potatoes and the granting of Part 2 rather than Part 1 listing for the movement of pets. I put in a plea for Dilyn the dog.

We remain unconvinced of the risk basis for these restrictions given our high biosecurity standards, and have consistently raised these trade barriers with the European Commission, including through the specialised committees. Any solution will need to safeguard UK sovereignty and autonomy and cannot involve aligning with EU law. However, I assure noble Lords that we stand ready to discuss such an equivalence-based agreement with the EU, and have raised it through the partnership council and the specialised committees that noble Lords referred to. In general terms, EU member states can, and do, attend specialised committees.

The noble Baroness, Lady Donaghy, the noble Earl and others raised financial services. In his Mansion House speech in July, the Chancellor set out the Government’s vision for an open, green and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens across the United Kingdom.

The UK and the EU’s financial markets are closely linked, and the EU remains a key international partner for us. We hope that the EU will continue to be a champion for international trade and openness. I disagree with the noble Baroness, Lady Bennett of Manor Castle: international free trade has been one of the greatest boons to poor people and raising people out of poverty across the world in the history of mankind. We look forward to collaborating with the EU on a range of issues, such as green finance, in the next year.

The Chancellor was clear in his Mansion House speech that the EU will never have cause to deny the UK access because of poor regulatory standards. We welcome the European Commission’s recent announcement regarding the extension of an equivalence decision for the UK’s central counterparty clearing houses. The Government have made sure that the EU has all the information it requires to make a positive decision for the UK for all equivalence regimes, and we remain open to answering any further questions that the Commission may have. On the MoU, raised by the noble Earl in his opening speech, technical discussions have been concluded; the MoU can be signed once the EU has completed its formal processes that are required under its rules.

Many noble Lords referred to the UK’s participation in Union programmes. The Government are committed to the UK being a science and research superpower, and we value the strong collaborative partnerships that we have globally in the areas of science, research and innovation. Through the TCA, the EU and the UK agreed terms for participation in Horizon Europe, Copernicus and Euratom research and training. As the underpinning EU regulations were in draft at the time, a joint declaration was agreed, setting out the parties’ intentions to formalise the UK’s participation at the earliest opportunity and with the view that the UK would participate from the beginning of the programmes.

Although the UK stands ready to uphold the agreement reached last year, we continue to see delays from the EU in formalising UK participation. That is disappointing. The EU is obligated to finalise our participation under the TCA; it would in fact be a breach of the treaty if this were not delivered in a timely manner. Our priority is supporting the UK’s scientists and researchers. That is why the Government announced on 29 November a financial safety net, in the form of guaranteed funding for the first wave of eligible and successful applicants to Horizon Europe who have been unable to sign grant agreements with the EU as a result of these delays. We will support our science and research community, no matter the scenario. We had a set of alternative plans developed in 2020 and are revisiting these. We will certainly keep the House informed.

As to Erasmus, I know that is a matter of regret to some noble Lords. We considered carefully which programmes were in our interests to join. The UK would have made a large net contribution to the Erasmus+ programme. We have chosen instead to pursue a global exchange programme under the new Turing Scheme, providing opportunities in Europe as well as around the world for young people to experience international education.

The noble Baroness, Lady Donaghy, raised the important question of touring musicians. She was echoed by a number of noble Lords in their rightful concern about creative industries. The UK has a creative heritage of which we are rightly proud. It was perhaps inevitable that, following the UK’s departure from the EU, there would be changes in how creative professionals toured. I know that this, exacerbated by the pandemic, has led to uncertainty in the sector, since working and touring in Europe is such an important part of their professional lives. In the negotiations for the TCA, we sought to ensure that touring artists and their support staff would not need work permits to perform in the EU. Our proposals were rejected by the EU, although we have been able to agree similar measures with other like-minded partners, for example Norway and Iceland.

I am aware that there have been calls for the Government to negotiate a visa waiver. It is not government policy to seek such agreements and neither did the EU propose a visa waiver for paid activities during the TCA negotiations. What was proposed by the EU was a reciprocal visa waiver for short stays, for example as a tourist. However, nothing in this proposal would have compelled member states to change their visa regimes for paid engagements such as performing at a concert.

Our focus now is on working directly with member states, which are principally responsible for deciding the rules governing what work UK visitors can undertake. Having engaged with EU member states, we have established that UK musicians and performers do not need visas or work permits for some short-term tours in at least 21 EU countries. This includes Spain, a key touring market for the UK, which changed its rules on visas last month. This change is testament to the efforts of the sector as well as the Government.

I was asked about the governance framework. The first partnership council meeting took place on 9 June 2021. The meeting marked an important milestone in the relationship between the UK and the EU as friendly trading partners and sovereign equals.

[Lord Hannay of Chiswick (CB)]

The Minister unfortunately did exactly as I predicted, which is to describe in great detail why nothing was done for the performing artists in the negotiations pre Brexit. He explained carefully why our proposal was rejected by the EU and its was rejected by us, but he has not said anything about what we propose to do to remedy the damage being done, other than to refer to the bilateral contacts that we have had with member states. I am sure that the Minister knows perfectly well that many aspects in that sector cannot be dealt with successfully bilaterally. There is a need for both bilateral and collective discussion as things such as cabotage, carnets and so on cannot be dealt with bilaterally. Can the Minister not simply say that the Government will pursue, bilaterally and through the TCA, all avenues possible to get a better deal than we have at the moment, and not go back to Tweedledee and Tweedledum saying, “They said this and you said that in the negotiations”, but to see whether we cannot move forward on this bilaterally and collectively?

[Lord True (Con)]

My Lords, the noble Lord repeats the points that he made earlier. I have repeated and set on record the efforts made by the United Kingdom Government on behalf of these important industries and drawn your Lordships’ attention to progress that has been made. Without going over this ground again, I reassert the Government’s concern for the well-being of these industries. It is time to move on. I have already pursued, without an intervention, a good deal of time.

I was asked about the number of meetings of the specialised committees that have taken place. I say to the noble Baroness, Lady Chapman, that the Government take these seriously. As of Monday 6 December, almost all the TCA specialised committees have met. Nine of the 10 trade specialised committees have met. The SC on VAT is due to meet on 15 December. The delay is due to internal EU processes to prepare for decisions to be taken jointly by the UK and EU at the initial meeting. The Specialised Committee on Participation in Union Programmes is the only outstanding SC yet to convene. I understand that it will convene later this month. If I am incorrect, I will come back to noble Lords.

On the civil society forum, about which the noble Lord, Lord Kerr of Kinlochard, asked, the Government sought public views on how to engage with business and civil society groups on TCA implementation. We published the official response on 19 October. An expression of interest campaign was launched to determine membership. We received 83 expressions of interest. Individual businesses are not included in the scope of the domestic advisory group and the civil society forum, but they can engage departments through existing channels outside these fora. After careful consideration of possible dates, the first meeting of the domestic advisory group is planned for early 2022. The Government are in discussions with the European Commission to finalise the exact date for the first civil society forum, which is also planned for early 2022.

As for the parliamentary partnership assembly, noble Lords will be aware—I know I invite another intervention, but it is the reality—that this is a matter for Parliament rather than the Government. I pay tribute to the noble Earl, Lord Kinnoull, and to the Member of Parliament for North East Hertfordshire in the other place for their continued work on this important matter. The noble Lord, Lord Kerr, asked whether my noble friend Lord Frost was responsible for relations with individual member states. That is true, but he works hand in glove with the Foreign Office, with the active involvement of the Foreign Secretary and the Prime Minister.

I was asked about parliamentary scrutiny of the TCA. My noble friend Lord Frost of Allenton has been discussing these matters with the chairs of committees tasked with scrutinising the Government. These discussions are approaching their final phase and will, I trust, be agreed shortly. While I listened carefully to the noble Earl’s requests and will pass them on, I do not wish to cut across these discussions. The scrutiny of individual departments on matters relating to their individual policy remits, through EU committees and the normal committee processes, is included. In the interim, the Government are working diligently to ensure that committees can properly scrutinise government policy.

In answer to the point made by the noble Lord, Lord Jay of Ewelme, my noble friend Lord Frost has reminded colleagues of the importance of scrutiny and of Explanatory Memoranda being timely and of the highest quality. It is an important point, and I assure him that it has been taken on board.

The noble Lord also asked about the Northern Ireland protocol. In referring to this, I apologise—I know that he would wish me to do so—that my noble friend Lord Frost is unable to be here. Noble Lords will understand the current activity on this front. The Government are in intensive discussions with the EU with the aim of delivering significant changes to the Northern Ireland protocol. Most recently, my noble friend Lord Frost spoke with the European Commission vice-president, Maroš Šefčovič, last Friday via a videoconference. They covered the full range of outstanding issues; my noble friend welcomed the Commission’s professed readiness to make progress on them. The UK Government still want to find a negotiated solution if possible; we are ready to keep working constructively and intensively to that end. I must tell noble Lords that the gap between our positions is still significant, and progress on many issues has been limited. The UK Government’s position remains as before: the threshold has been met to use the Article 16 safeguards to protect the Belfast/Good Friday agreement if solutions cannot be found. However, my noble friend Lord Frost will speak to Vice-President Šefčovič again this week, and the UK and EU teams will have intensified talks in the coming days.

There has been some potential convergence on the medicines issue, which the noble Lord, Lord Jay, asked me about, but agreement has not yet been reached. So far, we have been unable to consider all the details of the EU’s proposals in the way we need to in this sensitive, critical and highly technical area, where solutions must work in practice and genuinely solve the problems. We continue to believe that more progress is needed on customs and SPS arrangements if we are to deal with the fundamental issue of improving the flow of goods between Great Britain and Northern Ireland. There have been some constructive talks on subsidy control, but the issue remains unresolved, as does the wider issue of governance.

I have a detailed response on Gibraltar that I should give to the noble Baroness, but I am looking at the clock. I can give it to your Lordships now; perhaps I should. In 2020, the EU insisted on a two-phase process for negotiations which required a separate UK-Spain agreement—the framework—prior to formal UK-EU negotiations on a legally binding treaty. On 31 December 2020, the UK Government, the Government of Gibraltar and the Spanish Government reached agreement on a political framework to form the basis of a separate treaty between the UK and the EU regarding Gibraltar. The negotiations between the UK and the EU on that treaty began in October, and three rounds have taken place so far; the FCDO is leading on these negotiations. In the discussions to date, the UK has made clear the need for an agreement that reflects the delicate balance in the political framework and Gibraltar’s unique circumstances and is proportionate to Gibraltar’s size and the small volume of trade at stake. The UK remains steadfast in its support for Gibraltar, its people and its economy in any scenario and will not compromise UK sovereignty.

I have spoken at great length—I apologise to your Lordships for that—but the reports were of fundamental interest and importance. I have sought to answer many of the questions asked in the debate, though perhaps not to everyone’s satisfaction. I conclude by thanking noble Lords not only for their valuable contributions this evening but for their extraordinary hard work, intelligence and thought that have gone into producing these reports. I have no doubt that they will help us going forward as we seek to cement our new relationship with the EU alongside other international partners. That is our wish, and I hope it is a wish that all of us, whatever our past feuds and differences, now share.

Protocol on Ireland/Northern Ireland: Effect of Renegotiation on Other Trade Negotiations

Lord Hannay of Chiswick Excerpts

Thursday 21st October 2021 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, will the Minister tell us what the case is for the UK being the only country in the world which has two separate Ministers and two separate departments, each dealing with roughly one-half of our overseas trade? What are the consequences for our handling of negotiations? What analysis has he received from the embassy in Washington on the realism of expecting decisive progress on a US-UK trade agreement under the Biden Administration?

[Lord Frost (Con)]

My Lords, the decision taken, which I think is a good one, is that the UK-EU TCA is so sui generis—in fact, it goes much beyond trade into many wider areas such as law enforcement, road transport and so on—that it is best to handle it in a sui generis way. I do not know whether that decision is for ever, but it is the one that has been taken at the moment. We are ready to talk to the US about an FTA when it is ready. The US is conducting a review of its external trade policy at the moment. Some negotiating rounds have already taken place, but we stand ready to talk when both sides are ready.

Protocol on Ireland/Northern Ireland (EUC Report)

Lord Hannay of Chiswick Excerpts

Monday 13th September 2021 Grand Committee

[Lord Hannay of Chiswick (CB)]

My Lords, the report from your Lordships’ European Affairs Committee and its Northern Ireland sub-committee and the introduction to both by our two chairs do not stand alone. They need to be considered alongside the Government’s July White Paper on the same subject. Indeed, the fact that the Government chose to table their proposals for modifying the Northern Ireland protocol just 24 hours ahead of the committee’s report without waiting to consider its views or, indeed, without taking the opportunity to provide in evidence, which the noble Lord gave to the committee not long before, their own thinking was, I fear, a singular and lamentable act of disrespect to Parliament.

Although a member of the European Affairs Committee, I can without immodesty say that the report is a balanced, unvarnished account of the difficulties that have arisen over implementing the protocol, since we did not modify or criticise any of the sub-committee’s findings. I wish I could say the same of the White Paper, but it is an altogether more partisan document, designed as much to dismantle and renegotiate as to implement what was agreed so recently between the UK and the EU.

The hard fact is that the protocol was agreed by the two parties to it and was then endorsed and ratified by the two parliamentary institutions on both sides, thus becoming binding international law. It must seem odd to some looking at this that its principal negotiators on our side, the Prime Minister and the noble Lord, Lord Frost, now find so much in it to challenge despite probably having more experience of the way the EU operates than any of their predecessors in these jobs. Did they really not understand what it meant, or did they understand and conclude the agreement without any intention of implementing it? I shall be interested to hear which of those two the noble Lord, Lord Frost, opts for.

No one disputes that implementation raises a number of sensitive and complex problems which need solutions. They are reviewed in detail in the committee’s report. They cannot and must not be ignored. No one disputes either that solutions need to be found in a spirit of pragmatism and flexibility, but pragmatism and flexibility are two-way streets; they are not something you can ask just one side to show. You have to be prepared to show it yourself as well. I am afraid that pragmatism and flexibility are not encouraged by modifying deadlines and the protocol unilaterally, as the Government did earlier in the year, nor by threatening to invoke the main safeguard clause if we do not get our way, nor by seeking pretty fundamental changes in the governance procedures laid down in the protocol, nor by dismissing out of hand the idea of negotiating sanitary and phytosanitary conditions on a temporary basis, which would remove many implementation problems. Better surely to practise the qualities we are calling for, pragmatism and flexibility, and to eschew megaphone diplomacy.

A clear example of megaphone diplomacy was last week’s speech by the relatively new leader of the Democratic Unionist Party, Sir Jeffrey Donaldson. That sort of bluster and blackmail will serve no useful purpose, provoking, as it has already done, a reiteration of the EU’s refusal to renegotiate the Northern Ireland protocol, so recently concluded. It reflects too a refusal by the DUP to recognise the validity of a protocol which was agreed by the UK Parliament despite the DUP’s objections. That is the very conjunction which resulted in Britain’s exit from the EU despite the majority of Northern Ireland voters having voted to remain. Surely what is sauce for the goose should be sauce for the gander.

There are obviously major issues at stake here, including the overall health of the UK-EU relationship, which can hardly be said to be flourishing. We should not forget that triggering the Article 16 safeguard clause would open up the possibility for the EU to retaliate. Do we seriously accept the assertion that it is the protocol which endangers the Belfast agreement rather than a breakdown over implementing it being the immediate cause, with the main cause, of course, being Brexit? I know that that last statement will be considered a bit provocative, but how else is one to interpret a reversion to pre-Belfast agreement rhetoric by the leader of the DUP, which we heard last week?

Then, what price the prospects for a UK/US trade deal in circumstances where the protocol fails to be implemented or is set aside? The Government quite rightly take the view, and have often said so from the Dispatch Box, that Britain’s interests are best served by upholding the rules-based international order, but this protocol is part of that order. A post-Brexit Britain whose word is no longer its deed will pay a heavy and unnecessary price. It is surely preferable to negotiate calmly and purposefully to implement the protocol that we put our name to. I hope that the noble Lord, Lord Frost, when he replies to this debate, will confirm explicitly that that is the objective that the Government are pursuing.

--- Later in debate ---

[Lord Frost (Con)]

I thank the noble Lord for his intervention. The point that he mentions in paragraph 71, the issue of engagement of the Northern Ireland institutions in this process, is one of the most sensitive of all and I do not think it would have been right for us to set out a specific way forward in the Command Paper.

The difficulty we have is the lack of democratic consent for specific measures as they come through from the EU’s law-making process. At the moment those are imposed without consent. We are proposing a reordering of the governance arrangements of the protocol so that the consent, if it exists in Northern Ireland for such measures, can be more real, meaningful and based on genuine debate. There are a number of ways of achieving that if the EU wants to go down that road and that is a pre-eminently political question for people in Northern Ireland, as well as one for the UK Government. That is why we have set out the issue without proposing a specific way forward, but it is very much an issue for discussion.

We want to proceed by negotiation and that is part of it. I want to be clear about what is possible for us in doing so. First, the Command Paper sets out how the tests for Article 16 are, in our view, met. I urge the European Union to take that judgment seriously. It would be making a significant mistake if it thought we were not ready to use Article 16 safeguards if that were the only apparent way forward to deal with the situation in front of us. As my noble friend Lord Hannan commented, there is ample justification for doing so.

Secondly, if we are to avoid this situation there needs to be real negotiation between us and the European Union. The noble Earl, Lord Kinnoull, correctly referred to the need for an atmosphere of co-operation and trust. Others, such as the noble Baronesses, Lady Suttie and Lady Chapman, and the noble Lord, Lord Empey, echoed that. The question of trust has come up a lot in these discussions. The noble Lord, Lord Jay, asked for assurances that the time we have before us would be used constructively and the noble Baroness, Lady Ritchie, asked for an assessment of progress on that negotiation. We have had several technical discussions. I will give the floor to the noble Lord, Lord Hannay.

[Lord Hannay of Chiswick (CB)]

The noble Lord mentioned Article 16. Can he answer two questions? First, does he agree with the view expressed in the debate—which I do not agree with—that the European Union triggered Article 16 in January? My understanding is that the Commission sought the powers to trigger but never triggered. The more important question is: have the Government done any analysis at all of the sort of compensatory measures the European Union would likely take if we triggered Article 16 in circumstances it considered unjustified?

[Lord Frost (Con)]

I thank the noble Lord for his intervention. The issue of what the European Union did or did not do at the end of January deserves a bit of comment. There are two aspects to this. The first is the question of Article 16: was it triggered or not? In a way, obviously, the intention is as important as the fact. It is our view that it was triggered, however briefly. It was certainly the intention to do so. The second aspect of what the EU did in January—the reason why Article 16 was used—sometimes gets less comment. It intended to use it to put in place a process across the land border on the island of Ireland, something that for the previous five years we had been told was impossible, undesirable and disastrous. That is as much why this struck and changed the debate so much as the very fact of Article 16.

On the second point, if we were to use Article 16, it would obviously be open to the EU to consider countermeasures if it wished. I do not want to get too far down the hypothetical road, but it is obviously a possibility. Of course, there has been a good deal of analysis of that. We would have to see what the situation was in those circumstances, but everyone has an interest in avoiding needless deterioration of trade and needless further economic difficulties for either side, at a time when supply chain and trade costs are so significantly raised already. That will obviously be a matter for the European Union, and we have to take it as such.

To return to my flow, regarding where we are in talks at the moment, we have had a series of technical discussions with the EU and continue to do so. These have been quite helpful, but they are nevertheless talks about talks; they are not yet a process that gets to the fundamentals, and we need to get into that. We must get into something more substantive as a matter of urgency.

A real negotiation does not mean the EU coming up with its own plans for solutions within the framework of the existing protocol and presenting them to us, take it or leave it. To be honest, I have been a bit concerned by a couple of the comments I have heard from Commission representatives in recent days, which seem to suggest they might be considering that way forward. The noble Lord, Lord Kerr, picked up the comment by Maroš Šefčovič the other day, when he said:

“A renegotiation of the protocol … would mean instability, uncertainty and unpredictability in Northern Ireland.”


Unfortunately, we already have all those things in Northern Ireland. The question is: how do we move on from them? I do not take Commissioner Šefčovič’s words as a dismissal of our position. I take them as acknowledgement of it, but also as a fairly clear indication that there is more to be done. I urge the EU to think again on that point and consider working to reach genuine agreement with us so that we can put in place something that will last.

I am conscious of time and will wind up quickly. The negotiations need to begin soon. I will not put a timescale on that, but it needs to be urgent as the situation is urgent.

Finally, I would urge the Commission to be sensitive to the situation in Northern Ireland in its actions. The EU has a treaty with us, and as my noble friend Lord Moylan made very clear, that does not make it a part of the Government of Northern Ireland. We are very happy to receive representatives of the Commission in Northern Ireland at any point, so that they understand the situation there, but I gently suggest that they should be cautious in coming to public judgments about the situation, or suggesting it is for the EU itself to decide how to resolve it. I do not think that will make the situation calmer; it will make it more difficult.

The situation we face is complex and challenging, self-evidently, but there is still a real opportunity for us both to find durable arrangements. That is our intention and our wish, and that is where we will be putting all of our effort in the next few weeks—in arrangements that can win the confidence of communities in Northern Ireland. We are ready to seize this opportunity and we urge, as strongly as we can, the EU to do the same. Bold action is needed to build a new, sustainable consensus. Once again, I thank all noble Lords for their contributions to the debate, and I look forward to continuing it, as I am sure we will, in many different fora in the future.