EU: Trade in Goods (European Affairs Committee Report)

Debate between Lord Lamont of Lerwick and Lord Purvis of Tweed

Thursday 2nd February 2023 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, as one of the flurry of former members of the committee who has contributed to this debate today, I also add my thanks and appreciation to the clerking staff and for the policy support that the committee has received. I also commend the canny diplomacy—as I think the noble Lord, Lord Lamont, put it—of our chair, the noble Earl, Lord Kinnoull: it is quite a task to bring across unanimity on issues such as trade and Brexit. I also commend him for the parent committee on the Northern Ireland protocol and unanimous reports on that. So I think that I might take him with me on my next visit to the Middle East—and leave the noble Lord, Lord Foulkes, at home, if that is all right.

The debate ended with three contributions showing the human element to this. I am not foreign to using statistics—in fact, I will be relaying some later on in my contribution—but reminding us of the human impact within goods and on non-financial services is very important. The debate also had a very human element at the start with the valedictory speech of the noble Baroness, Lady Chalker. One of the signs, I think, of good politicians that I have admired is that people who they do not recall having met have a very fond opinion of them. When I was David Steel’s bag carrier when he was an MP and a shadow of the former Minister, she was always very pleasant to me, a humble researcher. Then when I worked briefly in this place as a member of staff for my then noble friend Lord Steel of Aikwood, she was also very generous and kind towards me. I hope she forgives me for saying so, but she was elected a month after I was born—so I cannot compete with those who met her earlier on in her career.

I took the opportunity, having noticed, as others had, that she was going to be making her valedictory contribution today, of reading her maiden speech in the House of Commons on 15 March 1974. She was highly regarded and very well noted for development, with, as the noble Lord, Lord Foulkes, indicated, nearly nine years in that post, whereas her successors as Ministers for Africa have lasted an average of nine months. That shows the contribution that she made. I will never forget the emotional plea that she made in 2015 on the 0.7% Bill, when she appealed to her successors as Ministers to have predictability in overseas development assistance. Alas, her successors have not heeded that, at the cost to the poorest in the world and our standing in the world.

In her maiden speech, she called for something which so many of us now take for granted—I look at my noble friend Lady Brinton, who perhaps still has to struggle on this issue. But I will quote just one line from what she said in her maiden speech, if the House will forgive me. She said:

“I suggest that the Secretary of State for Industry should instruct his planners and those carrying out the work to ensure that, when they dig up roads, kerbstones and cornerstones, they replace them with sloping stones to enable wheelchairs and, indeed, mothers with prams, to get along more easily. Far too often we go back to doing the old thing the old way, because we have not thought about it anew. If the right hon. Gentleman could plan in that way, it would be better than creating a castle in the sky in the shape of a national enterprise board.”—[Official Report, Commons, 15/3/1974; cols. 571-72.]


Well, the contributions that she has made and what she called for then, which we take for granted now, have made a real difference to people’s lives, and that is also a testimony to her career.

Now to castles in the sky—except that this one has Brexit-shaped ramparts. I admire the defence of the lone noble Lord, Lord Lamont, on those ramparts in this debate, but nevertheless we are one year on, as the committee said. We are one year on from the committee report, and three from Brexit. The Financial Times editorial board yesterday put it like this:

“In the 1970s, the UK was known as the ‘sick man of Europe’. Today it seems to be the sick man of the developed world.”


Citing the forecast by the IMF, which has been raised in this debate, but also the actual ONS outturn data on GDP, we have heard that, uniquely among developed economies, we have not regained pre-pandemic GDP levels.

Our businesses are suffering the whiplash of three Conservative Prime Ministers since the 2019 election, each saying they are a new Government, each condemning the economic policies of their predecessors, while all the time keeping new burdens and barriers on business, leading to, as the FT put it,

“incoherence in economic policy and exacerbated business reluctance to invest.”

That is not just within pure trading barriers, as we have heard so well in this debate.

I respectfully disagree with the noble Lord, Lord Lamont. We did not just analyse the teething problems of Brexit; as we have heard, many of these issues that we thought were teething are now permanent, and they are hardwired into the relationship we now have, whether it is SPS or cabotage, to name just two of many. These barriers to trading have a cost, and the cost is enormous.

This is not often debated, but the Government have a current framework called the business impact target. That is the target for the economic impact of their regulatory activity on business. It is called the BIT. The Regulatory Policy Committee, independent but nevertheless official, is the independent verification body. In its report, it said:

“For the 2017-2019 Parliament, the relevant government set a BIT target of a £9 billion reduction in direct costs over the length of the Parliament, however the final position was an increase in costs of £7.8 billion. Similarly, the government has set a holding target of £0 for the current Parliament”—


that is the one we are in—

“but in the first year of the Parliament, there was an increase of £5.7 billion (excluding the very significant impacts of temporary COVID-related measures).”

So, I want to ask the Minister what the current position is. What is the Government’s own current estimate of the actual cost on business of the additional burdens they have put in place? The numbers on the side of the Brexit bus need to be updated, of course, because, while the savings were always fanciful—I think many of us knew that—the costs are already outweighing them multifold, and the barriers erected by this Government on trading with our biggest market are a weight on our many SMEs and exporters.

Of course, as the noble Baroness, Lady Wheatcroft, indicated, with the REUL Bill we will be debating, there is going to be uncertainty added on to these costs. But all of us know that uncertainty becomes costs, and that is going to be an added burden. It is well worth noting that the same Regulatory Policy Committee for the impact assessment of that Bill has rated it “red”—not fit for purpose. The Government simply are not learning lessons. No Government in the history of this nation—only perhaps the Conservative-led National Government who introduced protective tariffs, which led to the Liberals leaving—have set on businesses a heavier weight of bureaucracy and burden. It simply must be reduced or removed.

The Government think that giving preferential market access to modest trading friends on the other side of the world without anything in return will offset the massive barriers they are putting up on trading with the huge market on the other side of the channel. Trade agreements seemingly negotiated by Prince Potemkin are not offering the growth to fill this void. The trade in the Far East or Asia that, it was argued, would offset this is simply not coming to pass. We know we have already missed the manifesto target for 80% of all our trade through FTAs by 2022, so I want to ask the Minister: will we be meeting it in this Parliament? I do not see a trajectory that suggests that that is going to be the case. Now that we are seeing trade barriers erected with our biggest market, we have seen decline.

I was very struck by the point the noble Lord, Lord Lamont, raised with regards to comparing GDP growth with Germany over the last couple of years. Before the debate, I wanted to make sure I was very accurate with the OECD data—not forecast data but real data on what has happened. The noble Lord was right about the last couple of years.

[Lord Lamont of Lerwick (Con)]

My figures were from 2016.

[Lord Purvis of Tweed (LD)]

I will retract what I was going to say. The noble Lord is wrong about 2016, but he would be right if he was talking about the last couple of years. He did not highlight the most relevant factor, which I found when I accessed the OECD database this morning and looked at 2016 to the current position: in 2020, the UK’s economy collapsed far deeper than that of any other OECD country. Regaining average levels over the period since Covid has not offset the massive fall that happened in 2020.

Taking the average over 2016 to 2022, we are behind Germany. In quarter 2 of 2020, UK GDP fell 22.6% and Germany’s fell 10%. The following quarter, we fell 10.3% and Germany fell 2.5%. In the quarter after that, we fell 9.2% and Germany fell 2.1%. The 2020 collapse of the British economy because of Covid was far deeper, so any regrowth is coming from a deeper hole, and therefore the average over this period shows that we are considerably behind Germany. I do not think that simply stating that we show comparable growth figures over the last couple of years tells that full story.

We are also not going to have a level playing field, which was one of the highlighted freedoms of having the ability to innovate. The power to innovate is all very well if we assume that no one else is innovating—but of course they are. We may have said, “Stop the EU, we want to get off”, but the EU did not stop moving, and therefore we have to look at this on a comparable basis. That is why I will close by looking at the really important border issues.

The Government have stated that, in just over 18 months’ time, in 2025, we will have the best border in the world—that is the target. However, as the noble Earl, Lord Kinnoull, indicated, we are still operating on temporary measures; we still do not have the facilities in place. The National Audit Office stated that the border operating model uses “temporary” or interim measures,

“delaying the introduction of full import controls.”

That is simply not sustainable. It is compounded by the recent decision to pull money away from the levelling-up fund to give £45 million to Dover to fix problems created by this Government. They are even taking money away from the very communities that were promised benefits from Brexit.

We have a Potemkin trade policy, and, like many charades, it gradually wears thin, the paint flakes and we all see it for what it really is. The FT editorial yesterday finished with an appeal to the Chancellor for his March Budget. It said:

“If he cannot go beyond mere buzzwords, the latest bout of ‘British disease’ will become ever more chronic.”


We want to see practical policies from this Government that will realistically help our trade and economy.

International Development (Official Development Assistance Target) Bill

Debate between Lord Lamont of Lerwick and Lord Purvis of Tweed

Friday 27th February 2015 Lords Chamber

[Lord Purvis of Tweed]

I am grateful and I have been listening very carefully to my noble friend. Perhaps he could clarify to the House what he means by “over the period” of five years. Is it that we would meet it once in every five years? Is it an average over five years? Is it rolling over five years or is it in each year of those five years? Will he clarify his understanding?

[Lord Lamont of Lerwick]

It is not intended to be each year of the five years but an average of or a rolling over the five years. That is what I suggest. Of course, we would be open to amending the amendment if my noble friend chooses to give us his support. The confusion which can be caused by the different outcomes of GNI is also recognised under Clause 2(2)(a), where,

“under section 1(4) of the 2006 Act”,

it is possible for the Secretary of State in a subsequent year—this could be years later if it proves that, because of revisions of GDP, the target it was thought had been met had not in fact been met—to make a subsequent statement, which would not refer to the current year but to years gone past. Of course, one might have a whole series of statements where one year it was thought that the target had been met and then the next year it was thought that the target in the previous year had not after all been met. You could go on contradicting yourself year after year because these statistics bob around on a very thin margin which could easily affect the 0.7% one way or another. That is why I say to the noble Lord, Lord McConnell, and others that the idea that the 0.7% gives certainty is somewhat fallacious and not very profound. Those are the external factors.

More importantly in terms of policy and what we are trying to achieve in debates around this issue, there may be factors other than external factors which affect whether the target was not met. These could be that projects were not ready or that there was not enough time to get them ready, However, if we want to place a premium on management, rather than just meeting the target on outcomes rather than input, again I suggest that that would be greater if we looked at this target not in one year but over several years. If we looked at it over several years, it would remove the incentive which came to light in Committee to hand over cash to multilateral institutions simply in order to meet the target. Although, as we learnt in Committee, it would take on average two years before the money handed over to a multilateral institution is spent, for the purpose of meeting the target it counts as though it was spent. Therefore, in any year, if you are not getting near to the 0.7%, there would be a tremendous incentive just to hand the money to a multilateral institution in order to say that the target has been met.

It also seems to me that the way in which the 0.7% works is that there will be a great incentive to spend money rather than to economise or to manage it efficiently. There is no way to claw back money in years in which there is an overspend. If the target is exceeded—if it is 0.8% of GDP—there is no way in which that money can be recouped. Therefore, the fear of the department will never be of overspending, it will always be the risk of underspending and, therefore, it will tend to overspend. For all those reasons, the amendment put forward by the noble Lord, Lord Lipsey, would be conducive to good management of the budget and thoroughly consistent with the aims of the Bill as put forward by its promoters.

--- Later in debate ---

[Lord Purvis of Tweed]

My Lords, Amendment 22 is in similar terms to an amendment tabled in Committee, and Amendments 24 and 27 are new. Noble Lords will recall that in Committee we debated an amendment—at that point Amendment 25, tabled by the noble Lords, Lord MacGregor of Pulham Market, Lord Hollick, Lord Lawson of Blaby and Lord Lamont of Lerwick—which called for an independent inquiry into the independence, efficiency and effectiveness of the Independent Commission for Aid Impact. We then debated their concerns about the operation, and we now return to their call for that to be the statutory body. I do not believe that they have made a strong case to reconcile the two aspects of it today, either.

Let me address the contribution of the noble Lord, Lord Hollick, because I actually agreed with a large amount of what he said about the need for proper scrutiny. The Minister responded to all those points. The purpose of the Bill, however, is to create a requirement not only that there is independent evaluation—it is important for that to be in the Bill anyway—but that it is the duty of the Secretary of State to report how that independent evaluation is being carried out. These are two very significant powers that the legislation will be providing. They strengthen the existing process for the 2006 Act, which is now on the statute book. We have seen a number of the annual reports presented under the basis of that Act; they will be even stronger.

As the Minister indicated, the mechanism that we wish to assume would be in place is ICAI. The question is whether ICAI can carry out its functions as an advisory NDPB, answerable to this specific sub-committee of the Commons International Development Committee, or whether it is required to be on a statutory footing for the exclusive purpose of this evaluation. From my own position, I believe that it is not flexibility but good governance which allows the structure in place to be taken forward—with of course the view, as the noble Lord, Lord Collins of Highbury, indicated, that there is sufficient scope in future to improve that process even more. That will of course have to take place anyway in May 2015 because the memorandum of understanding between the Department for International Development and the Independent Commission for Aid Impact is due to be renewed, as is the framework agreement under which it operates and is accountable to Parliament.

I think that I should highlight this, because it may address some of the points which I think have been erroneously cited about whether DfID is effectively being judge and jury when it comes to evaluating this. The memorandum of understanding states very clearly that under its principles, in paragraph 2.1, ICAI should:

“Ensure independence of staff, decision-making and the process of undertaking evaluations, reviews and investigations”.

Further, in paragraph 2.5, the memorandum says that DfID should:

“Respect the independence of ICAI staff, decision-making and reports”.

Any change to that would have to be brought to Parliament—to the Commons IDC—which I have no doubt would be scrutinising it, in addition to the very fact that the renewal of this memorandum and the framework will be brought to Parliament anyway.

[Lord Lamont of Lerwick]

We are listening to the noble Lord with great attention and he has made powerful points about ICAI. But is it not fundamentally very strange and unsatisfactory that the Bill should reach this stage with the status and role that ICAI is to play not being crystal clear and with the Minister simply saying that it is “highly likely” that it will perform this function? That assurance is in complete contradiction with her other remark that we do not want one agency to do it. Surely this ought to be clear.

[Lord Purvis of Tweed]

I understand the point that my noble friend makes but the purpose of the Bill, as I indicated to the noble Lord, Lord Hollick, is to require the duty for independent evaluation to be carried out and then for the Government to state how that is carried out. It is the role of the Government then to provide that—