National Security and Investment Bill

Lord McNicol of West Kilbride Excerpts

Committee stage
Tuesday 16th March 2021 Lords Chamber

I hope that noble Lords will see this clause as necessary and appropriate and have confidence that the Government and future Governments have limited but sufficient freedom to provide financial support under the regime as a result of it. I ask my noble friend to withdraw his amendment.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

I have received two requests so far to speak after the Minister—from the noble Lords, Lord Fox and Lord Clement-Jones.

[Lord Fox (LD)]

My Lords, I thank the Minister for his thorough answers. In his answer on Clause 30, the Minister referred to “affected parties” and did not rule out the aggressor, as well as the target, from potential compensation—or mitigation, as I think the Minister described it. Am I right in assuming that the aggressor might also feel that they are eligible for mitigation?

Secondly, the nature of that mitigation seems to rule out the Government taking a share in a potential company, rather than simply bailing it out. Given that this Government have already spent $500 million taking a 20% share in OneWeb, which was not even strategic, why would they not leave themselves open to taking a share in a company so important that they felt they needed to prop it up?

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[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord, Lord Clement-Jones, for his question, and I understand the concerns that he raised.

I will first deal with the £100 million figure. Of course, that is a lot of money for the Government to have to spend without having to report to Parliament. However, I assure noble Lords that, in order to offer this level of financial assistance, the situation would have to be truly extraordinary. The only circumstances I can envisage where the Secretary of State would need to use this power would be for some of the most significant nationally important firms. The significant nature of these firms means that they may be large, so the Government have put in this reasonable cap of £100 million. Personally, I would be very surprised if anything like that were spent. However, of course, any spending under this power will be subject to Treasury consent, as I have said—and the Treasury does not rush forward with money for departments in situations like this.

I have to say—and, in a sense, apologise—that the nature of national security makes it very hard to predict where some of these issues might arise. However, where they do and where national security is an issue, it is important that the power is there, provided that it is only ever used responsibly and respectively.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

As there are no further speakers, I call the noble Lord, Lord Hodgson of Astley Abbotts.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I thank all those who have spoken in the debate, as we struggle—that is the only word—to find the balance between national security and investor rights, and do so against a background of what is practical and realistic in the marketplace. I thank my noble friend the Minister for his extensive reply and tell him that I did not have a happy ending: we got taken over after four months, but never mind.

He has made a valiant effort. The noble Lord, Lord Clement-Jones, used the rugby match “stop the clock” analogy; I will use a cricketing analogy. I think the Minister’s officials have written him a speech that is a series of forward defensive prods, and it is rather like watching Geoffrey Boycott nought not out at lunch—but he has made a hugely valiant effort along the way.

On Amendment 48A, he says that we are completely aligned because the regulations provide for a streamlined procedure. Of course they do, but it will never happen because, unless something is written there, people will say, “Why go there, Minister? Why not just have the same old procedure we have always had?”

On Amendments 67B and 67C, I am not quite sure what appropriate incentives the Secretary of State had in mind to work the system appropriately. To be candid, it is unrealistic to say that judicial review is a possibility when you are working to the timetable these sorts of things will have to work to: it is not in touch with the reality of the marketplace.

On Clause 31, other noble Lords have made the relevant points. My noble friend the Minister made a determined effort to explain, but the loopholes and opportunities for difficulties with this are great. His example was that, if a firm’s takeover were to be blocked, help might have to be given until another buyer could be found. He knows better than any of us that, once a firm is known to be in trouble, any other offers will be very low indeed; the differential between someone selling on the uptick and when they know that the firm is a wounded bird will be very great indeed.

There is a big question to be answered about that, which he is much more familiar with than I am, of trying to meld together the realities of the marketplace with the needs of national security. We have not yet got the balance right. We have been advised by a number of leading law firms, and a number of Members of the Committee have practical experience. I cannot believe that we are wrong in everything that we are saying and that all the law firms are wrong. I cannot believe that some of the things that have been put forward are not worthy of much closer and further assessment. We are now in the territory of, “Are they fit for purpose?” “Oh yes, they are”, “Oh no they’re not”. I want the opportunity to go away, talk to the people who advised us, see what the Minister and his officials say, and then decide whether we should come back to these and other amendments at the next stage of the Bill.

In the meantime, I thank the Minister for the long speech that he made, and all other noble Lords who have spoken, and I beg leave to withdraw the amendment.

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[Lord Callanan (Con)]

I thank all noble Lords who have taken part in this brief debate, particularly my noble friends Lady Noakes and Lord Lansley for their contributions. I will start with Amendments 49, 62 and 64, which for the convenience of the Committee I will take together.

As drafted, the Bill provides that the Secretary of State must decide whether to reject or accept a mandatory or voluntary notice

“as soon as reasonably practicable”

after receiving it. He must then inform relevant parties of his decision as soon as is practicable. Amendment 49 would require the Secretary of State to decide whether to accept or reject a mandatory notice within five working days, as opposed to the current drafting. Amendment 62 would have the same effect, but for voluntary notices. Amendment 64 would require the Secretary of State to notify each relevant person whether a voluntary notice has been accepted within five working days of it being accepted, as opposed to the current drafting of doing so as soon as practicable.

As I am sure noble Lords would agree, mandatory and voluntary notifications should include the necessary information to enable the Secretary of State to determine whether to call in an acquisition for further scrutiny. Once a notification is accepted, the Secretary of State will be required to issue any call-in notice within 30 working days or else clear the acquisition to proceed. It is therefore important that the Secretary of State is able to reject a notification if it does not meet the requirements specified in the legislation. Of course, it is important that all decisions made under this regime by the Secretary of State are made promptly.

I therefore assure the Committee that the Secretary of State will make great efforts to ensure that decisions to accept or reject notifications are made quickly and that parties are notified in a timely way. In fact, one of my officials was keen to point out that the record so far for responding to informal guidance is 19 minutes. Civil servants will of course have different ways of going about it and will pursue different speedy methods, so I am sure that will not always be the case. Nevertheless, we will endeavour to reach these decisions to provide help and guidance to businesses and companies as speedily as possible.

As noble Lords will be aware, the Government intend to lay regulations setting out the form and content of the types of notification soon after Royal Assent. The draft notification form was published alongside the introduction of the Bill to help interested parties understand what information is likely to be required. Parties will therefore have clarity, and certainty about the information that they should provide when notifying the Secretary of State. We therefore expect notifications to be generally of high quality and, where this is the case, the Secretary of State expects to be able to decide quickly and then inform parties of decisions to accept their notices, in many cases, clearly, more quickly than the five working-day limit proposed.

However, it is important that there is scope for flexibility in the relatively rare circumstances where more time may be needed. For example, a hostile actor could intentionally provide very large amounts of unnecessary information that would take many days to read through to establish that important information was missing or incorrect. Or there might be multiple parties involved in a particularly complex acquisition that had all submitted notifications. In the event that the notifications do not match up, more detailed verification may be needed. I would argue that it is better for the Secretary of State to take the time to ensure that he has the information that he needs at the start of the process rather than risk finding gaps in information later on.

I turn to Amendments 51, 54 and 66. I know that my noble friend Lord Lansley did not speak to Amendment 51, but it is in this grouping, so, if he will forgive me, I will address the issue at this point. Clause 14 provides for the mandatory notification procedure, including subsection (6), which sets out the grounds on which the Secretary of State may reject a mandatory notice, and subsection (9), which explains when the 30-working day “clock” for reviewing a mandatory notice begins. These amendments go to the heart of both matters, so let me address each of them briefly.

Amendment 51, to which my noble friend referred although he did not speak to it, would remove the third ground for the Secretary of State to reject a mandatory notice, which is where

“it does not contain sufficient information to allow the Secretary of State to decide whether to give a call-in notice in relation to the proposed notifiable acquisition”.

I imagine that noble Lords may well consider that the first two grounds—which enable the Secretary of State to reject a mandatory notice where it does not meet the requirements of this clause or as prescribed in regulations—will cover most bases. However, we must also ensure that an acquirer cannot meet the technical requirements of providing a notice by doing so in a limited way or with incomplete information. Noble Lords will appreciate that if, for instance—in a purely hypothetical example, I was required to fill in the name of my chief executive on a mandatory notice, the ISU would have a pretty good chance of working out who “Boris” was, but in the case of the chief executive of a small start-up company that might have been operating for only a few months, a mandatory notice that had the same information would provide little to go on. I understand that it is an outlandish example, but it illustrates why we must not prevent the Secretary of State rejecting notices from those who plainly look to game the system.

Amendment 54 would adjust the timing for the beginning of the 30-working day review period from, as now, the date on which the Secretary of State confirms acceptance of a mandatory notice to the date on which he received the notice. Amendment 66 would make the equivalent changes in respect of voluntary notices. I can assure my noble friend Lord Lansley and other noble Lords that in the vast majority of circumstances we expect to confirm acceptance quickly and to begin the clock on the review period. However, the process of initially determining whether a valid and complete notice has been submitted is separate from fuller screening of the acquisition itself. Some acquisitions are likely to be complicated and a significant amount of information may be provided as part of the mandatory notice. In these instances, it is conceivable that the investment security unit may need a short time to ascertain that the relevant information has been provided. None the less, the screening will not yet have begun and, accordingly, it is right that the clock does not do so either.

Amendments 53 and 65 would reduce the time available to the Secretary of State to screen mandatory and voluntary notifications from a maximum of 30 working days to 20. I mention “maximum” again because that is exactly what these deadlines represent. In many cases, we expect the Secretary of State to be able to review and clear notifications much more quickly. The question, therefore, is what is appropriate in more complex cases and whether the ISU may need to gather input and expertise from across Whitehall on those acquisitions. The total figure of 30 working days is not arbitrarily chosen by the Government. I apologise to my noble friend Lady Noakes for saying yet again that it reflects detailed work undertaken across Whitehall to test past cases and mock scenarios against the new regime—I repeat that because it is our position. Some acquisitions may involve complicated ownership structures; the technology and activities of the target entity may not be immediately clear, and the format of the acquisition itself may be unconventional. It is vital the Secretary of State has the necessary time to examine an acquisition and to make an informed decision.

I again commend my noble friend’s efforts to make the new regime even more nimble and fleet of foot, but I hope she will understand—even if she does not agree with me—why I am unable to accept these and other amendments that I have addressed in this group. Therefore, I hope that both my noble friends will choose not to press their amendments.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, I have received no request to speak after the Minister, so I call the noble Baroness, Lady Noakes.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have spoken in this debate. Important issues have been raised. I particularly like the idea behind my noble friend Lord Lansley’s Amendments 54 and 66, which would create one period in the initial phase rather than two or more. Taken overall, the various time periods throughout the Bill, including “as soon as reasonably practicable”, “30 working days”, an additional “45 working days” as well as the ability to stop the clock here and there, represent an extraordinary period of uncertainty to which a business transaction could be exposed. At the end of the day, the transaction might not even raise what are adjudged to be national security issues and many of those who go through the process are likely to end up being cleared. I liked the analogy drawn by the noble Baroness, Lady Bowles of Berkhamsted, with China, and this seeming a bit like “when the Party decides”: it is when BEIS decides that a transaction can be dealt with and cleared.

Thirty working days is a long period of time. We talked about it as six weeks. Six weeks is actually 42 working days. If you are in the private sector and doing an acquisition, your processes do not respect weekends. You would expect to be working right the way through, and I am not sure that we should expect any less from those in the Civil Service handling the processes. The new unit being set up may need to be completely re-engineered from the normal Civil Service way of doing things, which is clearly driving the assessment of the time limits involved. My noble friend the Minister again gave me the mock scenarios and detailed analysis by civil servants of the time they would like to take handling these things, but he did not answer my specific question as to whether that had been independently challenged, potentially by using red teaming, and whether the processes had been rethought from the perspective of how we give certainty to the business community, which needs to progress investment decisions.

My noble friend the Minister gave us the example of 19 minutes for informal guidance. That is a complete red herring, because it is informal guidance and not a decision made under any of the provisions of the Bill. Nobody will expect 19 minutes to be the answer for any of the mandatory procedures or voluntary notification procedures taken under this Bill.

I said that my amendments were probing, and I do not intend to take them forward today, but we need to step back and reflect on the cumulative impact of the time periods set out in the Bill on the way in which the UK is perceived as a good place to do business and to invest. If we lose that, we will lose the potential for continuing economic growth. Our economic growth has been boosted considerably by the inward investment that we have been able to attract. If we become a bad place to do business, this country will be hurt in many ways that are worse than might be feared in respect of national security implications. We will need to return to this in one way or another on Report, but, for now, I beg leave to withdraw the amendment.

Trade Bill

Lord McNicol of West Kilbride Excerpts

Consideration of Commons amendments
Tuesday 23rd February 2021 Lords Chamber

What is going on, as we speak, in Xinjiang and in Hong Kong, to which we have a continuing and recognised moral responsibility, disgraces a great nation—one built on a great civilisation. It is appalling that the CCP—the Chinese Communist Party—should extinguish in the most brutal fashion the human and constitutional rights of every free-born man and woman. I beg noble Lords to support this amendment and to send an emphatic message to the other place, and I beg our friends and colleagues in the other place to vote with courage, integrity and determination when this amendment comes before them.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, the following Members in the Chamber have indicated that they wish to speak and I will call them in this order: the noble Lords, Lord Blencathra, Lord Polak and Lord Shinkwin, the noble Baroness, Lady Kennedy of The Shaws, the noble Lord, Lord Adonis, and the noble Baronesses, Lady Jones of Moulsecoomb and Lady Falkner of Margravine. After the final speaker, I will open it up to anyone in the Chamber to speak.

[Lord Blencathra (Con)]

My Lords, I rise for yet another time to support my noble friend’s amendment on genocide.

As Peers, we know our place, and this noble House asks only that the other place think again about the amendment put forward by the noble Lord, Lord Alton. Last time, the other place did not get a chance to think again because, in a brilliant and fiendishly clever move, our amendment was not considered. I pay tribute to the Government. It is the sort of clever, dirty, underhanded trick that I would love to have played if only I had thought of it when I was Chief Whip.

I will not spend time on the merits of the amendment and why it is necessary. The case has once again been put with frightening authority by the noble Lord, Lord Alton, and my noble friend Lord Cormack. The justification for it is overwhelming and in direct contrast to the increasingly desperate government excuses not to accept it, all of which have been discredited.

The Government say that only a court can decide, so they do not want a committee of former Supreme Court or High Court judges; nor will they tolerate the High Court—the second-highest court in the land—although they say that a court has to decide. They Government want only the International Criminal Court to adjudicate but they know full well that that is a sham. No case of state genocide will get before the International Criminal Court in a million years because it will be blocked by one or more players in the Security Council. No Minister, in either this House or the other place, can stand before a Dispatch Box and say hand on heart that he or she honestly expects a case ever to get before the ICC, so I am afraid that the Government’s case is a sham. I do not blame my noble friend the Minister, who is thoroughly decent and very able, as he has been handed a poisoned chalice. But, while he has been forced to drink from it, the rest of us have not.

Initially, I simply could not understand why the Government, whom I support, are so terrified of passing this amendment—a Government who have had the courage to leave the EU and stand up to its bullying, have threatened to break international law with regard to the Northern Ireland protocol and have had the courage to throw out some of Putin’s spies but are terrified to make one gesture in case they offend the Chinese regime. But I think I can throw some light on the Government’s inexplicable position on this matter, and it is our dear friends in the Foreign, Commonwealth and Development Office, who are never short of a tyrant or two whom they can appease. A few weeks ago, I asked the FCDO about our relationship with China and, in a Written Answer last week, they called China an “important strategic partner”. That can be found in the Written Answers produced by Hansard.

Can your Lordships believe that? The UK Government consider China to be a strategic partner. Now, if they had said that China was a very important trading entity and we had to be careful in how we negotiated with it, I could accept that, but “strategic partner”? Surely that is the terminology we use to describe one of our NATO allies, not the despotic regime run by the Chinese Communist Party. But that perhaps explains why we do nothing about China and say nothing—in case we cause offence to our valued, so-called “strategic partner.” So, the Foreign Office calls a country which imposes dictatorship on Hong Kong, threatens Taiwan, and steals islands in the South China Sea to turn them into military bases, a strategic partner.

China caused the Wuhan virus, covered it up and lies about it every day, and economically attacked Australia when it called for a genuine independent inquiry into the virus. It steals every bit of technology it can, has cyberattacked all our vital industries, infiltrated our universities and schools, and the new head of MI5 says that it is a threat to our western way of life and democracy, yet the FCDO calls it a “strategic partner”. Typical FCDO: sue for peace before anyone declares war.

We can do nothing about these things in this Bill, but the western world has to get off its knees and start to stand up to China before it is too late. The genocide of the Uighurs, of which there is now overwhelming evidence, is a sample of how the Chinese communist regime will treat every race and people it subjugates.

In this Bill we can make a small start by tackling the issue of trading with a country which commits genocide. I thought that the amendment in the name of the noble Lord, Lord Alton, that we sent to the Commons last time was superior to this one. I am certain that it would have passed if Members of the other place had not been robbed of a chance to vote on it.

Last week the Canadian Parliament voted to describe the treatment of the Uighurs as genocide. If our Canadian colleagues can make such a judgment, surely the great Parliament of this House and the other place is able to do likewise. This amendment is not going nearly that far, but it wants to start a process of thorough investigation which could eventually determine genocide. It is then left to the UK Government to have a completely free hand to decide what to do about it.

We cannot tackle all the iniquities of the Chinese regime, but this amendment is a start. It will show that the UK Parliament, with our new independence, cares not only about trade and prosperity but about moral issues, human lives and people in a faraway country of whom we know nothing, to paraphrase Chamberlain.

I say to the Government that this will not go away. This House will come back to the issue of genocide time and again in every other Bill where there is the slightest chance of pushing an amendment like this. The Government will face this issue again and again until we get off our knees and stand up to China on genocide. I urge all noble Lords to support the amendment in the name of the noble Lord, Lord Alton.

National Security and Investment Bill

Lord McNicol of West Kilbride Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 4th February 2021 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

It gives me great pleasure to follow my noble friend Lord Woodley’s maiden speech and welcome him. While growing up, I am sure very few, if any, of our friends would have ever believed that we would end up here in your Lordships’ House. I have known Tony for many years, through my time at the GMB and his at the Transport and General Workers’ Union. We all know, and we have heard, how proud Tony is of his time as a shop steward, a union officer and general secretary of TGWU, and now Unite.

However, there are a couple of interesting, even surprising, activities that he does not often shout about. He is rightly very proud of his role at Vauxhall Motors Football Club where, as chairman, he has led a committed team in developing the facilities. The club has a new all-weather pitch—a number of pitches—and a new club house. Thousands of children and young people have got involved and played on those football pitches at Ellesmere Port. Forty-seven teams compete in the league from the age of five upwards—it is a real community.

Tony has been involved in the Cuban Five or Miami Five campaign for many years. Not many of us can say that we have been involved in a prisoner swap, never mind one that involved the Pope, our Prime Minister and the US President. In late 2014, the prisoners’ release and exchanges, including Jewish American prisoner Alan Gross, were all secured during the end of a 16-year campaign, and we saw for a short time a step change in the Cuban-US relationships. Tony, welcome to the House.

Turning to today’s debate, I would like to focus on two issues: first, the importance of clarifying national security and, secondly, accountability and oversight. Before I do, allow me to make a few introductory remarks. Safeguarding our national security has always been critical to our nation’s future, but never more so than now. I support the Bill, which strengthens the powers of the Government to intervene when corporate transactions threaten national security. However, I believe that the Bill would be strengthened by a number of amendments, which I am sure will be forthcoming from all sides of the House as it passes through. The scale and sophistication of national security threats have materially increased since the current limited screening regime was introduced by the Enterprise Act back in 2002. Importantly, the Bill follows—if not offers a little UK catch-up—similar moves by many other countries, as outlined by the Minister in his introduction.

Turning to how the Bill should clarify national security, it gives sweeping powers to the Secretary of State but does not give any statutory guidance on the meaning of national security. Surely it would be sensible to include guidance on factors that would be captured by national security, outlining references to critical national infrastructure and economic security specifically. Such guidance would also provide much needed clarity for business.

Although the Bill is aimed at all investments—not just foreign investments—foreign companies, sovereign wealth funds and other international finance vehicles seeking to invest in companies and projects could pose a particular threat, whether that is relevant to critical infrastructure, personal data or cutting-edge technologies. The decline in democratically accountable Governments is highlighted by the Democracy Index, which recently stated:

“The global score of 5.44 out of ten is the lowest recorded since the index began in 2006.”


This is a real cause for concern. Any investment, not just critical national infrastructure, should automatically raise a red flag.

As we heard earlier, Part 3 of the Bill gives the Secretary of State quasi-judicial powers by allowing them to act as the key decision-maker for all decisions under the new regime. As we have heard, BEIS has previously been a cheerleader for Huawei and others, overly open to investment and pro-market to an extent that requires meaningful checks and balances. I do not believe that the Bill as drafted offers these. One option would be for a cross-departmental body to oversee the call-in powers. I listened to the Minister talk about the investment security unit in his introduction but I am not sure that that was clear, as my noble friend Lady Hayter outlined in her introductory remarks. Some further clarity on that would be much appreciated.

Finally, I worry that the Bill does not go far enough on takeovers, mergers and acquisitions outwith the realm of national security. For years the Government have refused to do more to protect growing UK companies so that they are less likely to be taken over, asset stripped or gutted by overseas businesses—which are often anti-trade union. Developing a robust takeover regime is essential if we want firms in our key sectors to grow and provide good jobs here in the UK. It is notable that we are coming into line with other countries on national security but not on takeovers; given the economic impact of coronavirus and potential corporate vulnerability, the case is now stronger, not weaker. The Bill is a missed opportunity to bring forward a comprehensive industrial strategy to help businesses to recover, grow and create jobs.

[The Deputy Speaker (Baroness Henig) (Lab)]

I now call the noble Lord, Lord McNally, again.

Trade Bill

Lord McNicol of West Kilbride Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Monday 7th December 2020 Lords Chamber

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

We now come to the group beginning with Amendment 7. I remind noble Lords that Members other than the mover and the Minister may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this or anything else in the group to a Division should make that clear in the debate.

Amendment 7

Moved by

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[Lord Blencathra (Con)]

My Lords, I rise to speak in support of Amendment 8 and my own Amendments 10 and 45—that is 10 and 45, not 11 and 45. I have been monitoring proceedings—watching them upstairs in my office—and I have popped down to the Chamber for this debate. I shall attempt to be brief because much has been said, in such wonderful ways and in such a powerful speech by the noble Lord, Lord Alton, whom I regard as my noble friend, and by the noble Lord, Lord Collins of Highbury—I think it is the first speech I have ever agreed with him on, although he may not find that helpful.

My Amendment 10 is designed to emulate the excellent Amendment 9 of the noble Lord, Lord Alton, because I seem to recall that, when he moved his amendments in Committee, the noble and learned Lord, Lord Hope of Craighead, commended the approach of involving the courts, and I thought, “That amendment has got some traction”. As such, my amendment on human rights—not genocide—follows the structure of the amendment of the noble Lord, Lord Alton. For the human right abuses, I have selected, in the main, the principal ones from the European Convention on Human Rights. I do not intend to push my amendments to a vote because I hope Amendment 8 will succeed, and I will vote for it.

The only little quibble I have with Amendment 8 concerns subsection (5)(d) of the proposed new clause. Subsection (5) talks about “serious violations” and lists “genocide”, “torture”, “inhuman or degrading treatment”, “slavery” and so on—but paragraph (d) then talks about

“other major violations of human rights”

and lists:

“the Universal Declaration on Human Rights and the International Covenant on Civil and Political Rights.”

My worry here is that one is getting down to less important human rights, some of which I regard almost as motherhood and apple pie. My concern is: would the Government use this as an excuse not to go down this route?

Yes, of course, they might accept genocide, slavery and torture, but I question reporting to Parliament every time that one of the more minor human rights is contravened. We may consider this terribly important in our western liberal democracy, but I suspect that, if you look at the huge range of UN human rights, the protocols and the additions to them, almost every single country in the world could be accused of breaching one of them. That is my concern, and it is why, in my Amendment 45, to which Amendment 10 refers, I listed the main ones from the European Convention on Human Rights:

“The right to life


Freedom from torture


Freedom from slavery


The right to liberty


The right to a fair trial …


Freedom of expression


Freedom of assembly


The right to marry and start a family”


and so on—because it is important to concentrate on the main ones.

The noble Lord, Lord Alton, has set out in detail the incredible abuses of the Uighur people in China. I put it this way: would we dream of doing a trade deal with the regime in Burma, considering what it has done? Would we do a trade deal with the late and highly unlamented Mugabe of Zimbabwe, after his extermination of 20,000 of the Matabele people? No—of course not. Yet in China—again, I distinguish between the people of China and the communist regime—the regime is equally as bad as Burma or Mugabe, and, as the noble Lord described, it is doing genocide in slow motion, whereas Mugabe exterminated 20,000 Matabele in a few months.

Of course we would not do a trade deal with those countries or other regimes, but we are trading with China because it has got a grip on us: we are overreliant on trade with it and overdependent on it. This is not the time to get into and debate this with my noble friend the Minister, but I wish all success with Project Defend, which is aimed at trying to make sure that we reshore some of the things that we are dependent on China for or that we source them from other countries. Even something as bog-standard as paracetamol, which costs about a penny a tablet, should not be 99% sourced from chemicals in China and then produced in India; we must source more of these vital products and services from other countries. That is why I support Amendment 8.

To save time, because we are running rather late tonight, I intend to withdraw from speaking on Amendment 9, but I completely support it. I will vote for it, and I hope it passes because it is probably the most important amendment we have dealt with today or tomorrow—or whenever we will address this Bill again; it is the most important amendment, and I think the Government can easily, and should, accept it. If the wording is slightly wrong, they have time to clean it up in the other place for us to get it back here during ping-pong. With those remarks, I will conclude and let others speak.

I would be grateful if the noble and learned Lord, Lord Hope of Craighead, would make a comment, if he can bear it, on my point about some of the more trivial human rights abuses in case that weakens the argument. I may be totally wrong, but if he has a chance to comment on it, I would greatly welcome that.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

I call the next speaker, the noble Baroness, Lady Northover, who will be followed by the noble Lord, Lord Curry.

United Kingdom Internal Market Bill

Lord McNicol of West Kilbride Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

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

My Lords, I must say that any computer that tries to silence my noble and learned friend Lord Mackay of Clashfern should be carried to the top of the Old Man of Hoy and dropped from a very great height, hopefully with destructive power—unless any environmentalist thinks that that is a serious suggestion; it is a figure of speech. Those who are not familiar with the Old Man of Hoy should understand that it is an extremely high stack in a very beautiful part of the country. It is very hard to climb, too; I have never attempted it—you only have to look at me to see that.

These amendments have difficulties because they would all introduce, in our judgment, a serious risk of the internal market system not being in place at the end of the transition period. That is a serious consideration in our contention. I agree with my noble friend Lord Trenchard, with his great experience of business—indeed, of business with Japan—that a secure, stable and functioning market is part of the bedrock of our union. It is a unionist principle that we should have a common functioning market; I think that that is assented to by almost all of those who have spoken in our debates. Of course, I repeat my personal commitment and this Government’s commitment to the union. My party has always been a unionist party, and we remain as such.

Coming back to the amendments, in our judgment, a considerable delay would undermine business certainty and consumer confidence at a time when it is vital that the economy is able to bounce back in the Covid recovery phrase, about which my right honourable friend the Chancellor spoke so eloquently earlier today.

Amendment 73, as others have said, absolutely underscores the honourable intent of the noble and learned Lord, Lord Mackay of Clashfern. We have had a meeting of minds on that. I am grateful for his kind words; I can certainly assure him that he has been a great influence in securing constructive change, as have other noble Lords in the course of these debates. I can affirm that the union will remain at the heart of the Government’s objectives. I am grateful for his withdrawing the amendment with the comments and, indeed, warnings that he set around that withdrawal because of the clear limitations—I will come on to these—of linking any proposal to the Joint Ministerial Committee.

For that reason, I will move on to Amendment 75, which specifies a process of debate and consent that must be achieved with the devolved Administrations through the joint ministerial council before the market access principles can take effect. This process would add an unacceptable delay to the implementation of the market access principles when the very reason for the Bill that we are here to discuss is to provide certainty to businesses from 1 January 2021, when the European structure falls away. The objective to provide certainty as powers flow back from the European Union is not new or rushed; indeed, efforts have been made to discuss this over a lengthy period. I must remind your Lordships that, sadly, the Scottish Government walked away from the internal market project in spring 2019. However, there has been continuing, positive and helpful engagement at official, and indeed ministerial, level since then. I do not share the pessimism, suspicion or doubt of a number of your Lordships that our union cannot prosper with this internal market after January 2021.

There is a valid question on how governance and disputes relating to the internal market should be dealt with through intergovernmental machinery; my noble friend the Duke of Montrose alluded to our earlier discussions on this. As I updated your Lordships earlier in these discussions, the Government are looking with the devolved Administrations at reforms to the Joint Ministerial Committee structure. The intent is to move on through the joint intergovernmental relations review.

This review will deliver the overarching architecture to support the delivery of improved and effective engagement with the devolved Administrations at all levels of government—as my noble friend the Duke of Montrose alluded to—from officials upwards and, if necessary, the consideration of cross-cutting issues above departmental level. I repeat what I said earlier: this is not complete, but work is progressing positively in this respect. I think that all the various Administrations would accept that. We welcome further discussions with the DAs on finalising the format of these engagement structures, including to complement those relating to the internal market, and I look forward to reporting back to this House on our finalised governance structures when we have concluded the review, which, as I have said, we aim to do by the end of the year.

In addition, as set out in my letter to colleagues prior to Report, the Government propose that a meeting be held in the new year with devolved counterparts once the Bill becomes law to agree a programme of official and ministerial-level engagement on the—my brief says “operationalisation”; can you imagine such a thing?—implementation and operation of the Bill. This includes determining the practical arrangements to deliver our commitment to meet Ministers in the devolved Administrations annually, as undertaken on this Bill, to review the operation of the UK internal market as supported by Parts 1 to 4 of the Bill, including new developments that might require the use of such delegated powers. This annual meeting will be just one of the regular intergovernmental meetings between BEIS Ministers and officials on other portfolio matters, such as the Covid-19 response.

On Amendment 76, I do not mean to disparage the noble Lords, Lord Fox and Lord Purvis of Tweed; indeed, I thank them for their openness and engagement in the process so far. I was going on to thank the Labour Party for its engagement, and I never want to give unintended offence to anyone in your Lordships’ House.

I thank the noble Lord, Lord Stevenson, for what he said; I am grateful for the engagement and discussions that we have had on this and the common frameworks programme. His amendment seeks to create a link between the common frameworks programme and the market access principles. While it is true that the internal market provisions and common frameworks programme are complementary, as we have tried to persuade your Lordships—that is how the Government see it—it is not appropriate to create a link with the common frameworks programme in that specific way in this amendment. I will not go on at length because the noble Lord has said that he does not intend to press it, but I underline that I appreciate the strength of feeling in the House on common frameworks, which I and other Ministers continue to reflect on. In saying that, I will not undertake to come back to this House on Third Reading, so if any noble Lords wish to test the opinion of the House on this issue, it would have to be at this point.

I assure noble Lords that the Government remain committed to the common frameworks programme. The processes established in it will work with future intergovernmental relations machinery. As the noble Lord, Lord Stevenson of Balmacara, pointed out, with the inclusion of the amendment of the noble and learned Lord, Lord Hope—although the Government did not and do not accept it—your Lordships have ensured that common frameworks will be discussed in another place; no doubt we will have opportunities to consider it further. I think that was the spirit in which the noble Lord, Lord Stevenson, was withdrawing his amendment. I appreciate that and offer him those words of assurance.

The process proposed in his amendment and Amendment 75 undermines the purpose of the market access principles, which are designed to provide underpinning certainty that the UK internal market will continue to function in all circumstances. These amendments would create uncertainty about whether and when the market access principles would apply. Leaving businesses to manage this uncertainty and friction is not acceptable. Indeed, it undermines the core purpose of the Bill of providing businesses with certainty that they can continue to trade across the UK at the end of the transition period. For these reasons, the Government cannot support these amendments and I hope the noble and learned Lord will withdraw his amendment.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

I have received no requests to speak after the Minister. I now call the noble and learned Lord, Lord Mackay of Clashfern.

[Lord Mackay of Clashfern (Con) [V]]

My Lords, I am glad to be able to speak to noble Lords, although I cannot now see them. I appreciate what has been said. I do not think it necessarily involves uncertainty about the principles, as my noble friend Lord True suggested. I think it could be quite clear that the principles apply, except so far as they are modified by the common frameworks agreements. That does not in any way make them uncertain. If it were needed, some kind of notice that a common frameworks decision was to become part of the internal market rule would possibly deal with that if it had to be dealt with, but it is perfectly reasonable to think that the common frameworks could work as part of the arrangements in such a way that the results of agreements in the common frameworks are put into effect in the UK internal market rule.

I agree that the internal market is fundamental to the union of the United Kingdom. As has been said, it was the rule right from the first day of the union. I entreat the Government to think carefully about how to engage the common frameworks policy in the rule of the common market in a way that is acceptable and does no harm. I cannot see that it does any harm. It makes it all the more constructive. The internal market rule is a living instrument, which should accommodate degrees of innovation that might well bring forward the whole market in due course. I shall not press my amendment, as I indicated, because I think the Government have already done what I wanted in most of the situations where it would be suitable. I beg leave to withdraw the amendment.

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Amendment 77 agreed.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

That concludes the Bill. We will now go straight on to the next session, so I ask the Ministers to swap.

United Kingdom Internal Market Bill

Lord McNicol of West Kilbride Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Wednesday 18th November 2020 Lords Chamber

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, Amendment 8 has been pre-empted.

Amendment 8 not moved.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

We now come to the group beginning with Amendment 9. I remind noble Lords that Members other than the mover and the Minister may speak only once, and that short questions of elucidation are discouraged. Anyone wishing to press this or anything else in this group to a Division should make that clear in the debate.

Amendment 9

Moved by

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Amendment 9 withdrawn.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

I remind noble Lords that Members other than the mover and the Minister may speak only once and that short questions or elucidations are discouraged. Anyone wishing to press this or any other amendment in the group to a Division should make that clear in the debate.

Clause 8: The non-discrimination principle: indirect discrimination

Amendment 10

Moved by

Canada-UK Trade Deal

Lord McNicol of West Kilbride Excerpts

Tuesday 17th November 2020 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

The right reverend Prelate makes a good point. I assure him that these matters are at the front of our mind. Uncertainty is being progressively eliminated. I am looking forward to the time when there is no uncertainty whatever.

[Lord McNicol of West Kilbride (Lab)]

Following my noble friend Lord Stevenson’s question, why, if the Minister says we have no bandwidth issues, will all future continuity agreements fall outside the full, proper CRaG procedure and be dealt with through a partial cover? This will eliminate a lot of the parliamentary scrutiny we talked about in the Trade Bill.

[Lord Grimstone of Boscobel (Con)]

My Lords, I can confirm that every single agreement will go through the comprehensive CRaG procedure. There may be issues of timing because these negotiations often go to the wire. But I assure the House that, even if they need to be provisionally implemented, every single agreement will be subject to appropriate parliamentary scrutiny.

United Kingdom Internal Market Bill

Lord McNicol of West Kilbride Excerpts

Committee stage & Committee: 5th sitting (Hansard) & Committee: 5th sitting (Hansard): House of Lords
Monday 9th November 2020 Lords Chamber

[Lord Dubs (Lab) [V]]

My Lords, I am also a member of the Joint Committee on Human Rights and I support what my noble friend Lady Massey said in putting forward the committee’s views and concerns. The noble and learned Lord, Lord Judge, spoke for me—and for virtually the whole Committee—in his opening speech. I think I agree with every contribution made so far, so I shall be brief.

On the front of the Bill, under the heading “European Convention on Human Rights”, it says:

“Lord Callanan has made the following statement under section 19(1)(a) of the Human Rights Act 1998: In my view the provisions of the United Kingdom Internal Market Bill are compatible with the Convention rights.”


Every Minister has to certify a Bill’s compatibility with the human rights convention.

The courts cannot strike down primary legislation but can make only a declaration of incompatibility. However, secondary legislation is different; the courts can strike it down if it is incompatible with the rights guaranteed by the European Convention on Human Rights. Why is there a difference? I believe that it is because, while primary legislation can be and is fully debated and amendable by both Houses, in contrast secondary legislation inevitably has a less thorough process of parliamentary scrutiny. That is why these amendments are so crucial. Clause 47(3) would require the regulations under Clauses 44(1) and 45(1) to be treated as primary legislation under the Human Rights Act. That would, therefore, prevent the courts striking them down if they were found to be incompatible with human rights.

The Joint Committee on Human Rights concluded:

“The Committee does not consider that it is constitutionally acceptable for ordinary delegated legislation to be treated for the purposes of the Human Rights Act as if it were primary legislation passed by Parliament.”


The Constitution Committee of this House echoed that point. It was

“concerned that clause 47 seeks to alter the scheme provided in the HRA without wider consideration of its constitutional implications and compliance with the UK’s international obligations under the Convention.”

I know that the Government have occasionally said that they do not like the Human Rights Act, but we should not seek to undermine it by a back-door approach. We surely need a proper debate on the Act, not to have something slipped in in this way.

I shall certainly vote against the Government on all the amendments to Part 5, but I draw particular attention to this, in the hope that the Government will never again try to use such a tactic to undermine the Human Rights Act.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

The noble Lord, Lord Singh, has withdrawn. I call the noble Lord, Lord Dodds of Duncairn.

[Lord Dodds of Duncairn (DUP)]

My Lords, we are in the position of Part 5 having to be brought forward because of the contents of the Northern Ireland protocol. We find ourselves in a very unfortunate position. Unionists in Northern Ireland do not find much comfort in some of the clauses in Part 5, particularly the clauses about preventing reach back in relation to the application of state aid rules for Great Britain but nevertheless allowing Northern Ireland to be subject to EU state aid rules, which could cause considerable problems going forward for the competitive position of businesses in Northern Ireland with businesses in the rest of the United Kingdom.

The protocol is at the root of the problem. The noble Lord, Lord Empey, referred to this. The protocol was opposed by us on these Benches because it differentiated between Northern Ireland and the rest of the United Kingdom as we left the European Union and we were always promised that we would leave as one United Kingdom. I have to correct the noble Lord on one thing: he has today and on previous occasions sought to lay some responsibility for this sad situation at the feet of the DUP. Of course, he will know that on 2 October last year—it is worth correcting the record since the assertion has been made—when the Prime Minister sent his proposals to Jean-Claude Juncker, one of the five principles, the elements that the Prime Minister set out, was that any potential all-Ireland regulatory zone on the island of Ireland could happen only if the Northern Ireland Executive and Assembly had the opportunity to endorse those arrangements before they entered into force and every four years afterwards. If consent was not secured, the arrangements would lapse, and it was on that basis, with the security of a lock in the Northern Ireland Assembly, as was agreed in the joint report of the EU and the United Kingdom of December 2017, that we gave a cautious welcome. When the Prime Minister jettisoned that democratic consent principle—and the Government have indeed jettisoned the principle of giving the Northern Ireland Assembly and Executive the right to say that this should come into force in Northern Ireland—we made it clear that we would not support the Government in that. I think it is important to correct the record and lay the responsibility where it truly lies.

On Clauses 43 and 44, we have heard many eloquent speeches tonight, but I speak as one who represented the city of Belfast for more than 35 years. It is a very diverse constituency. Whether a business is owned or run by someone from a unionist family or a nationalist family or indeed of no particular political persuasion, they are all interested in trying to make their company work, be prosperous, employ people and contribute to the economy. They are all united on the fact that it would be disastrous to have checks between Northern Ireland and the rest of the United Kingdom to fetter trade unnecessarily as they would add to costs. More than £8 billion-worth of trade goes from Northern Ireland to Great Britain and from Great Britain to Northern Ireland every year. This is an immense amount of trade. Almost 60% of all trade in Northern Ireland is done with the rest of the United Kingdom.

We talk about grand philosophical and legal principles, and I understand all that, but this is not a unique situation for any country to find itself in. To hear some noble Lords, one would think that this is the only country that has ever decided to step away from an international obligation in the interests of its own sovereignty, its own interests and the interests of its citizens. That is not the case by far. None of that has been referenced, although to go to into all that is perhaps more appropriate for a Second Reading speech than the debate on these clauses. However, it is important to remember the reality of the economic position that many companies in Northern Ireland and the people who are employed by those companies will find themselves in if sensible arrangements are not made to recognise that Northern Ireland is a full member of the customs union of the United Kingdom.

We must remember that the Government and the EU made commitments in this regard. I referred earlier to the joint report agreed between the United Kingdom Government and the EU back in December 2017, which allowed the negotiations to move on to the next stage at that point. Paragraph 50, which the EU agreed to, states:

“In the absence of agreed solutions … the United Kingdom will ensure that no new regulatory barriers develop between Northern Ireland and the rest of the United Kingdom, unless”—


this is the point I made earlier—

“consistent with the 1998 Agreement”—

they would uphold the agreement, so let us listen carefully—

“the Northern Ireland Executive and Assembly agree that distinct arrangements are appropriate for Northern Ireland. In all circumstances”—

it is important for noble Lords to remember this—

“the United Kingdom will continue to ensure the same unfettered access for Northern Ireland’s businesses to the whole of the United Kingdom internal market.”

Trade Bill

Lord McNicol of West Kilbride Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Thursday 8th October 2020 Grand Committee

This has been a long and rigorous debate, and I hope it has been helpful in clarifying the Government’s position. As I said at the beginning, I believe that if one analyses the Government’s position there is less difference between the Government and Parliament than some noble Lords have said. I hope that I have sufficiently addressed your Lordships’ concerns and therefore urge the noble Lord, Lord Purvis, to withdraw his amendment.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, I have received three requests to speak after the Minister, from the noble Lord, Lord Lansley, the noble Baroness, Lady Finlay, and the noble Lord, Lord Grantchester. I will take them in order.

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[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

We now come to the group beginning with Amendment 39. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate.

Amendment 39

Moved by

--- Later in debate ---

We can already see some of the reductions, for example, in TradeMark East Africa, an organisation which facilitates higher standards and less bureaucracy, reducing border time processing and trade—all of the areas which the Minister is passionate about, seeing trade agreements as unable to deliver by themselves unless businesses and enterprises can take advantage of them. Our commitment to the least developed around the world should be a priority for our agreements, which is why the amendments in this group are important and I am grateful for the cross-party support for them. I hope the Minister will look on them favourably when he responds, and I beg to move.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

We are trying to contact the noble Lord, Lord McConnell, but we have not been able to reach him and are checking to see whether that is due to technical failure. I therefore call the noble Baroness, Lady Sheehan.

[Baroness Sheehan (LD) [V]]

My Lords, it is a pleasure to follow my noble friend Lord Purvis of Tweed, whose grasp of the particular issues that developing countries face is well grounded through his leading role in the All-Party Group on Trade Out of Poverty, which he mentioned at the start, and which complements his demonstrated knowledge of trade matters in general. I thought I would be following the noble Lord, Lord McConnell of Glenscorrodale, so I will leave out a bit of my speech.

Amendment 39, to which I have added my name, seeks to ensure that trade agreements take full heed of the UN SDGs, or sustainable development goals, which the UK in no small measure helped to craft, along with an impact assessment report back to Parliament on progress towards meeting those SDGs. Embedding the SDGs in our trading ethos, which Amendment 39 seeks to do, will go beyond mere words and take ownership of a much-lauded initiative that we were instrumental in delivering, defining our determination to establish Britain as a force for good in the world, which is after all the stated aim of Dominic Raab, the Secretary of State of the newly created FCDO. I am concerned to hear about the cutting of the ODA specifically to implement trade agreements with developing countries. That is very disappointing, and I look forward to hearing the Minister’s response on that.

If we were to embed the SDGs into the new trade agreements, we would be keeping in step with the WTO, which has embraced the ambition of the SDGs and recognises its own central role in delivering them. The WTO’s publication Mainstreaming Trade to Attain the Sustainable Development Goals shows its commitment to delivering and implementing pro-growth and pro-development trade reforms, and which are crucial to prosperity for us here in the UK as well as for the rest of the world. Without a fair trading scheme, we will not realise the ambitions to protect our planet as we make good social injustices, and that is the purpose behind Amendment 97 in the name of my noble friend Lord Purvis of Tweed, with the welcome support of the noble Baroness, Lady Bennett of Manor Castle.

Least developed countries and low and middle-income countries have a few privileges when it comes to trade with more developed countries without which they would never get off the starting block in the cut-throat world of international trade. I urge the Minister to do all he can to expedite the rollover agreements with developing countries we have through the EU which to date have not been the subject of continuity agreements. The sooner that happens, the better. I think my noble friend Lord Purvis pointed to the east African states and Kenya where that has yet to take place.

The existing concessions for market access for developing countries, such as Everything But Arms and preference schemes, must continue and they need to be guaranteed as we carve out new deals post Brexit. I say that advisedly. The Minister repeatedly insists that this Bill has a limited remit to apply only to continuity agreements, but that is not what is written in the Bill. The Long Title starts:

“A BILL TO Make provision about the implementation of international trade agreements”.


There is no mention of continuity agreements. It is therefore little wonder that so many amendments have been tabled to secure in the Bill safeguards for existing standards that our citizens hold dear in so many spheres of their lives. Britain’s reputation for thorough, open and regular scrutiny, something that the noble Baroness, Lady Fairhead, remarked upon repeatedly, is in no small measure the backbone of our good standing on the international stage and should not be given up.

Amendment 97 would impose a duty on the Government of the day to lay a report before Parliament on a regular basis assessing the economic and developmental impact of each free trade deal between Britain and least developed and lower middle income countries. This is a powerful requirement, the mere knowledge of which will act as a positive incentive to the Government of the day to keep in place existing measures to deliver the “gold standard”, as the Fairtrade Foundation puts it, in the trade for development policy. That is what we are looking for: a gold standard in trade for development policy. It will go a long way toward securing—I again quote the Fairtrade Foundation,

“an overarching trade strategy that works in support of the SDGs, business and human rights and climate change commitments.”

I shall end my contribution with a few words on fossil fuel subsidies and their abundant use in our trading relationships with developing countries. If you believe, as I do, that unless we stop climate change, we will destroy life as we know it on our plant, we must stop burning fossil fuels. It makes little sense to me that we, through UK Export Finance, continue to subsidise investment in new fossil fuel infrastructure in developing countries as if existing infrastructure will not take us over the two degrees of warming that spells disaster. The argument is often put forward that not to help former colonies to harness energy from oil or gas somehow harks back to colonial times when Britain dictated economics abroad. That is pure bunkum. It is far more reminiscent of the colonial era to lock former colonies into soon-to-be defunct stranded assets and pocket the profits at the same time as we in the west equip ourselves with modern, clean and cheaper energy infrastructure. My plea to the Government is that they stop subsiding fossil fuel infrastructure here and abroad and transfer those subsidies to clean renewables, such as solar, wind and hydro, which present plenty of opportunities to do business in developing countries.

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Motion agreed.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

That concludes the work of the Committee this afternoon. The Committee stands adjourned. I remind Members to sanitise their desks and chairs before leaving the Room.

Committee adjourned at 7.28 pm.

Trade Bill

Lord McNicol of West Kilbride Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Tuesday 6th October 2020 Grand Committee

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, good afternoon. The hybrid Grand Committee will now begin. Some Members are here in person, respecting social distancing, and others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.

A participants list for today’s proceedings has been published by the Government Whips’ Office, as have lists of Members who have put their names to amendments or expressed an interest in speaking on each group. I will call Members to speak in the order listed. Members are not permitted to intervene spontaneously; the Chair calls each speaker. Interventions during speeches or “before the noble Lord sits down” are not permitted.

During the debate on each group I will invite Members, including Members in the Grand Committee room, to email the Clerk if they wish to speak after the Minister, using the Grand Committee address. I will call Members to speak in order of request and will call the Minister to reply each time. The groupings are binding and it will not be possible to degroup any amendments for separate debate. A Member intending to move formally an amendment already debated should have given notice during the debate. Leave should be given to withdraw amendments.

When putting the Question, I will collect voices in the Grand Committee Room only. I remind Members that Divisions cannot take place in Grand Committee. It takes unanimity to amend the Bill, so if a single voice says “Not Content” an amendment is negatived, and if a single voice says “Content” a clause stands part. If a Member taking part remotely intends to oppose an amendment expected to be agreed to, they should make this clear when speaking on the group.

We will now begin. In Grand Committee in person you do not need to unmute the microphones: the microphones are working, so when I call you, just start to speak.

Clause 2: Implementation of international trade agreements

Debate on Amendment 17 resumed.

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[Lord Hendy (Lab)]

It is a pleasure to speak to Amendment 17 and open the batting on a group of amendments on dispute resolution. Put shortly: Amendment 17 opposes investor-state dispute settlement arrangements —ISDS; Amendments 43, 44 and 52 seek to constrain it; Amendment 91 deals with tax matters; and Amendment 94 deals with disputes between state parties.

Amendment 17 is intended to prevent regulations permitting ISDS in the agreements, envisaged by Clause 2, which the Government are negotiating to replace existing EU agreements. Existing EU agreements are listed in the Library briefing. Some of them include ISDS; others do not.

The new agreements will differ from the existing EU agreements, not least by making the UK a party. There will be other modifications too, as explained in paragraphs 37 and 38 of the Explanatory Notes. The Bill envisages modifications. It does not require replication of the content of EU agreements—contrary to the Minister’s comment last Tuesday. Amendment 17 seeks, in the new UK agreements, modification of the content of existing EU agreements by the exclusion of ISDS where those agreements provided for it and its non-inclusion where EU agreements did not.

ISDS is often found in international trade agreements. Where it exists, it is wholly objectionable. ISDS has the power to override the supremacy of Parliament, to defeat the rule of domestic law, and it discriminates on grounds of nationality. Far from taking back control, as the noble Baroness, Lady Bennett, pointed out in our last sitting, ISDS is the surrender of control.

The inclusion of ISDS in the then proposed EU-US trade deal, TTIP, was the principal reason for 3 million signatures—half a million of them in the UK—on the petition against it. The legitimacy of ISDS in EU agreements is now in doubt. The judgment of the Court of Justice of the EU in Slovak Republic v Achmea on the Netherlands/Slovakia trade agreement, held that ISDS has an adverse effect on the autonomy of EU law and is therefore incompatible with EU law. This is an EU judgment we should follow.

ISDS is a mechanism whereby a corporation of one state party to the FTA can bring a claim for compensation against the other state. That sounds fine, until one appreciates that such claims are not brought in the courts of either state, nor under the laws of either state. ISDS is a system of arbitration usually conducted in secret. The usual basis for claims is that the accused state has failed to ensure “fair and equitable treatment” or has expropriated some asset of the investing corporation. Such claims are not open to any but foreign corporations. The claim is not that the host state has breached the law of the land but usually the converse: that domestic law has caused the foreign corporation loss of hoped-for profits.

Take the Philip Morris case, referred to by the noble Earl, Lord Caithness—

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, we are having some technical difficulties online. A number of our colleagues who are participating remotely cannot hear you as well as we can in the Room. If we cannot resolve it in the next minute or two, I will adjourn the Grand Committee for five minutes, until 2.42 pm. I apologise to the noble Lord, Lord Hendy, but it is more important that people online hear his comments.

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[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, the Grand Committee is resumed. We now resume debate on Amendment 17. I apologise to the noble Lord, Lord Hendy, for having to call on him to start again from the beginning. We have now resolved the technical difficulties so, from the top, the noble Lord, Lord Hendy.

[Lord Hendy (Lab)]

No apologies are needed. It is a pleasure to speak to Amendment 17 and open the batting on a group of amendments on dispute resolution. Put shortly: Amendment 17 opposes investor-state dispute settlement arrangements—ISDS; Amendments 43, 44 and 52 seek to constrain them; Amendment 91 deals with tax matters; and Amendment 94 deals with disputes between state parties.

Amendment 17 is intended to prevent regulations permitting ISDS in the agreements, envisaged by Clause 2, which the Government are negotiating to replace existing EU agreements. Existing EU agreements are listed in the Library briefing. Some of them include ISDS; others do not. The new agreements will differ from the existing EU agreements, not least by making the UK a party. There will be other modifications too, as explained in paragraphs 37 and 38 of the Explanatory Notes.

The Bill envisages modifications. It does not require replication of the content of EU agreements—contrary to the Minister’s comment last Tuesday. Amendment 17 seeks, in the new UK agreements, modification of the content of existing EU agreements by the exclusion of ISDS where those agreements provided for it and its non-inclusion where EU agreements did not.

ISDS is often found in international trade agreements. Where it exists, it is wholly objectionable. ISDS has the power to override the supremacy of Parliament and to defeat the rule of domestic law, and it discriminates on grounds of nationality. Far from taking back control, as the noble Baroness, Lady Bennett, pointed out, ISDS is the surrender of control.

The inclusion of ISDS in the then-proposed EU-US trade deal, TTIP, was the principal reason for 3 million signatures—half a million of them in the UK—on the petition against it. The legitimacy of ISDS in EU agreements is now in doubt. The judgment of the Court of Justice of the European Union in Slovak Republic v Achmea on the Netherlands/Slovakia trade agreement held that ISDS has an adverse effect on the autonomy of EU law and is therefore incompatible with EU law. This is an EU judgment that we should follow.

ISDS is a mechanism whereby a corporation of one state party to the international trade agreement can bring a claim for compensation against the other state. That sounds fine until one appreciates that such claims are not brought in the courts of either state, nor under the laws of either state. ISDS is a system of arbitration usually conducted in secret. The usual basis for claims is that the accused state has failed to ensure “fair and equitable treatment” or has expropriated some asset of the investing corporation. Such claims are not open to any but foreign corporations. The claim is not that the host state has breached the law of the land but usually the converse: that domestic law has caused the foreign corporation loss of hoped-for profits.

Let us take the Philip Morris case, referred to by the noble Earl, Lord Caithness, and the noble Lord, Lord Lansley. The Australian Parliament passed legislation requiring plain-paper packaging for cigarettes. Philip Morris challenged the legislation on constitutional grounds. It failed at every level, including in the High Court of Australia. It then transferred ownership of its Australian companies to a subsidiary it had set up in Hong Kong so as to enable an ISDS claim under the Australia-Hong Kong trade agreement. The claim failed, but only because the transfer of ownership of the companies to Hong Kong post-dated the activity giving rise to the claim.

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If the Minister tells me that he is going to insist on moving towards a genuine multilateral tribunal or court system, I need to warn him that it will anger the United States, which at this moment is doing everything it can to scupper the WTO dispute resolution system by refusing to allow the appointment of new judges to the WTO’s appellate body. The WTO settlement system continues only because the EU, along with 16 other countries, has devised a workaround. That is not sustainable in the long term. We really need to hear from the Minister what position this Government are taking, because at present we have a wholly unsatisfactory state of affairs.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, I offer a gentle reminder that all mics in the Grand Committee are live at all times. If everyone’s mobile devices could be on silent and their notifications muted, it would be greatly appreciated.

[Baroness Chakrabarti (Lab) [V]]

My Lords, in the light of the way we have spent much of the past hour, I begin by recording my thanks to the members of your Lordships’ House’s staff who have been extraordinary in their patience and calm with the technical difficulties that we have all suffered. They have held everyone’s hand and been wonderful under fire.

It is my absolute privilege to follow the speeches we have just heard, particularly those of my noble friends Lord Hendy, Lord Hain and Lady Blower. I have lent my name to Amendment 17, drafted by my noble friend Lord Hendy. But before I speak to it, I will make a preliminary point of law that is relevant not just to Amendment 17 but to many of the amendments that your Lordships have discussed during these many hours of debate in Grand Committee, which I have had the delight of listening to very closely.

In the community and in the country at large, it is understood that it is dangerous to pontificate about the law and give legal advice without a certain level of qualification. That is so well understood that the profession is regulated and there are tight legal limits. That cannot be the case in the business of legislation, of course, because there is politics and policy on the one hand and the law on the other, with the journey—the process of legislation—in between. So, although I think that dinner-table lawyers are almost as dangerous as armchair medics or epidemiologists, I do understand that making claims about the law during legislative debates is sometimes an occupational hazard.

Your Lordships’ House is criticised in many quarters, but one thing that can often be said of it is that it contains a great many experts who contribute expertise from different areas of life and practice to the business of scrutinising legislation. My noble friend Lady Blower mentioned the noble Lord, Lord Patel. I do not think that she is alone in having benefited from his contributions, from a medical and public perspective, to your Lordships’ Grand Committee.

Of course, my noble friend Lord Hendy, who drafted Amendment 17, has been a practising barrister for 48 years—he will forgive me for pointing this out—working in particular as a labour lawyer but also on legislation and legal disputes, and he has spent 33 of those years in silk as one of Her Majesty’s Queen’s Counsel. So noble Lords can imagine that he would not have drafted an amendment to the Bill if it were outside the scope of the Bill; or, if he had, or if other noble Lords had drafted amendments that were beyond the scope of the Bill, the amendments would not be entertained in this way. They would not appear on the Order Paper and your Lordships would not have been asked to waste so many hours debating them.

That brings me to my preliminary point of law. In the many hours of Grand Committee that I have listened to in recent days, I have heard claims made, at times by the Minister and at times by some of his noble friends, notably the noble Lord, Lord Lansley, and others, suggesting that various amendments trying to restrict the vires of the regulation-making powers in this Bill are somehow beyond the Bill’s scope, or are irrelevant, or would clutter up the statute book—that was one comment I heard—or are otherwise inappropriate because they seek erroneously and improperly to clip the Executive’s wings when they are out trying to make trade agreements. That is one argument to the House that has emerged in your Lordships’ Grand Committee. Another argument that has been made is that the amendments completely miss the point of this draft legislation, because this legislation is purely about so-called continuity or rollover trade agreements; therefore, there is no need to place any additional hindrances or fetters on the regulation-making powers in the Bill to implement these rollover or continuity—other similar phrases have been used—trade agreements.

Well, the politics and the policy can come later, but let us be straight about the law here. That is just not correct. As a matter of law, that is not what is provided in the Bill, which allows for trade agreements, albeit with parties that have already been in an agreement with the European Union. They are trade agreements and there are regulations to be made under those trade agreements to implement them. That is the law. That is not spin. That is not politics. That is the law and the effect of this legislation.

Therefore, it is important to pre-empt the comments that will no doubt come from the Minister in due course and point out that it is completely appropriate for your Lordships and this Grand Committee to use amendments that have clearly been ruled as within the scope of the debate to restrain the vires, or the power, to make these regulations: that is, to say that it is perfectly appropriate that the regulation-making powers to implement these trade agreements—whether you call them continuity agreements or rollover agreements or even Charlie—can be constrained. Many amendments attempt to do that.

Your Lordships are perfectly free to say that some of the constraints should not be there as a matter of politics or policy: indeed, to say that we should not protect the NHS, workers’ rights, environmental standards, et cetera. That is fair for political and legislative debate, but in my view it is not okay—it is not straight talking with Members of your Lordships’ House—to suggest that these amendments are somehow beyond scope or inappropriate for debate in this way. I am afraid that, whatever else we are, some of us are lawyers first and last, just like some of your Lordships are distinguished medics, career politicians and so on. That is quite important.

This brings me to Amendment 17, and ISDS in particular. Obviously, this is dealt with with some care and precision in my noble friend Lord Hendy’s amendment, to which I have added my name, but I noted that, during the many hours of debate, other Members of the Committee have spoken to the evils of this system of secret justice, if such a thing is even possible. It seems to me that, whatever our differences in this Grand Committee and in your Lordships’ House, all Members ought to be concerned about ISDS and should seek to rule it out from being implemented by way of regulation-making powers in this Bill. In other words, if there is to be ISDS in future, it should require a new, separate Act of Parliament that can be consulted on and aired publicly, and debated line by line in both Houses of Parliament. All Members of your Lordships’ House, whether they are socialists, Greens, Liberals or Conservatives, ought to be scandalised by ISDS.

What is more, all people in our nations should be alarmed by the practice of ISDS, whether they voted to leave the European Union or to remain. Why? In a nutshell, because this practice prioritises unelected, unaccountable corporations over democratically elected Governments and the people they serve. That is the first reason. The second reason is that, as other noble Lords pointed out, it prioritises foreign corporations over domestic businesses. That cannot be right either.