Brexit: UK-EU Relations (EUC Report)

Lord Whitty Excerpts

Monday 2nd July 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I thank the noble Lord, Lord Boswell, for steering this report and initiating it himself, and for giving the House such a masterly presentation of what it is advocating. That makes it rather more difficult for the rest of us, and I may need to be slightly more controversial than I had originally intended simply to distinguish myself from the noble Lord. Still, his basic message is that time is short and it is time to abandon the red lines on both sides.

We are in a very difficult situation. Let us remind ourselves that the withdrawal treaty has not yet been agreed and that the issue of the Irish border threatens our even reaching stage one in any mutually agreed arrangement for the future. The transition period has also not been agreed, and therefore the question of what happens after 29 March next year is not as certain as a number of people and businesses already think. We are looking positively at October or November for not only agreement on the withdrawal agreement but a political declaration on all aspects of our future arrangements. Some on the European side refer to this as a four-pillar approach: the first pillar on economic affairs and trade; the second on internal security, police and justice matters; the third on external security and foreign policy; and the fourth on what my colleague, the noble Baroness, Lady Noakes, would probably refer to as the “odds and sods” of the agreement but it will include important things such as R&D, transport and, importantly, internal migration within the former EU.

How has it taken the Government so long to get to the point where the communication to the EU of our basic approach to the long-term relationship will depend on agreement by a fractious Cabinet this weekend? I claim no great foresight on this but the noble Baroness, Lady Verma, and I chaired a committee nearly 18 months ago at which we pointed out some of the arrangements that were needed and some of the decisions that would have to be made. For example, we referred to our future trade arrangements. We said the EEA option would be the least disruptive, although of course it had downsides in terms of freedom of movement. We said that all international agreements require some degree of compromise. We argued then that it is possible that a temporary arrangement to stay within the customs union, or a union with the customs union, would be a very sensible defence. Even this week we have seen the strange position of Michael Gove being ahead of the game once again by tearing up one version of the customs arrangements before, as I understand from the papers today, the Prime Minister tore up two. So we do not even know where we stand on basic trade in goods.

Our committee also said at the time that the issue of trade, important and central though it was, would have to be considered eventually in the context of other arrangements. We touched on an association agreement, which we come back to in this report. We were ambivalent about it because there were members of the committee, witnesses and others, who saw association agreements as a way into the EU rather than facilitating a way out. However, association agreements are much wider than that. One of the things that we must by now have noted about the EU is that it needs a legalistic basis for agreeing any movement, and association agreements in their broadest sense are clear within the treaties of the EU whereas bespoke agreements of any sort are not. Association agreements, for example, cover not only potential accession countries but countries such as Chile, which, as far as I know—I keep in touch with Chile as I have family there—have no intention whatever of joining the EU. So association agreements could be central to bringing together all the different themes of trade, security and foreign policy in a way that would give us a context and a totality of approach and give the Europeans what they need in terms of a legal base.

I have also on occasion been critical of how the negotiations have proceeded. A few months ago, I tried to relate them to my experience conducting industrial relations negotiations and talked about how so many mistakes have been made by the Government in that respect. I add another point to what I said then. In any such negotiations, it is very important to ensure that the people you purport to represent understand what you are doing and that, at the end of the day, there must be some compromise. I fear that the leadership of the Conservative Party has not obviously observed that and some of the members of the party are taking advantage of that failure to lay down those rules.

However, on reflection, this process is less like a negotiation over wages or the price of a house and rather more like a divorce. That is partly because it has serious emotional overtones but also because there are always complexities that you do not appreciate at the beginning. It is not a no-fault divorce. It is we who are walking away from what has for a long time been a tetchy marriage. As a result, we are not having any serious communication of minds between us and the European Union. We are in terms of procedure and what needs to be done next, but in terms of approach there is serious dissonance.

The Select Committee has picked this up on our visits to Brussels and in the report back that we get from the Secretary of State. It is all very formal and helpful, but indicates that there is no meeting of minds. To take the divorce analogy a stage further, we have made a grudging contribution to the ongoing upkeep of the house, but we are not engaged in what our future relationship will be. There are so many arrangements that we have to untangle and redefine after 45 years of marriage.

I shall focus a little on trade. A disturbing idea in the past few days is that we can reach agreement with the EU on customs for goods and ignore the whole of the service economy. That seems a crazy position for a country whose employment and GDP is now 60% in services. In the modern world, it is difficult to disentangle some of the contracts that offer products from the service element of looking after those products. So that is difficult to do in any case, but a single market for goods and a complete barrier on services as a result of regulatory non-alignment would be a foolish outcome for this country.

All the service sectors, which are so important to our economy—as important as manufacturing—require some across-the-board arrangements. They require the right of establishment, they require something such as passporting, they require intellectual property rules, they require data protection and data flow rules and mutual recognition of qualifications. They also require access to EU agencies in many areas, an issue which I was raising throughout the passage of the withdrawal Bill but has not yet been resolved, despite the fact that the Prime Minister’s Mansion House speech recognised that in some cases, we will need associate membership—if we can achieve it, if the Europeans agree—in some of those sectors. There are 30-odd agencies to which many sectors have to redefine their relationship. We hope we can get some degree of membership or associate membership to them. All these service sectors, from finance to the performing arts, need some access to those arrangements.

Most mention as their first item their need for access to the talent and labour available from the European Union. Some would say that it is our own fault that we have not trained people to be medics, scientists, vets or to contribute to the physical and performing arts, but the diversity of people who are talented in those areas that the European Union has brought us has been an important part of British success in those sectors. That means that the trade agreement is interrelated to the agreement, if we can reach one, on the future access of workers—of people—between the EU and the UK. We will need a bilateral agreement, as one of our sub-committees said a year or more ago, as part of the final deal.

We will also need respect for the rights of those workers and individuals. I was worried when I read a government paper that stated that environmental standards have to be as good as or better than those of the European Union once we have complete control of our regulations. It did not say that in relation to workers. It simply said that those standards should reflect the changing nature of the labour market. That is not much of a commitment to workers at either end —British workers or European workers coming here.

There are a lot of questions that the Government need to address. After all the division, manifest in the press and beyond over the past few weeks, the Government need in the next few days to come to a position that defines their approach to the negotiations, which can elicit a positive response from the European Union and which the British people will understand. At the moment, I fear that the Government are a long way from that position.

European Union (Withdrawal) Bill

Lord Whitty Excerpts

Report: 6th sitting (Hansard): House of Lords
Tuesday 8th May 2018 Lords Chamber

[Lord Baker of Dorking (Con)]

My Lords, as someone who voted leave, I have always envisaged that what is being debate here will actually happen. I have always assumed that, when Britain is outside the European Union, it will want to co-operate extensively with Europe on a whole range of matters, such as environmental matters, which have been mentioned. I cannot conceive of any future Government of our country, whether they be Labour, Conservative or coalition, wanting to reduce the environmental quality of life. The trend is all the other way: to make it even better as it goes on. That is what will happen when we are out of the European Union, just as ever it did when we were in the European Union.

Similarly, as an ex-Home Secretary, I see the value of Interpol. I am quite sure that we will continue to work very closely with Interpol and continue the exchange of information that is so vital to arrests and to the reduction of crime, not only in our own country but in Europe.

One item not mentioned today is the Erasmus programme. I was the Education Secretary who started Erasmus and I think it has brought inevitable great benefits, both for students of our own country and students of other countries. Indeed, I discovered that one American university has decided that, during one year, all its students have to go and study in another city for three months. Erasmus allows that to happen and I am quite sure that it will continue in the future.

Having said all that, I do not think it requires a parliamentary fiat, if I may say so to the right reverend Prelate. It is clearly the Government’s policy to do that because it is a policy based upon common sense. It is essentially part of our negotiations, as has been made clear by the Prime Minister, and I hope that the negotiations are successful.

[Lord Whitty (Lab)]

My Lords, briefly, I want to support this amendment. I think I was probably responsible for the previous three occasions that the noble Baroness, Lady McIntosh, referred to, in that very early in this debate I asked the Government to set out for each of the European agencies their intention for future co-operation. I did that because, like the noble Lord, Lord Teverson, as chair of one of the sub-committees I know that every industrial and professional sector wants to know what its future relationship would be, as that is the normal way of doing business: they operate with their European counterparts through those European agencies. I then asked further questions about the environment, food safety and, vitally, transport, which would otherwise close down.

I am very grateful that the Prime Minister has picked out aviation as an area on which we must continue to co-operate, and chemicals—the European Chemicals Agency regulates 20,000-plus day-to-day chemicals. Unless we have very close relationships with all those industrial sectors, and on issues such as security and Europol, Brexit will be a serious blow to the way large parts of our industry, public sector and professions operate day to day. We need to give them certainty. I still think it would have been helpful had the Minister produced a detailed list, because we are gradually working our way round to saying that, on all these issues, co-operation will need to continue.

[Lord Adonis (Lab)]

My noble friend has given a great deal of thought and study to this issue. Is he aware of any legal impediments that prevent us continuing to participate in agencies in any event? Is this change in the law in any way required?

[Lord Whitty]

In terms of the Government’s intention in the negotiations, it is required. But to counter, to a degree, the otherwise helpful contribution from the noble Lord, Lord Baker, the EU have to agree it. If we do not have this as a positive point in our negotiations, and if we do not co-ordinate the role of British industry, sectors and professions with those of their European counterparts, there will be an end to that co-operation. I have had cause to remind the Minister that the EU’s current guidelines in negotiations say that we will no longer participate in these agencies from March next year. If so, that is seriously disruptive. It is therefore important that this House gives an indication to the other place and to the Government that we must continue to participate. I hope the Minister does not repeat his and his colleagues’ previous disdain in dismissing the need to make this clear. I hope the Prime Minister’s intention is wider than the few specific agencies to which she referred in her Mansion House speech.

[Lord Wallace of Saltaire (LD)]

My Lords, I strongly support the amendment, partly to give our support to the Prime Minister against those within her divided Government who do not believe that it is important to stay closely associated with these agencies.

Perhaps I may give a little of their history. I was on the staff of Chatham House in the early 1980s when the British Prime Minister, Margaret Thatcher, first proposed the single market and made it clear that what was in Britain’s interests—as well as, she argued, in enlightened European interest—was to replace a tangle of different national regulations with single regulations in a single market. She did not assume that we would get rid of all these regulations but that we would agree on common regulations. Many of the agencies then grew up to make sure that these regulations were observed and enforced, and altered and developed as technology, pharmaceutical research and other things changed. That was why they were clearly in Britain’s interests. There were always some in the Conservative Party who did not believe in that—they believed in deregulation—and thus were dubious about the single market because it was replacing national regulations with common European regulations.

One of the most interesting pieces of research carried out for Chatham House in that period was by an American trade lawyer who wrote about the extraterritorial jurisdiction of US regulations over the United Kingdom until the single market was formed. Very often business, engineering, the chemical industry and the pharmaceutical industry in Britain simply followed American regulation. The idea that we had sovereign regulation on our own did not exist. As the single market developed, so European regulations, over which we had considerable influence, replaced the British adoption of regulations designed for American purposes, which we felt we had no choice but to accept.

That is these agencies’ historical origins and they clearly still serve British national interests. It is therefore important that if and when we leave the European Union we remain associated with them. Technology and research have continued to develop and these agencies therefore serve an increasingly important role. I therefore hope that the Minister in replying will reinforce what the Prime Minister said in her Mansion House speech and make it clear that a major objective of the Government is to remain as closely associated with these agencies as possible, even if Boris Johnson may then denounce it in the Daily Mail.

European Union (Withdrawal) Bill

Lord Whitty Excerpts

Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th April 2018 Lords Chamber

Moved by

[Lord Whitty]

48: After Clause 8, insert the following new Clause—
“Transport connectivity
(1) The Secretary of State must within two months of the passing of this Act lay before both Houses of Parliament a report indicating the manner in which continuity and safety of transport is to be maintained following the United Kingdom’s withdrawal from the EU.(2) The report referred to in subsection (1) must include proposals to maintain a relationship with the deliberations and operational activities of the EU’s transport Executive Agencies, whether by continued participation in the European Agencies in some form or by establishing an effective equivalent within the United Kingdom or by other means.(3) The Agencies referred to in subsection (2) include—(a) in respect of civil aviation, the European Aviation Safety Agency;(b) in respect of maritime transport, the European Maritime Safety Agency; and(c) in respect of rail transport, the European Railway Agency.(4) A Minister of the Crown must seek approval for the proposals in the report under subsection (2) by means of motions in both Houses of Parliament.(5) The Secretary of State may by regulations made by statutory instrument provide for the implementation of any proposal approved by both Houses of Parliament under subsection (4).(6) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

[Lord Whitty (Lab)]

My Lords, Amendment 48 is in my name and in the name of my noble friend Lord Judd. I have often remarked, in my long years in this Chamber, that the attendance in the Chamber is often in inverse proportion to the range of interests in the population and economy as a whole. I am glad we have the additional attendance of the noble Baroness, Lady Sugg. This is a very important issue to a large proportion of our population and a large chunk of our industry—everybody who is ever a traveller, a tourist, an importer or an exporter, or who buys those imports or sells those exports, everybody who works in the international transport sector and the whole of the aerospace and other manufacturing industries which support all those sectors.

Ministers will recognise that I am returning to my favourite subject in the Bill: the future relationship with the EU agencies. Frankly, I have at no point received clarity from the Government—nor have the industrial sectors—as to their aim in the negotiations and what they would like the future relationship to be between our industries in those sectors and the EU agencies of which we are currently full members.

I was encouraged in this view only yesterday. As noble Lords will know, I am a member of your Lordships’ EU Select Committee. This was in public proceedings, so I can reveal it. We had before us yesterday among our witnesses the director-general of the CBI. We asked her what were the practical problems for her members that were being brought to her, of the uncertainty and lack of clarity over Brexit. The very first thing she mentioned was that there were so many sectors that did not know what their future relationship with those agencies and the processes under those agencies would be—in other words, the very terms of trade and the terms of the relationships under which they will operate. That underlines the Government’s failure to explain what they are after.

We had some glimmer of light from no less a person than the Prime Minister herself. In her Mansion House speech, she referred to having to have continued relationships with the aviation agencies. She referred to associate membership. I have said before that associate membership does not bring the kind of rights and influence that we currently have, but nevertheless it is a step forward on anything else the Government have said. On the rest of the agencies—there are not only the three mentioned in the amendment, but roughly 40 other agencies that affect different sectors of our economic and cultural life—we have no glimmer of what the Government intend.

Transport is a vital sector. I would hope that Ministers could give at least as clear an assurance as I think the noble Lord, Lord Callanan, gave on Monday in relation to my equivalent amendment on the environment and food safety agencies. He said that, because the Government were committed to bringing forward a new statutory authority for environments, before we reach Third Reading greater clarity will be shed by the Government on the role of the environmental agencies. I would hope that we could have at least a glimmer of such hope with regard to the transport agencies.

The aviation industry is probably the most acutely affected by this, as not only British airlines and European airlines but also American and third-party airlines do not know what they will be selling in a year’s time. We do not know what the landing rights will be; we do not know how British-based airlines will operate, even through the transition period. At the moment, in the transition period, if we understand the EU’s position clearly, they will no longer be members of those agencies. EASA, to take the most important example in this amendment, has been greatly influenced by British presence, expertise and regulation. The British aviation industry is the biggest single such industry in Europe, and the tourist industry in Spain and several other Mediterranean countries depend on it continuing to be so. If we are no longer full members of EASA, the airlines themselves will be in difficulty in knowing quite what they will sell to their customers—passengers —in less than 12 months, and even more so beyond 2020.

I am not entirely sure whether the noble Baroness, Lady Sugg, or the noble Baroness, Lady Goldie, will reply to this debate. I do not mind who says it, and hope that they are all agreed, but I would like a bit more hope that we can get greater clarity on these vital transport agencies, which are key to connectivity across Europe. We ought to have clarity before we complete the passage of the Bill, and the Government have only a few weeks to provide that clarity. I beg to move.

[Lord Judd (Lab)]

My Lords, it is always good to support my noble friend Lord Whitty. He invariably brings to our deliberations well-argued, well-analysed speeches that in the end boil down to common sense. His arguments are absolutely irresistible, and I cannot imagine that the Government would not want to be positive in their response, in one way or another.

One of the opportunities that you get when living in Cumbria is that when you have clear skies—and we have clear skies more often than the cynics suppose—one sees the indispensability of British airspace to European traffic, using the Arctic routes to North America and beyond. There are mutual interests at stake here, which is partly why this is so urgent. We cannot scramble something together at the last moment as a consequence of the action that we have taken constitutionally; we must plan now for how we are going to guarantee effectiveness in meeting the challenges of that mutual interdependence.

--- Later in debate ---

[Baroness Goldie]

I thank the noble Lord for his clarification. This issue will continue to be an important factor as we engage in the negotiations. I have endeavoured in so far as I can to set out for your Lordships the current situation, what the Government’s objectives are and how the Prime Minister anticipates the way forward. I invite the noble Lord, Lord Whitty, to withdraw his amendment and observe that the Government do not intend to return to this matter at Third Reading.

[Lord Whitty]

My Lords, the noble Baroness was doing quite well until her last sentence. I take a limited amount of comfort from what she says are the Government’s desired outcomes. I am sure that we all subscribe to those outcomes on safety and co-operation and so forth. However, these entities have provided the basis on which European railways, European maritime contacts and European air contacts have operated with increasing closeness over the last few decades. The situation is similar with roads. At least yesterday, with regard to haulage, the noble Baroness, Lady Sugg, provided a necessary but not complete basis for activity to replace the European Community licence system. In these areas, the industries feel uncomfortable that they do not know what is happening and do not know how to plan ahead. That has been underlined to us from time to time and Ministers must have had the same kinds of approaches. Therefore, it would have been helpful if the Minister had given us a promise—in writing, if necessary—that the objectives would be spelled out in a little more detail.

We are in an asymmetrical position. We know what the EU has said. In its guidelines for the negotiations, it has said that not from December 2020 but from March next year we will no longer be a member of those agencies and will be invited only at its request for particular reasons. That is the EU’s negotiating position. We are not clear what the Government’s negotiating position is in relation to these or any other agencies. The Prime Minister has, admittedly, said slightly more about aviation but, even there, she referred at one point to continued participation and at another point to associate membership, which have rather different connotations.

Therefore, despite the noble Baroness’s efforts and some of the reassurances that she has given us, which I appreciate, I am no clearer about which way we are going. If I am not clear, I suspect that those who run our airlines, railways, maritime services—the ferries in particular—and roads are not clear either. On transport depends the rest of our industry and our society. If those industries are not clear, that bodes ill for how we respond economically to the shock of Brexit.

I will beg leave to withdraw the amendment with some regret—I had hoped for better from the Minister—but the issue remains, and I certainly advise Ministers to address that issue with the industries as rapidly as possible.

Amendment 48 withdrawn.

European Union (Withdrawal) Bill

Lord Whitty Excerpts

Report: 2nd sitting (Hansard): House of Lords
Monday 23rd April 2018 Lords Chamber

[Baroness Jones of Moulsecoomb]

I think it is obvious that I rise in support of Amendments 27, 28 and 41. In Committee, there were so many noble Lords who wanted to put their name to the amendment that I was not able to. Of course, they have my wholehearted support and I agree with everything that has been said so far. The Government are well aware that the public care very much about the environment these days, and not accepting this amendment will be a real problem for the Government. They will hear a lot from the public.

I was speaking to a Conservative Peer last week, and that Peer was shocked and surprised that the Government were not bringing over all EU law into UK law as they promised. I shall save that Peer’s blushes by not revealing a name. I then asked that Peer if they ever listened to anything I said in the Chamber, and they said no. But the point is that that person was shocked because it was believed that the Government would honour their promise to bring over all EU law, but they are not doing so. I do not want to go on again about that, but I feel very cheated, quite honestly, and the Government have to understand just how angry they have made a lot of people who voted to leave. They feel cheated as well.

I have to repeat the very serious point that, of all the issues that lose out with this Bill, the environment is the biggest loser, and we have to make changes to the Bill to make sure that that does not happen. The EU’s environmental principles and standards are the cornerstone of environmental law in this country. Successful legal challenges have been brought, and there are ongoing cases in our courts that seek to apply the environmental principles further. As the Bill is currently worded, we risk losing huge chunks of environmental law and the crucial enforcement role currently undertaken by the EU. The Government have admitted that there will be a problem when we leave the EU. The Secretary of State for the Environment seems to be promising a new Bill every week, in stark recognition that a wide field of environmental law must be retained and improved.

We were promised an update on the consultation before Report, and we have not had it—another broken promise. The consultation is supposed to feed into a Bill that is supposed to make sure that there is a new body. I have the list of EU Bills here—the guide to EU exit Bills—and I cannot see that Bill on the grid, so where is it? It is already going to be incredibly difficult to produce all the Bills that have been promised and get them through before exit day. I simply do not believe it can be done; the Government would have to perform a miracle, which is not something they are famous for. The consultation could anyway lead to nothing, or to a much weaker, unsatisfactory proposal. We just do not know.

These are not special interest amendments, trying to get something better than what already exists. They do nothing more, and nothing less, than ensure that environmental law in our country will be the same on 30 March as it was on 28 March. This is the seamless transition to which the noble Lord, Lord Inglewood, referred. The Government have had the opportunity to address all our concerns but so far they have chosen not to. They have left this House with no choice but to amend the Bill yet again.

[Lord Whitty (Lab)]

My Lords, Amendment 41 is in my name and those of the noble Lords, Lord Judd and Lord Wigley. I had a dilemma as to whether I should group it with these other amendments or return to a list of agencies to which the UK is at present a party and which are important in enforcing laws on the way we trade and on how our industrial and agricultural processes work. I have been banging on about the post-Brexit relationship between the UK and the EU agencies from the beginning of this Bill and I have yet to get a satisfactory answer from the Minister or any of his colleagues on how they see relations with those agencies—if at all—beyond exit day or, indeed, into the transition period. A slightly higher authority has given me a bit of a hint. The Prime Minister herself has said that we need to maintain a relationship with, for example, the European Chemicals Agency, which is referred to in this amendment.

My amendment interrelates with Amendments 27 and 28. If the independent environmental body to which Amendment 27 refers has full scope; if it is genuinely independent, as my noble friend—ex-friend—Lord Smith underlined; and if it has the powers of prosecution of other public bodies, which is vital, it will be able to replace some of the powers which are currently within the Commission and other European agencies. However, we do not know what that body looks like. As the noble Baroness, Lady Jones, said, it was hinted pretty heavily that the basis of that body, at least, would be presented to the House before the end of the Bill. It is vital that the Minister gives an indication tonight, and a detailed report prior to Third Reading, as to what that body looks like and whether it can actually fulfil the functions currently fulfilled by European agencies, some of which are referred to in my amendment.

This is not just a question of how the UK manages its own environment beyond Brexit. Every bit of industry, and every one of our agricultural and land-use processes, has an important trading dimension with Europe. Hitherto, the standards, and how they are enforced, have been set by Europe. In some cases, this is by particular agencies, in other cases by the Commission. It is therefore not just that this sceptred isle will have a Michael Gove-type, high-powered environment agency to oversee what happens within these shores, but that almost everyone within them trades with the outside world one way or another. The environment does not respect boundaries.

An example is our arrangements for, for example, the chemicals industry and the REACH processes. The European chemicals industry could not function without that being centralised at European level. Many of the companies concerned are multinationals which transfer substances internally within the countries of Europe and follow European standards. The same is also true of many other sectors. The agencies listed in the amendment need an effective replacement which also has a continuing relationship with the agencies of the remaining 27 EU countries. Since the beginning of the Bill, I have asked the Government how those relationships are going to operate.

The Prime Minister, in her Mansion House speech, said that she was looking at associate membership. That is an important move, but will not necessarily deliver us much influence. Generally speaking, associate membership in European institutions does not give you a vote. It is therefore important that we have a clear idea of what the relationship will be with these agencies here and with many others of the 40-odd agencies that exist within Europe, some of which I will return to later in the Bill. It is also important that we have a relationship which replaces the Commission’s power to enforce—for example, on air quality and on land management standards, partly through cross-compliance against CAP payments, which is a pretty effective form of enforcement. Unless we get answers or at least the outline of answers as to how that will happen after Brexit, I am afraid we will have to return to these matters. Tonight the Minister needs to spell out how that will happen.

--- Later in debate ---

I hope that noble Lords will agree that the Government have been similarly explicit that our exit from the EU will not lead to a lessening of standards in these areas either. We have been vocal in our belief that our exit from the European Union will likely create new opportunities to further strengthen standards, and the Government are steadfast in their intent to capitalise on these potential improvements.

[Lord Whitty]

Before the Minister moves on from the issue of future relations with the agency, can he address one point? The EU’s position is that we will cease to be a member of those agencies less than a year from today. Would the Government at least indicate that they are looking to an arrangement during a transition period where we continue to participate in those organisations, because we will be following their rules and procedures, but, according to the EU’s negotiating position, we will not be party to that? Would he please address the transition period as such?

[Lord Callanan]

That is not part of the amendment we are discussing, but I am happy to provide the noble Lord with that reassurance. Yes, we are discussing the exact nature of our participation in the various agencies during the implementation period.

I hope the commitments that I have made, in particular on the fact that the consultation on environmental principles will be published ahead of Third Reading, are sufficient for your Lordships to feel able not to press the amendment.

European Union (Withdrawal) Bill

Lord Whitty Excerpts

Committee: 6th sitting (Hansard - continued): House of Lords
Monday 12th March 2018 Lords Chamber

[Lord Liddle]

I congratulate the noble Lord, Lord Bilimoria, once again on an excellent speech raising many serious issues which we have to deal with. I shall draw particular attention to Amendment 233, which asks that any amendments to the roles and responsibilities of the European Aviation Safety Agency should be subject to the affirmative procedure. I would like a response from the Minister. I see no reason why the Government cannot just agree to that now to assure the Committee that there will be full accountability on these questions. Why not just say, “Yes, we agree to that”?

[Lord Whitty (Lab)]

My Lords, I shall make a brief broader point. For all the reasons we heard from the noble Baroness, Lady Randerson, and the noble Lord, Lord Bilimoria, I strongly support the objectives of these amendments. So, apparently, does the Prime Minister, judging from her speech last week. Is the reality not that it is also in the interests of all the airlines, the aerospace industry and the airfreight industry across the whole of Europe to retain the present situation? Was that not obvious from day one of Brexit discussions? Why did the Government’s negotiating strategy not recognise that this was one deal which we could have done very quickly and very clearly which would not have interfered with any of the rest of the negotiations and one which almost the rest of Europe would have greatly welcomed? There would have been no cries of “kein Rosinenpickerei”—“no cherry-picking” —from Europe on this one. A bit of common sense at the beginning of these negotiations would have parked aviation. We would have agreed aviation.

[Lord Hamilton of Epsom (Con)]

Was it not the EU that said that nothing was agreed until everything was agreed?

[Lord Whitty]

It was both the EU and Mr Davis and they were both wrong because in all negotiations whenever you enter negotiations you agree some things and you then park them. We could have agreed this. It is ridiculous that airlines are now faced with selling tickets in three weeks’ time not knowing whether they can deliver on them. I just make that more general point because the Minister keeps saying it is all down to the negotiations, but the negotiations went wrong from day one, and this is one example where we could have delivered something, albeit it would need to be part of a total package at the end of the day.

[Lord Tunnicliffe (Lab)]

My Lords, I shall be brief. I spent 22 years in the airline industry from the mid-1960s onwards as everything from co-pilot to number two in the marketing department. I learned two things from that. One was that aeroplanes are very dangerous. When I first joined the industry, we would crash a jet aircraft about every two years in the United Kingdom, and it has been a long, hard slog. That slog has not been all UK—it was the UK, the US, Canada and France, working together through international co-operation, producing the safety we take for granted today. It is crucial that those mechanisms stay in place to achieve that.

The other thing I remember is what air services agreements are. They are treaties, and if you are not part of one of these more modern situations, such as the European one, there are country-by-country treaties between pairs of countries—all of which would have to be renegotiated. Falling out of the present situation would create enormous problems. I am very sorry that the Minister did not like my suggestion of contact between interested Peers and senior transport people on these three groups. I hope that perhaps that could be reconsidered—I am glad they are nodding now on the Front Bench, but the Minister said nothing in either of his two speeches to suggest that. Obviously in all parts of the House there is a genuine concern that progress is not being made in these very important areas. I do not want to have that concern; I want to share the Government’s optimism. At the moment, given the responses we have had, I do not.

--- Later in debate ---

Moved by

[Lord Whitty]

115: After Clause 7, insert the following new Clause—
“Chemicals
(1) The Secretary of State must ensure that the standards established by and under the Regulation for the Registration, Evaluation, Authorisation and Restriction of Chemicals (EC 2006/1907) ('REACH') continue to apply on and after exit day.(2) The standards referred to in this section include, but are not limited to, the restriction of chemical substances and the identification and control of substances of very high concern.(3) The Secretary of State must by regulations establish a procedure for the registration of chemical substances with a domestic agency previously registered under REACH, with particular attention paid to companies whose market is limited to the territory of the United Kingdom.(4) Chemical substances that have not been registered by under REACH before exit day or under domestic legislation procedure established pursuant to subsection (3) must not have access to the United Kingdom market after exit day.(5) The Secretary of State must by regulations establish a procedure for issuing authorisations for the use of substances of very high concern.(6) The procedures referred to in subsections (3) and (5) must retain as far as possible the rules applied, principles underlying and processes followed under REACH.(7) The Secretary of the State must, within one month of the passing of this Act, produce and publish a review analysing the options for the regulation of chemical substances in the United Kingdom after exit day and this review must consider at least the following—(a) the potential for future participation in REACH processes;(b) the functions currently exercised by the European Chemicals Agency or shared with other member States that are not currently carried out by an equivalent UK body;(c) the compatibility of new chemicals regulations with achieving a high level of environmental protection;(d) the future validity of registrations of United Kingdom chemical companies in the EU; and(e) access to the REACH database.”

[Lord Whitty]

My Lords, in moving Amendment 115 I will also support Amendment 172, which is about the European Chemicals Agency. Noble Lords may have noticed that, although I normally speak to amendments as a Back-Bencher, I am also representing the Front Bench tonight. I hope the noble Lord, Lord Taylor, the Chief Whip, will recognise that this reduces the number of speeches by one—and possibly two if the Minister agrees with me.

Amendment 115 sets out in some detail a fallback position to deal with the important issue of the management of chemicals. Essentially, it is also a probing amendment in that it asks the Government to clarify their future relationship with REACH, the regime for registering, authorising and controlling the use of chemicals in industry and in everyday life. I note that, since we tabled this amendment, the Prime Minister is at least in part in support of its objective, in that she wishes to maintain some degree of UK participation in the European Chemicals Agency—which I applaud.

This is a very important area of protection for workers, consumers and the environment, and for ensuring that there is a level playing field in the trade in chemicals across Europe. It deals with more than 20,000 chemicals in an industry which, in British terms, exports 60% of its export produce to the EU, while 75% of our own imports are also from the EU. Having equivalent arrangements is therefore very important: for the industry and the trade; for the protection of people as workers, consumers and the general public; and for the environment and the associated ecosystems of air, water and soil.

The REACH system goes well beyond the point which the Prime Minister made in relation to the agency. It is a very complex interrelationship between regulating the way that companies operate and market, and the way in which products are handled, traded and transported. It is dependent on a lot of highly intricate, multiple interactions between UK actors and actors within the EU at various levels, and between the institutions of the EU. It is essentially based on a precautionary principle and is a backstop to prevent dangerous chemicals entering the UK. This is a further backstop, were no agreement to be reached along the lines which I hope the Prime Minister is moving towards—in other words, to maintain the present system. Clearly, maintaining the present system is the preferable option. It is one which the chemical industry itself and environmentalists are advocating, and which those who have to deal with the chemicals trade, its products and their incorporation within other products also strongly support.

The Government have been looking at various options and it is right that they should do so. We are given to understand that Michael Gove, or rather the Permanent Secretary of his department, has suggested that we should be paying £6 million at the moment to create the capability to enable registration on a UK basis. Amendment 115 attempts to move on from that and to ensure that we have a clear legislative basis for the UK to operate on, which would come as close as possible to maintaining engagement with the REACH process.

We would, however, much prefer it if the REACH process were incorporated in the UK and that we effectively continued in the status quo. If we do not do so, it will not only engage the Government in considerable expenditure but disadvantage UK industry. It will also potentially disadvantage the UK public, in that they will not have the same protections as they had within the EU because we will not have access to the complex database on which the REACH procedure is based.

Incidentally—but to many people quite importantly—it would also increase the number of testing arrangements that would have to be made within the UK, which would be expensive and complex, and would also, among other things, increase the number of animal tests. Therefore, the issue of animal suffering and opposition to animal testing would be duplicated between the EU and the UK.

--- Later in debate ---

[Baroness Goldie]

I can only repeat the Prime Minister’s stated intention in her speech, and that is specifically to explore with the EU the terms on which we would continue to co-operate with ECHA and participate in certain processes. I say to the noble Lord, Lord Fox, that clearly, EU REACH is an EU organisation and to be a member of it you have to be an EU member state. After Brexit we shall not be that, but it is in the interests of the UK and certainly of industry that we work, in so far as we possibly can, in tandem with what is happening within the EU. That is certainly what the Government’s objective will be. The precise detail of that will be the subject of the negotiations.

The UK is strongly committed to the effective and safe management of chemicals and pesticides, and that will not change when we leave the EU. I hope this provides the noble Lords with sufficient reassurance that they will not pursue their amendments.

[Lord Whitty]

I thank the Minister for that reply, and I thank my noble friend Lady Young and the noble Lord, Lord Fox, for supporting the amendments. I am afraid the Minister’s speech was not as forthcoming as I was hoping due to the way that I had been led, in my usual spirit of optimism, to interpret the Prime Minister’s speech. I am therefore going to have to say slightly more than I promised the Chief Whip.

It seems that the Minister is saying that we will be outside the REACH process but will develop our own parallel process and might, if we can negotiate it, still in some way be party to the agency. I had hoped that being party to the agency as part of the Prime Minister’s aim meant that she had been convinced by the industry and others that it would be sensible to be part of the process. The Minister’s reply today narrows that hope somewhat.

European Union (Withdrawal) Bill

Lord Whitty Excerpts

Committee: 5th sitting (Hansard - continued): House of Lords
Wednesday 7th March 2018 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, I rise to take the place of my noble friend Lord O’Donnell, who unfortunately cannot be here, to make it clear that there are quite a few others on these Benches who share his views. I would not be so unwise as to talk about the collectivity of Cross-Benchers—I have been around long enough to know that that does not exist—but there are quite a few, and for the same reason. I hope that when he comes to reply to this debate, the Minister will not again trot out the “housemaid’s baby” argument that he has been using all evening—that it is a very small one and nothing terrible is going to happen, et cetera. We are talking here about some quite significant decisions which, as the noble Lord, Lord Newby, said, have invariably, and quite correctly, in the past been taken by primary legislation.

I know—this is very welcome—that in her Mansion House speech the Prime Minister rather reduced the number of public bodies that might have to be created following our leaving. She has recognised that we would do much better to stay in a number of the public bodies that already exist in the European Union, and we will see whether that bears fruit in the negotiations. That might reduce the list but it does not remove the problem. Therefore, this amendment deserves wide support from all round the Committee. It would be an extremely unwelcome and dangerous precedent if we started delegating the powers to set up these public bodies to a government Minister with only a resolution available and the nuclear option to stop it. I support the amendment.

[Lord Whitty (Lab)]

My Lords, as the noble Lord, Lord Newby, was kind enough to refer to my amendment, which was probably misgrouped at an earlier stage when we were discussing Euratom, I wish to underline the points that he makes. At that time I asked the Minister to set out for Parliament the approach to the EU agencies that the Government were going to take in the negotiations. Frankly, the noble Lord was far too dismissive of that approach, and it would do him some good now if he were to say that at some point during the course of the Bill the Government will set out the line that they will take. After all, as has been said, the Prime Minister has set out her line in relation to some of those agencies. Unfortunately, within 48 hours, the EU has effectively said, “Sorry, that is not on”—not only for the post-transition period but for the transition period itself. While we were continuing to follow the rules and procedures of those agencies, we would no longer take part in their activities. We have an issue here.

I was a bit diffident about the coalition’s Public Bodies Bill—I did not want to embarrass the noble Lord, Lord Newby, who has been so kind to me—but, as my noble friend said, the achievement of the House of Lords was to knock out an enormous schedule. The Chief Whip, who was the Minister in charge of the Bill at that time—he is now in his place—looks less fraught with this Bill than he did when he was dealing with the Public Bodies Bill. In the end he wisely convinced his colleagues that he had to drop the huge schedule that gave carte blanche powers to the Government to abolish or tweak the responsibilities of a host of public bodies. That Bill was to abolish bodies or alter their remit; this Bill is to set up entirely new bodies. Unless we do that knowing what the overall approach is, this House cannot give the Government that degree of power.

Mention has been made of the new environmental body. Strictly speaking, under this clause as it currently stands, the Government would be able to establish, under secondary legislation, the kind of body that the noble Lord, Lord Krebs, who is no longer in his place, was arguing for earlier—a body so powerful it could sanction other public bodies, including the Government, if it was able to reproduce the powers that presently rest with the European Commission. That is an enormous power, which this House would not allow the Executive arm of government on its own without primary legislation conducted through the two Houses.

I recognise that there is a timescale problem for the Government, but might it be possible to set up some of these bodies in shadow form? If there are 10 bodies, as the noble Lord suggests, there may be a need at least to stop the process before the final passage of this Bill. To have permanent public bodies to regulate large swathes of our public life, industry and personal behaviour—even if there are only a dozen of them—would require primary legislation. This House needs to assert that it does and the Government need to accept that.

[Lord Beith]

My Lords, I support my noble friend Lord Newby on one specific reason why it is primary legislation that we use, and should use, for the creation of public bodies, even in these circumstances. He referred to the somewhat limited procedures in both Houses, but particularly in the Commons, for dealing with statutory instruments, but one abiding characteristic of them is that they do not admit of amendment. When a public body is being created, even in the short timescale we are talking about here, its remit, terms of reference, composition and the powers it can exercise are incapable of amendment. The idea that the Government would produce so perfect a form that it would not benefit from amendment, or even discussion of amendment, is so fanciful that I am sure the Minister will not advance it. Surely primary legislation capable of amendment, even if addressed with greater speed than normal because of the circumstances, is the only defensible way of doing something as extensive as creating a public body.

European Union (Withdrawal) Bill

Lord Whitty Excerpts

Wednesday 7th March 2018 Lords Chamber

[Lord Mackay of Clashfern]

There is no question of not leaving them in. They will be left in in any case. There is no question of putting them out. I will see what my noble and learned friend the Minister has to say about this but so far as I am concerned, it is not necessary because the whole instrument will be incorporated. There is no question of editing it or leaving out half of it or the beginning or anything. My noble and learned friend may be willing to give the assurance that the whole instrument will go in. I must say, I would have hoped that that would be understood without it having to be said.

[Lord Whitty (Lab)]

My Lords, I hesitate to challenge the noble and learned Lord, Lord Mackay, on points of law, but the fact of the matter is that when we have transposed directives and regulations previously, they have excluded the preambles and the recitals, as they have excluded aspects that are in the treaties rather than the individual directives and regulations. It may well be that the courts, in their wisdom, will take into account something that European law has previously said, but unless that is laid down as a central principle of this transposition, whether or not to take it into account will be at the courts’ discretion.

The Government’s commitment was that we would have the European law on day one of Brexit in exactly the same form as we did the day before. That has broken down in the way in which the Bill has been presented in a number of respects. It has broken down on the European Charter of Fundamental Rights; it has broken down with regard to animal sentience, as we debated the other day; it has broken down on the environmental law which the noble Lord, Lord Krebs, referred to; and I was going to use the air quality example that the noble Baroness, Lady Jones, referred to. Unless Parliament gives a signal to the courts that these preambles and recitals must be taken into account —as must, in my view, the principles laid down in the treaties—we are not doing what the Government have promised the people of this country that they would do; namely, that European law would not be changed on day one of Brexit and then only if it was necessary or Parliament so decided. Unless we do something very similar to what the amendment of the noble Lord, Lord Krebs, does, we are not doing what the Government have promised the nation.

[Baroness Featherstone (LD)]

My Lords, I support Amendment 58 in the name of the noble Lord, Lord Krebs. I was greatly relieved by the noble and learned Lord’s rebuttal because my interpretation of what we are doing is that we will not have the protection of the recitals and the preambles. Our problem is that any law leaves room for interpretation. EU law in particular is often a reflection of the manner of its birth: it has 28 single parents.

To reassure those of us, particularly from my point of view as the spokesperson on energy and climate change, who do not necessarily trust things to naturally follow and for this Government or possible future Governments to be as keen on some of the standards required in EU regulations and directives, it is in the recitals and preambles that we can gain some measure of comfort, as a guide to the intention of a particular instrument. The recitals supplement the operative part of the directive. They are interpretive tools in the EU legal order, and if we simply transfer the law but not the recitals we are removing a beneficial tool. I am afraid that assurances and good intentions from the Government are not adequate when it comes to something as important as our environmental protection.

It is quite clear that the Bill does not deliver that security and surety. We need certainty in the Bill, so I hope that the Minister will be able to accept the amendment. This amendment is only part of that certainty and protection.

European Union (Withdrawal) Bill

Lord Whitty Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Wednesday 21st February 2018 Lords Chamber

[Lord Carlile of Berriew]

If I could be allowed an ad majorem argument, I would recommend to noble Lords an article written on the Monckton Chambers website by the distinguished competition lawyer, George Peretz QC, which—as I understand it because I am not an expert on European law—provides the answer yes to the question put by the noble Lord, Lord Adonis.

[Lord Whitty (Lab)]

My Lords, I have two amendments which are grouped with Amendment 8. I am afraid that they probably should not have been included, but like the noble Lord, Lord Teverson, and my noble friend Lord Liddle, I was in Brussels today and did not have a chance to argue the groupings, so I am afraid that noble Lords are going to have to hear me speak on this issue tonight. My Amendment 114 makes a rather important cross-reference to Euratom.

The amendment seeks essentially to add a clause to the Bill after Clause 7, with an accompanying schedule. Before we understand what is happening to our whole regulatory system and therefore pass this Bill, and certainly before we leave the European Union, we need to know from the Government what their view is on future relationships with the EU executive agencies. The schedule lists those agencies which include two Euratom agencies. It lists the supply agency to which the noble Lord, Lord Teverson, referred. Its observatory plays a key role in dealing with supply chains of extraordinarily sensitive and potentially dangerous material. It lists also the Fusion for Energy agency which deals with some of the aspects to which the noble Lord, Lord Broers, referred in terms of the development of fusion as a new source of energy and the high-level, European-wide research programme at Culham and elsewhere. They are very important agencies. At this point we do not know what future UK participation, arrangements, observer status or links with those agencies are going to be.

In addition to those two Euratom agencies, there are 34 executive agencies of the European Union. I have noticed the time and I will therefore not go through the role and remit of them all, as well as the importance of knowing where we are, but they include a number of agencies of great importance to the lives of our citizens, to our industry and to our environment. There are agencies which deal with safety at work, food safety, environmental safety generally, and of course there is the EU Medicines Agency, which regrettably is moving away from Britain, dealing with medical safety. There is a whole range dealing with police and judicial procedures.

These agencies are not law-making bodies, but they are operationally very important to the sectors to which they apply. The UK has engaged very effectively with most of those agencies, to the benefit of our citizens, industries, sciences and judicial system. I have asked a number of Written Questions as to what the future arrangements are, with the standard reply being: “This will all be sorted out in the negotiations”. However, the negotiations are going on at the same time as we are dealing with the Bill. We need to know, in relation to the Bill, how those agencies will interact with the regulations newly transposed into UK law and the way in which we operate in those industries and systems.

My visit to Brussels in the last couple of days has underlined the urgency of the situation of knowing where we are with such agencies. For the first time, I carefully read the EU’s proposition on how we deal with transition periods. That document says that the UK will not only no longer participate in the institutions of the European Union but also,

“no longer participate in … the decision-making or the governance of the Union bodies, offices and agencies”.

In other words, in approximately one year and 34 days, we will no longer participate in any of these vital agencies. It is possible, if the Government put their mind to it, to establish in that period new relationships. In some of these agencies, non-EU bodies are either observers or participants. At the moment, we have not a clue how the Government are approaching the future in all of these important areas. It is an urgent decision that we cannot delay until the end of the transition period, because unless the Government persuade the EU otherwise in the next few weeks and months, from the date of exit we will no longer participate. This will change the way in which we operate in a range of safety, environmental, scientific, judicial and police areas—including security and defence.

That issue arises for a whole number of areas well beyond Euratom. On Euratom, I agree very much with what virtually everybody else has said: it is unnecessary to come out of Euratom. It is still possible to distinguish our approach to Euratom and effectively rescind our resignation from it without changing our position on the EU. Indeed, all the arguments—from industry, science and environmentalists—indicate that we should do that. At the same time, I urge your Lordships, and the Government in particular, that before we get very far in the process on the Bill, we should get a clear indication, not only on the Euratom agencies, but on the rest of the agencies set out in Amendment 263 proposing a new schedule, so that we will know, well in advance of leaving the European Union and its agencies and well in advance of the beginning of the transition period, quite how we will operate with them in future. I ask the Minister to take seriously the list I have given him and, perhaps in writing or on Report, to indicate to us how the Government intend to deal with this very important tissue.

[The Earl of Selborne (Con)]

My Lords, I think it is important on these Benches to put in a word of support for the amendment of the noble Lord, Lord Hunt. We all recognise that Euratom is a good brand; no one, on any side, is disputing that Euratom has achieved what a good brand should do. It has given confidence to the British and European public on a matter of critical importance, not least in handling medical isotopes with a very short half-life.

It is quite clear to my mind that if we leave for reasons that are obscure to me but probably are concerned only with the notional theory that the European Court of Justice might be able to exert some malign influence on Euratom—that seems to be the only reason that has ever been advanced as to why we should leave Euratom—then that plays second order to how we ensure, in the words of the amendment, which I very much support, that we “maintain equivalent participatory relations” with Euratom. It is essential that we continue to command the confidence of the users of isotopes and other nuclear material and of practitioners. It is not clear to me that the regulation we will have to put in place will be ready in time. In fact, I am absolutely certain that it cannot be. The amendment is a very sensible and modest proposal that I fully support.

Brexit: Deal or No Deal (European Union Committee Report)

Lord Whitty Excerpts

Tuesday 16th January 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I rise to move the Motion in the name of the noble Lord, Lord Jay, who regrettably is now unable to be here. As a member of his committee, I am therefore introducing this report. The speech I am about to make is, in fact, the speech of the noble Lord, Lord Jay, with only minimal interpolation by me. However, I wish to record my appreciation of the work the noble Lord has done on the Select Committee as acting chair. He replaced the noble Lord, Lord Boswell, for the period when he was unable to be here. I am happy to report that the noble Lord, Lord Boswell, is now back in harness and has just chaired a meeting of the committee. Your Lordships will also be gratified to hear that speaking in the place of the noble Lord, Lord Jay, means that I will not be speaking in my place in the list as well. Any remarks I have, I shall leave until the end.

This report was published only last month, and I am therefore grateful that the usual channels have found a place for it early in the agenda. It also means that we have not had a government response, although I am looking forward to receiving one shortly. Indeed, the day after our report was published, on 8 December, a new deal between the Government and the European Commission was reached on the key withdrawal issues. Time is therefore moving on.

Our report covered two key issues, both of which remain in the forefront of our minds. They are, first, the consequences of a potential no deal outcome, and, secondly, the nature of any transitional period that may follow Brexit on 29 March 2019.

First, on no deal, there are some who believe that no deal, a complete break with the EU and a resort to trading on WTO terms, is the right outcome for the UK. The views of that group were represented to our inquiry by John Longworth, of Leave Means Leave, who urged the Government to act now to, as he put it, “crystallise” the benefits of Brexit. That was a minority position, and even many convinced pro-Brexit experts, such as Ruth Lea, of the Institute of Directors, who gave evidence to our inquiry, believe that agreeing a trade deal is vital to our national interest in the post-Brexit era.

Still more striking, of the 40 written responses to our open invitation to submit evidence, not one argued that no deal would be the preferred outcome. We did not ask them to comment on whether Brexit was a good thing or a bad thing; we simply asked them to assess, on the assumption that Brexit was going to happen, the impact of no deal. The conclusion, contained in paragraph 56 of our report, is clear:

“It is difficult, if not impossible, to envisage a worse outcome for the United Kingdom”,


than no deal.

Last December’s agreement between the Government and the rest of the EU was a necessary first step to reaching a deal to avoid this damaging outcome, and I hope that the Minister will reassure us tonight that the agreement covering the rights of UK and EU citizens, the implications of Brexit for Northern Ireland and Ireland and the UK’s honouring of financial commitments it has voluntarily entered into is irreversible. What businesses and people across the country now need is an absolute assurance that there will indeed be a deal at the end of this process.

[Lord Garel-Jones (Con)]

Does the noble Lord agree that one of the characteristics of this country is that we do not have a written constitution, that the non-constitution is summed up by the words “Parliament is supreme”, that therefore the Supreme Court was right to rule that the referendum has taken place because it was authorised by Parliament and that Parliament has not authorised the outcome, which is, at the moment, unknown?

[Lord Whitty (Lab)]

My Lords, I am not, in my limited capacity tonight, going to argue with the Supreme Court or, indeed, the noble Lord. Clearly, there is a parliamentary process which, no doubt, noble Lords in the course of this debate may well refer to, and which I may refer to in my final remarks. However, the position of Parliament and how binding the role of Parliament in the final vote would be—a meaningful vote, which is now being debated in the other place on the withdrawal Bill—did not form part of this report.

What businesses and people across the country now need is an absolute assurance that there will indeed be a deal at the end of this process, and both sides need to realise that tone is as important as substance. As we say, government statements that no deal is better than a bad deal are not helpful. Last week’s spat between the Secretary of State, Mr Davis, and the Commission over the EU’s preparations for a no deal outcome was a case in point. Once the Government raise the possibility of no deal, of course the Commission is equally justified in advising those who will be affected by such an outcome of how it will affect them. In fact, our report attempts to do the same thing.

The evidence we received was that no deal would be deeply damaging to key sectors of the British economy: financial services, the agri-food sector, freight and transportation, higher education and research. Against this overwhelming evidence, it makes no sense for the Government to talk about retaining no deal as an option. We say that in paragraph 57. As last week’s events so clearly demonstrate, this kind of language,

“risks becoming a self-fulfilling prophecy”.

It does not make any sense to threaten the EU that we will shoot ourselves in the foot if we do not get what we want. It is we who will end up limping.

No deal will affect not just the economy; co-operation on security, counterterrorism, foreign policy—co-operation that is hugely in our interest—would be affected, too. That is no doubt why David Davis spoke to the committee about a so-called bare-bones deal covering some of these non-economic issues, but even if it were possible to negotiate such a deal, the damage to the rest of the economy of not reaching a trade deal would remain, so I hope the Minister will reassure the House, when he replies to this debate, that the Government are wholly and unambiguously focused on achieving the best possible deal, one that will benefit both the United Kingdom and the EU.

The second major theme of our report was transition, or implementation as the Government prefer to call it. This is an altogether more complex, though equally important, issue. Almost everyone, including the Government, agrees that we need a transition period; we cannot simply switch off the system of EU law, which has underpinned so many aspects of our national life for 45 years, at 10.59 pm on 29 March next year. There will have to be a transition, a bridge to lead us safely from where we are today to our as yet unknown final destination.

The Government continue to insist that transition will be merely an implementation phase, a time-limited period that will allow for a phased adjustment to the terms of the new UK-EU relationship, but if that is to be the case, the terms of that new relationship will have to be agreed, in full, before exit day in March next year. The committee agrees, at paragraph 123, that an “early and comprehensive” agreement would be the best outcome, but we have to be realistic, and the fact is that almost no one outside Her Majesty’s Government thinks that achieving agreement on this timescale will be possible, so unless there is extraordinarily rapid progress in the coming weeks, sooner or later the Government will surely have to acknowledge that transition will, in fact, be made up of at least two distinct elements. There will have to be an initial standstill phase, where everything stays pretty much as now, while negotiations to finalise the terms of the future relationship continue, and there will then be a period of adaptation or implementation.

We cannot say much about adaptation or implementation at this stage, since the negotiations on future relations have yet to start, but so far as the initial standstill phase is concerned, we cannot afford to wait. Uncertainty over the terms of UK trade with the EU from 30 March 2019 onwards is already having an impact on many sectors of our economy, for instance in the financial services sector, where insurers will soon be issuing policies which, by their very nature, extend beyond that date. So the forthcoming negotiations on transition really need to be concluded quickly and decisively. We cannot afford any lingering impression that the transition period is contingent upon reaching agreement on the future relationship. That would be damaging for business confidence and the wider economy. Instead, we need a commitment from both sides that, in effect, the legal framework for trade will remain unchanged between 29 and 30 March next year. In other words, we want to confirm that it is the Government’s intention that the transition period will be a standstill period in all respects, save that the UK will no longer be party to EU institutions.

My next point may appear more technical, but it is equally important. Both the Government and the Commission have indicated that they envisage transition forming part of the withdrawal agreement under Article 50 of the Treaty on European Union. The fact that both sides agree on this is welcome, but the ultimate arbiter of EU law is neither the UK Government nor the Commission, but the Court of Justice of the European Union. There is every likelihood that the ECJ will be asked to review the compliance of any proposed withdrawal agreement with EU law before March 2019.

As the report therefore points out, there remains a possibility, however remote, that even if political agreement is reached on transition, the court could strike it down before it comes into force. We recommend that the Government, as a matter of urgency, and if possible in agreement with the Commission, set out their view on the legal basis for transition. I hope that the Minister, if he cannot set out those views tonight, will at least assure the House that the Government will accept that recommendation.

Finally, I touch on the last paragraph of our report. There are two legally watertight ways to achieve a time- limited standstill period to buy more time to finalise the details of the agreement on the future UK-EU relationship. These are clearly set out in Article 50 itself: either to extend the two-year negotiating period or to post-date the withdrawal agreement so that it takes place later than March 2019. I recognise that neither side is currently contemplating such an extension of our EU membership, but the committee suggests that we should not rule it out, if only as a last resort—not to thwart Brexit, but in order to make it as smooth as possible.

We now have 14 months before we leave the European Union. I welcome the agreement the Government reached with the EU in December, although the substance of an agreement on Ireland remains dangerously opaque. The most difficult phases of the negotiations lie ahead. Time is short. The objective must be an orderly and legally certain transition to a new and lasting partnership between the UK and the EU. I beg to move.

--- Later in debate ---

[Lord Whitty]

My Lords, I thank the Minister and all noble Lords who have taken part in the debate. The noble Baroness, Lady Neville-Rolfe, said that it has been both enlightening and entertaining. That is certainly true. It was kicked off in high style by the noble Lord, Lord Hamilton of Epsom, which led on to rather more critical comments on this report, albeit from a minority of the speakers, than is normal in the Chamber. Select Committee reports are usually dealt with with a degree of deference, respect and gentility, even if there is some disagreement. Having had greatness thrust upon me and having therefore sat through the whole debate, which is not my wont, I feel that I need to reply to some of these contributions. Indeed, had I been in my own position in the speakers list, I would have spoken immediately after the noble Lord, Lord Hamilton, and I would have disagreed with him roughly on the same lines as did my noble friend Lord Davies, who is no longer in his place, and my noble friend Lord Liddle, who explained that we did not look at the damage to the EU primarily because the balance of advantage in these negotiations lies with the EU, because of the proportionate effect on the economies of both sides. It is also true that the report makes clear—I refer the noble Lord to paragraph 50—that no deal would also have a damaging effect on the EU. Indeed, Michel Barnier admitted as much when he gave evidence to us in July and we point that out.

I conclude from that, since we all at least make obeisance to wanting to make sure that whatever comes out of this Brexit process is good for the EU as well as for the UK, that our conclusion would have been that the damage of an absolute no deal would be to the EU as well as to ourselves. I doubt if a whole litany of German industrialists would have made that conclusion any different. As to British industrialists, we had responses from 20-odd sectors, all of which reached the conclusion that no deal would be the worst outcome for their sector. We cannot ignore that degree of evidence.

I was rather afraid at various points during this debate that we were refighting the Brexit referendum. Let me make clear that the committee accepted Brexit as its starting point. We also actually accepted what appears to be the Government’s negotiating position; that they want to move to a comprehensive agreement in the new stage—the second stage of these negotiations —which will mean, on the trade front, some form of free trade agreement. That comprehensive agreement, incidentally, should also cover some of the points that the noble Lord, Lord Blair, raised towards the end of the debate, on security and on co-operation on foreign policy.

What concerned us was that the timetable that the Government seem to have got themselves into would preclude being able to reach a decent and detailed free trade agreement effectively by this October. We are now in the middle of January. The Government hope to reach a deal on transition this March and an agreement on a free-trade deal covering the anxieties of every sector of our economy by October. We did not consider that sensible. We therefore go along with the Government’s objective that there will be a transition period and we regard that as being a period not just of standstill, during which we are still subject to EU regulation, but also as a period when we can finalise a full-scale free trade agreement. That seems to us sensible as a timetable.

The clock is seriously ticking on reaching agreement on a transition and on a free trade agreement, and getting a comprehensive new partnership with the EU. We were also concerned that negotiations so far have not filled us with as much confidence as we would like. The noble Lord, Lord Teverson, and my noble friend Lady Hayter pointed out the shortcomings of some of the negotiation stances. We over-eagerly accepted the sequencing put to us, which leads to some illogicalities. We ruled out many alternatives very early on. We exposed our negotiating position by disclosing our red lines very early. I have spoken about this before in the House. But what we are interested in today and what much of the debate has been about is whether a threat to walk away and have no deal actually enhances your negotiating position.

I have engaged in a few negotiations in my time—some successful, some not. Yes, people want to walk away in most forms of negotiation, and threaten to do so. At the end of the day sometimes they do walk away. But in most negotiations in business, industrial relations—and life—when you walk away, when the deal falls, you go back to the status quo ante. In this case there is no status quo ante because we have already determined that we are moving in an entirely different direction. That is why no deal appears to us to be so damaging. We are not going back to a position whereby we can start negotiating again if these particular talks fail. We are in an entirely different position in terms of the world economy as a whole, let alone our specific relationship with the EU.

Threatening to walk away, let alone what appears to have been suggested by some government spokespeople —that no deal could actually be a preferred outcome—does not do our immediate negotiating position any good whatever. I think that the mainstream of the Government—if I can put the Minister in that camp—feels broadly the same. That is the thrust of our report and why, for all the objective reasons that my noble friend Lady Hayter spelled out, an actual outcome of no deal would be so damaging, but the use of the no-deal option in these negotiations is of itself damaging to those negotiations and the preferred outcome that the Government are seeking.

I will make one final point before I let your Lordships go home. We say in the report—this has been picked up by a number of people, and the noble Baroness, Lady Wheatcroft, actually said that she favoured this outcome—that there is the option of extending the date of leaving the European Union. We also say that there is doubt about the legal form of transition and whether that can be dealt with in the withdrawal treaty. Other noble Lords have complained about us envisaging that we might change that date, but the alternative—which is the alternative that is most likely to happen now—is that we will reach an outline agreement, I hope, by October this year for implementation after March 2019 and then there will be a transition period, when we are still in a standstill period, obeying European rules but without any influence in the European institutions. That is preferable to us not having a transition period, but an easier and more logical way of doing that—a smoother way of moving towards Brexit—would be to extend the date so that the negotiations to complete the comprehensive agreement and the free trade agreement could take another couple of years, and within those couple of years we would be a full member of the EU, with full rights within the EU, rather than being a total and complete rule-taker during that two-year period. That seemed to us to be a more desirable outcome and in many respects an easier way of dealing with this.

Of course, the difficulty is—and I remember saying this quietly to the noble Lord, Lord Jay—that there are elements in the governing party who would not accept this. More importantly, possibly, there are very large elements within the British media which would not accept it. Although we decided that we would put it in the report, my hesitation has been borne out tonight by those noble Lords who have portrayed this as a betrayal. That was not the intention. As a committee, we accept the Brexit decision, whatever our individual views may be, but a logical way out of the dilemma we are now in would be to extend the date.

I will end on that. It has been a very entertaining and enlightening debate, as the noble Baroness said. Once again, my thanks go to everybody and I will pass on your Lordships’ good wishes to both the noble Lord, Lord Jay, and the noble Lord, Lord Boswell. The committee will be back in normal working order, I hope, very soon. I beg to move.

Motion agreed.

Brexit: Trade in Non-financial Services (EUC Report)

Lord Whitty Excerpts

Monday 18th December 2017 Lords Chamber

Moved by

[Lord Whitty]

That this House takes note of the Report from the European Union Committee Brexit: trade in non-financial services (18th Report, Session 2016-17, HL Paper 135).

[Lord Whitty (Lab)]

My Lords, I commend to your Lordships this report by Sub-Committee G. I thank the members of the sub-committee—many of them have put their names down to speak today—for their important contributions, and I also thank the staff of the committee and our specialist adviser, Dr Ingo Borchert.

I want to make three preliminary points. The first concerns the elapsing of time. The inquiry was conducted between October 2016 and January 2017, over a year ago, and our report was published on 22 March, which was still before the Government triggered Article 50. Much water has therefore passed under the bridge since publication. Regrettably, much of that water is almost as murky today as it was then in terms of the kind of free trade agreement that the Government are really after and how services fit in with that approach. The negotiations have had their ups and downs, and the Government have produced a number of future partnership papers on the UK’s relationship with the EU, but regrettably, up until today, no response to our report has been forthcoming from the Government.

It was delayed at first by the general election and subsequently by the Government’s insistence that they cannot provide us with a response until all their position papers have been published. I had a gracious response from the noble Lord’s predecessor but that was some months ago. I take this opportunity to express my disappointment at this and to emphasise the Government’s responsibility to engage with such reports and the findings of Select Committees. Therefore, I look forward to the Minister giving his detailed response later this evening.

My second preliminary point concerns the vital importance of these key services. As we know, the UK is very much a service-driven economy, and in these services the EU is an important trading partner. We export in aggregate to the EU and worldwide more than does the financial services sector and two-thirds the amount of the goods sector, and we have a surplus in most of the areas covered by the report. We emphasise the complexity of trade in services, which admittedly is largely unaffected by tariffs but can be substantially restricted by non-tariff barriers.

Our report tries to examine what a bold and ambitious free trade agreement between the UK and the EU would look like and what it would need to include to represent a good deal for these non-financial services. We also look at the implications of trading in services under WTO rules—the so-called no-deal scenario.

My third preliminary point was the inadequacy of the statistics on these services. I was quite keen to spell this out but, interesting though it is, in view of the lateness of the hour I will instead refer noble Lords to chapter 2 of the report, which addresses that complexity.

As I said, trade in services does not generally attract tariffs, but trade is very much restricted by various forms of non-tariff barriers, some cultural but, in the main, resulting from divergent regulatory systems. Within the EU, the single market in services has not developed nearly as completely as the single market in goods. Nevertheless, significant progress has been made in developing common regulatory frameworks and structures and often specific consumer protection provisions for the various sectors, such as those in aviation, transport and travel, audio-visual and broadcasting, and telecommunications. In many of these areas the frameworks are overseen by EU agencies, such as the European Air Safety Agency. In most of these agencies, of which there are 34 in total, the EU has historically been a very influential member as well as a major beneficiary.

There are also some general provisions in EU regulations and directives that facilitate trade in services, such as the mutual recognition of qualifications, various intellectual property provisions, provisions on the free flow of data, and general data protection and consumer protection. There are also programmes that facilitate university students’ teaching and research. In many of these sectors, there is the free movement of often highly skilled labour.

It has to be said that at the point we received written and oral evidence, almost all representatives of the services we covered were relatively satisfied with the present or prospective EU situation affecting their sectors and the degree of influence and reflection of their interests they felt they had in these European institutions. Most were keen for the EU single market to move rapidly in the services sector and were encouraging the Commission and member states to move faster. They were particularly keen on developing a real single digital market.

At that time, most sectors were also confident that a separate bespoke sectoral agreement might need to be made in their areas to preserve the benefits of the single market. They saw a mutual UK-EU benefit in continuing the existing relationships. I will come back to the issue of separate sectoral agreements. Of course, this could have been agreed if we had moved towards the option of rejoining EFTA and the EEA, but that had already been ruled out by the Government; hence we did not consider it in detail but focused on a comprehensive free trade agreement.

I will make a few specific comments on some of the main exporting sectors, beginning with the professional business services, such as legal, accountancy, medical, engineering, business consultancy services and so on. These represent the UK’s largest services exports, generating a £30 billion global surplus and a £6 billion EU surplus. To support this sector, a free trade agreement would need to include provisions on the mutual recognition of professional qualifications and regulatory structures. It will also be important for UK businesses to retain the right to establish themselves in the EU, and of course vice versa, and to move staff easily across borders to service European clients and contracts at short notice. For these sectors, a no-deal scenario would result in increased, and in some cases absolute, barriers to trade with the EU. That would be particularly so for regulated businesses such as legal and accounting firms. In such a scenario we conclude that businesses would be likely to have to relocate or move substantial resources to the EU, incorporating separately, which would impact the UK’s trade balance, tax revenues and employment.

Digital services represent an important and growing sector of UK trade, which created jobs at almost three times the rate of the rest of the UK economy in the first half of this decade. To maintain the UK’s leading position in this field, a lot of our witnesses highlighted data transfers and access to skills as their most pressing concerns. Some adequacy decision from the Commission on the UK’s data protection standard would be needed to maintain the flow of data between the EU and the UK under a free trade agreement and it would be important to ensure that future changes in domestic law do not jeopardise regulatory equivalence in this field. On the other hand, a no-deal scenario would represent a regulatory cliff-edge for UK digital businesses and many may choose to relocate or redirect part of their activities to the EU.

The UK is also a world leader in creative services from music to fashion and design, representing a global hub in which companies from different parts of the creative sector cluster in the UK. To sustain that status, a comprehensive free trade agreement would be needed to ensure protection of intellectual property rights, market access and the mutual recognition of broadcasting licences, for example. Again, the contrast between a free trade agreement and a no-deal option was stark. Alternative conventions and treaties do not account for technological developments such as on-demand services, and so are not really viable options for trade. Audio-visual media services are also excluded from the EU’s schedule of commitments at the WTO, meaning that EU member states would be free to impose discriminatory provisions on the UK in the event of there being no deal.

We also considered aviation services. Witnesses told us that the strength of the UK’s aviation sector and shared interests with the EU offer important leverage for the Government to negotiate a good deal for UK air services after Brexit, either through continued membership of ECAA and EASA, the safety agency, or a bilateral air services agreement with the EU. Our report recommends that the Government should urgently clarify which of those two options they will seek. As air services are excluded from the WTO provisions and the validity of pre-existing bilateral agreements is frankly uncertain, there is no viable fallback position under a no-deal scenario for aviation. We also emphasised the importance of clarifying the UK’s position with regard to EU-third country aviation agreements and of securing transitional arrangements if the UK has in the event to negotiate new bilateral agreements with these markets.

Last month, we held a follow-up session with witnesses from the aviation sector. They were still confident that the UK and the EU would be able to strike a deal on air services due to the sector’s fundamental importance to both parties and restated the view that this should be negotiated and agreed separately from any wider UK-EU free trade agreement. Incidentally, we intend to hold similar follow-up sessions with other service sectors.

Chapter 8 of our report looked at the UK trade in travel services and tourism, highlighting the importance of UK tourism to some EU member states as well as its social importance to families and businesses in the UK. Incidentally, tourism is the one sector in our analysis where we are in substantial trade deficit with the EU, largely because of the balance of tourist journeys. UK visitors unaccountably prefer the Med compared with EU tourists to British climes for most of the year. Again, our own tourism industry is doing reasonably well. As we have seen from the tourists around here, we are still dependent on EU tourists freely coming to London and other parts of Britain to spend their money and appreciate our culture, business and economy.

Throughout our inquiry, our witnesses told us that the UK is a global leader in these services and that the Government had already engaged extensively with the sectors to inform their position in negotiations with the EU. We applaud that on behalf of the Government. However, it has not been clear, either then or since, quite how the Government would respond to the points raised with them by the sectors. We start from a position of harmonisation, which ought to help us provide the foundation for an ambitious partnership for future UK-EU trade services. However, it is clear that to protect our service sectors the UK’s future partnership will need not only to be ambitious, but to deliver the most competitive services free trade agreement the EU has ever agreed. Reduced EU market access or failure to secure a free trade agreement at all would risk significant changes to the sectors, which would face increased regulatory complexity and some businesses would need to restructure or relocate their operations.

The Government also need to recognise the alarm raised by many of these businesses at the abandonment of the free movement of people. A relatively high number of EU nationals work in all these sectors, from the brightest and best in tech and professional sectors to the mobile labour in some areas of tourism. Put delicately, this dimension needs to be taken on board as the Government move away from freedom of movement to new forms of migration controls. Our report also calls on the Government to prioritise agreement of transitional trade arrangements to avoid a regulatory cliff edge and to reduce uncertainty. I hope that such an agreement on transition is now in sight.

It seems that the Government’s negotiations now face a dilemma, which was clearly spelled out in the news bulletins this very morning. All these sectors want to continue and to develop the kind of regulatory trading structures they currently have access to, with minimal change to trading arrangements, standards, the regulatory framework, and technical and regulatory agencies. They want bespoke chapters or separate deals in any free trade agreement to achieve that. But while David Davis may advocate Canada plus-plus- plus, neither CETA—the Canadian agreement—nor the South Korean and Japanese deals, which are very extensive deals with the EU, cover anything like bespoke provisions on which we can build. Of course, Michel Barnier says that we cannot cherry pick or have bespoke deals. There is not only no template; we do not have a mutuality of approach.

In preparation for this debate, I flicked through the 450 pages, excluding annexes, of the Canada agreement. While there are some particular provisions on services, such as telecommunications, and some general issues, such as intellectual property, are covered, there is very little on services and it is very thin. However, as I have said and as I have no doubt the Minister will emphasise, we start from near regulatory equivalence with industries that largely want to keep it that way.

I am about to conclude. Most of the points we made in the report, almost a year ago, remain valid. Real trade talks are about to begin in earnest. The Government need to take on board those points from us and from these dynamic sectors, as well as those from more obvious and traditional voices approaching the Government from the City, the manufacturing sectors and areas such as agriculture. It is vital that these key growth service sectors, replete with innovation and creativity, are not sacrificed in the inevitable trade-offs with other issues that will arise once the complex trade negotiations begin. I hope this morning’s Cabinet Brexit committee will at last have addressed some of these issues and be clearer on the outline free trade agreement that we are trying to achieve. I look forward to whatever the Minister may be able to tell us about those developments and his comments on the report. I beg to move.

--- Later in debate ---

[Lord Whitty]

My Lords, in view of the hour and the state of my throat, I will be relatively brief. I thank the Minister for his response. In default of a previously written report, he has covered a lot of ground. I am not entirely clear why the department could not have written that down before. Nevertheless, I am grateful for it and look forward to a more detailed reply in the new year which fits his remarks in the general positioning of the Government following the conclusion of the withdrawal arrangements and the discussions that have now taken place at the highest level on the Government’s approach to Brexit.

There are two key points about this report. I thank all noble Lords who have participated in the debate—both the members of the committee and the newcomers. I was particularly grateful to see the noble Lord, Lord Green, join us. I will certainly take his point and will read the Japanese agreement in more detail than I have done hitherto. Those noble Lords who are outsiders will have noted, from the rather clever sequencing of speeches, with the noble Baroness, Lady Noakes, being followed by my noble friend Lord Liddle, that the committee is not always easy to control or to bring to a consensus. However, broadly we do, and the report reflects our experience of that, whatever our preconceptions.

The two key things are these. These sectors—this wide range of sectors—are very important to this country. I think that many of us did not realise quite how large or how important they are, and they require special attention in relation to trade discussions. Hitherto, we had the suspicion that their leverage had been somewhat less than that of traditional sectors such as manufacturing and the City. It is therefore important that their voice is heard.

Their voice was, by and large, pretty unanimous. It was not that they wanted the status quo, but they were keen on the single market and wanted to move more rapidly than the EU was moving towards something like the single market. However, we know that that is not the Government’s preferred option; we are talking about the structure of a free trade agreement. All of us, whatever our previous preferences, are focused on what the nature of that agreement now is.

What we need more from the Government than we had tonight is an indication of how the esoteric elements of these various industries will fit in with their approach to negotiating that free trade agreement. If the Minister is able to give us at least an indication of that without betraying all the cards in the negotiations early in the new year, I am sure that all of us would be most grateful—as, more importantly, would be all those sectors. There is a lot of uncertainty and concern, and these sectors are all people based. They serve people and employ people, and their assets are not fixed but are intellectual and people-based assets, which means they are highly mobile. The success that the UK has hitherto had in these sectors is a fragile but very important thing, and we need to preserve it.

I hope that the approach of the Government in the trade negotiations does not ignore these sectors and that in fact there is a brave new world out there. I have as yet to be totally convinced that the Government have reached that point, but we will continue to monitor it, and I am sure that the Government will provide us with some further information.

Motion agreed.