European Union (Withdrawal Agreement) Bill

Viscount Trenchard Excerpts

Committee: 2nd sitting (Hansard continued) & Committee stage & Committee: 2nd sitting (Hansard continued): House of Lords
Wednesday 15th January 2020 Lords Chamber

[Lord Liddle (Lab)]

My Lords, I support the amendment moved by my noble friend Lady Hayter. I particularly support the speech of the noble Earl, Lord Kinnoull. He is already establishing himself in this House as an excellent chair of the EU Select Committee, succeeding a previous excellent chair. My only regret is that I am no longer on that committee to serve under his chairmanship.

In my experience from my four years on the committee, the attitude of successive Secretaries of State towards the committee was always one of good will but they made promises they never kept. At one stage, we were told, “Oh yes, every month you’ll see me and I’ll come to answer your questions.” My recollection is that we saw David Davis at intervals of perhaps five months during his time as Secretary of State. I think that we saw Mr Raab once; I might be wrong about that. Mr Barclay was the most attentive towards the committee. He seemed keen to improve in the next phase of the EU negotiations on his own degree of accountability. He saw maximum transparency in the conduct of the negotiations as being in the Government’s interests. I am sorry that No. 10 has decided to go for breach of promise on all this. That is a great shame.

Whenever the issue of the European Parliament’s rights to scrutiny is raised, you get a vigorous shaking of the head from the Minister, the noble Lord, Lord Callanan. I would love to hear his explanation of why those rights are not what we all know them to be. He seems to reject the notion that the European Parliament has many more rights than the British Parliament to access information and question officials to find out what is happening, but that is the case. The role of the European Parliament was greatly strengthened by the Lisbon treaty, and again by the ECJ judgment to make it easier for the Commission to negotiate on the EU’s behalf on services as well as on goods. It has also been strengthened by the brouhaha over the Canada agreement; a stronger role for Parliament clearly would have prevented the difficulties that the agreement then ran into in its ratification in member states. I think it is in the Government’s interests to be more transparent.

Yes, Brexit is happening—as I said in my Second Reading speech, I fully accept that—but the Government do not yet realise what trade negotiations are really like, because they have not done them for half a century. Having served for three years in DG Trade, or at least in the cabinet of the Commissioner, I can tell you that they are brutal. The people in charge of the EU side in these negotiations stand up for EU interests with tremendous firmness. I suspect that this is what we will encounter once we have allowed ourselves to become a third country, which in a few weeks we will be. They will treat us like any other third country.

One has to be transparent about the trade-offs. I will cite just one example. How do we rate the relative importance of the fishing and car industries? The fishing industry has tremendous political profile and thinks that as a result of Brexit it will get much more fishing in British waters and that we can keep continental boats out—but it represents 0.5% of GDP. How much are we prepared to sacrifice in our negotiating position for the fishing industry? The car industry employs up to 1 million people in this country, when you look at the supply chain. If we do not achieve the kind of customs partnership that Mrs May said she was in favour of, there is a real risk that inward investment by the overseas companies that rebuilt the car industry in Britain will go elsewhere over time. There has already been a lot of talk of that on their part. This would be a devastating blow to one of Margaret Thatcher’s main achievements in the 1980s and 1990s in being able, as a result of creating the single market, to attract to Britain huge amounts of foreign investment, which has greatly benefited our people. I repeat: 1 million jobs.

If there is not transparency, how do the Government explain to people that they are not guaranteeing the future of 1 million jobs but have put all their negotiating eggs in the basket of trying to give a few more opportunities—not actually saving any jobs—to our fishing? We need openness if we are to have a proper debate in this country about where our interests lie. That is what we need in the coming 12 months if we are to have any hope of a harmonious outcome to these rushed negotiations.

[Viscount Trenchard (Con)]

My Lords, I will comment on the views of the noble Lord, Lord Liddle, about the European Parliament and the relative degrees of parliamentary scrutiny. He has much more experience of Brussels; I have worked there, but not for nearly as long as he did. It is not correct to say that the European Parliament’s rights in this matter are greater than the United Kingdom Parliament’s. Article 218 of the Treaty on the Functioning of the European Union states that the European Parliament must be kept

“immediately and fully informed at all stages of the procedure”,

but does not give it a role in deciding the substance of the negotiations. However, it must pass the final agreement by a simple majority vote. So it has to agree at the end, but it appears not to have the right, stage by stage, to dictate to the Government what they are to do as they negotiate.

[Lord Liddle]

I never claimed that. I claimed that the Parliament was so fully informed that it had a grasp of the trade-offs that it would have to make in deciding whether to vote for this deal at the end of the day.

[Viscount Trenchard]

As far as I understood, the noble Lord said that the European Parliament had much more say in dictating the mandate, but perhaps I misunderstood him. In any case, it appears that during the last three years the UK Parliament has been exercising power to control the Executive, and the Executive have not been seen by their interlocuters on the European side as having the right to negotiate, because all the time noble Lords opposite, and others, were saying to individuals in Brussels, “Don’t worry, Parliament isn’t going to allow the negotiating team to do this. We will reverse it.” Now the people have spoken and the House of Commons has a strong majority of 80 Conservative MPs, all committed to a real Brexit. That is known. This amendment is designed to obstruct because the House of Commons will not accept it, and noble Lords know this well.

[Lord Wigley (PC)]

My Lords, I very much agree with the points made a moment ago by the noble Lord, Lord Liddle. In Wales during the 1970s, 1980s and 1990s, we were fortunate enough to attract more than 200 American companies and more than 50 Japanese companies to invest in Wales, largely through the work of the Welsh Development Agency. They came to Wales in order to sell to the European market: there is no question about that, and therefore these questions are of mainstream importance to the National Assembly for Wales. That is why Amendment 40, standing in my name, covers the matters involved in Amendment 27 and brings into the loop a role for the National Assembly for Wales, the Scottish Parliament and the Northern Ireland Assembly. I concur very much with the points made by the noble Baroness, Lady Hayter, in opening this debate.

Amendment 27 provides, in subsection (4) of the proposed section entitled, “Negotiations for future relationship,” that:

“A Minister of the Crown may not engage in negotiations on the future relationship with the EU unless … a statement on objectives for the future relationship with the EU has been approved by the House of Commons.”


My Amendment 40 extends the same principle to the National Assembly for Wales, the Scottish Parliament and the Northern Ireland Assembly.

The lead Amendment 27 does indeed bring in the three devolved legislatures, to the extent that it provides that copies of the proposed progress reports should be provided for each devolved legislature, and to the relevant Ministers of those three nations. The general arguments in favour of my amendment are similar to those for Amendment 27, so I will not repeat them. I support everything stated by the noble Baroness, Lady Hayter. However, I will again press that the devolved legislatures should be fully in the loop and that their approval should be obtained. They have as valid a right to be in the picture as Members of the European Parliament; it impacts directly on their work.

I realise that the Government may withstand the whole concept of getting prior parliamentary approval for their negotiating position with regard, say, to trade in sheepmeat, but they contend that the Government can negotiate exactly what they like, and they have it in their power to do so. In reaching their negotiating position and their proposals, they will no doubt have discussed their strategic objectives with their ministerial colleagues in charge of sheepmeat issues in England. It would be amazing if they were not to do so; indeed, it would be a chronic dereliction of duty. But, unless a provision along the lines of Amendment 40 is brought into play, the government team in charge of negotiating with the EU on the future sheepmeat trade will be totally ignorant of the views of Wales, Scotland and Northern Ireland. These need to be systematically built in.

--- Later in debate ---

This amendment also seeks to maintain UK access to participation in major funding programmes and the like, which I will not go into. The amendment sets out what we think is important around the level playing field issue. It maintains a beneficial framework—a framework jointly developed by the United Kingdom with the European Union; it was not foisted on us—and it helps to send the right messages to important businesses and sectors about how they can face the future. This discussion is a chance for Her Majesty’s Government to set out their approach because, at the moment, the messages have been confused, confusing or both, so we look forward to comments from the Minister.

[Viscount Trenchard]

My Lords, the noble Lord, Lord Fox, has talked at great length about a level playing field. The level playing field he refers to is the EU level playing field. It is not any other level playing field, such as the House of Lords level playing field, which seems to suit the Liberal Democrats, who are overrepresented in your Lordships’ House by 67% on the basis of the proportion of votes cast at the last general election.

[Lord Fox]

I congratulate the Member opposite on embracing proportional representation.

[Viscount Trenchard]

That is my pleasure. Proportional representation has its place but it may not be applicable everywhere.

I am very surprised that the noble Lord has sought to require the Government to adopt his amendment seeking a level playing field with the EU on workers’ rights and environmental and consumer standards. Is he not aware that it was a manifesto commitment of the Conservative Party, to which all Conservative candidates signed up, that the Government would get a proper Brexit done and that we would leave the customs union and the single market? It is essential that we do that to have the flexibility we need to develop and maintain our own independent trade policy, and to negotiate free trade agreements with third countries.

The noble Lord’s amendment requires close alignment with the EU single market, underpinned by shared institutions and obligations. “Shared institutions” sounds to me as though we could still be regulated by EU regulators even after we had left. The EU will seek to export its regulatory framework and standards to us in return for providing market access. Dynamic alignment on workers’ and consumers’ rights would completely subjugate us to the EU, ruling us out as a potential trade partner for others and denying us the benefits and upside of Brexit. We know that the noble Lord does not want to leave the EU but surely he understands that, given that Brexit is going to happen anyway, we should make sure that we can play on a level playing field at the global level. That means freeing ourselves from EU strictures, such as the noble Lord’s amendment would make worse.

[Lord Warner]

I am sorry to interrupt the noble Viscount’s flow but I cannot resist asking him, even at this time of night, whether the Prime Minister’s new best friends in constituencies in the north of England and the Midlands will welcome his robust approach to workers’ rights at the next election.

[Viscount Trenchard]

I believe that the policy which my right honourable friend the Prime Minister used to persuade his new supporters in the north of England and elsewhere to support is one that will produce more prosperity for the United Kingdom and a brighter future for all, and that those who voted for him in the north of England will see that it is in their interests to continue to vote for him and his successors, because his policy will have so clearly worked. Furthermore, since we will be free of the cash drain and the regulatory strictures of the EU, which have progressively stunted the United Kingdom’s voice in global fora—I speak as someone who has spent a large proportion of his working life outside the UK, looking in—the new supporters of the Conservative Party in the north will, I hope and trust, wish to continue to support it.

The noble Lord, Lord Fox, talked a lot about regression and standards. He is always trying to bind the Government not to resile or retreat from the high standards set by the EU. But standards are not about high and low; they are about what is proportionate, what properly balances the interests of the innovator with those of the consumer, and what sufficiently but properly protects the consumer against risk. EU regulation in many fields relies so much on the precautionary principle that it has a very negative effect on innovation. That places at risk the UK’s position as the best country in the world in which to conduct medical and scientific innovation, so for all those reasons I would resist the noble Lord’s amendment.

[Baroness Ludford]

Before the noble Viscount sits down, can I point out that the reputation he just mentioned, as the greatest country in the world in which to develop medical and other research, has been acquired while we have been in the European Union?

[Viscount Trenchard]

The noble Baroness is quite right—it is in spite of our being in the European Union. This precautionary principle regulation increasingly affects international pharmaceutical companies, which have said to me that it is important that we should not allow much more of that or we will be a less friendly place for innovation.

[Baroness Hayter of Kentish Town]

My Lords, I do not know about this talk of workers’ rights, but I started at 11 this morning, it is now nearly 10 pm and we are starting again at 11 tomorrow morning—sadly not being paid to be here; I am not a worker, so I cannot use the EU regulations. But that is rather beside the point. I am looking forward to the Minister’s “intellectual thoughts” as the noble Lord, Lord Fox, asked of him.

The Government’s aim is for a free trade agreement—“unfettered” trade—which, if we are not to undercut our competitors across the EU, is bound to involve a level playing field of regulations and state aid rules, as the noble Lord, Lord Fox, said. Michel Barnier has repeatedly stated that Boris Johnson’s ambition of a tariff-free, quota-free deal hinges on accepting this, and EU leaders suggest that level-playing-field commitments will be a precondition for the EU to conclude a free trade agreement. Emmanuel Macron has stated that

“the more ambitious the agreement, the more substantial the regulatory alignment”.

That does not mean all the same rules and institutions—we do not go along with that—but this is about the rules by which we can trade with the EU. Macron also said that a level playing field will make the negotiations “go pretty quickly”.

As we know, the Prime Minister keeps saying “Get Brexit done”, but this also means getting an FTA before the end of the year. If we do not uphold workers’, consumers’ and environmental rights, this will not help the Prime Minister to get his Brexit done. Appearing willing to undermine EU standards—and the Government are seen as undermining them—will immediately indicate to the EU that its companies may face unfair competition from ours. The Government’s deletion of the clauses upholding existing rights has already alarmed the EU and companies there, let alone our own workers and consumers.

Amendment 35 inserts the aims already set out in the political declaration—though of course they are not enforceable in that—where the Government agreed to

“maintain environmental, social and employment standards at the current high levels provided by the existing common standards.”

We are asking for this, from the political declaration, to be included in the Bill.

We have had 45 years of progressive integration of our employment rights and other standards alongside the EU. These regulations are good in themselves for the workers and consumers concerned and for the environment, but they are crucial for an open, fair and competitive continental market on whose growth and resilience all our well-being depends. Furthermore, as has been suggested, any future trade deal must incorporate these high levels of alignment and a level playing field with the EU in order to prevent an alternative vision—the deregulatory US deal—taking primacy over the EU deal. It sounds as though that it is something the noble Viscount, Lord Trenchard, would like, but we on this side of the House would not. Let us keep to the high standards that we have.

European Union (Withdrawal Agreement) Bill

Viscount Trenchard Excerpts

2nd reading & 2nd reading (Hansard): House of Lords & 2nd reading (Hansard)
Monday 13th January 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I thank my noble friend Lord Callanan for his optimistic and confident introduction and congratulate my noble friend Lord Barwell and the noble Lord, Lord Mann, on their inspiring maiden speeches. I am enormously excited and heartened by the ringing mandate given to the Prime Minister in the general election last month. As he said:

“Now is the time to act together as one reinvigorated nation, one United Kingdom, filled with renewed confidence in our national destiny and determined, at last, to take advantage of the opportunities that now lie before us.”—[Official Report, Commons, 20/12/19; col. 146.]


During the years that I worked in Tokyo, and later when I worked in Brussels, I too believed that the UK should remain a member of the EU. However, with the passage of the Maastricht and Lisbon treaties, it has become increasingly clear that the EU is different from the body we joined. We had become increasingly uncomfortable passengers on the European train because we knew or suspected that its intended destination was different from where we wanted to go.

The Government have rightly recognised that there is nothing to be gained from providing for the possibility of an extension to the implementation period beyond the end of this year. Anyone who has experience of negotiations knows well that parties are willing to make their most significant concessions only when it has finally become clear that their interests depend on reaching agreement within a certain timescale. As long as the EU could hold out the hope that we would ultimately decide not to leave—or anyway not leave the customs union or the single market—it would continue to try to prolong the negotiations. As my right honourable friend Dr Liam Fox said at Second Reading in another place:

“We will face a political issue rather than a technical issue,”—[Official Report, Commons, 20/20/19; col. 154.]


if the EU were to prevent our reaching a satisfactory trade deal before the end of this year. The debate will not be about tariffs, fees and quotas, but about regulatory alignment.

There are two diametrically opposed systems for conducting global trade. One is to require your trade partners to harmonise their regulations with yours, as the EU is increasingly demanding. The only other major economy seeking to do this is China. The other system is to work towards outcomes-based equivalence, leaving each country free to determine its own rules and standards and to achieve that in a way which best reflects its legal system and its business practices. This way is consistent with parliamentary democracy, but the EU’s way is not. It is very important that our negotiators make it clear that we cannot accept any concept of dynamic alignment with EU rules. Mark Carney, who is not one of the strongest advocates of the merits of Brexit, has warned that the City must not be forced to accept EU financial regulations after we have left.

There has been much talk of the risk of damage to the City if it is denied access to European markets. However, surely a bigger risk is that faced by continental users of the London markets. For example, what damage would German car makers suffer in the event that EU regulators were to prevent them raising funds in the liquid international capital markets based in London? Their cost of funds would rise significantly. It is in our discretion to allow European financial institutions to continue to operate here, and I cannot believe that their regulators will really wish to circumscribe their activities here.

Finally, I shall say a word on the union. I believe that leaving the structures of the EU will of itself immediately start to reduce the support for independence for the constituent nations of the United Kingdom. EU membership, as the EU elite in Brussels perhaps knows better than we do, of itself diminishes the significance of being British and a part of the United Kingdom. Remove the European umbrella and the Scots will suddenly come to appreciate the British umbrella—especially the Barnett-lined umbrella—much more than they did. That is why I believe that the threat to the unity of the United Kingdom will be diminished, not enhanced, by Brexit.

Brexit

Viscount Trenchard Excerpts

Wednesday 2nd October 2019 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Wigley, although I regret that what I have to say will not be to his liking.

I thank my noble friend Lord Callanan for introducing this debate. I am not a lawyer, but I am surprised that the learned justices of the Supreme Court ruled as they did last week. It seems to me that they have changed the constitution by their decision that the Prime Minister’s use of his prerogative powers in advising Her Majesty the Queen to prorogue Parliament was justiciable, contrary to the opinion of the Lord Chief Justice and the Master of the Rolls. Their justification seems to be based on their opinion that the effect of prorogation upon the fundamentals of our democracy was extreme. However, prorogation reduced the number of sitting days by only three days from what was anyway scheduled. Furthermore, both your Lordships’ House and another place had clearly passed the decision on Brexit to the people to decide by referendum, promising to carry out their decision. I believe that those responsible for the passage of the surrender Act, and indeed the Cooper-Boles Act, have had a much more extreme effect on our democracy.

I agree with the Government that it would be much better to leave the European Union with an agreed deal, providing a transition period to the end of next year. However, those who have tried and continue to try to take no deal off the table have done the country a gross disservice by seriously weakening our negotiating position. I wholly agree with the Prime Minister that it is time to get Brexit done and move on. We have already postponed our departure from the EU twice, at considerable cost to businesses and unnecessarily prolonging uncertainty. The surrender Act significantly reduces the incentive for the EU negotiators to show flexibility in revising the withdrawal agreement to one that might find support in another place. I commend the work of the Alternative Arrangements Commission, whose report published in July has, I believe, assisted the Government in putting forward the very reasonable proposals put to Mr Juncker today.

I was in Japan earlier this month and was able to discuss the current situation with several senior politicians, civil servants and businesspeople. They are, of course, concerned about the potential disruption to trade between the UK and Europe. However, the Japanese Government very much want the UK to use its regained freedom in trade policy to accede to the Trans-Pacific Partnership, or TPP. They want us as a member not only because we are the one country most likely to spur the United States to reconsider its decision to withdraw; they want us there in our own right as a G7 economy committed to furthering a global trading system based on competition and free markets, where nation states are free to adopt regulatory regimes that suit their own needs and priorities based on mutual recognition and equivalence of outcomes, rather than state-led harmonised regulation, with excessive reliance on the precautionary principle, as increasingly adopted by the EU.

Six of the 11 members of the TPP are Commonwealth countries, including Australia, Canada, New Zealand and Singapore, and the Governments of those countries have all also shown support for UK accession. The negotiations with Japan on an FTA and on the TPP could be a single-pocket negotiation. While shackled to the EU’s customs union and single market, we would not be able to join the TPP or enter into any other FTAs. I welcome the new Government’s policy of seeking a trading relationship with the EU which is as frictionless as possible, given our absolute requirement to be free to develop our independent trade policy.

I give the example of a major Japanese pharmaceutical company whose CEO I have known well for nearly 40 years. When Brexit came along, he was initially upset and disappointed; it has cost his company some $8 million to strengthen his EU-based companies and obtain the necessary licences from the European Medicines Agency, requiring some duplication with the group’s UK companies. Now he is confident, deal or no deal, that he can research, develop, manufacture and distribute medicines in the UK and in the EU 27. Now he wants the upside of Brexit. His expectation is that the UK will move to a more innovation-friendly regulatory system, which means divergence from EMA rules. He is confident that if the UK will do this, it can remain the best place in the world for a life sciences company such as his to research and develop new therapies and medicines. However, noble Lords opposite and, indeed, some of my noble friends are determined to ensure that if Brexit takes place at all, it should be only a very soft one whereby we remain under the EU’s trade policy control and have no say in new laws that it brings in as it moves to further harmonise and expand its competences at the expense of its member states. Your Lordships’ House has even passed an amendment to the Trade Bill to require continued adherence to EMA rules and oversight after Brexit.

There is no point at all in being half in and half out of the EU. I strongly believe that the way to maximise prosperity for our country and all its people in future decades will be to get Brexit done on 31 October, as the Prime Minister promises to do.

Brexit: Appointment of Joint Committee

Viscount Trenchard Excerpts

Wednesday 3rd July 2019 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I respect the opinion of all noble Lords who have spoken so far in this debate but, holding a different opinion from the majority in this House, I would like to put forward some other points.

I believe that the Government were right to try to negotiate a sensible withdrawal agreement that would allow us to recover our freedom as a global trading nation with an independent trade policy yet continue to trade as smoothly and easily as possible with the EU. I absolutely cannot understand why the Government’s negotiators believed that they had to accept the EU’s demand to agree the terms of withdrawal separately before starting to negotiate the basis of our future relationship. The separation of negotiations into two parts played completely into the hands of the EU’s negotiators. We had a very strong case for refusing to separate the negotiations in this way, as Article 50 clearly states that,

“the Union shall negotiate and conclude an agreement”,

with the departing member state,

“setting out the arrangements for its withdrawal, taking account of the framework for its future relationship”.

As the noble Lord, Lord King of Lothbury, has said,

“There are arguments for remaining in the EU and arguments for leaving. But there is no case whatever for giving up the benefits of remaining without obtaining the benefits of leaving”.


I agree with him that it makes no sense to try to find a framework for our future relationship that effectively keeps us half in. Should your Lordships’ House agree with the proposal of the noble Baroness, Lady Smith, to appoint a Joint Committee, would it not be logical for such a committee also to consider the costs and implications for the United Kingdom of staying in the EU or of seeking a third extension to the Article 50 period? Many people are asking, “Why haven’t we left already?”, irrespective of whether they voted leave or remain in 2016. The uncertainty created by our failure to leave according to the expected schedule has resulted in extra costs and uncertainties for business.

In 2018, our net contribution to the EU after rebate and after £4.3 billion of public sector receipts amounted to £8.9 billion. However, moves are afoot to abolish all rebates for the next EU multiannual financial framework for 2021-27. If this were to happen and if the UK, in spite of the referendum vote, were to remain a member of the EU, our contributions, net of public sector receipts, would be likely to be in excess of £13 billion or some £250 million a week.

It is a fact that small companies have found it increasingly expensive to comply with all the EU regulation that has been transposed into domestic law over the last few years. It is true that much of this has been initiated by the UK, but where we have opposed elements of EU regulation, we have always been overruled, especially with the extension of qualified majority voting in recent years. In the financial sector, many smaller asset management companies have been forced to merge or incorporate elsewhere to avoid AIFMD or MiFID II. The proposed Joint Committee should look at the loss of revenue and jobs caused by cumbersome and expensive EU regulation and at the cost of further delaying the date when we can begin, carefully and selectively, to abolish or change regulations which damage our markets and our industry.

Another benefit of leaving with a better deal or, in extremis, without a deal, is that we would no longer be bound by chapter 4 of part 5 of the draft withdrawal agreement, which deals with the European Investment Bank. It seems extraordinary that we have agreed to accept only the return of our paid-in subscribed capital, amounting to some €3.5 billion. It is logical that we should also be entitled to receive our 16.1% share of the retained earnings. Adding this amount, the net tangible assets attributable to our stake amount to €11.1 billion, more than three times what we have agreed to accept. Worse, the repayment of our paid-in capital is to take place over 12 years, until December 2030, without payment of any dividends or interest. Furthermore, there has already been a marked decline in the funding of UK projects since the referendum, from €7 billion in 2016 to less than €1 billion in 2018. To cap it all, the UK is to remain liable for its 16.1% share of the uncalled but committed capital in respect of the EIB’s financial operations at the time of withdrawal. That could amount to a call of up to a further €35.7 billion. As a member of the EU Financial Affairs Sub-Committee—although the report was completed prior to my appointment—I trust that your Lordships’ House will have an opportunity to debate our report, published on 31 January, before the House rises for the Summer Recess.

Lastly, I suggest that the proposed Joint Committee should also look at the potential costs to the UK of a major eurozone failure, such as envisaged in the recent worrying report by Bob Lyddon for Global Britain. Seven member states have debt to GDP ratios in excess of 90%, making it most unlikely that they can comply with the 60% limit set by the EU fiscal stability treaty by 2030. Italy’s is the highest, at 132%, and it is not politically acceptable for the Italian Government even to try to comply. It is very likely that investors will recognise that the recovery and stability of the eurozone system is an illusion, concealing as much as €1 trillion of overvaluation of assets in the euro system. A new eurozone crisis could well be triggered as early as the end of next year, for example, if Moody’s were to downgrade Italy’s credit rating by one notch from its current level of Baa3. In that event, the ECB might be compelled to recapitalise the euro system for up to this amount and there are only six eurozone member states whose central banks are capable of contributing to a reset. It is inevitable that, again, the non-eurozone countries would be called upon to contribute, of which there are only three solvent candidates. Of these, only the Bank of England is sizeable and, based on its “capital key” of 13.7%, could be called upon to make a contribution to the order of €230 billion. If our finances remain accessible to the EU, we will not be able to escape the risk of an enormous hit of this sort of size unless we leave with a better deal or, if necessary, no deal.

It is not my preferred option that we should leave with no deal, but in some respects the costs and risks of leaving under the withdrawal agreement are arguably much higher. We must be prepared to leave with no deal to persuade our EU interlocutors that they should put economic common sense above their political interests and agree to negotiate a fair deal, which will protect trade, jobs and the economies of both the UK and the EU 27. I welcome the publication last week, by the alternative arrangements commission of Prosperity UK, of an interim report which offers several clear ways of solving the Irish border problem. I believe that, with good will on both sides, the EU’s negotiators will recognise that they can, and must, work hard to agree a new deal that is equitable and sensible, and which will provide the basis for a sustainable, positive, long-term relationship between the UK and the EU.

European Union (Withdrawal) (No. 5) Bill

Viscount Trenchard Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 8th April 2019 Lords Chamber

[Lord Adonis (Lab)]

My Lords, what has just been demonstrated is that the Bill has many parents and very wide support across the House. The point made by the noble Lord, Lord Pannick, is completely conclusive. It is for the House of Commons to decide what the date should be. The Commons have invited us to give them this power, and I think that we should get on with it.

[Viscount Trenchard (Con)]

My Lords, I apologise for having failed to speak in the debate on Second Reading. I had to leave London early on Friday to attend a memorial service the following day. I was pleased to see that the normal operation of the usual channels was restored on Thursday, although I deplore the fact that the closure Motion procedure was excessively and improperly used. Indeed, I would guess that it was used more times than in the previous decade or more—I would like to know. The result was that I was unable to speak either in the debate on the amendment to the business Motion moved by my noble friend Lord Forsyth or in the debate on that tabled by my noble friend Lord True. Of rather more significance than my ability to speak, however, is the fact that the use of the closure procedure denied both my noble friends the right to reply to the debates on the amendments that they had moved.

As my noble friend Lady Neville-Rolfe illustrated so well at Second Reading, the nature of business in the UK Parliament and the UK Government seems to be increasingly last minute. It is simply unacceptable to try to rush through a Bill of such huge importance without proper time to consider its implications. It makes a mockery of our parliamentary democracy. The Bill received a Second Reading in the other place by the narrowest of majorities: just one vote. It is deplorable that many noble Lords thought it was nevertheless appropriate to suspend the normal procedural rules of this House—

[Lord Pannick]

My Lords, may I respectfully remind the noble Viscount that we are debating Amendment 4?

[Viscount Trenchard]

I am well aware, and I thank the noble Lord for his advice.

However, I congratulate my noble friend Lord Blencathra on the report from his committee and on the fact that he so quickly responded.

The amendment moved by my noble friend Lady Neville-Rolfe is much needed. In her speech at Second Reading and again today, she has made the very good point that the Bill has profound financial implications. My noble friend Lord Cathcart also made this point most clearly in his powerful speech. It is reasonable to say that the terms of withdrawal should require the UK to honour its commitments during the current EU spending round, provided of course that the UK is not disadvantaged by its decision to leave the EU in terms of the amounts that UK projects and companies would otherwise have received from EU programmes.

Besides that, any extension beyond 22 May would require us to participate in the European Parliament elections, and that requirement would of course have financial implications. It is therefore strange that the Speaker has ruled that this is not a money Bill, but it is not surprising given his increasing willingness to allow his own political views and prejudices—

[Lord Kerr of Kinlochard (CB)]

My Lords, like the noble Viscount, I was not able to be here for the debate on Second Reading. I am therefore sure that he will agree with me that neither of us should intervene.

[Viscount Trenchard]

I hear that the noble Lord thinks that, but I regret that I take a different opinion. I have apologised for not having been present at the debate on Second Reading for the reason I have given, but this morning I took the trouble to read virtually the whole of the debate.

[Lord Adonis]

My Lords—

[Viscount Trenchard]

No, I would like to finish so I will not give way to the noble Lord again. It is therefore strange—

[Lord Lisvane (CB)]

My Lords, I rise purely in a spirit of helpfulness. Perhaps the noble Viscount could keep in mind the difference between a money Bill and a Bill that requires a money resolution. It is quite a profound difference.

[Viscount Trenchard]

I thank the noble Lord for his helpful advice. Nevertheless, I find it strange that the Speaker made the ruling he did, as the—

[Lord Taylor of Holbeach (Con)]

I must remind my noble friend that, under paragraph 4.45, it is incorrect for Members of this House to criticise proceedings in another place or rulings of the Speaker. I make this point only to help the debate to move on.

[Viscount Trenchard]

I thank my noble friend for his correction.

--- Later in debate ---

[Baroness Noakes]

My Lords, I shall not detain the House long. My amendment would ensure that this legislation ceases to have effect on exit day. It could be said that the amendment is there just for the avoidance of doubt because, clearly, there is nothing to be done with this Bill after exit day. However, I wanted to table the amendment because this is, by almost common consent, a pretty terrible Bill. One of the best things that has been said about it today is that it is a bit of a mess. During the brief passage through your Lordships’ House, it has been improved, which is what customarily happens when this House considers ill-thought-out Bills from the other place.

As I said at Second Reading, I have accepted that the will of the other place will prevail in the case of this Bill. Therefore, the powers that it creates to restrict the royal prerogative in this important area of international relations will come into force to the extent now drafted. I regret that, but I hope that we will return to the normal practice of leaving the royal prerogative for international relations and negotiations with the Government on an unfettered basis. I have tabled this amendment to make the point more forcefully that this should not be a permanent part of our statute book; we should write it out as soon as the purpose of those who have sought to make it the law of the land for this week comes to an end. I beg to move.

[Viscount Trenchard]

My Lords, I support my noble friend Lady Noakes on this amendment. As she explained so clearly on Thursday and in her speech today, the curtailment of prerogative powers envisaged in this Bill is significant. I agree with her that the powers available to the Government to negotiate international treaties are important and should not be curtailed.

My noble friend Lord Norton of Louth, who is acknowledged across your Lordships’ House as the most knowledgeable constitutional expert, explained that the changes sought by the Bill, and the practices by which it was passed in another place, are not small but highly significant. I consider it unfortunate that your Lordships’ House is likely to pass this Bill, but at least it would be better if its destructive elements could be made temporary. Surely even noble Lords who support the Bill would agree that, against the background of the views of the noble Lord, Lord Norton, on the matter, the restrictions on prerogative powers should be temporary. It would be unfortunate for the House to agree to a precedent created by such a rushed and controversial piece of legislation.

[Lord Pannick]

My Lords, this amendment is not needed to ensure that the provisions in the Bill are temporary. They are temporary in any event because the Bill is concerned with only the period for negotiations for withdrawing. Once we withdraw, the Bill has no effect whatever.

Brexit: Withdrawal Agreement and Political Declaration

Viscount Trenchard Excerpts

Wednesday 9th January 2019 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, it is often said that the principal reason people voted leave in the referendum was concern about immigration. However, subsequent research has shown that an even more important reason was that most people want control of our laws and regulations returned to this Parliament. Unfortunately, the agreement in its present form fails to achieve that, because the Irish backstop threatens to reduce us to the role of rule-taker, without a direct voice in the formulation of those rules, as was clearly explained by the noble Lord, Lord Kerr of Kinlochard, in his speech on 6 December. Even if it is true that the EU does not want the backstop to be applied, its existence as the default position hands all the cards to the EU in the negotiations over our future trade relationship, which was, after all, supposed to be largely agreed by now but is not.

I do not believe that the apocalyptic predictions of serious and sustained damage to jobs and to the economy, as suggested by many, would be the result of leaving the EU and trading under WTO rules. Many predicted from the outset that the only deal that the EU would offer us would be a bad deal, and we should have done more preparation for the no-deal scenario. We should not call a clean Brexit “crashing out”. There would of course be difficulties, but economic necessities would ensure that the worst impediments to trade, whether accidental or wilful, would be fairly quickly sorted out. We need to remember that it is not Governments who make trade; it is businesses. The advantage of a clean break would be that we would be able to negotiate the new trading relationship we want with the EU without our hands tied behind our backs. We would of course honour that part of the £39 billion that is due and for which we are liable. We would anyway not have to pay the £20 billion net contribution for the two-year implementation period. We would not be crashing out but cashing in, as explained so well by my noble friend Lord Lilley in his excellent paper 30 Truths about Leaving on WTO Terms.

Whatever economic challenges may arise, the UK economy is well placed to adjust to them. It is among the most flexible and open of the advanced economies in its product and labour markets, and it has both a flexible exchange rate and an independent monetary policy. We also have full control of our fiscal policy and, at the moment, a highly competitive exchange rate.

Although we have debated the withdrawal agreement for many hours, comparatively little has been said about security and defence. I have a high regard for Sir Richard Dearlove, a former head of MI6, and take seriously his warning that the withdrawal agreement clearly puts British forces and our intelligence and security interests under the rules of the common foreign and security policy. The European Commission has apparently also confirmed to the Government of Cyprus that the proposed future security and defence co-operation with the UK would not involve decision-making.

Noble Lords may also have noticed that Germany, the Netherlands and six other member states tried unsuccessfully in December to prevent the adoption of the new directive permitting member states to require telecoms companies to provide them directly with e-evidence on criminal suspects anywhere in the EU without requiring judicial approval in the host country. As the German Justice Minister explained, the principles of the rule of law are not respected equally everywhere in the EU. The first duty of the state, above trade, is the security of its citizens. Does the Minister believe that the security and defence aspects of the withdrawal agreement do not in any way impede the ability of the state to carry out its first duty?

Does he not also accept that they would have a damaging effect on the Five Eyes intelligence partnership? I would much rather we leave the EU under an agreement to enter into a future relationship similar to CETA or, better than that, a Canada-plus-type deal, such as has been clearly offered by Messrs Tusk and Barnier. My choice would be Plan A+, proposed by the IEA. This sensible and comprehensive plan explains how it is possible with existing technology to conduct the necessary border checks without installing new infrastructure. We have allowed the EU to blow up the question of the Irish border to a level of significance far greater than it warranted. This has been used by the EU because it quickly understood that it is our soft underbelly, and by the Irish Government because it assists them in their objective of prising Northern Ireland away from the UK. The excellent speech by my noble friend Lord Trimble on 6 December pointed out that it is not the act of leaving the EU that is damaging the Belfast agreement; rather it is what the EU is attempting to do by way of reprisal that threatens to damage it.

I admire the Prime Minister’s resilience and determination and I have stood loyally behind her throughout the two and a half years since the referendum. As your Lordships may have noticed, Mr Abe, the Japanese Prime Minister, who arrives in London tomorrow morning and will hold talks with our Prime Minister tomorrow, has on several occasions stated that Japan is a strong advocate of the UK’s accession to the CPTPP, six of whose 11 founder members—Australia, New Zealand, Canada, Singapore, Malaysia and Brunei —are Commonwealth countries. Under the proposed deal, I fear, the prospect that we will be bound to align our standards and regulations closely to those of the EU will make us unattractive as a potential trade partner. Indeed, Gavin Barwell acknowledged this as a point of concern in reply to my question at a meeting in December. Will the Minister confirm that it nevertheless remains government policy to seek accession to the CPTPP, and confirm that the Government think that other countries will still be interested in entering into trade agreements with the UK under the terms of the proposed deal? I strongly recommend that your Lordships s read the excellent paper Trading Tigers, published by Policy Exchange, which explains well the case for UK accession succinctly and concisely, in just 12 pages.

As the most reverend Primate said on 5 December, quoting from Proverbs:

“Where there is no vision, the people perish”.


I would like to see more vision, more optimism and more confidence shown by the Government. This is not a damage limitation exercise. It is a great opportunity for this country to revert to our natural state as a strong advocate of competitive free trade throughout the world, which is the best way to achieve economic growth and prosperity for future generations.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Report: 1st sitting: House of Lords
Wednesday 18th April 2018 Lords Chamber

[Lord Adonis (Lab)]

I defer to the noble Viscount in his knowledge of millionaires. Maybe he is right, maybe he is wrong, but I do not think that they particularly enter into it. It is ordinary, hard-working people who will, of course, suffer the consequences if our trade collapses, and they are the people we should have at the front of our minds. However, on the point about trade with the wider world, almost two years ago a very thorough analysis of our trade and trade policy was made by a prominent politician in a speech. This is what she said:

“It is tempting to look at developing countries’ economies, with their high growth rates, and see them as an alternative to trade with Europe. But just look at the reality of our trading partnership with China—with its dumping policies, protective tariffs and industrial-scale industrial espionage. And look at the figures. We export more to Ireland than we do to China, almost twice as much to Belgium as we do to India, and nearly three times as much to Sweden as we do to Brazil. It is not realistic to think that we could just replace European trade with these new markets”.


That was the current Prime Minister speaking on 25 April 2016, and I do not think anything has changed since.

[Viscount Trenchard (Con)]

My Lords, I am not quite sure exactly what this amendment means, in spite of the eloquent speeches by the noble Lord, Lord Kerr, and my noble friend Lord Patten. It would require the Government to lay before Parliament a statement outlining the steps taken to negotiate an arrangement which enables the UK,

“to continue participating in a customs union”.

I do not think this is at all helpful to our negotiators. Even if remaining in a customs union were one of the Government’s possible objectives, which it is not, the amendment does not even set a condition that such negotiations must be successful. I expect that those of your Lordships who believe that we should remain in a customs union, which I believe is now the policy of the Labour Party, will not wish to support this amendment in its present form.

I believe that noble Lords who think that we should stay in a customs union are misguided because it would prevent us establishing our own tariff schedules at the WTO. As my noble friend Lord Lawson mentioned, we would be in an unenviable position similar to that of Turkey, which is bound to accept imports from third countries, agreed to by the EU at similar tariffs to those decided on by the EU. Turkey, however, does not even benefit from any preferential tariff rates for its own exports to such third countries which become available to EU countries through agreements made by the EU with third countries.

It is essential that the UK, after the end of the implementation period, should be free to implement bilateral and multilateral free trade agreements with third countries. Failure to be able to do this would negate the whole upside potential of recovering our sovereignty in international trade matters and it would be pointless for the UK to leave the EU on such a basis. A major benefit of leaving the EU will be acquiring the freedom to reduce and ultimately eliminate tariffs on essential products, which represent a high proportion of the budget of poorer people, as mentioned by the noble Lord, Lord Howarth, my noble friend Lord Ridley and others.

One of the two possible customs arrangements the Government have said they are considering is a customs partnership with the EU, under which the UK would mirror the EU’s requirements for imports from third countries where their final destination is the EU. It seems to me that if such a customs partnership required the UK to retain a high degree of regulatory alignment with the EU, it would make the UK unattractive as a potential trade partner for third countries and prevent us becoming a powerful advocate for free trade around the world and exercising our considerable influence on ensuring that developing global—rather than European—standards represent best practice in consumer protection in a way that does not inhibit innovation, as excessively bureaucratic regulatory regimes tend to do. I look forward with interest to hearing what my noble friend the Minister has to say about the Government’s current thinking on the option of customs partnership. In any case, the inclusion of any of these amendments in this Bill, which is largely technical in nature, would unnecessarily tie the hands of our negotiators in a manner detrimental to the UK’s interests.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

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

[Viscount Trenchard (Con)]

My Lords, I listened with interest to the amendment proposed by my noble friend Lord Carrington of Fulham and supported by the noble Baroness, Lady Falkner. I accept that my noble friend is trying to be helpful to the Government, but for various reasons I nevertheless feel unable to fully support his amendment. I understand well that the amendment reflects the proposals put forward by the IRSG in its paper published last September, prepared in collaboration with Hogan Lovells. That report has been endorsed by TheCityUK and the City of London Corporation, which support IRSG.

The reasons why I cannot support the amendment are, first, that it is not appropriate or helpful to put into legislation, at this stage, the detail of any future regulatory collaboration with the EU, let alone on financial services. Secondly, the report which the amendment would require the Government to prepare, like other reports which other amendments discussed today have called for, would be quite onerous and time-consuming. Thirdly, it is not helpful for our negotiators if we argue against ourselves, and especially unhelpful to incorporate amendments into law which appear to accept that it is desirable, even necessary, to treat continuing alignment with EU regulations as being a greater priority than aligning our regulations with those of the SEC in the United States, the FSA in Japan, or other regulators in other countries with significant financial markets. Fourthly, the Government have already stated their intention to negotiate an implementation period following exit day when things would be largely the same, including, as I understand it, for the financial services sector. This amendment appears to assume that everything changes on exit day.

In his excellent recent speech at the Mansion House, the Chancellor referred to a framework to supervise,

“separate evolution of rules to deliver the same results”,

and to resolve disputes. I believe there is a danger that this would place too much pressure on UK regulators to continue to align completely the UK’s rule book with that of the EU 27. This would make it more difficult to agree any kind of mutual recognition of standards with other financial regulatory regimes around the world. For example, the City Corporation and Tokyo Metropolitan Government have recently entered into a memorandum of understanding to collaborate more closely on financial services, and this could be developed in future to include some kind of mutual regulatory recognition of standards.

Of course, the City will survive if there is not a deal which covers financial services. The EU regulators have forced upon us Solvency II, AIFMD and MiFID II, to name but three directives which have cost the City dear in terms of higher costs, fewer jobs and fewer revenues than would otherwise have been the case. We should not agree to align more closely to EU rules than to US rules, Japanese rules or the rules of any other major financial centre in the world. Once our regulators recover their independence from the EU regulators, their influence in shaping best practice rules at the global level will be enhanced, not diminished. Of course, while the inclusion of financial services in our FTA would be better than its exclusion, our negotiators need to be very aware of the significant upside for the City in recovering our regulatory independence.

The amendment, in proposed new subsection (2)(a), refers to the degree of alignment “necessary” between the regulatory provisions of the EU and UK. I submit that this is a rather subjective concept. What is important is that our regulators will establish the best regulatory regime for our markets, retaining the highest standards for which London is rightly held in high regard and participating fully in discussions with regulators of the other major financial markets, within IOSCO and other bodies, with a voice commensurate with the size and scope of our markets.

As my noble friend Lord Hill of Oareford said in his interesting speech at Second Reading, our withdrawal from the EU is allowing Europe already to move in directions that we have traditionally resisted, whether that is a financial transactions tax, more screening of overseas investment or more centralisation of supervision of financial services. As we now have to choose between effectively remaining in the single market and being free to make our own rules where we want to, we must surely place a greater priority on being able to shape our own future than on preserving the status quo.

Mark Hoban, chairman of IRSG, has proposed a forum for regulatory alignment, referred to by my noble friend, whereby the UK and the EU can work together to implement new global and international standards. That is fair enough, although I do not think it is in the City’s interests to do this with the EU exclusively. Furthermore, my noble friend’s amendment is silent on the proposed forum’s relevance to new global and international standards and relates only to a perceived need to maintain regulatory alignment with the EU alone. If I were a banker in the EU 27 or the finance director of a major EU 27 company wishing to raise money in the capital markets, I would certainly not want the EU to impede my access to the UK’s financial markets, but I have not yet heard of any proposed EU regulation or directive requiring the Commission to continue to align closely to UK regulations.

My noble friend’s amendment indicates a frame of mind which I believe casts us too much in the role of supplicant, where we do not need to be. Does the Minister recognise that the City would worry less about the downside and show more confidence in the upside of Brexit if the Government showed more leadership and enthusiasm for the City’s role as the leading international financial centre, unfettered by the EU’s cumbersome and somewhat dirigiste regulatory framework, while maintaining the high standards and proportionate regulations that provide the necessary protections and financial stability for investors and borrowers, but without burdening market participants with unnecessary costs or with measures that inhibit the innovation that has helped to make London the great success it is?

[Baroness Kramer]

My Lords, the noble Viscount, Lord Trenchard, speaks a commonly held Brexiteer view. I take a very different view—that if we were to follow the course he just recommended, in 10 years’ time the UK would no longer be the premier centre for financial services in Europe, and certainly not for those generated within the EU, which is one of the largest economic and trading blocs in the world, and perhaps the most important as regards feeding financial services.

I understand the amendment in the name of the noble Lord, Lord Carrington, but I cannot support it because, as I think he would say, it is quite limited. Financial services depend not just on passporting: for the asset managers it is delegation, for the fintechs it is the e-commerce directive, and for the insurance and trading world it is the mutual recognition of contracts. There are so many complex features at so many different levels that create the ecosystem that has enabled London to thrive, essentially on the basis that it has sitting behind it the resource of a 28-country 510 million population who turn to it as their primary financial centre. However, the way in which the Government respond to Lord Carrington will be critical. It is a matter of timing.

The industry, as the Minister well knows, has been in some despair to try to persuade the Government that how they structure the relationship, should Brexit take place, is absolutely critical. The large companies in the industry have been going ahead with contingency planning that, so far, has been in a relatively preliminary phase. They have identified new real estate, taken out leases, and negotiated licences and other authorisations that they need to be able to expand either their field of business or to be able to expand business. However, almost every one of them has said, I think to many noble Lords in this House, that by the end of March—we are now talking about a matter of days—they will have to push the button on the next phase. That is the fitting out and purchasing of the very extensive and expensive equipment that has to go in, and the setting up of the recruitment process to staff out those new operations. From that there is no return. We therefore reach a point of no return for a significant portion of financial services which will be transferred to continental Europe with, frankly, no possibility of reversal, in a very brief period of time.

The industry has coalesced around the idea of mutual recognition as the one possible route. If we leave the single market—that is key; if we stay in the single market, it is not an issue, although the Government say that we will not—mutual recognition is the only possible route to limit the damage. It is nowhere near equivalent to the access that we have today, but it could perhaps be negotiated so that the damage is to some degree limited. Every major company I have talked to says that it does not understand how this new form of mutual recognition will work. It seems highly problematic. I have said in this House before that when the EU first began to bring together and create aspects of the single market in financial services, it began by using mutual recognition. However, it turned out to be completely inadequate to deal with the complexity of so many different kinds of issues, so much competition, so much size and so much depth.

So mutual recognition is seen not as a successful strategy but as the failed strategy for these arrangements that is now being revived in a new form. Because the industry is listening, it is important that we get from the Government something that provides some meat and bone on how this mutual recognition could function. If we do not hear that today, we will in many ways be accepting that we will not have any kind of significant arrangement around financial services, and the consequences for this country, which is essentially a service economy in which financial services are the most significant part and the largest exporter, will be highly significant. We need to understand today whether we are looking at something that is real and has the prospect of achieving success or whether we are simply tossing around an idea that has PR attractions but, frankly, offers no meaningful route to keeping access to the European market for our financial services industry.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 26th February 2018 Lords Chamber

[Baroness Brown of Cambridge (CB)]

My Lords, I support these two important amendments and I apologise to the Committee for having being unavailable to speak at Second Reading. I therefore take the opportunity to declare my interests as chair of the Henry Royce Institute, a member of the Committee on Climate Change and chairman of the Adaptation Sub-Committee of the Committee on Climate Change. As we have heard from many noble Lords, the Horizon 2020 and Erasmus+ programmes are critical to our world-class academic institutions, to research and to our students. I will not take up any time by repeating the arguments but I remind the Committee that historically UK students are some of the least internationally mobile in Europe, particularly young people from less advantaged groups. If we are to compete ever more widely on the international stage after leaving the EU, ensuring that UK students from all backgrounds have the kinds of experiences that are enabled by the Erasmus+ programme should surely be a national priority.

We have not heard much about what Horizon 2020 does outside our outstanding academic institutions. It is a key funding source for industrial collaboration, supporting important initiatives such as helping Rolls-Royce develop new generations of more efficient and environmentally friendly aero engines. It also plays a key role in supporting innovation and entrepreneurship schemes, such as the knowledge and innovation communities, with a great example at Imperial College: Climate-KIC, which has already seen a number of new entrepreneurs with low-carbon technologies start to develop businesses in the UK.

In my own area of interest, Horizon 2020 supports environmental research. The UK wins around £147 million per annum for environmental research. Sadly, that rather dwarfs the £5 million investment in the new northern forest. Other EU funds, such as Interreg and LIFE, are important not only for environmental research but to cross-border collaboration on the island of Ireland; for example, supporting shared environments through the cross-border Loughs Agency, as well as other types of cross-border community projects. This is hugely important work that the House of Lords EU Select Committee was able to see and hear about at first hand on our recent visit to both sides of the Irish border. It is a really important element of the peace settlement on the island of Ireland.

These funding mechanisms play a critical role in our economic growth, as we have heard; in cross-border relations and well-being in Ireland; and in helping the Government achieve their stated aim to leave nature in “a better state” for the next generation. For these reasons, the amendments have my very strong support.

[Viscount Trenchard (Con)]

My Lords, I would not wish to disagree in any way with all those noble Lords who have said how excellent the Erasmus+ and Horizon 2020 programmes are. Undoubtedly, the United Kingdom contribution to them is very significant, just as the United Kingdom’s gains from being a participant in them are hugely beneficial. Nevertheless, one thing that has not been said by any noble Lord is that after Brexit we will have considerably more money to spend on important programmes than we have while we are making net contributions to the European Union of £10 billion to £12 billion a year. I have never been one to use the £350 million a week figure because that was the gross contribution, but the net contribution is about half that.

My noble friend Lord Patten pointed out that our contribution to the Horizon 2020 programme is about £5 billion but we receive £8 billion back. Presumably, this means that the organisers of the Horizon 2020 programme appreciate that the United Kingdom knows better than some other participants how to use the money wisely. Indeed, we continue to use the money from such programmes extremely well. Furthermore, if one looks at the participants in Horizon 2020, there are 17 countries which are not EU members. The European Commission website makes it clear that non-members participate on exactly the same terms as members. Therefore, I see no reason at all why we should not be welcomed as a continuing participant in Horizon 2020.

[Lord Hannay of Chiswick (CB)]

Does the noble Viscount not understand that if we participate from outside the European Union, instead of getting more back than we put in we will get exactly the same back as we put in?

[Viscount Trenchard]

I hear what the noble Lord says but I am not sure whether that follows at all. As far as the Horizon 2020 programme is concerned, presumably our contribution would still be assessed and valued in the same way that it is now. The deservability of the programmes for which we seek support would also be considered on the same basis as now, so I do not see why it should make any difference. But overall, we will have a considerable amount more money to spend, not less, because we will not be making the very large net contributions to the European Union budget that we make at present.

[Lord Patten of Barnes]

Can I clarify for my noble friend the position of countries from outside the European Union sharing in the European Research Area? I am sure he is aware that while some of them participate—I mentioned Switzerland and Israel– they play no part whatever in managing the programmes. They do not determine the priorities or what the money will go on. We could negotiate membership of the research council, I guess, although it would be with the financial consequences that the noble Lord, Lord Hannay, mentioned and the additional consequence that we would have no say in managing the programmes.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

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

[Lord Warner]

My Lords, I rise as a co-signatory of Amendment 8, moved by the noble Lord, Lord Hunt. I do not want to repeat all that he has said; I want to talk about this from the point of view of the industry. The industry’s legal opinion is that leaving the EU did not require the UK to leave Euratom. The noble Lord, Lord Hunt, has set out all the conflicting arguments that the Government have had over their attitude to the ECJ. I will not go over those this evening, though I will not be able to resist the temptation tomorrow morning to go over them again with the Minister.

The fundamental point that I wish to make is that the Government have set out on this reckless course without taking the nuclear industry with them and without allowing sufficient time to put an alternative nuclear safeguards regime in place. I want to quote a few extracts from the excellent briefing provided by EDF, which after all provides 20% of the electricity generated in this country and is the Government’s preferred contractor for delivering new nuclear power stations, including Hinkley Point C. My first quote from the briefing is:

“The best thing for the UK nuclear industry would be for the UK to remain within Euratom. However, if the UK exits Euratom, new arrangements must be in place before existing arrangements are terminated, and there must be a smooth and orderly transition to the new arrangements”.


I have to say, from the Second Reading debate, you would not have been very confident about some of that.

My second quote is:

“It is absolutely essential that following the UK’s exit from Euratom and its EU wide safeguards regime, the nuclear sector in the UK is covered by a UK Safeguards regime. There can be no gap in coverage – the new regime must be ready for deployment on exit day, having already been reviewed and accredited by the IAEA, to ensure the UK can continue to fulfil its international obligations for nuclear non-proliferation”.


It has just about a year to achieve that.

My third quote is:

“An IAEA accredited nuclear Safeguards regime is a ‘must have’ – it is a pre-requisite for the movement of nuclear materials (including fuel) and for the agreement of NCAs”—


nuclear co-operation agreements with other countries outside the EU, such as the US, Japan, Canada and Australia. You would have to be one of life’s great optimists to have listened to the debate so far on the Nuclear Safeguards Bill and be confident that all those objectives set out by EDF will be achieved.

My final point is that, on the evidence so far provided by the Government, it is almost a racing certainty that by 29 March 2019 the UK will not have in place a nuclear safeguards regime equivalent to that provided by Euratom. Perhaps more worryingly, there is no published plan with clear milestones showing how the UK will have in place by exit day a nuclear safeguards regime accredited by the International Atomic Energy Agency. This is absolutely essential, as EDF has made plain, if the UK is to have nuclear co-operation agreements with a wide range of other countries, as it has said. These agreements are absolutely essential for nuclear trade with these other countries once we leave Euratom. The agreements have to be reached in time for them to be ratified by the political and governmental processes in the various countries. In the case of the US, they have to be ratified by Congress and even, I am told, be approved by the White House—there is a thought for noble Lords.

We are travelling very dangerously in this area, not least because of the timescales that the Government have allowed for putting in place alternative arrangements to Euratom membership. I suggest that we have a duty to make amendments to the Bill and to the Nuclear Safeguards Bill to give the Government a chance to pause and think more carefully about what they are doing. The amendment of the noble Lord, Lord Hunt, is the very least we should do in the Bill. I suspect that we may well need something stronger on Report which reflects the outcomes of our consideration of the Nuclear Safeguards Bill.

[Viscount Trenchard (Con)]

My Lords, this issue is not quite as simple as the noble Lord, Lord Hunt, claimed. I too was present at the briefing referred to by the noble Lord, Lord Warner, given by the Nuclear Industry Association and EDF, which was very valuable.

The issue is not as simple as the noble Lord, Lord Hunt, said—namely, that Euratom is the most marvellous institution and we have to remain a member of it or continue to apply standards equivalent to those which have been developed by it. I recall that EDF explained that the international standards are set by the IAEA, and that it is absolutely necessary that before exit, other than by virtue of a transition or implementation period, which of course applies more generally to the EU, in order to exit from Euratom and continue to be able to trade in nuclear equipment and fuel, we need an IAEA-accredited—not Euratom—safeguards regime. We need nuclear co-operation agreements with four countries: the United States, Canada, Australia and Japan, a nuclear agreement with the European Union and an export licence regime. Euratom’s nuclear safeguards regime concentrates heavily on verifications, whereas the IAEA places more emphasis on process, operations and compliance with international standards.

The noble Lord referred to isotopes. It is essential to ensure a secure and consistent supply of radioisotopes. Molybdenum-99, for example, has a half-life of 66 hours, similar to human organs, and therefore cannot afford to be delayed by customs at ports and airports. There can be no delay at all. We obtain about 60% of our radioisotopes for medical use from the EU, to which the noble Lord referred, but we obtain 40% of our isotopes from non-EU countries, principally South Africa, which the noble Lord did not refer to. I understand that the procedures for importing both those from the EU, which come through the Channel Tunnel without, obviously, any customs procedure, and those from South Africa, which come through Heathrow under a fast-track procedure, are virtually identical; there is no significant difference at all. Our membership of Euratom does not in any significant way influence our access to the world market in isotopes. Therefore, our leaving the EU does not make much difference to how we get in our medical isotopes.

However, we need to have this IAEA-accredited regime, and, obviously, there is not enough time for the four essential nuclear partners to get NCAs through their Parliaments before March next year. But given that the Government have committed to an implementation period, we should be able to agree with Euratom that we remain a member of that organisation and therefore we will be able to continue to operate under its standards for that period.

[Lord Warner]

I am sorry to interrupt the noble Viscount’s flow, but does he remember that the Government voted down in the Commons an amendment which would have given him more time for a transition period on this issue? So the Government have turned their face away from allowing more time to a transition period to get things right. Whether one believes that the Government have taken the right course or not, they have committed themselves to do all this by 11 pm on 29 March next year. Does the noble Viscount accept that that is an impossible objective because at the moment the Government have not agreed to a transition period for the subject area?

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[Viscount Trenchard]

I am not familiar with the amendment which was voted down in the Commons. I believe it is perfectly possible for the UK to develop its own IAEA-accredited safeguards regime within the next few months, and I understand that a lot of work is being done on that already. I understand that Euratom’s treaties are mixed up with the EU treaties; therefore, is it not natural that, if there is an implementation period for putting into practice what comes afterward with the EU, the same will apply for Euratom?

[Lord Teverson (LD)]

My Lords, I am also a signatory to this amendment, and I thank the noble Lord, Lord Hunt, for having brought it before the House today. There is another explanation about why this has happened. Soon after the referendum, I submitted a Written Question to the Government to ask whether it was intending to leave Euratom. The answer I got back, after a little bit of foreplay, was that the people of Britain voted to come out of the European Union. It was quite clear that the Government did not realise that Euratom was not part of the European Union. They had not even thought about it. That is the answer that came back. I had to go back and ask the question again, at which point the Government answered that they were still thinking about it. Indeed, during ministerial conversations, there was a full admission that we should be able to remain part of the Euratom organisation. However, at that point it was legally impossible, for some reason which I do not understand at all. Euratom has its own separate Article 50 system, Article 106a; it is an entirely separate treaty, which did not come together during the Maastricht process when the other treaties came together, partly because there was a concern that Austria and Germany, which were anti-nuclear nations at that time—Austria still very much is—would not agree for that treaty to be integrated into the rest of the system.

I think that the Government agree that it is a good organisation. Coming out of it will certainly cost taxpayers a lot more money in terms of safeguarding and, as the noble Lord, Lord Warner, said, we have a real problem regarding the timescale. As I understand it, it is the Government who are saying that they want Euratom standards. That is their position; it is not ours. It is one that I agree with but the Government’s position is that we need Euratom standards, not purely International Atomic Energy Agency standards. We have a very difficult timetable here.

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[Lord Adonis]

My Lords, there are 101 reasons why people voted for or against leaving the European Union. As the great Lord Salisbury, the last Prime Minister to serve in this House, famously said after a general election, the problem is:

“When the great oracle speaks, we are never quite certain what the great oracle said”.


However, I have not yet met a single person in any walk of life anywhere who told me that they voted to leave the European Union so that they could leave Euratom. Indeed, I imagine that there were not many people outside the confines of your Lordships’ House and the nuclear industry who were even aware that there was this organisation called Euratom, where the final court of appeal was—wait for it—the European Court of Justice.

There is always a problem about loss of face. I have sat on that Bench, too. I know that Ministers do not like having to change their mind. But I do not think the Minister will have any problem with any loss of face with anyone, including those who have been so keen to see that we leave the European Union because of the instruction from the British people, if he were to announce that the Government intend to withdraw the notice under Article 106a of the Euratom treaty and put this complete nonsense behind them. I do not mind what hour of the night he announces it. I would be perfectly happy for him to announce it at 2.30 am if that ensures that it gets less coverage.

The Minister will have noticed that there has been no support at all from behind him. The noble Earl, who is not given to criticising the Government, made a devastating speech. Although the noble Viscount said that he thought the consequences might not be as bad as people had said, I did not detect him saying there would be any positive advantages from leaving Euratom. The noble Baroness gave an equally devastating speech.

[Viscount Trenchard]

I certainly said that Euratom was not the marvellous organisation that it is made out to be. I actually think it would be very good if we can find a way to continue the current arrangements until such time as we put in place the necessary independent arrangements with IAEA accreditation. But I did not say that I thought Euratom was marvellous. I know of one senior officer in the nuclear industry who thinks we should remain in the EU but leave Euratom.

[Lord Adonis]

My Lords, it is not part of the human condition to think that institutions are marvellous. They can always be improved. But I did not take the noble Viscount’s clarification to be raising the banner for abolishing Euratom because there were going to be such great advantages to the public from us—in the words of the noble Lord, Lord Bridges, to the House a few weeks ago—walking the “gangplank into thin air”.

However, I have a specific question for the Minister. Can he confirm to the Committee that Her Majesty’s Government can withdraw the notice of withdrawal from Euratom under Article 106a of the Euratom treaty and that they can do that unilaterally? As he knows, I am slightly persistent in these matters. I always thought that part of the argument from those who were in favour of Brexit was that we were going to restore the sovereignty of Parliament. It is not too much to expect that Parliament should be able to see and study the legal advice on which Ministers make decisions. I ask him yet again whether he will make available to the House before Report the legal advice which his department has on the legal basis on which the Government can act in withdrawing the notice of withdrawal under Article 106a of the Euratom treaty.