Queen’s Speech

Viscount Trenchard Excerpts

Monday 21st October 2019 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I am delighted to follow the noble Lord, Lord Green of Deddington. I compliment him on his most interesting and thought-provoking speech.

I had intended to speak in the debate last week, concerned principally with Brexit, trade, foreign affairs and defence, but was committed to be away. Since today’s debate covers constitutional affairs, I should like to make virtually the same remarks as I would have made last week. Brexit, after all, brings about the most momentous change in our constitutional affairs since we joined the EEC in 1973 and, additionally, has ramifications for justice, devolved affairs and much else besides.

I congratulate the Prime Minister and his negotiating team on achieving what was said to be impossible: reopening the withdrawal agreement and making significant changes to the Irish backstop. His deal is sufficiently good to be preferable to no deal, although I do not think that a no-deal departure would be anywhere near as catastrophic or cataclysmic as the architects of Project Fear have suggested. I saw Sir Oliver Letwin on The Andrew Marr Show; he seemed to be saying that he supported the agreement reached by the Prime Minister with the EU. Yet he is one of the architects of the Benn—or “surrender”—Act, Section 1(4) of which, as my noble and learned friend Lord Mackay pointed out on Saturday, required the Prime Minister to seek an extension specifically and only to pass a Bill to implement Mrs May’s withdrawal agreement, not the one that the Prime Minister reached last Thursday. Does the Minister agree that the Benn Act is, therefore, ineffective?

The gracious Speech shows the Government’s intention to protect the integrity of our democracy. I am not a lawyer, but I was surprised that the learned justices of the Supreme Court ruled as they did on the attempted Prorogation of Parliament in July. 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 the Queen to prorogue Parliament was justiciable, contrary to the opinion of the Lord Chief Justice and the Master of the Rolls. It is also most surprising that the Supreme Court justices decided this unanimously. Their justification seems to be based on their opinion that the effect of Prorogation on the fundamentals of our democracy was extreme. However, Prorogation would have 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 in the referendum, promising to carry out their decision. Many of those who supported the passage of the Benn Act have had a much more extreme effect on our democracy.

David Cameron is said to be sorry that he arranged for the people to decide the question of our EU membership by referendum. He is quite wrong to apologise; history will recognise him as the Prime Minister who finally accepted the inevitable. We have always been more reluctant than any other member state to see powers transferred to Brussels. Opinion polls have consistently shown that a much higher proportion of people in Britain support the return of powers from the Union to the member states than in any other member state. The fact that Mr Cameron failed to persuade the EU to offer us continued membership on a basis which at least partly restored our lost sovereignty is what persuaded me that we could no longer remain uncomfortable passengers on the European train and that we would do better to get off.

It is nonsense to argue that we are too small or weak to exist without the umbrella of the EU. I have spent many years of my business life working for British firms in Japan and for Japanese firms in the UK. I do not think our EU membership has helped or strengthened our standing in the world whatever. It is rather the opposite; our soft power has been restricted by our EU membership. Brexit is not about becoming little Englanders and looking in on ourselves. It is about gaining our freedom from the tentacles of the EU bureaucracy and resuming our role on the world stage as an independent trading nation and a strong advocate of rules-based free trade and competition, underpinned by proportionate regulation which does not stifle innovation. The gracious Speech indicates the Government’s intention to work towards a new partnership with the EU, based on free trade and friendly co-operation. We should be able to negotiate an FTA that offers as near to frictionless trade as possible. I am excited by the UK’s prospects of entering into mutually beneficial FTAs with many of our important trading partners and of accession to the Trans-Pacific Partnership.

Finally, I entirely agree with the brilliant speech by the noble and learned Lord, Lord Judge. I trust—and ask the Minister to confirm—that the reference to the protection of the integrity of democracy and the electoral system, contained in the gracious Speech, can be read as an indication that the Government intend to repeal the Fixed-term Parliaments Act, whose unintended consequences have caused so much damage to our democracy.

Trade Bill

Viscount Trenchard Excerpts

Committee: 4th sitting (Hansard): House of Lords
Monday 4th February 2019 Lords Chamber

[Lord Finkelstein]

It is a credible proposal, but only if it has some sort of political support. The questions I put are merely a matter of guidance to me—and I am sure to lots of other people like me—and I am hoping that we will get a little bit of illumination from both Front Benches that will help us along the way.

[Viscount Trenchard (Con)]

My Lords, against the framework of what the future relationship will be, I do not think that the proposal of the noble Lord, Lord Lea, that we do not follow the procedure set by Article 50 for withdrawal but instead combine a withdrawal agreement-plus with seeking to accede or re-accede to EFTA would find much support among our European friends and partners. They would say that that is not what Article 50 says.

The noble Lord has made clear on many occasions his view that the UK should seek the softest possible Brexit, and his amendment would achieve that. If we were to become a member of EFTA—I think that Norway, for one, has not expressed any enthusiasm for our accession or re-accession—it is true that we would escape the jurisdiction of the ECJ and instead be subject to the EFTA Court, but that court follows closely ECJ judgments.

The leader of Norway’s European Movement has stated clearly that it is in neither Norway’s nor the UK’s interest for the UK to become again a member of EFTA. Continued membership of the EEA would require us to accept future EU rules and regulations, but without a seat at the table and with a greatly reduced voice in the formulation of those rules and regulations. It would also prevent the UK having its own trade policy and remove the raison d’être of my noble friend the Minister and the Department for International Trade. We would not be able to enter new free trade agreements with other countries or accede to broader free trade partnerships such as the CPTPP, which includes Japan, an enormously important trade and investment partner, and leading Commonwealth countries such as Australia, Canada and New Zealand, whose trading regulations, policy and law share origins with our own.

The EEA/EFTA proposal would make this Bill redundant, because we would have no need to novate existing EU FTAs and it would negate the whole upside of Brexit, leaving us as effectively a vassal state of the EU. That is not what the people voted for and your Lordships’ House would not be serving the nation’s interest by supporting the amendment.

[Lord Stevenson of Balmacara]

I hesitate to become too involved in this debate, which seems rather above the level at which I am accustomed to operating, but one or two things came to mind. As the noble Lord, Lord Lea, explained to me and as came through in his address, the purpose of the amendment is to make sure that we explore all possible options before coming to a conclusion on the many difficult issues before us today. He has done that clearly and it will be interesting to hear what the Minister has to say in response.

It would probably defeat any prospect for active negotiation to play the card that has been played in this amendment at this point, but it is worth bearing in mind the issues that it raises and the much broader point that the noble Lord, Lord Finkelstein, was keen to explore: so many strands to our positioning are being coalesced into a single deal/no deal debate, squeezing out our opportunities for further, richer and more flexible solutions to the long-term problems that we have all recognised and debated today. At this point, it would be best to hear from the Minister what the official line is and then see whether there are issues that we need to come back to on Report.

Trade Bill

Viscount Trenchard Excerpts

Committee: 3rd sitting (Hansard - continued): House of Lords
Wednesday 30th January 2019 Lords Chamber

I believe that these three amendments should be considered seriously as a way of, at a minimum, continuing as far as possible with business as usual, avoiding the perils that we might fall into if we have a free-for-all in the future.

[Viscount Trenchard (Con)]

My Lords, the hour is late and a large number of amendments are being debated. I shall not touch on more than one or two. I was impressed by the mention by my noble friends Lady McIntosh and Lord Risby of Amendment 48, on the tripartite agreement. I declare an interest because my brother-in-law is a racehorse trainer near Newbury and he is worried that he will not be able to move his staff and horses round Ireland and France as is necessary for his business. I see no reason why this agreement should not be grandfathered through because it existed before the European Union was founded. I fear, as my noble friend Lord Risby also intimated, that the tentacles of the European state have already embraced Ireland and France to such an extent that they will not have the freedom unilaterally to decide to continue the agreement. I hope, though, that our United Kingdom will have such freedom after Brexit but perhaps we can find a way to preserve this tripartite agreement for the future.

It is clear that all of us would like as little disruption to current arrangements as possible, but most of these amendments should not be in this Bill. They have nothing whatever to do with its purpose. I simply wish to comment on Amendment 55, tabled by the noble Baroness, Lady Kramer, who has not, I believe, spoken to it. Does she not realise that the City of London has suffered from the imposition of several barriers to trade in financial services as a result of having been forced to implement some new European regulations in recent years, such as parts of MiFID II, AIFMD and others? One of the benefits of Brexit is that the City will be free to adopt proportionate and sensible regulation that will enhance its business in years to come.

Brexit also provides an opportunity for the UK to play an enhanced role in the development of proportionate regulation at the global level, balancing the need to protect the consumer and the environment against the requirement to provide an innovation-friendly environment that will enable us to abandon some of the more cumbersome and restrictive parts of the European regulatory regime to which we have become progressively shackled and which is, in places, more about harmonisation and protectionism than about the genuine protection of consumers.

I shall give one example. I have known the chief executive of a Japanese pharmaceutical company for more than 30 years. He told me that when Brexit came along he was not happy, but he has spent more than $8 million upgrading his European network and is now confident that he will be able to research, manufacture and distribute medicines in both the UK and EU27 after Brexit, just as he does now, on whatever basis we leave. He told me that now that he has spent the money, he would like to see the upside of Brexit. He says that the upside is that he expects us to return to what I believe is a more natural state for this country, in which we will have a less cumbersome regulatory regime that will be more helpful for a life sciences company such as his to innovate in new therapies, new drugs and new medicines. What worries me is that, although we are about to leave the European Union, we will, through this type of amendment, promise to continue to align entirely with EU regulation, which in places relies too much on the precautionary principle, and in that case there will be absolutely no upside to leaving. Therefore, we must have a balance here.

[Baroness Kramer (LD)]

My Lords, perhaps it is sensible to come in right after the noble Viscount, Lord Trenchard, following that invitation. I will try to be brief.

Amendment 55 stands in my name. In the past two and a half years I have been shocked by how little attention has been paid to financial services and to what would happen to our access to the EU 27 in the field of financial services after any Brexit. I do not suppose that I have to rehearse for this Committee the significance of this industry. It accounts for something like 80% of GDP; it pays £76 billion a year in taxes, which support our National Health Service; and it has created 2 million jobs spread over the country. It is absolutely critical but has been very largely ignored. I make a plea to the Government that they should begin to get serious about financial services and understand their significance.

If I were to describe the industry in the UK, it basically breaks into thirds. Financial services range all the way from the smallest fintech companies, through insurance, asset management and banks, right up to the global sector of the London Stock Exchange and the London Clearing House. It is huge and varied, but roughly a third is domestic-facing and relatively untouched by Brexit.

About a third is intensely based on the industry’s EU 27 clientele. About half of that business has already gone or is in the process of leaving, and if anyone speaks to government on a day when they are being honest, basically they do not think that we have much chance of keeping much of that one-third in the UK over the medium term and certainly not over the long term.

We come to the final third, which is absolutely critical and where the decisions made in the coming weeks and months will have a great impact. I refer to the global piece, which one could think of in a way as being bigger than but represented by the London Stock Exchange and the London Clearing House. The future of that final global third has a real question mark hanging over it.

I say to the noble Viscount, Lord Trenchard, that London is a global centre partly due to its long-standing experience and partly due to good regulation, but critical to it is that it is the global financial centre for the euro—the second most significant global currency. That is what underpins London and its global role. Unfortunately, in all finance, where we know that risk exists, the ultimate protection and backstop in a time of risk is liquidity, and for all euro-denominated transactions that source of final liquidity is the European Central Bank. Therefore, from a European perspective, to be exposed to that level of risk, which is in euro trillions, with no ability to control the regulation, monitoring or supervision of a major global financial centre is really serious and significant.

I believe that fundamentally the Government have never looked at this issue from a European perspective and that they completely underestimate the medium and long-term interest in the European Union in pulling back much of that activity to an area where it can regulate, monitor and supervise because it carries the ultimate risk. Suggestions that have come from the City, which have been kicked around in government and in this House, have come largely from a very small Brexiteer think tank. I know the people well and have been to many of their meetings.

[Viscount Trenchard]

I totally agree that the bulk of the settlement of euro-denominated transactions takes place in London but, in a similar way, London is the most important centre for the settlement of offshore dollar-denominated securities—or even renminbi, or yen. That is because London is the leading global financial market in the world. I have not seen any moves by the United States Fed or Japan’s FSA to try to repatriate London’s role in their currency securities.

Taxation (Cross-border Trade) Bill

Viscount Trenchard Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 4th September 2018 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I am grateful to my noble friend Lord Bates for introducing this Second Reading debate. I realise that this Bill has been designated a money Bill and therefore, perhaps fortunately, your Lordships’ House cannot amend it. The House will have opportunities to review and improve the associated Trade Bill at length following its Second Reading next week. It is most unhelpful, and detrimental to the country’s interests, that the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, have introduced the amendments to which they have spoken, because whatever agreement may or may not be reached with the European Union on our future trading relationship, we need a new customs regime to be in place before we leave the EU on 29 March 2019. This is necessary whether we ultimately agree a form of the proposals adopted by the Cabinet at Chequers, whether we enter a Canada or Canada plus-type free trade agreement with the EU or whether we leave the EU with no deal agreed and initially trade with our European partners under WTO rules.

The noble Lord, Lord Tunnicliffe, argues that the Government accepted amendments to this Bill without adequate parliamentary scrutiny, but these matters have been debated at length both in your Lordships’ House and in another place and the Government have committed to giving the House of Commons a vote on the final agreement that they reach with the EU. The passage of either amendment would have no effect on the legislation and this Bill, as a money Bill, can be passed without your Lordships’ consent. Nevertheless, adoption of an amendment expressing regret will strengthen the perception, held widely across the country, that your Lordships’ House does not respect the democratically expressed will of the people that we should leave the EU. That does further harm to the standing and reputation of the House. In addition, it gives further solace to the EU negotiators, who want us to agree to a deal where we remain closely tied to their regulatory regime, and encourages them to believe that we will blink first and ultimately agree to an arrangement whereby we are unable to take advantage of new opportunities to expand our trade with the wider world and whereby we will continue to pay vast sums towards the ever-growing budget of the Union but without any say over how those funds are to be applied.

How can the noble Lord object to the amendment ensuring that we should agree to collect tariffs on behalf of the EU only if the EU agrees to do the same on our behalf? Is my noble friend the Minister confident that the facilitated customs arrangement could be made to work efficiently and that it would not be a deterrent to third countries that might otherwise be keener to enter a free trade agreement with the UK? The FCA clearly would work better if it were reciprocal than if it were just one way. If goods from a third country are imported into an EU member state for onward delivery to the UK in a sector where the UK would have applied a lower tariff rate than that applied by the EU, unless the FCA is made reciprocal the EU state initially importing the goods destined for the UK would have to apply the higher EU tariff and the importer would later have to seek a refund from the UK Exchequer, which would seek reimbursement of the difference from the EU. This would be very cumbersome and would have a negative effect on trade between the third country and the UK via the EU. The FCA is cumbersome enough anyway.

Of course, as noble Lords are aware, Monsieur Barnier has indicated that the EU will have difficulty in accepting the FCA in its proposed form. Surely the noble Lord, Lord Tunnicliffe, agrees that if we were to agree to collect duties on behalf of another state, we should certainly expect that other state to collect the same on our behalf. Is he also objecting to the amendment that binds the Government by law not to accept a difference between the tax regimes operating in Northern Ireland and in the rest of the UK? It would again be most unhelpful if the amendment were to be passed, giving the impression to the EU negotiators that your Lordships’ House would be willing to see Northern Ireland develop into a semi-detached province, still effectively a member of the EU in fact, if not in name.

Both the Conservative Party and the Labour Party clearly stated in their manifestos at the general election last year that the UK would leave the customs union, yet the noble Lord’s amendment laments the fact that the Bill introduces barriers to securing a UK-EU customs union. Has the Labour Party’s policy changed since the general election? Has this been made clear? The policy adopted by the Conservative Party and maintained by the Government consistently is that we should leave the customs union and the single market. Those who now seek either to remain in the customs union or to create a new customs union do so in the belief that it is more important to continue to trade with the EU in exactly the same manner as we do today, submitting to EU regulatory standards over which we have enjoyed steadily decreasing influence. Those standards are, in many cases, unnecessarily cumbersome and unduly inhibit innovation—for example, in the medical and scientific fields. In recent years when the UK has objected to the adoption of new EU regulations in both goods and services we have invariably been overruled.

Why do we not hear about the costs in terms of jobs that would have been created here, and tax revenues lost to the nation, as a result of companies establishing businesses outside the EU in order to avoid the EU’s suffocating regulatory tentacles? I can understand that the establishment of borders across which supply chains operate will require change and increased reporting, but technology can mitigate that in the same way that it does across the United States-Canada border. I am absolutely not advocating a race to the bottom. I wholly agree with the Government’s policy of maintaining the highest standards across the board, especially in areas such as the environment and food safety. However, high standards do not require in all fields adherence to the unnecessarily bureaucratic standards set by the EU, which offer no real additional protection to the consumer over standards applied by the United States, Japan or other non-EU countries.

In the medical field, for example, too much weight is given to the precautionary principle, which makes it more difficult to gain approval for new life-saving drugs and makes the EU an unfriendly jurisdiction in which to conduct research and development. The chief executive of a major Japanese pharmaceutical company told me during my visit to Japan in July that it is true that Brexit will increase the cost of its European operations, but it has already invested a considerable sum in adapting its corporate structure to what may be necessary post Brexit. On the other hand, he believes that the UK will remain the best place in the world to conduct research and development and introduce new drugs, and that the regulatory environment in the UK post Brexit should encourage such innovation with a more constructive and less bureaucratic approach.

I believe that those who want to avoid changing anything are misguided because they want to keep a relationship with the EU which does not really work well for us and never has. They are prepared to forgo the considerable upside which will accrue if we are truly free from EU shackles and can again apply our influence at the global level, where our enhanced voice in the development of sensible, global-level regulation will offer appropriate and necessary consumer protection without unduly restricting the freedoms to innovate and develop new processes which are necessary for a brighter, more prosperous future for our citizens.

The amendment of the noble Lord, Lord Tunnicliffe, seeks to tie us into the customs union. The amendment of the noble Baroness, Lady Kramer, further seeks a second divisive vote, in the misguided hope that the Liberal Democrats can persuade the people to vote to remain in the customs union and single market. But 80% of the UK’s economy comprises services, of which 75% do not form part of the single market. Only 15% of our output is exported to the single market and in recent years the EU has taken a declining share of our exports.

Noble Lords should read the excellent paper on CPTPP, Trading Tigers, published by Policy Exchange, which illustrates the opportunities available to the UK from acceding to that partnership. The authors do not claim that increased trade with the TPP 11 would immediately replace our EU trade but I believe that the UK’s increasing trade with them and other non-EU trading partners would soon outstrip any damage to UK-EU trade, even under the undesirable scenario where we fail to agree a deal with the EU and trade under WTO rules. The noble Baroness forgets that when Jacques Delors was driving through his plan to create the single market, its negative aspects were widely seen as a move to create a “Fortress Europe”. At that time, the chief concern was the threat posed to European manufacturers by Japanese exporters; Edith Cresson attributed Japanese economic success to her view that they lived like ants.

The Government’s policy—reflecting the manifestos put forward at last year’s general election, which were supported by 85% of voters—is to leave the customs union and the single market. It is therefore absolutely necessary and strongly in this country’s interest to support this Bill, which is necessary to enable the UK to establish its own customs regime and implement its own trade remedy measures. Although the noble Lord, Lord Tunnicliffe, has said that he will not seek to divide the House, the noble Baroness, Lady Kramer, has indicated that she will press her amendment. This is also unhelpful and, I believe, contrary to the country’s interests and I urge the House to reject it.