House of Lords and Machinery of Government: Consultation on Changes

Viscount Waverley Excerpts

Wednesday 15th July 2020 Lords Chamber

[Lord True]

My Lords, my noble friend makes a number of important and relevant points. As I said yesterday, in some respects the House already takes part of its work outside London. I do not believe this is something to which your Lordships should close your ears.

[Viscount Waverley (CB) [V]]

My Lords, if idealistic elements of decision-making advocate decentralisation, why not move the whole machinery of governance out of town, or make it rotational? This may have the added beneficial consequences of strengthening the sanctity of the union and lessening the drain on the Exchequer.

[Lord True]

My Lords, the noble Viscount puts forward considerations which would need to be, and will be, reflected on as we look at the future of our constitution. The operation of Parliament must be absolutely fundamental in that consideration.

EU: Customs Arrangements

Viscount Waverley Excerpts

Wednesday 8th July 2020 Lords Chamber

[The Deputy Speaker]

There seems to be a problem with the hub. We shall move on to the noble Viscount, Lord Waverley.

[Viscount Waverley (CB) [V]]

[Inaudible.]—to the continent by some key players. Are the Government expecting UK manufacturers to adapt to government policies, or are the Government adapting to the needs of industry? After consultation with those at the sharp end of supply chain issues, and the clarion call for certainty, what change of policy might the Government feel obliged to consider, should the US remove itself from the WTO, thus compounding uncertainty?

[Lord True]

My Lords, the issue with the US is slightly wide of the Question, but I assure the noble Viscount again that engagement with business is ongoing, has been ongoing and will develop further in light of the new proposals. The Government have been grateful for the welcome from many representative bodies in industry to the engagement that has taken place so far.

UK-EU Negotiations

Viscount Waverley Excerpts

Thursday 18th June 2020 Lords Chamber

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

My Lords, we now come to the 20 minutes allotted for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

[Viscount Waverley (CB) [V]]

I wish the Government well in delivering a far-ranging, successful set of negotiations that will serve all sides in the long term. It is to be hoped that an eye is being kept in parallel during these complex negotiations on the central necessity of broad relationship-building with civil society, the Commission and the capitals of the 27. If that is the case, will the Minister offer the House specific examples of programmes that are being and will be implemented to ensure that a deep and special relationship will be the outcome, whereby both sides are mutually satisfied?

[Lord True]

My Lords, I will preface my answer by saying that some noble Lords will have seen the name of my noble friend Lord Forsyth on the speakers’ list. It is not that he has not turned up; he suffered a close family bereavement, and I know that all noble Lords who may be asking themselves why he is not here will understand that.

The noble Viscount’s question was framed in a manner about the cultural, social and instinctive links that the United Kingdom has with other European nations. Some of those have been institutional links of different sorts, while others have been links that are not in any sense political. I am personally committed, as are the Government, to maintaining the closest possible cultural and societal links between the nations of Europe. The question is what institutions are required to secure that. I submit that the European Union is not one of them; other institutions and arrangements are currently still under consideration.

Manifesto Commitments

Viscount Waverley Excerpts

Tuesday 16th June 2020 Lords Chamber

[Lord True]

I pay tribute to the haulage industry; it has been an outstanding performer, and not just in this crisis. However, the answer to the noble Baroness’s question is no. The transition period will not be extended. That has been accepted by the European Union, and I suggest it is about time that it was accepted by your Lordships’ House.

[Viscount Waverley (CB) [V]]

My Lords, I have listened carefully to the Minister’s responses, but would it not be prudent, at this time of unprecedented national and international uncertainty, for the Government to adapt to these new circumstances, or are they to follow an end game, irrespective of the consequences? How can the repeatedly professed line of seeking a deep and special relationship with the EU, on the one hand, be reconciled with walking away from negotiations, on the other—and that is before a probable downgrading in relations and a global trade war with China, together with an untested strategic trade relationship with individual Commonwealth members?

[Lord True]

My Lords, we have moved slightly away from the manifesto. I do not know whether the noble Viscount saw the very friendly discussions yesterday between the Prime Minister and representatives of the Commission. There is a commitment on both sides to intensify negotiations to produce a satisfactory outcome. I remain confident that that is possible.

Covid-19: Economy

Viscount Waverley Excerpts

Thursday 4th June 2020 Lords Chamber

[Viscount Waverley (CB)]

My Lords, achieving more with less should be the UK’s mantra, as well as not being overly reliant on ways of old, in order to counter recession and unemployment. Innovative digital platforms —in which I declare an interest—should be brought to the fore with particular emphasis on support for SMEs, which is where the greatest opportunities across all industries lie in opening new, or deepening existing, export markets. Supply and demand in emerging markets will be heavily competed for post Covid.

The emphasis should be on instilling a sense of transparency, in generating a team effort between the public and private sector and supporting networking organisations with possible mandatory membership to beef up multipliers, be it a chamber of commerce or trade association.

Our economy would be further protected by ensuring an across-the-board concerted effort to harness conducive official policy across all government departments in order to create the environment for operating to maximum national gain. Regional trade commissioners, the Prime Minister’s trade envoys and an agenda by the relevant bilateral APPGs must all play their role. These roles, including that of reviewing ambassador appointments, should be heavily scrutinised by Parliament.

Beyond Brexit (European Union Committee Report)

Viscount Waverley Excerpts

Tuesday 12th May 2020 Lords Chamber

[Viscount Waverley (CB)]

This is an important report and requires comprehensive consideration. Fostering relationships and working for certainty is key to the UK’s future in this complex, uncertain world. As applicable to beyond the EU as within, engagement, trust-building, negotiation and agreement are key. I remain for ever hopeful that conditions can be met to reset a number of relationships.

The sum of four strands makes up relevant relationships: government, both central and local, parliamentary, the private sector, and civil society, including culture exchange and soft power. Central government’s role must be to uphold standards and exercise its mind on such matters as national security, but also, importantly, to co-ordinate the other components. After all, it does not have a monopoly on relations.

I will run with the theme from the noble Earl, Lord Kinnoull. The report underlines the essential need for parliamentary scrutiny and engagement. Enhanced inter-parliamentary dialogue could serve a real purpose. However, the UK’s APPG movement requires an urgent overhaul. Its role, and that of the IPU and CPA, should be properly funded and not be as a single focus group, so as to become effective in advising government. Chairs and officers should be selected for their approach to being even-handed, but will the Government take parliamentarians seriously or do they believe themselves to be a centralised cabal?

In my time as chairman of the APPGs for the five states in central Asia, I endeavoured to make the groups meaningful by signing co-operation agreements with opposite numbers to underline their importance to the broadest range of priorities, from security, the environment, climate, trade, human rights and others, including parliamentary exchanges. That process could become a model.

EEA Nationals (Indefinite Leave to Remain) Bill [HL]

Viscount Waverley Excerpts

2nd reading (Hansard): House of Lords
Friday 19th July 2019 Lords Chamber

[Viscount Waverley (CB)]

My Lords I was in two minds about the need for the Bill brought by the noble Lord, Lord Oates, as I was unsure how elements were different in their effect from what the Government have already guaranteed through the pre-settled and settled status scheme. However, listening to the noble Lord’s introductory remarks, and given the current vagaries of the political arena—and this is a political matter—I have been persuaded otherwise.

It has always been a source of constant amazement, tallying the anomaly of decision-makers professing a global outlook for this country while being insular in approach. Not much need be said in support of the Bill, as it is not as if, from the word go, the Government have not been counselled—in this place and elsewhere. We all want the best for the UK, but—the noble Lord, Lord Kerr, captured the situation—we should be magnanimous and practical, we should consider the national interest, we should consider the uncertainty it causes and the plight that further uncertainty would cause, we should not fall foul of moral ineptitude but beware not to create a latter-day partition of sorts—not our finest moment.

Obstacles to working this out are time, political will and legal uncertainty—to which I may add that personal experience of the immigration decision-making process taught me that there is ill in the system. The rights situation and precarious status should be removed. It ill befits a country that prides itself as a global leader.

It should be noted that a number of EU countries—in my case, Portugal—have rightly acquiesced on citizens’ rights, whatever the UK’s upheaval. Who knows? It may well be that the UK will want to ally itself strategically to the EEA and EU in one form or another—so best not to upset the apple cart with aspects identified by the noble Lord, Lord Oates.

I ask for clarification on one point for the record: the question of who constitutes a family member who could accompany. The Minister may wish to comment on that point.

In conclusion, the time to address this is now. For reasons I have put before the House and so as not to leave anything to chance, I commend the Bill and encourage your Lordships to fast track it to the next stage.

Brexit: European Investment Bank (European Union Committee Report)

Viscount Waverley Excerpts

Tuesday 16th July 2019 Lords Chamber

[Viscount Waverley (CB)]

My Lords, this report can be commended for enabling negotiations with the EU to be arrived at in advance—an approach absent from Brexit negotiations thus far. I hope that the new political guard will take note of the messaging this evening.

The report recognises the worrying position we seem to be in regarding our investment in the EIB and the proposed financial compensation contained in the draft withdrawal agreement. If that was not enough, the effect of today’s news that the pound is dropping like a stone in reaction to a probable Brexit outcome makes the outlook on borrowing dismal, compounded by the generally parlous state of geopolitics and geo-trade issues, including financing. This debate is much about numbers. It would be helpful if the Government set out their proposals for their strategy on borrowing for UK infrastructure projects, given these additional challenges.

The mechanism to remove a member is not clearly defined in the constitutional documents of the EIB. The UK should not be accepting anything less than the fair value of its investment. This would equate to approximately €7 billion to €8 billion in value above the approximately €3.5 billion of paid-in capital on retained earnings alone. It appears that the UK will be liable for undrawn capital during the period in which it has been paying in capital until repaid. If this is called in, how will it be repaid? It is probable that such drawn funding is unlikely to be invested or lent back to UK organisations at all. Do the Government agree that the UK’s share of undrawn capital could be as high as €36 billion?

The negotiation of our sovereign value warrants greater focus. It seems prudent to look at alternative arrangements, either by renegotiating the current proposed terms, or by being more creative. For example, could the UK’s stake in the EIB be commuted into a direct shareholding in the EIF, given that owners of the EIF do not have to be members of the EU, as is the case currently with the EIB? Alternatively, could the UK exchange its stake for some of the UK investments or loans? This would ensure that the UK is able to remain a player in a non-obstructive and mutually beneficial way, post Brexit.

The UK has benefited from a number of key infrastructure loans from the EIB. Crossrail, for example, was a beneficiary of a £1 billion loan, with payments staggered annually. As the exit of a member state from the EU is unprecedented, will the Minister confirm whether outstanding loan payments confirmed would still be received by the UK in a no-deal scenario? Will the UK seek additional loans once we have exited, as Switzerland and Norway do? Given that the EIB’s mission is to make a difference to the future of Europe and its partners, such an arrangement would inject some much-needed confidence and positivity into the future of UK-EU relations, post Brexit.

I agree that the funding decline caused by the retraction of EIB support, be it via EIF or infrastructure-related investment and lending, must be substituted. This will have a compounding effect and get progressively worse. The British Private Equity and Venture Capital Association has remarked:

“Pitchbook data from February 2018 shows that the total capital raised by Europe’s venture groups fell by a quarter in 2017 to €7.4 billion, and the total number of new funds dropped to a 10-year low of 54 in 2017, compared with 75 in 2016”,


a point raised by many in this evening’s debate. Tim Hames, the BVCA’s director-general, said:

“There is no question but that the referendum, never mind the actual date of Brexit, has already had a pretty fundamental effect. EIF investment in the UK fell by 91% between 2016 and 2017, which is a large enough number to make you suspect that it was not an accident or a coincidence of timing”.


This is a stark reminder of what is at stake.

The British Business Bank has done a good job starting to cover the shortfall. However, British Patient Capital has £2.5 billion of funding over 10 years, while the EIF provided £2 billion over five years, so clearly more needs to be done. Additionally, BPC is yet to substitute the EIF’s cornerstone function via its reputation drive, “crowding in”. It needs to transition to this role sooner and be ready to scale further, particularly if the EIF increases funding across other EU jurisdictions. The gaping hole in the numbers is the need to crowd-in UK private institutional funds, particularly pension funds, to replace the EIF. Neither the BBB nor the Government can do that in isolation.

Specifically on infrastructure investment, the EIB can provide funding for infrastructure projects and initiatives across numerous sectors—energy, education and transport are examples—at low interest rates, due to its own AAA rating and zero-profitability objectives. However, a legitimate question might be asked: what if no deal damages the EIB AAA rating and causes a downgrade? This unlocks the viability of large-scale and riskier projects, because the EIB will both cornerstone these projects and consequently unlock parallel private infrastructure funding, given the blended cost of capital of these projects as attractive. It is not clear whether the BBB would be able to replicate that. Can the Minister comment on this and previous questions, or write and place a copy in the Library?

The scope to create a new UK funding institution capable of tapping into the capital markets should be explored. It is critical that the UK develops an alternative to the EIB capital—one that not only ensures that projects can be funded, but also that we do not revert to projects that fit a prescribed risk-return profile.

The report refers to the renewable energy sector, with lower-risk return visibility of offshore, for instance. Would the substitute funding support such large and ambitious plans? The alternative must evolve in time, to ensure that it is an organisation with the capability to assess projects with the robustness of the EIB, whose reputation also drives the crowding in of private funders.

This is where a sovereign wealth fund, or one-stop shop, can contribute to creating a best-in-class organisation. There will certainly be benefits in a one-stop-shop delivering both SME ambitions and broad infrastructure programmes, which will need to be developed as the EIB scales back. There could be significant benefits to having a sovereign institution independent of government, particularly with respect to individual investment decisions, thereby generating greater confidence from investors, especially for long-term projects and crowding in investment from the private sector. Such an institution must be free from day-to-day political interests, though aligned with clearly defined strategic national priorities.

The report recognises that the skills to deliver EIF and infrastructure-type investment differ. However, any institution tasked with funding, deploying and governing these can be constructed with the flexibility to ensure that it tasks the most capable teams with delivering its overall investment objectives, working alongside appropriate stakeholders and leveraging central functions such as HR, accounting, investor relations and compliance.

In conclusion, the UK requires a new and bold sovereign wealth fund, created to fit the nation’s needs, one that can deploy its funding, no matter the source, in a commercially viable and responsible manner. There is no need to single out any specific technology innovation, given the ongoing and rapid rate of change, but it is critical that the right funding solutions are available for all sectors, now and in the future. That said, a new sovereign wealth fund, working alongside Innovate UK, will help to unlock opportunities such as blockchain technology and AI.

--- Later in debate ---

[Lord Bruce of Bennachie (LD)]

My Lords, I join all the other members of the committee in thanking my noble friend Lady Falkner for introducing this debate and for her chairmanship of the committee over the last four years. She has done it with considerable application, skill and expertise, and will be sadly missed. The staff who supported the committee were a class act, supporting the committee expertly, promptly and without complaint, in spite of the extreme pressures put on them from time to time.

It is shocking, but not surprising, that this debate is taking place in an empty Chamber. This is a monumental scandal of mismanagement by the Government and a failure of communication to the wider public of one of the serious consequences of leaving the European Union. Members of the committee, and all noble Lords who have spoken, have highlighted the benefits that this institution has provided to the UK—the billions that have been invested across a range of sectors. These benefits are not just financial but nuanced in other ways. The reputation and the AAA credit rating of the bank have unlocked substantial private and public finance, some of which would simply not have happened without the existence of the bank, which is about to not exist for the United Kingdom in the very near future, unless things change very sharply. Of course, we continue to contribute while the investment has almost disappeared. I find it extraordinary that we have allowed a situation in which the UK is not financed, when we are a full member, despite our still providing the resources for that investment.

The Government’s determination to deliver Brexit and, as a number of speakers have said, their ideological indifference—if not hostility—to the public-private partnership that the bank represents, mean that the impact of losing it has been very undervalued. This has been brought out in our report. All we asked for, and all we are getting, is our capital over a long period and without interest—indeed, as the noble Lord, Lord Vaux, said, not even the value of the capital. The retained earnings that our capital has helped generate will stay just that: retained.

I draw the House’s attention to the fact that during the coalition, the Liberal Democrats introduced innovative measures in this area. It was the Liberal Democrats who called for the establishment of the Green Investment Bank. It was Vince Cable who, out of the wreckage of the financial crash, secured the establishment of the British Business Bank. If the Government had thought ahead about the implications of Brexit, I suspect that they might not have privatised the Green Investment Bank. My instincts are that they would have privatised the business bank, had Brexit not happened, but they realised that this was a vehicle they needed to strengthen, rather than let wither away or sell off.

We need to look at how we can replace the EIB. The noble Viscount, Lord Waverley, made some interesting suggestions, which I am not sure would be welcomed by the EU, about how we might find a way of effectively locking ourselves back in through a shareholding of the EIF. It is an interesting idea. Again, if we were in the right kind of negotiating framework and relationship, it might just be possible.

[Viscount Waverley]

Does the noble Lord agree that the UK does in fact have a lot of experience, through the Asian Infrastructure Investment Bank, which is funding the one belt, one road initiative from China all the way through central Asia and beyond? Maybe there is a lot we could learn from that process.

[Lord Bruce of Bennachie]

That is indeed true, and of course, Danny Alexander is one of the directors of that bank.

The point, which has been drawn out by all the speakers, is that infrastructure banks—promotional banks, as my noble friend Lady Bowles described them—are well established in many countries. You could argue that the EIB was, in effect, Britain’s answer to that, but as we leave the EU, we do not have an answer to that. I think it fair to say that all the speakers have suggested that now is the time for the Government to think about a promotional bank of this kind, because it is very difficult to see how we are going to fund massive infrastructure projects and the kind of innovative financing for small and medium-sized enterprises that has been provided, and which we do not have any mechanisms in place to deliver.

The evidence we had from KfW, established in 1948 partly to deal with the Marshall plan, demonstrated how a bank of this kind can become a major national asset. Yet, somehow or other, the UK has tended to sniff at these ideas, and we do not have anything to compare to it. When I was chair of the International Development Committee, I argued the case for a British development bank—something that France, Japan and a number of other countries have an equivalent of. We have in the CDC perhaps the nucleus of an organisation that could become a development bank, but on reflection, on the evidence that this committee received, I am of the view that we should not set up a series of banks; we should consider having one national bank which has sectoral commitments. Infrastructure is absolutely necessary—small and medium-sized enterprise finance—but so are development and external activities. I ask the Minister to take away from this debate the fact that we would like the Government to give serious and considered thought to setting up a bank of this kind—and if not, why not? In other words, I ask them to explain their thinking and what the alternative might be, because it is not at all clear from anything the committee has heard.

It is worth noting that, even within the United Kingdom, Scotland is setting up its own bank. I suggest that it will find that difficult in the consequences of a Brexit, and certainly a no-deal Brexit, but at least it is a recognition of something. It would be a bit ironic if Scotland could do something that the United Kingdom feels incapable of doing. What is abundantly clear is that, once we are left to our own resources outside the EIB, the UK’s credit rating is unlikely to soar. It is already downgraded. It is likely to be further degraded. One of the consequences is that we will have difficulty borrowing money and it will be expensive to do so.

It is difficult to see how the UK can possibly replicate the advantages currently available through the EIB. As we have learned, the EIB has the advantage, first, of borrowing at the lowest possible rate and being able to pass that on, and secondly, because of its established expertise, of effectively crowdfunding other sources of investment. There is no institution in the UK that has the capacity to do that, and the UK’s credit rating will be such that, in the short to medium term, we will be unable to do it. The consequence of that—especially if we have no deal, the economy and revenues are shrinking, yet the infrastructure needs and the other investment needs are growing—is that the Government are going to face a huge black hole of astronomical proportions.

We heard the noble Lord, Lord Butler. My mother’s expression was, “You’ll be sorry when I’m gone”. It is the same thing. We are going to be very sorry when the EIB is gone because, as we have established, we can see no future relationship with the EIB; certainly not if we do not negotiate in a constructive way. Without that, we will be left with no viable alternative. We will effectively be in a situation where we do not have a fallback and we have a gap. The noble Viscount, Lord Trenchard, made the point that it was a terrible deal. I am a passionate remainer, but I cannot understand why, if we are going to leave the EU, we do not negotiate the best future relationship that recognises the contribution we have made. Whatever side of the argument you are on, simply to throw up our hands and hand it over was quite extraordinary. We were led to believe that when this was discussed with the board of the bank, the British representative did not even contribute to the discussion, which I find utterly appalling—an abdication of responsibility, if you like.

To conclude, I suggest that the Government have some very hard thinking to do and some very serious questions to answer. I hope the Minister will be able to answer some of these, but I respect him enough to know that those he cannot, he will take away and bring back: I ask him to do that if that is the case. If I may say so, in a very partisan way, this debate and this report tell me exactly why we should stop Brexit.

Honours System

Viscount Waverley Excerpts

Tuesday 26th March 2019 Lords Chamber

[Lord Young of Cookham]

I agree: no one should get an honour simply for carrying out the job they are paid to do. As I said right at the beginning, the operation of the honours system is independent of government; there is a Main Honours Committee and nine or 10 sub-committees below it, with civil servants and Members of your Lordships’ House on them. I am sure they will take on board the comments made by the noble Lord that there should be a fairer distribution of the ranks of Orders of the British Empire between those who at the moment are the main beneficiaries and others who perhaps get some of the lower orders.

[Viscount Waverley (CB)]

My Lords, does the Minister accept that our now Commonwealth allies are part of our proud heritage and shared great hardship on our behalf? Decisions of this sort should not be taken in isolation as, more than ever, we need to stand shoulder to shoulder.

[Lord Young of Cookham]

I agree with the noble Viscount. As I said a few moments ago, the order remains in use in other countries: Antigua, the Bahamas, Belize, Grenada and many other countries continue to nominate. Any change would have implications for those Commonwealth countries.

Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations 2019

Viscount Waverley Excerpts

Thursday 14th March 2019 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, the Government are committed to securing an agreement on the UK’s exit from the EU but we must be prepared for all outcomes, notwithstanding yesterday’s votes. It is for this reason that I am today bringing forward two sets of regulations for approval: the Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations and the Public Procurement (Electronic Invoices etc.) Regulations. To be clear, in the event that the UK enters into a withdrawal agreement with the EU, the first of these sets of regulations will not be required.

The amendments in the Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations do not amount to a material change in public procurement policy but, to all intents and purposes, maintain the status quo for UK contracting authorities with regard to their obligations towards certain non-UK suppliers. They will ensure that the UK’s procurement system continues to function as intended post-EU exit in the event of no deal, and grant certainty to UK contracting entities that they can continue to procure goods and services in the same way as they do now after exit day. In this way, the Government are ensuring that these entities continue to be able to obtain value for money for UK taxpayers.

As noble Lords will be aware, the UK Government are working to secure continuity agreements with a number of our international trading partners, which will replicate as closely as possible trade agreements to which the UK is currently a party via its EU membership. We have already laid before Parliament agreements with Switzerland, Israel and Chile. All these agreements contain substantial provisions on procurement, which will provide UK businesses with guaranteed access to lucrative procurement markets in those countries. Where the UK has entered into an agreement which contains provisions relating to public procurement, we must ensure that our domestic procurement legislation takes account of the obligations in that agreement.

In their current form the Public Procurement (Amendment etc.) (EU Exit) Regulations 2019, which were approved by this House on 20 February, would amend the existing procurement regulations so as to disapply, from exit day, the duties which UK contracting authorities currently owe towards economic operators from countries with which the EU has a trade agreement containing procurement provisions. Regulation-making powers in Clause 2 of the Trade Bill currently before Parliament would then enable the UK to reinstate these duties in such a way as to reflect the UK’s transitioned continuity agreements, rather than the EU agreements which these replicate and to which of course the UK will no longer be party after exit day.

As noble Lords will be aware, the Trade Bill is yet to complete its parliamentary passage. In the consequent absence of bespoke implementing powers in that Bill, we have had to look at other measures which would enable the UK to demonstrate compliance with the agreements that we have worked hard, and continue to work hard, to conclude. It is the duty of a responsible Government to ensure that, once we have left the EU, we continue to reap the economic benefits that these agreements bring. It is also our duty to uphold our reputation as a valued and respected trading partner, by ensuring that the obligations we have committed to maintaining after our withdrawal from the EU are adhered to.

I am therefore bringing forward this second EU exit instrument, which will amend the first such instrument before it comes into force so that, instead of removing from the procurement regulations the obligations owed by UK contracting authorities and other entities towards non-UK suppliers immediately on exit day, that first SI would preserve these obligations for a period of 18 months after exit day. The need for there to be a second, amending instrument was referred to during debate on the first EU exit instrument in the other place: specifically, during its consideration in the Delegated Legislation Committee on 13 February.

In practical terms, this preservation of obligations will have the effect of ensuring that, for a time-limited period, suppliers from certain non-EU trading partners will be afforded the same guaranteed rights of access to UK procurement markets that they enjoy now. This mirrors a similar provision already contained in the first SI in respect of suppliers from states which are party to the WTO government procurement agreement. That provision has already been approved by this House, but it is being extended so that it aligns with the other provisions in this instrument. By keeping alive the duties owed by contracting authorities as they exist already, the Government are ensuring that the UK can continue to meet its international procurement obligations. In turn, that will help to ensure that UK businesses continue to enjoy access to overseas public procurement opportunities and that UK contracting authorities can continue to obtain the best possible value for money when procuring, through robust supplier competition.

Noble Lords may at this point be wondering why, when the UK is leaving the EU, it is appropriate to preserve obligations arising from EU agreements to which we are no longer party, and whether doing so may produce any adverse effect on British businesses and authorities. The procurement obligations which arise from the UK’s continuity agreements are, in essence, the same as those which have arisen until now from the EU’s trade agreements, meaning that the amendments in this instrument represent a temporary technical solution to complying with the UK’s international procurement obligations until such time as the Trade Bill is enacted.

I reassure noble Lords once again that, in practical terms, the provisions in this instrument amount to a time-limited continuation of the status quo, which will create no additional burdens or costs for UK businesses or contracting authorities. Public sector contracting authorities and other covered entities across the UK will continue to be able to procure competitive goods and services from overseas suppliers as they do currently; and UK businesses will see no change as a result of this instrument in the way they go about bidding for and winning lucrative public contract opportunities, both in the UK and in countries with which the UK has a trade agreement. It is for this reason that it has not been necessary to publish an official impact assessment.

In summary, this instrument will ensure that the UK’s procurement system will continue to function as intended post EU exit in the event of no deal; that the UK can successfully ratify and comply with its international continuity agreements; and that UK suppliers and contracting authorities can continue to operate as they do now for the foreseeable future.

I now turn to the second of the two instruments: the Public Procurement (Electronic Invoices etc.) Regulations 2019. Unlike the other SIs which we have been debating today, we will need this if we secure an agreement—as I hope we will. In the event that the Government enter into a withdrawal agreement with the EU, we will be required, under the terms of this agreement, to continue to comply with EU procurement law during the implementation period. That includes this directive, which concerns electronic invoicing in public procurement. It is a short and simple measure which aims to promote the uptake of electronic invoicing in public procurement by requiring public bodies to accept electronic invoices from their contracted suppliers. Principally, this instrument is to transpose the e-invoicing directive; it also makes a small number of other technical corrections to the public procurement rules. There are numerous different types of e-invoice used across the EU. These varied formats cause unnecessary complexity and high costs for businesses and public bodies.

There are significant benefits to be realised in promoting the uptake of standardised electronic invoicing in public procurement, both in terms of a reduction in costs and administrative burdens for procuring entities and their suppliers and in terms of the environmental impact of a move away from paper-based invoicing. That is why, in 2014, the EU adopted Directive 2014/55 on electronic invoicing. This instrument transposes the e-invoicing directive into domestic law. It does so by amending existing procurement legislation applicable to the award of public contracts and contracts in the utilities sector. The Scottish Government have brought forward their own legislation to give effect to the directive, in similar terms to this instrument.

The directive contains one simple obligation for member states: to take the necessary measures to require public sector buyers and utilities to receive and process electronic invoices that comply with a common standard. Private sector suppliers, other than those privatised utilities remaining subject to public procurement rules, will not be obliged to use the e-invoicing standard unless they wish to do so. We are not imposing additional costs on suppliers. The measures we have introduced would oblige contracting authorities and other procuring entities to include within their contracts an express term requiring them to accept and process electronic invoices that comply with the standard where, of course, there is no dispute as to payment. In the absence of an express provision of the contract dealing with electronic invoicing, a term to that effect is to be implied. In that way, suppliers will be able to enforce their ability to invoice purchasers of goods and services electronically via the terms of the contract itself.

The European Committee for Standardization—CEN—was commissioned to draft the standard and the British Standards Institute was involved in its development. The standard was published in October 2017, following which the UK had 18 months to implement the directive’s requirements. The deadline for implementation is 18 April 2019. This falls after the date on which it is anticipated that the UK may leave the European Union. However, it remains the Government’s aspiration and intention that the UK will secure a deal with the European Union. We would then enter a period of implementation, as provided for in the withdrawal agreement, during which the UK would continue to be bound by most aspects of EU law, including the e-invoicing directive. This instrument is, therefore, expressed to come into force on 18 April 2019.

For sub-central contracting authorities, such as local authorities and utilities, the directive confers on member states the discretion to postpone the application of implementing provisions until 18 April 2020 and we have taken advantage of that derogation. It is right that we allow procuring authorities, other than central government authorities, time to adapt to the change, although there is of course nothing to prevent those authorities from accepting electronic invoices prior to that date. In the event of no deal being reached by 29 March, we are free to implement the European e-invoicing standard and we will consider the options available to us for this instrument. The UK will be free to set its own policy on electronic invoicing.

As set out in further detail in the Explanatory Memorandum, we have also taken the opportunity in this instrument to make minor amendments to the way in which the Public Contract Regulations 2015 and the Concession Contracts Regulations 2016 refer to offences under the Modern Slavery Act 2015. The aim of the amendment to the Public Contract Regulations 2015 is to ensure legal certainty as to which offences under the Modern Slavery Act constitute grounds for mandatory exclusion from award of a contract. More specifically, the amendment omits a duplicate reference to offences under Sections 2 and 4 of the Act. That duplicate reference was included in error in 2016.

For the Concession Contracts Regulations 2016, the amendment is to ensure that offences under Section 1 of the Modern Slavery Act 2015 are included within the mandatory grounds for exclusion from participation in a concession award procedure, and ensure consistency in the grounds for exclusion across the procurement regulations. With this instrument, therefore, we have the opportunity to provide real benefits to both the supplier community and the public sector, and I look forward to seeing it progress through both Houses.

I hope noble Lords will agree that both sets of regulations brought forward today are necessary for the UK to adhere to the commitments it has made, both in its trade continuity agreements and under the terms of the withdrawal agreement. I hope they will also agree that these instruments will provide benefits to the public sector and to UK businesses. I commend them to the House.

[Viscount Waverley (CB)]

I wonder whether the Minister’s notes allow him to comment on the following and, if not, he will agree to write. Currently, all UK public sector opportunities are published on Tenders Electronic Daily—TED—which is the EU service on which all public sector tender opportunities within the European Union are listed and updated, constantly. What might be the plan for UK public sector tender opportunities either to continue to be published on Tenders Electronic Daily or to be published separately? If so, where might they be published?

[Baroness Neville-Rolfe (Con)]

My Lords, I welcome the opportunity to debate these SIs, but I have one or two questions of clarification. Luckily, the Minister has already answered my question about the Modern Slavery Act.

As I understand it, the first of the two SIs, in practice, relates to third-country public procurement by the UK. I admit to having a concern about the interests of our own UK businesses and small operators that are involved in procurement. I refer to my registered interests, just in case any might be affected, although the impact assessment suggests that the impact of this order is negligible.

My experience is that we in the UK are more punctilious about enforcement of procurement rules based on,

“transparency, non-discrimination, equal treatment and proportionality”,

and the remedies for breach of any of those; I picked up the wording from paragraph 6.2 of the Explanatory Memorandum. Perhaps the Minister would be kind enough to comment on the risk that the changes will put us at a future disadvantage and not be fully reciprocated by the third countries concerned in the procurement process. If there is a risk, how long will it last? The SI lasts for 18 months, but I am not clear whether that is 18 months altogether or 18 months during which contracts might be let. Of course, procurement contracts often go on for many years.

I was sorry to see that there was no public consultation on this SI, but perhaps my noble friend the Minister can let me know if any concerns have been raised since the SI was published. I fully support the second SI on electronic invoicing. The UK has led the charge in Brussels on permitting businesses and citizens, and people around the world, to take advantage of the magic of online. That includes invoicing, contracts and many basic things. Both in business and as a Minister, this is an area that I have strongly supported and I am glad to see that electronic invoicing continues to apply. Our support for online should continue in third-country and EU procurement, although I know that the latter may be more peripherally affected on this occasion.