European Union (Withdrawal) Bill

Baroness Bowles of Berkhamsted Excerpts

2nd reading (Hansard - continued): House of Lords
Wednesday 31st January 2018 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, as several noble Lords have mentioned, and as the Constitution Committee report said, lessons can be learned from the Sanctions and Anti-Money Laundering Bill. That is a sectoral Brexit Bill, not saving legislation and not aimed at policy change. It was explained, variously, as a technical bill, as dealing with deficiencies and as not changing policy—just the same vocabulary used to describe the withdrawal Bill and operations within it.

I will elaborate more fully on some of the lessons. First, all creation of new criminal offences by regulation was taken out, not just those over the threshold defined as “relevant” in the withdrawal Bill, which means sentences greater than two years. When voting on this constitutional point for the second time, there was a massive vote to remove from the anti-money laundering part, where sentences were indeed limited to two years, any new criminal offences. If anything, the case is clearer for the withdrawal Bill: why should “saving” legislation create any new offences?

Secondly, in the anti-money laundering part of that Bill, it was frightening to compare the unlimited, policy-free, mechanistic list of delegated powers with the far richer policy context and predictability of the EU money laundering directive that it replaced as the source legislation. Until amended, this proposed primary legislation gave absolutely no substantive foundation against which to test future secondary regulation. It was without constraints or policy now, empowerment for total policy change by regulation later. I call that a constitutional-level policy change. We have a similar wolf in sheep’s clothing prowling parts of the withdrawal Bill.

Thirdly, with its amendments, the anti-money laundering part is much improved. Nevertheless, businesses are in a more uncertain place because the Bill is no longer set in the richer EU format. Uncertainty is not a good direction of travel for our home-made laws and we should not be inured to it—we can do something about it.

The good news is that the withdrawal Bill aims, so we are told, to save policy context—the idea is right. The bad news is that the legal status is confused; it certainly cannot be case-by-case at ministerial convenience. There are “panic button” clauses giving delegated powers without objective definition and stretchy schedules that expand, sometimes for ever, what you thought had been limited in clauses. The Explanatory Notes say the law is not deficient merely because a Minister considers that EU law was flawed. Such clarification must surely be in the Bill; so must objective qualification of the much overused “appropriate”—that is definitely an alpha wolf, not a sheep.

Businesses have been promised policy continuity. So, in considering amendments around status, legal clarity and interpretation, my test is that, however legislation is saved, it should not mean sacrificing policy. Policy continuity means keeping all relevant factors to assist interpretation or challenge; keeping them after modification, because that has been stated as being only to clean up language; and keeping them for EU-derived legislation, such as directives, under Clause 2. Just as Ministers quote rules and precedents to justify their words in legislation, similar happens when negotiating directives. A great deal is contained in recitals, which are relevant for interpretation by the EU court and regulatory authorities, even though they are not transposed and their content is needed.

In that context, my final point is to ask how EU constraints on delegation of power will be retained. My goodness, we need to get some constraints from somewhere. This has relevance to financial services, where the European supervisory authorities are bound by the Meroni principle. Will the FCA and the PRA be so bound when taking over—and if not, why not? At present, it is the EU that implements international standards, such as Basel rules, via co-decision and providing policy guidance for tertiary legislation. Where will the implementation and policy guidance come from in future against which to measure secondary and tertiary legislation? Will this Parliament have any role, or will the UK be run by delegation and deference—delegation to regulators and deference to the same regulators sitting in international regulatory bodies? Will this Parliament be given comparable time and opportunity for consultation and scrutiny of regulatory proposals? I say to the noble Lord opposite that I should like an opportunity to do here one fraction of what I did in the European Parliament.