European Union (Withdrawal) Bill

Baroness Hayter of Kentish Town Excerpts

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

[Baroness Ludford (LD)]

My Lords, I am a signatory to the amendment and would like to speak to it. The Government’s paper of last August on future customs arrangements proposed two customs schemes as the alternative to being in the customs union, one based on technology, described as “innovative”, the other with the UK acting as an agent for the EU for EU-bound goods, described as “unprecedented” and “challenging”. Those are words that, if in Jim Hacker’s vocabulary, would have attracted congratulations from Sir Humphrey for the Minister’s bravery.

The issues for manufacturing industries such as cars and aerospace have been covered by the noble Lords, Lord Kerr and Lord Patten. They are to do with supply chains, border checks and rules of origin. That all sounds like very dry stuff but it boils down to costs, delays and red tape affecting investment decisions and jobs. Staying in the customs union is an economic and industrial issue. The Freight Transport Association estimates that an even an extra two minutes checking every truck during peak hours could result in queues of almost 30 miles at border points.

The chief executive officer of Airbus, Tom Enders, has summed up the problems for his company. I say to the noble Lord, Lord Lamont, that Tom Enders sees leaving the customs union, not staying in it, as very damaging. He points out that during production parts of his company’s wings move between the UK and the EU multiple times before final assembly. This is typical for all our UK-assembled products and why the lack of clarity around the customs union and trade is hugely worrying. We think that across our operations and supply chains Brexit will affect 672 sites. Hard borders and regulatory divergence risk blocking trade, creating supply-chain logjams and causing our business to grind to a halt. This is not some esoteric question. Of course, being in the customs union does not solve all the problems; for example, it would be great to have participation in regulatory convergence as well. However, staying in the customs union is a necessary part of preserving the simplicity and streamlined nature of the manufacturing industry. The noble Lord, Lord Lamont, is right that remain is the gold standard, but let us at least go for silver.

As for the argument that being in a customs union would constrain our freedom to conclude third-party trade deals, the ones that we have by virtue of EU membership are far more valuable. Our food, animal welfare and environmental standards could be compromised by third-party agreements. Many potential partners will want immigration concessions, which has proved difficult. As has been noted by the noble Lord, Lord Lawson, you do not need a trade agreement to export, hence Germany exports four times as much to China as we do. That country has not been inhibited so why have we? That is something that we can do inside the customs union. As reported yesterday, China’s top diplomat in Brussels, its head of mission to the EU, has said that a UK deal with the EU is a precondition for trade talks with China. The Chinese need us to have a decent arrangement with the EU before they want to talk about it. If there is not a Brexit deal, they say, there will not be things to talk about. They need to know exactly how we are going to operate with the EU. I add that no member of the Commonwealth has wanted us to leave the EU, so praying that in aid is totally inappropriate.

Not only did people not vote in 2016 to leave the customs union—that was not on the ballot paper—they did not vote to lose their jobs, either. We should protect those jobs by pressing for Britain to stay in a customs union.

[Baroness Hayter of Kentish Town (Lab)]

My Lords—

[Lord Forsyth of Drumlean (Con)]

My Lords—

--- Later in debate ---

[Lord Forsyth of Drumlean]

This is a debate. If I may, I will pick up one point as a point of information to my noble friend Lord Ridley, which was the suggestion that the customs union does not discriminate against African countries. Why is it that Germany exports more coffee than the whole of Africa? Answer: because there is a tariff barrier on any finished products. If African countries wish to export coffee beans, that is fine, but if they wish to turn them into an added-value product and create jobs and industries, they are subject to, I think, a 7% tariff. I would have thought that the noble Lord, with all his experience, would have known that, but it is typical of the way in which this campaign has been organised by the remainers: misleading the British public and trying to overturn the decision which the people made with the full knowledge of everything involved.

The noble Lord says, “Calm down”, but I believe in this House. I believe it has an important duty to carry out and it is quite outrageous that people are trying to use this House to overturn the wishes of the British people.

[Baroness Hayter of Kentish Town]

I am so delighted that I gave way to the noble Lord, Lord Forsyth, because he has exposed that it is not the Labour Party, nor is it this House, spreading disarray over Brexit: the Government are doing that quite well by themselves in the other House. We are saying that the Bill is a part of what started with Article 50: looking at how we leave the European Union. As we know, a part of what will come at the end will be our future relationship with the European Union. That is why it is absolutely correct that this House discusses it in this Bill.

On the particular amendment—of course the meat of it is Amendment 4 rather than Amendment 1—it is right for us to cover it, and it is right for us to support it today. It is right for the country. It is demanded, as we have heard, by industry and by trade unions. It is vital for the future of Ireland—although not repeated again today, we have heard that before. It will also get the Government off a hook of their own making: their adoption of the red line of leaving the customs union, which was taken without any impact assessment, without any consultation with business, investors, farmers, exporters or importers, and when the Prime Minister had a Commons majority. Come election night in 2017, soon after 2 am, David Davis admitted on air that the Government might have lost their mandate to exit the customs union. As he said,

“that’s what we put in front of the people, we’ll see tomorrow whether they’ve accepted that or not”.

They did not. There was no majority for that red line. There was no mandate for a hard Brexit.

This amendment is good for the governance of this country. It reflects the rejection of that part of the Government’s manifesto. It would save the economy £24 billion over the next 15 years, which ejection from the customs union would otherwise cost. The amendment would allow full access to European markets, no new impediments to trade, no reductions in standards, no tariffs on goods traded with the EU and common tariffs on goods imported from other countries. This presents no problems for increasing trade outwith the EU; as the noble Lord, Lord Patten, has already said, Germany exports more than we do to China. Even Liam Fox admitted that a customs union self-evidently does not prevent us from increasing bilateral trade with countries such as China. The CBI, as we have heard, stresses that the EU is businesses’ preferred market by far. Three-quarters of exporting companies are selling into the EU and the vast majority of them are SMEs. We have already heard the Japanese ambassador warning that Japan’s firms will leave Britain if Brexit makes it unprofitable to stay—that is a real risk with new tariffs, if we are outside the customs union. As we have heard, there is a high level of integration between the UK and EU supply chains, so checks, delays, and VAT charges all challenge the bottom line. Rules of origin, which we have heard about, could cost up to 15% of trade.

There are also physical challenges. The British Ports Association says that, with 95% of imports and exports handled by its ports, if we have anything like the customs checks that we now have on non-EU imports, it could take 45 minutes per lorry. A quarter of trade between the UK and continental Europe goes through the Channel Tunnel, as indeed does most of the Republic of Ireland’s road freight into mainland Europe. Folkestone—there is a bad joke coming—would look more like stone than folks. We had to have one—I warned your Lordships it was bad.

Last year, the CBI, the Institute of Directors, the British Chambers of Commerce, the EEF and the Federation of Small Businesses all called for tariff-free goods trade between the UK and the EU, in preference to the Government’s slightly weasel words of “as tariff-free as possible”. The CBI stresses that frictionless trade with the EU is businesses’ number one priority and that some form of a customs union is necessary to ensure frictionless trade and no hardening of the Irish border. We have heard already about Airbus, Boeing and Rolls-Royce all saying that a customs union would best support the free flow of goods. Ford, the biggest car manufacturer, argues that any sort of border restrictions or customs friction will be an inhibitor for us continuing to trade the way we have done. The Food and Drink Federation wants a tariff-free customs union. And so it goes on.

We have heard it from industry, we hear it from trade unions, we have heard it from Northern Ireland, and indeed southern Ireland, and it is the same for our regions. Those particularly identified by the Government’s impact assessments will be of interest to the Minister: the north-east and the West Midlands. Those are the areas that will be most affected by Brexit if we have more customs and less trade. They are major exporters of cars, food and other goods.

This amendment is not about us playing politics; it is not about us unscrambling Brexit: it is about how we leave the EU. It is about our future relationship once we are outside. All it asks is for the Government to seek to negotiate our participation in a customs union with the EU. We will support this for the sake of the economy and for the sake of the country.

--- Later in debate ---

[Lord Wigley]

My Lords, I intervene briefly to support Amendment 8, moved by the noble Baroness, Lady McIntosh of Pickering, and supported by the noble Baroness, Lady Smith of Newnham, which also stands in my name. I spoke on this matter in Committee so I shall not repeat the points I made then. We were seeking greater clarity at that stage—and as far as I can see we still need that from the Minister—on the status of EU directives adopted but not implemented before exit day. I seek an assurance from the Minister that if an amendment of this kind is not accepted for inclusion in the Bill, the loose ends that will undoubtedly exist will be tied up by some other process later, whether in the implementation and withdrawal Bill or by some other device. Clearly some very valid issues have been raised by the noble Baroness, Lady McIntosh, and we need to be sure that they have been looked after in the legislative process.

[Baroness Hayter of Kentish Town]

My Lords, as has been said, this is an issue for which the Government simply have to produce a solution. For once I am quite glad that I am at the Dispatch Box on this side of the Chamber so it is not my problem—but I do know that it is a problem that the Government absolutely must solve. Let us consider some of the subjects covered by the list in the amendment: safeguards for child suspects in criminal proceedings; the recognition of professional qualifications, which will be extraordinarily important for business; health and safety; and the trademarks directive. We cannot afford to have gaps, particularly with something such as trademarks. This list covers issues that are already our policy and have been adopted with our consent, so we need to find a way of getting them into our legislation. How that can be done, I hope the Minister will now tell us.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I begin by apologising to the House, and to the noble Baroness, Lady McIntosh, for not having been in my seat when she moved the amendment. I can attribute that only to my oversight, and to a disappearing group of amendments.

We addressed this matter in Committee. As has often been said during the passage of the Bill, it is intended to create a snapshot of EU law as it applies in the United Kingdom immediately before exit day, and then to retain it in our domestic law following our departure. That has always been the necessary mechanism. It is crucial that this snapshot is taken accurately and with certainty, to ensure that, as far as possible, the law we have before exit will be the same as the law after exit. This is not merely a dry technical or legal point. It is fundamentally important to people, businesses and other organisations throughout the country that we should have that degree of certainty.

Keeping that in mind, I turn first to Amendment 8 and the questions that have been raised in that context. Unlike other EU law such as regulations, decisions, and tertiary legislation, EU directives are not intended to form a part of a member state’s domestic law. Instead they require member states to bring forward their own national measures within a certain period of time, in order to implement their intended effect domestically. It is these domestic measures which are part of our law, and will be saved under Clause 2.

Questions have been raised about a series of directives that have been adopted, which have been helpfully listed by the noble Baroness, Lady McIntosh. The noble Baroness, Lady Smith, suggested that there was an anomaly in the situation when directives had been adopted at EU level but not implemented. However, with respect, where they have been adopted, so be it. Where they have been implemented we have a different scenario: they form part of our domestic law.

There are two developments that I wish to mention, because they impact on the amendment and the questions that have been raised in this context. First, the Government have reached agreement with the EU—subject to everything having to be agreed before anything is agreed—regarding an implementation period that will begin on 30 March 2019 and last until 31 December 2020. It is proposed and agreed that for the implementation period the United Kingdom will continue to follow and implement EU law, and that the existing EU mechanisms for supervision and enforcement will continue to apply. The proposed final agreement with the European Union will include the implementation period and its domestic effect. As the noble Baroness, Lady Smith, anticipated, that will be provided for by the withdrawal agreement and implementation Bill. That has an impact on the series of directives to which the noble Baroness, Lady McIntosh, refers in her Amendment 8. Before I turn to those directives, I should observe that at least two of them are directives in respect of which we have opted out; in other words, as member states can do, they can secure an opt-out from a directive and it is never implemented in their national law, nor is it intended that it should be so implemented. Those directives in the noble Baroness’s amendment are: at paragraph (d), the legal aid (suspects, accused persons and those under European arrest warrant proceedings) directive; and, at paragraph (g), the safeguards for child suspects in criminal proceedings directive. In respect of those, there is already an opt-out in place; it was never intended that we would opt in and implement those directives—that is simply the position at the present time.

On the remaining directives listed in the amendment, there is a confusing reference to the websites and mobile applications directive, which I believe should be a reference to a 2016 directive. However, putting that to one side, I can say that all but two, or possibly three, of these directives will be implemented during the implementation period running up to 31 December 2020. That will be provided for by the withdrawal and implementation Bill, which is the instrument that will be employed for that purpose. Those directives will be addressed. There are exceptions. There are instances, for example, in which a directive can have a divided implementation period, where it may be only partially implemented before the final implementation period date of 31 December 2020. Essentially, we must come back to the fundamental requirement for an identifiable point at which we have ring-fenced and identified retained EU law. That is subject to what will go into a withdrawal and implementation Bill in the event of the implementation period agreement being implemented. That will cover all such legislation.

Amendment 32, also tabled by the noble Baroness, Lady McIntosh, would amend Clause 7 so that it would extend the correcting power of Ministers to include legislation arising after the snapshot had been taken. As set out before, Clause 3 seeks to convert direct EU legislation—regulations, decisions and tertiary legislation—as it applies in the UK immediately before our exit from the EU into our domestic statute book. This provision is a reflection of the snapshot approach taken by the Bill and is to ensure that our law stays as similar as possible following our departure to what it was immediately before our exit.

While most direct EU legislation will apply shortly after it is adopted, certain provisions within the legislation may be stated to apply in a staggered way on different dates. If the date falls after our exit from the EU, these provisions will not be retained by the Bill in our domestic law. That cut-off provides the necessary clarity for individuals and businesses to understand what the law is both pre and post the exit date.

Instead of seeking to change this clear cut-off point, the noble Baroness’s amendment would amend how such staggered implementation within direct EU legislation may be treated for the purposes of the correcting power within Clause 7. As will be discussed in much greater detail on later days, the power contained in Clause 7 is designed to correct the “deficiencies” arising within retained EU law as a result of our withdrawal from the EU, thereby helping us to provide a functioning statute book from day one. As I understand it, the noble Baroness’s intention in tabling Amendment 32 was to widen the definition of “deficiency” to include the provisions within direct EU legislation which are stated to apply after our exit from the EU, thereby giving Ministers the ability to use Clause 7 to bring them into our domestic law. That is currently prohibited by Clause 7(4).

--- Later in debate ---

Moved by

[Baroness Hayter of Kentish Town]

11: After Clause 3, insert the following new Clause—
“Enhanced protection for certain areas of EU law
(1) Following the day on which this Act is passed, a Minister of the Crown may not amend, repeal or revoke retained EU law relating to—(a) employment entitlements, rights and protection,(b) equality entitlements, rights and protection,(c) health and safety entitlements, rights and protection,(d) consumer standards, or(e) environmental standards and protection,except by primary legislation, or by subordinate legislation made under any Act of Parliament insofar as this subordinate legislation meets the requirements in subsections (2) to (5).(2) Subordinate legislation which amends, repeals or revokes retained EU law in the areas set out in subsection (1) must be subject to an enhanced scrutiny procedure, to be established by regulations made by the Secretary of State.(3) Regulations under subsection (2) may not be made unless a draft has been laid before, and approved by a resolution of, each House of Parliament.(4) The enhanced scrutiny procedure provided for by subsection (2) must include a period of consultation with relevant stakeholders.(5) When making regulations relating to the areas of retained EU law set out in subsection (1), whether under this Act or any other Act of Parliament, a Minister of the Crown must—(a) produce an explanatory statement under paragraph 22 of Schedule 7, and(b) include a certification that the regulation does no more than make technical changes to retained EU law in order for it to work following exit.”

[Baroness Hayter of Kentish Town]

My Lords, I hope that perhaps we might get some more concessions like that one. No? I thought it might be one of those nice little things.

As noble Lords will see, Amendment 11 has support from across the House. It would basically ensure that there can be no reduction in the laws we are bringing over into domestic law under the Bill without primary legislation. This amendment should, of course, have included the words “human rights” which appear in the Marshalled List in Amendment 11A, so elegantly suggested in that amendment by the noble Lord, Lord Low. I may need some help here; I was going to say mea culpa for not having put the words in, but I do not know what the plural of mea culpa is. No Latin comes to mind. However, I express our apologies, because clearly the same arguments apply here to human rights as they do to the other rights: the things that we are bringing over and transposing on Brexit date should not then be vulnerable to subsequent change by secondary legislation. That is clearly as true in the field of human rights as for the other rights we have mentioned.

In getting on for half a century in the EU, we have seen great improvements in the quality of our environment—those clean beaches, rivers and air—and in consumers’ and workers’ protection. Some of these improvements, particularly on the environment and consumer protection, require international action—but some are there to ensure a level playing field for industry. They are driven by fair competition objectives, although they happen also to benefit workers and consumers.

Hitherto, all the areas covered by Amendment 11 —employment, equality, health and safety, consumer protection and the environment—have been safeguarded, or ring-fenced if you like, thanks to EU membership requirements. We now need to bubble-wrap those protections for what we bring into our law to safeguard them from meddling hands—because, without any protection, those standards could be weakened by secondary legislation. That could happen without consultation with stakeholders and even without a Bill going through Parliament, where MPs and Peers could interrogate the rationale, cost and benefit of any change.

I hope that no Government would ever want to sweep away such protections. We heard earlier about the importance of manifestos and the 2017 Conservative manifesto promised not to change the protections. It said:

“Workers’ rights conferred on British citizens from our membership of the EU will remain”.


However, there are other parts of the Government who appear a bit more deregulation-obsessed. Liam Fox has said that protections make it “too difficult” to fire staff, and that:

“Political objections must be overridden”,


to deregulate the labour market. Michael Gove boasted at one point that the Government,

“now have the potential to … if necessary rescind”,

employment protections. Boris Johnson has described EU workers’ rights as “back-breaking”. Others have contemplated scrapping the working time directive, the agency workers’ directive and the pregnant workers’ directive or even tearing up the precautionary principle under which traders have to prove that something is safe before it is sold—which is of course a key consumer protection.

The demands to deregulate do not emanate from industrialists or employers. We have had representations from architects, scientists, designers, insurers and testers, the CBI and the British Chamber of Commerce. The very businesses which operate EU rules at the moment, which want us to stay in the customs union, are all also content to keep those regulations.

Furthermore, there is widespread support for EU- derived consumer, employment and environmental protection, with only minimal appetite for deregulation among the public. Three-quarters of the public want us to retain the working time directive and two-thirds want us to keep vehicle emissions rules. An Opinium survey found,

“little to no appetite ... for reducing or removing EU standards”.

The figure was the same for remain as for leave voters. Trade unions warn against giving Ministers,

“wide-ranging powers to repeal, dilute or limit hard-won employment rights”,

regulations and standards, without such changes being made through an Act of Parliament.

The British Medical Association, along with 12 royal colleges and unions, wrote to the Prime Minister calling on her to stand firm against Brexiteers who want to scrap European laws and warning of the risk to patient safety since, in their words,

“fatigue, caused by excessive overwork, remains an occupational hazard for many”,

NHS staff. The Royal College of Nursing warns that,

“removing or weakening working time regulations would put patients at serious risk”.

Such protections are not just good in themselves; they matter for trade. Indeed, non-tariff barriers are a bigger hurdle for trade than customs duties, so even if the Government were not worried about patient safety, workers’ rights or consumers—although I am sure they are—they might listen to industry, on whose success our economy depends.

The British Chambers of Commerce stresses the importance of businesses getting their goods across borders as quickly as possible and calls for a pragmatic agreement between the UK and the EU that ensures that businesses face only one set of regulatory approvals to sell their goods across borders. Dairy UK, the NFU and 35 others signed a joint letter stressing that a successful Brexit for the food sector must involve free and frictionless trade, and that means keeping the same rules with no diminution of standards. The Urology Trade Association is just one of many trade bodies that came to see us. It wants the Government to ensure regulatory continuity, since any divergence could lead to changes in licensing arrangements and an increase in bureaucracy, which would reduce competitiveness and market penetration.

Our EU partners are already talking of a no-regression undertaking to promote fair competition and a level playing field, but also to reduce the checks and assurances that have to take place when rules diverge. Maintaining the standards that we are incorporating into UK law is supported by business, requested by the EU, demanded by environmentalists, strongly demanded by trade unionists, whose working days are affected day in, day out by these protections, and promised by the Prime Minister—so what is not to agree to? The Prime Minister said:

“This Government has committed not to roll back workers’ rights”,


and that,

“it would be for Parliament or the devolved Assemblies to decide on future employment law”.

We are merely seeking to put her words into legislation. I beg to move.

Amendment 11A (to Amendment 11) not moved.

--- Later in debate ---

[Lord Callanan]

No, I do not think they are mutually exclusive. I think the amendments can both stand.

[Baroness Hayter of Kentish Town]

I thank the Minister for his clear answer today. I wish the amendments he drafted were equally clear—I have had three very good lawyers sit and explain them to me. I have to say that they do not do what he says. There is not a hierarchy in status between EU regulations and EU directives, and the extra protection he has put in will not affect the directives. There are particular directives, such as the ambient air quality directive, the habitats directive and the working time directive, that are not covered by the government amendments. There is enhanced scrutiny for stuff coming over now, but for the future it does not cover those really important directives. I have had three different lawyers look carefully at his wording and, believe me, all three tell me that it does not meet the promise of the Prime Minister.

The Prime Minister said that we will bring over everything, but after that it will be for Parliament—not a statutory instrument but Parliament or the devolved Assemblies—to decide whether there is any change to working time law. The same is true for the environment. It is, I am afraid, not good enough to leave this to secondary legislation. We need to make sure that these really important provisions are safeguarded and that only primary legislation can amend them. I wish to test the opinion of the House.