European Union (Withdrawal) Bill

Baroness Hayter of Kentish Town Excerpts

Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th April 2018 Lords Chamber

[Lord Newby (LD)]

My Lords, I too thank the Minister—I fear that that will not necessarily be very common, so I am pleased to be able to do so now. I am sure he will agree with me that these amendments are sensible, appropriate and necessary.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I commend the Government for these amendments, which respond to and accept the arguments made in Committee. As I argued then, and there is a reason for me repeating this, the very way that we set up quangos—how they are appointed, funded and run, and particularly their reporting structures and independence from both government and any other organisation they happen to be regulating—is key to how they work, hence the need for primary legislation so that we can interrogate all these things. That is why I very much welcome what has been said.

I am afraid, however, that I am led to make one comment, which is aimed not at the Minister but at friends of his in another place. After the vote last week on the customs union, we read in the Sun that the Government were going to remove those Conservative Peers who had voted for a customs union from their various positions on public bodies. I am absolutely certain that those threats, although mere briefings, did not emanate from anyone in this House. That is simply not the way that I have seen those on the Government Benches here work. They recognise the role of the Lords and that it is our job, on occasion, to ask the Commons to think again, even if sometimes that is a bit inconvenient when it comes from their own side. However, it was rather disturbing to learn that there are certain people around No. 10 who could, even for a moment, think that it would be right to undermine the independence and arm’s-length nature of such bodies, as is often written into their statutes, simply because Members of the House of Lords voted in a certain way. Everything I know about Ministers in this House means I know that not only were they not involved in this but they were probably as shocked as I was. Perhaps the Minister would like to take the opportunity to distance himself from such threats and reaffirm what I know to be government policy: that any appointment to such bodies is done without fear or favour and nobody would be taken off them for a choice that they made in this House.

On the essence of the amendment, and particularly given the role of the Minister and his officials, we are happy to support the government amendments.

[Lord Callanan]

My Lords, I am grateful to all noble Lords who have contributed to this debate. There were relatively few but I thank them and I hope these amendments satisfy the concerns that have been previously raised in the many discussions I have had with noble Lords about this matter. It is proof that, despite the accusations that have been made, we are listening and will respond appropriately if we deem something to be necessary and it improves the legislation, which on this occasion we do.

I am not going to comment on every press article. Precise recruitment criteria are set down for these posts. I am sure that those criteria will be followed and that all appointments will be made on merit.

I hope noble Lords welcome the reassurance that these amendments provide and recognise that this reflects the sincerity of the Government’s commitment to narrowing the scope of the powers wherever practicable without compromising the purpose of the Bill.

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[Baroness Kramer (LD)]

This is another opportunity to thank the Minister because some peace of mind will now be provided about the structure of Clause 7. We understand now that the Government have stepped away from any capability to introduce new or increased fees.

I also thank the Minister for clarifying what a charge is. Many in this House have been trying to understand exactly how it could be framed. I hope the fact that he has now described it in the House will, in effect, put that definition on the record so that no future Government will attempt to use the word “charge” in order to circumvent these various constraints. Again, on this occasion, I thank the Minister.

[Baroness Hayter of Kentish Town]

To make sure that the Minister blushes fully, we, too, will take the opportunity to say again that we think that this is a good improvement. We thank those who have been involved in the drafting of the amendment and we support it.

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[Lord Judge (CB)]

My Lords, the issue that these amendments give rise to is quite an important constitutional one. This will not be a great moment after having had the excitement of a vote involving 500 or more Peers, but if we could add up to 100 it would be very successful. There are two reasons why there is no great interest in this issue, and one is that we have become habituated to the creation of criminal offences by regulation. It happened under the last Labour Government and the coalition Government, and it happens under this Government. Over the past 20 to 25 years there has been a proliferation of these clauses. Constitutionally, that is an aberration. We should not be creating criminal offences that can lead to an individual being imprisoned by regulation that, for the reasons we have discussed over the past few weeks, is controlled only by negative or affirmative resolution, which, as we have seen, is no sort of control at all.

The constitutional principle was upheld during the debates on the sanctions Bill. Those noble Lords who were here will remember a very significant vote in favour of an amendment to that Bill which would have deleted the ability of a Minister of the Crown to create criminal offences by regulation. There was cross-party support for the amendment and, as I say, the Government were defeated. The end result was that I had a series of meetings with the noble Baroness, Lady Bowles, who is not in her place. We then met with the Treasury Minister, with the Bill team and twice with parliamentary counsel to argue about how best to preserve constitutional certainty in relation to the creation of criminal offences. It was not easy. One significant point was made that certainly affected me: there will be occasions when it may be necessary—to use the word we now have—to allow for an offence to be created by regulation. A compromise was put forward and was accepted. It was put before the other place and, on this particular issue, that Bill will now proceed.

Faced with that, it seemed to me that we had to reflect again on the absolute nature of this amendment. I see that the Government have put forward proposals in government Amendments 83C and 83G which coincide with the suggestions made by the Constitution Committee, of which I am a member. I am speaking today only for myself, of course, not for the committee. The Government have recognised that there needs to be a significant increase in the element of parliamentary scrutiny and, if I may say so, proposals to encourage ministerial hesitation before proceeding by way of regulations to create criminal offences.

I really am not suggesting more than this. This is a start. It is a pullback from a process to which, as I said, we have become habituated. It is a process; it is an advance. It had not been made when the present Bill came before the House. The Bill has now come before the House, and we have discussed it. We have debated it in Committee, we have now discussed it again and ministerial amendments have been made. I welcome those, as I said at the start. I welcome the proposal that these amendments should be made. Ultimately, it is not my decision whether Amendments 83C and 83G should be supported in the House. If they were, that would provide a significant improvement to the current arrangements. There is nothing more I can usefully say. I beg to move.

[Baroness Hayter of Kentish Town]

My Lords, we have heard from the noble and learned Lord, Lord Judge, an indication of where the Government have arrived on this issue and that there will in future be a document stating why this measure is needed and what necessitated it, according to the Minister.

The Government’s changes, which I welcome, do not go as far as Amendment 34 and the others in the group, but they insert an element of both written explanation and scrutiny of the use of these powers. I still doubt the need for these powers. Since the Bill was introduced in the Commons—not even when it came here—I have been asking for examples of where such new offences might need to be created. Finally, after numerous times of asking, the Government this week were able to provide just one example; that is all. It related to the marketing of medicine where it is an offence to produce false or misleading information in applications for approvals. After six months, that was the only example they gave of where such a new criminal offence, imprisonable for up to two years, might be needed, so I am still not entirely persuaded. However, given the new procedure that will come up later in the Bill, it should include the written statement as part of the Explanatory Memorandum and say that such powers will be available only in relation to our exit from the EU anyway. If the Minister could confirm that they are also subject to the timings of sunset clauses, we would see the Government’s amendments as a great improvement.

Finally, these will be orders that the House could not simply debate or put down a regret Motion about. However, if necessary, there is a backstop so that if we were not persuaded by the written statement, we would still be able to ensure that the orders did not go ahead. I hope that will never happen. I hope that they will not be used that much; clearly, there is no plethora of examples where the Government feel the need for them. Given where the extra scrutiny has now been inserted, given that there is a sunset on these powers—I think I am right in saying that—and given that they will be used only for the purpose of exiting the EU, we would certainly be content with the noble and learned Lord, Lord Judge, withdrawing his amendment.

[Baroness Goldie (Con)]

My Lords, it is important that we have returned to this issue after our debate in Committee, during which many noble Lords raised concerns about the creation of criminal offences through secondary legislation. I am grateful to the noble and learned Lord, Lord Judge, for Amendments 34, 44, 54 and 97, which seek to prevent the key powers in the Bill from creating criminal offences. I think we are all in agreement that the power to create criminal offences, above all things, is not to be taken lightly. These decisions can have huge impacts on people’s lives. Therefore they are decisions that the Government take very seriously. Parliament is absolutely right to give full scrutiny to proposals of this kind.

The Government listened very carefully to the debate we had in Committee and respect and understand the concerns raised. I pay tribute to the noble and learned Lord, Lord Judge, for his constructive approach to this matter. The Government believe that serious omissions or weaknesses to law enforcement could arise if the Bill did not include a capacity to create criminal offences in certain circumstances. It is therefore the Government’s view that the ability of the key powers to create criminal offences must remain in the Bill, for reasons I shall endeavour to explain. I realise that the noble and learned Lord and the noble Baroness, Lady Hayter, are very conversant with these issues, but perhaps other noble Lords would welcome a slight expansion of the Government’s approach to this.

Before I endeavour to expand on these reasons, I take this opportunity to highlight the amendment tabled by the Government—to which the noble and learned Lord referred and of which I am sure noble Lords are all aware—requiring a statement to be made alongside all instruments made under the main powers that seek to create a criminal offence. The statement will be made in writing by a Minister before the instrument is laid and then usually published in the Explanatory Memorandum to inform the deliberations of committees and the House. I am happy to talk with the noble Baroness further about the form in which the statement will be made to the House. One option might be to deposit the statement in the House.

The statement will explain why, in the relevant Minister’s opinion, there are good reasons for creating the offence and for the penalty provided in respect of it. This is in line with the approach taken in the Sanctions and Anti-Money Laundering Bill, and it will increase the level of transparency, ensuring that where the Government seek to create a criminal offence the Minister’s reasoning is clear and justified to Parliament. Of course, if either this House or the other place feels that these reasons are not good enough, I expect MPs and certainly noble Lords to vote against the instrument—I remind noble Lords that all statutory instruments made under the main powers in the Bill creating criminal offences must be affirmative. If noble Lords did not wish to take that dramatic option but wanted to express their dissatisfaction with the proposal, I hope they would avail themselves of other options to express this such as regret Motions, inviting the Minister to give evidence before the sifting sub-committee of the Secondary Legislation Scrutiny Committee, or asking for the Minister to justify himself or herself before a committee of this House or of the other place, such as the Exiting the European Union Committee or other relevant departmental Select Committee.

I understand the amendment will be discussed in detail once we reach the debate on Schedule 7. I shall be happy to go into further detail then. However, I will say that the Government have tabled the amendment to increase the scrutiny of the main powers, rather than to reduce their scope or remove the power completely because of its important function. The Bill does, of course, limit the ability to create criminal offences with the sunsets on both the correcting power, which is sunset at two years after exit day by Clause 7(8), and on Clause 9, which is sunset at exit day as set out in Clause 9(4). I stress to noble Lords that these are the only powers—other than Clause 8; I hope the House accepts the Government’s amendment to remove that clause—that could create a criminal offence.

Upon exiting the EU, existing criminal offences that relate to the EU may require amending to ensure that previous criminal conduct remains criminal—for example to correct deficient references to the EU, EU bodies or EU legislation. If these are left unaddressed, the protections provided by having an offence in place will fall away. The reality of this would be a green light for criminal behaviour to go unpunished, leaving businesses and individuals unprotected from what was previously deemed so unacceptable that it was made criminal.

The noble Baroness, Lady Hayter, asked about examples. Some examples were given in Committee but there may be further examples that she is not aware of—if she is, I ask her to indulge me—where it might be appropriate, depending on negotiation outcomes with the EU, to amend existing offences or to create new ones. Certain financial services firms that are regulated at an EU level may need to be brought into the UK regulatory regime. HM Treasury is therefore considering amending the offence of misleading a regulator to include trade repositories misleading the FCA and third-country central counterparties misleading the Bank of England, if their regulation is transferred from the European Securities and Markets Authority. Without this, these important City operators, unlike other firms already supervised in the UK and within our regulatory perimeter, would not be subject to a criminal penalty when misleading the regulators which ensure their good conduct and the stability of our financial system. I cannot believe that any noble Lords would want this.

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[Baroness Smith of Newnham (LD)]

My Lords, I will speak briefly about Clause 8 but, like the noble Baroness, Lady McIntosh, I have signed Amendment 47. That amendment would become obsolete if Clause 8 disappears. Like my noble friend Lord Beith, I am perhaps a little suspicious to see an amendment in the names of the Minister and the noble Baroness, Lady Hayter. To see the Government and Opposition Front Benches agreeing makes one a little suspicious but anyway, as my noble friend suggests, perhaps the Government think that they do not need Clause 8.

One of the issues I want to raise briefly is a genuine question because I have read different things by academic colleagues on where we are in terms of the EEA from a legal perspective. Amendment 47 refers to remaining a member of the European Economic Area. Before the Minister shakes his head and says, “No, no, no, we’re leaving the EEA”, there is a question about our membership. We are a member of the EEA as a member of the European Union. All EU members are members of the European Economic Area. My understanding is that we are individually members, not just as part of the EU 28, so do we legally have to resign from the EEA? The assumption is that we are there automatically as a member of the EU. That was my genuine question. A slightly more facetious question would be: given how keen noble Lords who favour Brexit are on free trade, should we perhaps be thinking about going back to EFTA where we started off way back in the 1950s?

[Baroness Hayter of Kentish Town]

It is late at night and I cannot resist it. For the Liberal Democrats who were in coalition with the Conservatives for five years to be suspicious about my name on one amendment is a bit rich. On the whole I resist doing this, but I am afraid I was led into it. I thought the Minister would enjoy that.

There are two debates here. On Amendment 43, to which I also have my name, as does the noble Baroness, Lady Kramer—but I hope that does not give the noble Baroness, Lady Smith, too many worries—I associate myself with what was said by the no longer young but, I gather, still irresponsible noble Lord, Lord Kerr. I particularly look forward to the answers to the serious questions raised about Schedule 4, which is referred to in Amendment 104.

I very happily put my name to Amendment 47A. Were any of the things on the international agreement arising out of the withdrawal deal to come to pass, the clause could be in the withdrawal and implementation Bill, which is probably a much better place because it would be much more specific. I am not in favour of wide powers just in case. We have too many just-in-case powers in the Bill as it stands, so the deletion of Clause 8 is an improvement to the Bill.

Since Amendment 47 has been moved into this group, it is probably right that I should say a word about the Opposition’s position on it. Since the noble Baroness, Lady Smith, is an academic and much better read than I am, I am sure she is familiar with the House of Commons briefing on this. It is clear that the vast majority of legal advice, certainly that which I had when I was in Brussels and elsewhere, is that the EEA combines EFTA and the EU—there is an even more expert head nodding. So, it was a nice try, but it is a red herring, and one of the things that we do not want to do is to give people false hope that there is a way out of the mess that this Government got us into—sorry about that.

That is why I shall a word about rejoining EFTA. I worked for an EFTA organisation many years ago. It was a very nice, friendly body at the time, but it was larger than it is now. There is an idea that we could just rejoin and that it would accept us. The Prime Minister of the largest EFTA country has already said, “Ahem. Hang on a moment. This is going to be a little more difficult and complicated than you think”. There are fewer than 14 million people, I think, in the EFTA countries. That is more than in London but not bigger than London and Wales combined. There are serious questions about whether structures that suit their economies, size and way of working in marketing and in other things would suit our economy with 66 million people. I worry that people think there is a nice, easy option. On this side, we are not persuaded that it would be easy or necessarily correct for us.