Trade Bill

Baroness Hooper Excerpts

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

[Baroness Kramer]

I assure the noble Viscount that from the perspective of the dollar, far more of the transactions clear through New York. It is a bigger market. I know we often say that we are the largest, but if we look at the table comparisons, New York is frankly bigger. Certainly, dollar dominance is exercised through New York. The yen is less of a controversial player, and there are not a lot of renminbi. If anybody thinks that China is going to allow its currency to develop a real global presence and not be regulated, monitored and supervised by the Chinese state, they have missed any understanding of how China works. We are convenient but temporary, and we need to recognise that.

People talk about the growing market, but essentially the global markets function in the dollar, the euro and—in the future—the renminbi. They will not function in small African or South American currencies. Those are not players; they are minor currencies. Sterling is treated by the industry as a minor currency. There are two, and there will be three, major currencies that essentially underpin global activity. At the moment one is dominated by New York and the other by London—and the one dominated by London is the euro.

What worries me is that the think tanks that have been going through this process have an underlying conceit and arrogance, and imagine that somehow we are fundamentally and in the long-term superior, that no one else will have the capabilities that we have, and that in the end, Europe needs us more than we need Europe. But Europe works on a five to 10-year strategy to gradually bring back choice pieces of that industry—and we can see it.

I have a real question for the Minister in all this. The right-wing think tank came up with a solution called “mutual recognition”, which basically required the European Union to change how it made regulation and to change its legal framework completely. The think tank thought that was entirely reasonable. It was irrational, and has been abandoned. The Government have finally recognised that it was complete nonsense. There is now an idea that third-country equivalence could be the mechanism that will apply. However, we all know that third-country equivalence can be cancelled for no reason at 29 days’ notice. That is a very unstable way to provide access for a key industry.

Various attempts have been made, but little thought, effort, discussion or energy has gone into trying to find solutions. I am exceedingly worried about that. Looking at that global sector that I talked about, as I understand it, the European Union has provided an equivalence ruling for the London Clearing House for 12 months only. I am sure that it will extend the ruling beyond that—but it is a message. I understand that, as of this moment, no equivalence has been put in place for the London Stock Exchange. Again, that may come, and it may come very much at the last minute. But there is a deep message in all this. I make a real plea to the Government to take our amendment seriously and to recognise that they will have to get totally engaged and make some real compromises—I suspect around their own red lines. If they do not, they will be making absolutely sure that, over five to 10 years, significant parts of the industry will be sucked back into very capable hands in Frankfurt, Paris and Amsterdam.

This is not an instant crisis, although there may be some areas of instant crisis. But it is an area where the Government need to move now, and not lock themselves into a position from which they will see this industry, not perhaps disappear altogether, but lose its global leadership, when they could, with more intelligence and flexibility, have provided some degree of protection.

[Baroness Hooper (Con)]

My Lords, I apologise for being tail-end Charlie in this discussion—at least, I hope I am. I agree that this is a very important group of amendments. I shall concentrate particularly on Amendment 39 because that is the overarching amendment giving mutual recognition of qualifications, which has been so important for frictionless commercial activities and relationships throughout our membership of the European Union. I trust and hope that the mutual recognition and—dare I say it?—harmonisation to some extent of professional qualifications will be able to continue, to give the continuity to which my noble friend Lord Lansley referred, but also, for example, in the field of education, where university qualifications and degrees have been based on mutual recognition of qualifications and the ability to work in professional fields in more than one country.

My own interest in this is that as a solicitor I went to work in Paris in 1973, a year after we joined the European Community. Although I did not need a carte de travail—a work permit—at that stage, I still needed a carte de séjour, but that was progress. There have always been particular difficulties for the legal profession simply because of the difference between the common-law system and the civil law system. That has led to a different approach to our understanding of what we have been trying to do within the European Community throughout our membership.

I may not be up to speed on all the detail. There may have been discussions, and possibly solutions, about continuing the recognition of professional qualifications, but I am not aware of them. I am surprised that the Law Society, for example, has not provided any briefing in this respect—at least not to me. Still, I would like to hear what the Minister has to say about this. At the next stage of the Bill I would hope that we could be given more certainty about what may happen in future. I am curtailing my remarks because it is a late hour, but I feel that this would be so important, not only to British and Scottish lawyers—I look to my noble friend Lady McIntosh in this respect—but to all the European Union lawyers who have set up offices and are operating in London and other parts of the country, making our commercial activities ever more possible.

Perhaps, as a sort of PS, I might refer to Amendment 48 and the tripartite agreement. I am not sure how this applies to polo ponies. As your Lordships will know, I take a great interest in Latin America and Argentina. Polo ponies are not only from South America and the UK; they have passage rights within the EU. I do not think the tripartite agreement itself applies to polo ponies but I hope that any consideration of this element of the debate could include that important aspect.

[Lord Foster of Bath (LD)]

My Lords, the noble Baroness, Lady Hooper, hoped that she was tail-end Charlie, and I apologise for depriving her of the appellation. In introducing this group of amendments, the noble Lord, Lord McNicol, described them as being about the smooth organisation of business post Brexit, while my noble friend Lord Fox described them as the necessary day-to-day plumbing of post-Brexit life. As we have heard, the amendments cover a wide range of issues, including mutual recognition, not least of qualifications, but also seeking a way to have the maximum continued relationship with many EU bodies, expert groups, agencies and so on. In that regard, Amendment 70 is perhaps the most comprehensive. I share the view of the noble Lord, Lord Lansley, that it is of mutual benefit to ourselves and the European Union if we can find ways of staying as close as possible to many of those bodies. If we fail to do so, there will be some serious difficulties. I believe we need to take positive steps, as is suggested in Amendment 70, for instance, to achieve that close working relationship. If we do not do that, I believe there will be very significant problems.

To illustrate that very briefly, I will touch on two of the bodies that are referred to in Amendment 70: the Body of European Regulators for Electronic Communications—BEREC—and the European Regulators Group for Audiovisual Media Services, or ERGA. It is worth remembering that the telecoms industry in this country has revenues of something like £40 billion a year and our broadcasting industry is probably one of the best in the world; both are critical to the UK’s economy and their success depends to a large extent on close co-operation with the EU 27 countries. That is because, in the case of the telecoms industry, for instance, many of the bodies regulated by our own regulator, Ofcom, are members of subsidiaries which operate in many of those other countries—Virgin Media, Vodafone, Three and Telefónica are very good examples. In broadcasting, we have our own domestic channels, but Ofcom also acts as host to something like 500 channels which are not shown in the UK, but are regulated here and shown in other countries. Therefore, it is very important that our regulator continues to work in a way that allows close alignment with the regulations that will apply across Europe. That means having close involvement with those two bodies, BEREC and ERGA.

As such, my questions for the Minister are about how that will be achieved. I suspect he will reject most of the amendments in this group but that he will say it is important to have close relationships, as the noble Lord, Lord Lansley, said. It is worth reflecting that in the other place, the Minister for Digital and the Creative Industries, Margot James, said that Ofcom intended to “seek observer status” within BEREC. As I pointed out on another occasion, that is no longer possible following changes to BEREC’s regulations in December last year. For us to have observer status in BEREC, it would now be necessary for a formal agreement to be made between the UK and the European Union. I am not entirely convinced that that will be easy under the current arrangements without very active steps being taken by the Government.

In Grand Committee last week, the Minister, the noble Lord, Lord Ashton of Hyde, said he was confident that Ofcom would be able to be part of BEREC. He said that during the transition period,

“the UK will no longer be a member state of the EU but, as is set out in the terms of the withdrawal agreement, common rules will remain in place. That is why we expect Ofcom to continue to participate in BEREC”.—[Official Report, 23/1/19; col. GC 96.]

That is what they are expecting, yet it is in stark contrast to what the withdrawal agreement actually says. In Article 128, it says—I will paraphrase—that with only one caveat, we cannot participate in decision-making or even attend meetings of expert groups or similar entities. The caveat says—again, I paraphrase—that UK representatives or experts may, upon invitation, exceptionally attend meetings or parts of meetings of bodies such as BEREC or ERGA, provided that either the discussion concerns the UK or UK residents or,

“the presence of the United Kingdom is necessary and in the interest of the Union”.

The noble Lord, Lord Ashton of Hyde, saw this as a green light, and declared that there was “every reason” the EU would want Ofcom on these bodies because,

“Ofcom is one of the leading telecoms regulators in Europe—if not the leading one. The interchange between Ofcom and other European regulators has been extremely beneficial … There is every reason to think that they would wish to continue that”.—[Official Report, 23/1/19; col. GC 97.]

That is not an interpretation of Article 128 which any rational person can give. It actually says that we can be involved only in a small way, in exceptional circumstances and when it is necessary, so I do not read Article 128 as meaning that we will easily be able to participate in that particular organisation. The same case could be made for all the other organisations which the Government may wish for us to continue to have close relationships with. My question for the Minister is simple: does he agree with my interpretation, or with his noble friend during the debate in Grand Committee? If he agrees with my interpretation of Article 128, are the Government willing to take the positive steps referred to—for example, in Amendment 70—to achieve that close working relationship which is so important?