European Union (Withdrawal) Bill

Baroness Ludford 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—

--- Later in debate ---

[Baroness Goldie]

My Lords, I am grateful to the noble Baroness, Lady Brown of Cambridge, in absentia for her Amendment 12 and to my noble friend Lord Deben for speaking to it on her behalf. I note that this amendment is very similar to an amendment tabled in Committee by the noble Lord, Lord Krebs, to which the noble Baroness was a signatory. As was the case with that amendment, Amendment 12 seeks to amend what EU law is retained through Clause 4.

As this House is aware, and has been said earlier within the debate, one part of EU law that the Bill does not convert into our domestic law is EU directives. The reason for this is clear. As EU directives as such are not a part of our domestic law now, it is the Government’s view that they should not be part of our domestic law after we leave the EU. Instead, the Bill, under Clause 2, is saving the domestic measures that implement the directives, so it is not necessary to convert the directives themselves. This is not only a pragmatic approach but one that reflects the reality of our departure from the EU. As an EU member state, we were obligated to implement those directives. When we leave the EU, those obligations will cease.

However, the Bill recognises one exception to this approach. Where, in a case decided or commenced before exit day, a domestic court or the European Court of Justice has recognised a particular right, power, liability, obligation, restriction, remedy or procedure provided for in a directive as having direct effect in domestic law, Clause 4 will retain the effect of that right, power, et cetera within UK law.

That seems to the Government to provide a clarity which it is important for this Bill to achieve, and it is why we believe that Clause 4 as currently worded strikes the right balance—ensuring in respect of directives that individuals and businesses will still be able to rely on directly effective rights that are available to them in UK law before exit day, while also providing clarity and certainty within our statute book about what will be retained in UK law at the point of exit.

I shall explain to my noble friend Lord Deben what we see as a difficulty. This certainty would be undermined by the amendment, placing both businesses and individuals in the difficult position where they are uncertain about whether the rights they rely on will change. It could also create practical difficulties for our courts following our exit. There could be new litigation about whether implementing legislation correctly or completely gave effect to a pre-exit directive, and whether Ministers had fulfilled the duty in the amendment’s proposed new subsection (3) to make implementing regulations. This could continue for years after our exit from the EU, effectively sustaining an ongoing, latent duty to implement aspects of EU legislation long after the UK had left the European Union.

I think it would be acknowledged that it would be strange for Ministers to be obligated to make regulations to comply with former international obligations which the UK is no longer bound by. Although Ministers might find that they were obliged to make regulations under the amendment, it would presumably still be open to Parliament to reject the instrument and either require it to be revoked or decline to approve it, depending on the procedure involved, yet the Minister would, under the terms of the amendment, remain under a legal obligation to make regulations. I think that this gets to the heart of the problem: how is that tension to be resolved?

Therefore, I say to my noble friend Lord Deben that, although I understand that the genuine intention behind the amendment is to give confidence and certainty, in practice I do not think that it would necessarily achieve this, and I respectfully suggest that the real consequence would be confusion.

Furthermore, the amendment specifically implies that the Government would have to undertake a thorough investigation, as soon as possible, of all the EU directives that have been domestically implemented over the course of this country’s 40-plus years of EU membership to ensure that they have correctly and completely implemented them all.

[Baroness Ludford]

I apologise for interrupting the Minister and thank her for allowing me to do so. Would it be so terrible if there were to be an audit of whether the UK had correctly implemented EU directives? The Government are marking their own homework if they say, “We’re not implementing the directives; we’re only going to freeze the domestic implementation”. However, if there is something wrong in the way that we have implemented a directive, then the Government are judge and jury of what will be retained.

At the risk of boring everybody—I will probably mention it again on Monday—I have cited before the directive on the European investigation order, which is about summoning evidence or maybe a witness to give a statement. It is the parallel to the European arrest warrant. The directive says that someone could challenge this in, say, a British court on the grounds of a breach of the Charter of Fundamental Rights. The Government have substituted for the charter the European Convention on Human Rights, which, as we know—we will be discussing it on Monday—is a bit narrower than the charter. Therefore, they have wrongly transposed the directive. Whether the European Commission is going to do anything about it, I do not know, but I remind myself that I want to find out. What happens if the Government have wrongly implemented the directive? What happens to people’s rights?