NHS and Future Trade Deals

Catherine West Excerpts

Monday 22nd July 2019 Westminster Hall

[Stewart Hosie (Dundee East) (SNP)]

It is a pleasure to serve under your chairmanship, Sir Roger. I thank the hon. Member for Hartlepool (Mike Hill) for introducing the debate and speaking so well on behalf of the petitioners.

Let me start with a reference to Brexit, because I suspect that many of the concerns about trade deals, which may bring the NHS into play, will be driven by the loss of trade associated with Brexit. Let us remind ourselves of what the UK Government’s long-term economic analysis said. Under all the versions of Brexit that they analysed—the White Paper, the European economic area-type agreement, an average free trade agreement, and no deal—trade and GDP would be lower at the end of the forecast period than they otherwise would have been. The analysis went on to say that, under all those options—with the exception of the EEA, which does not apply—the situation would be worse if we had net zero migration from EEA workers. So before I come on to talk about trade, it is worth pointing out that we face a challenge relating to the retention and recruitment of staff if whatever Brexit we end up with drives a hideous and illogical end to the free movement of people.

The National Institute of Economic and Social Research’s analysis suggests that, depending on the type of Brexit, we could see a 22% to 30% fall in total trade. It went on to suggest that a free trade agreement with Brazil, Russia, India, China and all the major English-speaking economies, including the USA, would result in an approximately 6% uplift. I suspect that, if Brexit happens, Government thinking will end up being that, in order to make up some of the losses, we will have to have a quick win—a quick gain—probably with the USA. It is hard to see, for a variety of reasons, why the NHS would not be included in that.

[Catherine West (Hornsey and Wood Green) (Lab)]

Does the hon. Gentleman agree that it is very concerning that, when the President was here on his state visit, he seemed to say that that was the No. 1 priority, despite the fact that our Prime Minister tried to deny that on the day?

[Stewart Hosie]

It was concerning that his initial response was, “Yeah, sure, the NHS—everything is on the table.” It was clawed back slightly the next day, but one wonders whether he understood what he said on the first day, or even what he said on the second day. The concerns out there among the public are very real, for the reasons I have set out. If we need to make up trade gains from the losses that almost every single forecast suggests we will have, it is hard to see how the NHS, or broader aspects of health, might not be included in some kind of trade deal.

The starting point for me is that we should not be contemplating exposing the NHS through trade deals, not least because the EU has made more trade deals with third countries than any other bloc, which we benefit from, and it has done so while protecting public services. It makes little or no sense to throw that away. The EU has protected public services such as the NHS in all trade negotiations. It has shown itself to be principled in its approach. Not only would we potentially lose access to those markets, but we do not have the means to replicate the agreements we already benefit from. The hon. Member for South Thanet (Craig Mackinlay) mentioned the Swiss deal, but it was of course not rolled over in its entirety. Indeed, a number of the reports that came out at the time said:

“The deal risks new limits on the export of agricultural products from the UK to Switzerland—for example, a possible ban on organic products…Switzerland may no longer recognise UK businesses as ‘authorised economic operators’, eligible for lighter controls at the Swiss border.”

At the same time, a second roll-over deal was announced—the Norwegian one—but while it included zero duty for industrial goods, it did not include services. It was described in the Norwegian press as a “crisis agreement”, and it did not cover technical regulations and rules for trade in food, animals or plants.

I mention those two because they highlight the UK’s weakness in the Brexit process. If we are not able to roll over in full with friendly countries with which we have long trading relationships, how on earth are the public expected to believe that we will be able to cut a deal with the USA to make up some of the losses from Brexit without having to sacrifice the NHS? On my last visit to the United States, I was told time after time that the UK will be required to put everything on the table, and the US will be required to put nothing on the table.

[Catherine West]

The hon. Gentleman is being very generous in giving way. Does he agree that one sector for which there will be implications is research and innovation? Is he as concerned as me about the prospect that a lot of our universities and the collaborations they do, which are in effect services, will be at risk? It will take an awful long time and an awful lot of effort to replicate them in a US trade deal.

[Stewart Hosie]

I am concerned about that. I am concerned that, even now, we are seeing relationships, partnerships and academic work being restricted, and doubt being cast on their continuation, for those very reasons. It would be tragic if health improvement work was not done or was lost from the excellent universities that undertake those studies.

The weaknesses that I speak about are where many of the concerns about the NHS lie, particularly in relation to a US-UK deal. They drive the impression, rightly or wrongly, that the UK will be involved in some kind of investor-state dispute settlement mechanism, and that Governments or other public bodies could be sued simply for protecting our health service.

I will give three examples to demonstrate why there are real concerns and why the public are extremely anxious. The first took place between 1995 and 1997. The Canadian Government banned the export of polychlorinated biphenyl waste to comply with obligations under the Basel convention, to which the US was not a party. The waste treatment company SD Myers then sued the Canadian Government for £20 million in net damages under chapter 11 of the North American free trade agreement—an ISDS-type arbitration scheme. That claim was upheld under NAFTA, even though Canada had taken action to remain in compliance with an international treaty.

In the second case, in 1997, the Canadian Parliament again banned the import and transport of the petrol additive methylcyclopentadienyl manganese tricarbonyl over concerns that it caused a significant public health risk. Ethyl Corporation, the manufacturer of the additive, sued the Canadian Government, again under NAFTA chapter 11, for $251 million to cover losses resulting from what it called the “expropriation” of its plant and to its “good reputation”. That action was upheld by the Canadian dispute settlement panel. The Canadian Government repealed the ban and paid Ethyl Corporation $50 million in compensation.

Cases that involve toxic polychlorinated biphenyl waste and a petrol additive that was deemed to have a public health impact were overturned. It is quite wrong for any corporation to be able to sue a Government simply for taking steps to protect the wellbeing of their citizens. I use those two examples on purpose; they may not have a direct clinical NHS procurement characteristic, but no one could doubt they were public health measures that were overturned as a result of a trade deal that allowed private investors to do certain things.

My final example is more local. Some time ago in Scotland, we had an increase in the prevalence of hospital-acquired infection. One of the actions the Scottish Government took was to remove private cleaners and return cleaning to NHS staff. Lo and behold, the incidence of hospital-acquired infection reduced dramatically. It does not take an enormous leap of the imagination for non-core work, such as cleaning, to be put out for competition. Had that been an international company, utilising an ISDS-type arbitration scheme, one can easily see how it may have sued the Scottish Government to win back that work and continue to make profit, irrespective of the health consequences.

I have heard what the petitioners have said, and I welcome the commitments made so far that the NHS will not be included in any future trade deal. However, it would be foolish not to recognise the concerns the public have or that fraying around the edges, when it comes to what appears to be non-core, non-clinical work, can still lead to the kind of problems the petitioners are concerned about. I await with interest what the Minister says. I congratulate those who signed the petition and brought this important matter before us today.

--- Later in debate ---

[Catherine West]

The Minister is being generous in giving way. Does he agree that there are precedents where companies, such as tobacco companies, have taken elected Governments to court and wasted, in private courts, a lot of money that could have been spent on public services, and that that is a serious dent in democracy as we know it?

[George Hollingbery]

The hon. Lady anticipates exactly the section of my speech that I am about to come on to.

I was talking about the £1.3 trillion invested overseas and the fact that ISDS arrangements are incredibly useful in guaranteeing the delivery of justice of some sort for those who have invested under certain terms in less certain legal markets. However, they cannot force the UK to change the way we run our public services. The proof of that—I hope that this will answer the hon. Lady’s question—is in the results. The UK has more than 90 bilateral investment treaties in place, yet there has never been a single successful ISDS claim against the UK Government on any issue. Nor has the threat of potential claims affected the Government’s legislative programme. I therefore do not believe that there is a chilling effect. The UK Government have legislated exactly as they wished on every issue, despite those 90 bilateral investment treaties.

That is not to say that bringing services that have already been opened up to private providers back into public ownership might not lead to challenges. That is true, and we should not sit in the Chamber today and not admit it. Of course, that does not necessarily rely on ISDS agreements. In the UK we have perfectly competent courts, and I suspect that many people might pursue those issues through the regular courts under contract law. However, ISDS indeed provides another avenue. Even the shadow Chancellor, the right hon. Member for Hayes and Harlington (John McDonnell), recognises that compensation would have to be offered if any fairly let contracts were not honoured because of a change in policy. That much is clear, and we have heard him say so directly. However, that is wholly different from being able to force the private letting of contracts that a state wants to remain public. That cannot happen under any ISDS arrangement.

Another concern that has raised its head today is medicine costs, and the idea that a trade deal with the United States would raise the cost of medicines the NHS needs. Across all nations of the UK, we have an excellent set of systems that generate great outcomes for patients at an affordable price. We are proud of the way we assess the value of and agree commercial deals for medicines here in the UK‎, which is good for the NHS, for patients, and for companies that want to do business with us. We are absolutely clear that in any future negotiations we could not agree to any proposals on medicines pricing or access that would put NHS finances at risk or reduce clinician and patient choice—and what on earth would the incentive be? We have a system in place that works, ensuring that patients have access to medicines they need at prices that are affordable to the NHS. That is in the best interests of patients in the UK.

It is simply not a matter for the UK that the US is a highly fragmented market for pharmaceuticals and medical equipment, and so has reduced buying power. Neither is that issue a matter to be contemplated in any potential trade deal. There is no protectionism here; it is simply a matter of market power. Ultimately, it is a matter for US domestic politics. If the US takes a different route, it will have more buying power. We have taken a different route, and we have much more buying power. I can think of a thousand different markets where the US has much larger buying power than us. Are we supposed to petition it suddenly in a US trade agreement to bargain away its buying power? I do not think so, and I do not see why it should be any different in this case.

Some people—not in this debate, but it is worth dealing with, as there has been so much interest in the debate, in terms of the number of signatories to the petition —have raised the related issues of patent protection, extensions and generics. There is a complex web of interactions around those issues. On the one hand, there is a need to allow innovation in pharmaceutical and medical technology research and, on the other, there is a need to ensure that when patents expire—I nearly said “when patients expire”; forgive me—generic or bio-similar alternatives are quickly brought to market. We will seek to balance those as we always have, in a way that stimulates research and innovation, together with the cost of supplying healthcare free at the point of use in the UK.

Let me turn to concerns about the potential use of NHS data. The Government take seriously the use and sharing of that data. I reiterate what the Secretary of State for Health and Social Care said recently:

“NHS data must always be held securely, with the appropriate and proper strong privacy and cyber-security protections.”—[Official Report, 18 June 2019; Vol. 662, c. 114.]

The Government will ensure that trade negotiations do not undermine the safeguards that we have in place around health and care data. Those safeguards allow the public to have trust in how and why their data is used, and it is incredibly important that we maintain them.

To be clear, free trade agreements of course have a role in data. At the Department for International Trade, we are tasked with ensuring that data flows on a legal, safe and secure basis. We would seek to review any rules in place to safeguard data, such as data localisation requirements, and ensure that they are not overly protectionist. However, that should not be confused with the data that actually flows. We set up the pipework, but whether or not the taps are turned on is a matter for the regulators. In our case, that is the Information Commissioner’s Office, which is entirely clear about the need for privacy and cyber-security.

I will deal with one or two other issues that were raised that do not fit neatly into the categories in my written speech. First, on FTA scrutiny, the hon. Member for Bradford South (Judith Cummins) will know full well that we laid a Command Paper earlier this year that made a full and generous offer on scrutiny. I am well aware of her party’s position on scrutiny, and I absolutely agree with her and her Front-Bench colleagues on the need for real transparency on and scrutiny of free trade deals. I absolutely understand about the incentives to control every part of the passage through Parliament by votes. I would happily sit down with her at some stage and talk through why I think that is perhaps not deliverable, and perhaps not exactly what she wants.

I am clear that we must have responsible scrutiny, and that the Government must be as transparent as they can under the auspices of an FTA. When negotiating an FTA, plainly there are things that we cannot reveal in public; otherwise, we simply give away any negotiating advantage we might have. At the same time, there needs to be accountability to Parliament. I therefore think we are largely of one mind, at least on the principle, if not the actual solution.

The hon. Member for Dundee East (Stewart Hosie) chose very carefully the two examples he gave—Norway and Switzerland. They, of course, are two free trade agreements that the EU has with partners that have very close arrangements with it in any event, in other ways. It is precisely because of the relationships that they have with the European Union that they cannot match in a continuity agreement what they can match in an agreement with the EU. The fact that those agreements are not as comprehensive as they might be is a consequence of our leaving the European Union, not of our inability to negotiate or, somehow, a failure on the part of the Government. I think we have achieved remarkable amounts, given the circumstances that Switzerland and particularly the EEA countries face.

I shall comment briefly on positive and negative lists, ratchets and so forth. In the end, having taken advice and listened to arguments from officials one way and the other, I have to say that, on the whole, it does not matter a great deal whether the list is positive or negative; the only thing that matters is that it is right, so that the outcomes—what the agreements actually achieve—are precisely what the UK wants. We can either include everything on the list and strike bits out, or exclude everything from the list and allow things in, but it seems to me that in the end that is a nice distinction, in the legal sense, and that actually what matters is the effect when we have finished. This is something that people talk about a great deal. In the end, all I want to do is ensure that we actually get the outputs that we need.

I hope we can agree that the picture is at least slightly rosier now than when this debate started. The legal protections are there to provide robust protection for the national health service. The commitment from the Government is there to ensure that that remains the case. The opportunities are there for us to make the most of our world-class experience and expertise in healthcare and the life sciences. As we look back at all the NHS has given us—particularly after its 70th birthday last year—we can be hugely proud of our past, but we can also be extremely optimistic about our future on the global stage.

I shall finish by repeating what I said earlier. This Government, the two candidates for the leadership, the outgoing Prime Minister and, indeed, all of us on the Government Benches are clear that we have no interest in privatising the national health service. We do not want to use free trade deals to do that either. We understand the concerns of the petitioners, and I hope very much that what I have set out today gives some reassurance.