Freedom of Establishment and Free Movement of Services (EU Exit) Regulations 2019

Earl of Clancarty Excerpts

Wednesday 23rd October 2019 Lords Chamber

[Lord Greaves (LD)]

My Lords, I have been listening with great admiration to the knowledge and expert understanding of all this of noble Lords who have spoken. I thank the noble Lord, Lord Stevenson, for tabling his amendment and my noble friend Lord Oates for explaining it all, so that I understand it a bit more.

The right reverend Prelate and other noble Lords referred to UK citizens living in other EU countries and the effect that the whole Brexit thing is having on them. We have friends who live in the south of France and operate a small business there, and they have just held up their hands and applied for and obtained French citizenship as the only way they thought they could secure their position and their business there. There is a clear understanding among a lot of British citizens in other EU countries that in the negotiations so far, the Government have not taken their interests fully into account.

On this regulation, when we were discussing settled status during Question Time this afternoon, the noble Lord on the Opposition Front Bench declared a personal interest, so I suppose I ought to declare a personal interest in that my daughter’s husband is a European Union citizen and they live in this country. They work from home; I must confess that I do not know whether they are technically self-employed, have a zero-hours contract or both, but they certainly have a highly technical, successful operation, which is inherently insecure as it depends on the organisation that provides them with work. Sometimes there is none and at other times there is a lot. They are very concerned, not only about these regulations but about their position, so they asked me to take a look at this.

I looked at it and read the Explanatory Memorandum, knowing that this is where I would find the truth, the whole truth and nothing but the truth from the Government. It asks:

“Why is it being changed?”


As noble Lords have said, it says that Section 4 of the European Union (Withdrawal) Act provides the rights in domestic law, and so on. It then says in paragraph 2.11:

“To address any inoperability and to ensure UK law continues to function effectively, with legal clarity, and that the UK is compliant with its World Trade Organization … obligations, including the General Agreement on Trade in Services, these rights need to be disapplied”.


I have read it again and again and I do not understand why, and I have heard noble Lords speak today and I still do not understand why. However, what concerns me is not that I do not understand this—what inoperability there may be or what conflicts there may be with the rules of the WTO—but that the Government do not seem to know either. The Explanatory Memorandum talks about “any inoperability”; is there any or is there not? I presume that the Government have taken legal advice on this and have a belief as to whether there is or is not. Because they think this legislation is necessary, I assume that they think there is, but they do not want to tell us exactly what it is.

Later, paragraph 2.12 says:

“These directly effective rights of establishment and free movement of services would appear to have limited practical effect, post-exit in a no deal scenario”,


but the Minister is telling us that the Government do not think that it will have any effect in practice. Will it have a limited effect or not really any effect? If it will have a limited effect, can the Minister tell us exactly what that limited effect is, in words that I, as a non-lawyer and a non-expert in these WTO matters, might understand? The Minister himself used the word “could” about three times—“It could have an effect”. But will it or will it not? What is the legal advice, or is it all very vague and nobody knows?

However, the Explanatory Memorandum reassures the individuals and businesses concerned:

“Individuals and businesses will be able to check published no deal planning guidance on gov.uk”.


If I were to look at GOV.UK this afternoon, would I find advice on whether there is inoperability and limited practical effect, or would it tell me not to bother because there is not? If it tells me not to bother because there is not, why is this all coming here anyway?

[The Earl of Clancarty (CB)]

My Lords, at the beginning of this debate, the noble Lord, Lord Stevenson, said that parliamentarians are talking about this issue. The noble Lord, Lord Oates, and others, said that EU citizens are talking about this issue, and indeed, the British living and working in Europe are doing so too. They are all very worried. There is something about this issue to which the noble Lord, Lord Greaves, referred. It is a confidence issue, a trust issue and a perception issue. That is very important. There is a sense that a safety net is being removed in preparation for worse to come, despite the Minister’s assurances.

I would be appalled by any legislation that attempted to reduce the rights of EU citizens to run businesses or be self-employed in this country under a no-deal scenario. Such legislation should surely be in an immigration Bill, not presented to the House in this form as a fait accompli. As the noble Lord, Lord Stevenson, noted, we are talking about a wide variety of industries being affected. The so-called gig economy, the NHS, IT and the creative industries would be hit hard if EU citizens felt forced out, and we would be culturally impoverished as a result. However, as the noble Lord pointed out, it is not only the livelihoods of EU citizens that will be at risk, but the livelihoods of British citizens living in Europe.

It is a widely held view, but a misconception, that most British abroad are retirees. Of the 1.24 million UK citizens in Europe, Britain in Europe estimates that only 20% do not work. Many of those in work are self-employed, in as wide a variety of service industries as in the UK. It feels, however, as though the Government do not care enough about the British living in Europe, or about their livelihoods, which will without a doubt be threatened through any reciprocal effect. A number of us in this House have repeatedly asked the Government to protect the rights of the British working in Europe. This is not the right way to go about it, and that is apart from the message being sent through this legislation to EU citizens who run businesses or are self-employed in this country.

[Lord Purvis of Tweed (LD)]

In the absence of an impact assessment, I have four questions for the Minister. In many respects, they support the points raised by my noble friend Lord Oates.

The first is linked to the questions asked by the noble Lords, Lord Anderson and Lord Pannick. Can the Minister be clear with the House about what the Government consider the current preferential trading environment to be? If we offer a preferential trading environment to those providing services to a national of a country with which we do not have a trade agreement, we fall foul of the WTO. The Minister said that there would be no difference to those providing business services in the UK if they were EU, Swiss or EEA nationals. If that is the case, there should be no difficulty with the WTO, because we would not be offering any preferential arrangement. At the same time, if the WTO considered it a preferential trading agreement, and therefore discriminating against third countries other than EU countries, what would that preferential trading environment be for those that the WTO considered the UK to be falling foul of?

Given our consideration of the Trade Bill, we also looked at the draft services schedule presented by the UK to the WTO. There was no reference to that in the Minister’s remarks. Given that the services schedule has been lodged at the WTO for nearly a year now, what is the interaction with that services schedule? The Minister will know that there is a specific reference in it to those providing financial services, yet there was no reference to that in his remarks today. Will there be a difference for those EU nationals currently providing financial services products to UK citizens? I see the Minister nodding his head from his sedentary position, but that is contrary to the understanding of others. If the operation of the European financial single market ended on a no-deal Brexit, such people would not have the same level of protections. I would be most grateful if the Minister could clarify that.

My second point is linked to that. We also considered a continuity treaty with the Swiss Confederation. That treaty has specific clauses providing for elements of those who would be offering services. There was no mention of that in the Minister’s remarks so I am interested to know whether he can clarify something on the interaction with the treaty that Parliament has agreed, which offers, on a no-deal basis, a preferential level of support for those Swiss nationals. With this instrument, it seems as though things would contradict that because mentions of Swiss nationals run throughout it. If the Minister can clarify the point on how this will interact with the treaty that we agreed with the Swiss Confederation, I would be grateful.

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[Lord Hope of Craighead (CB)]

My Lords, I should like to return very briefly to the points made by the noble Lords, Lord Anderson of Ipswich and Lord Purvis of Tweed. They relate to the extent to which the Government have informed themselves about the impact of the instrument we are discussing. Like the noble Lord, Lord Greaves, I tend to look at the Explanatory Memorandum for guidance, and what I looked at first was paragraph 10, dealing with consultation. It is a most surprising paragraph, against the background of what we have heard in the Chamber this afternoon, because all it tells us is that the only area in which the directly effective rights of establishment or the free movement of services have been identified to have a direct impact on UK business is that of satellite decoders. That suggests that those who have been considering this instrument have a very narrow vision of the extent to which they are disrupting the system that has existed during our time in the EU. I am concerned about the extent of the consultation and therefore the about lack of information that has been gathered by the Government about the effect of the instrument. If it is to be taken away, I hope that a further and more wide-ranging consultation will be undertaken so that there will be a better awareness of the effect of this instrument.

[The Earl of Clancarty]

My Lords, does the noble and learned Lord agree that there is one impact that we do know about, which is the impact of a climate of concern?

[Baroness Bull (CB)]

My Lords, the House has heard from many noble and noble and learned Lords. I rise briefly to add my support to this amendment and to put on record that the concerns set out by the noble Lord, Lord Stevenson, and which have been elucidated by so many distinguished and legal brains, are shared more broadly across the House. Those of us without legal backgrounds rely on the expertise of the House’s Secondary Legislation Scrutiny Committee, which has highlighted that removing treaty rights means that EU-plus citizens will no longer be able to use these rights to challenge new restrictions. It describes this as a, “significant reduction of rights”—yet, as we have heard, there has been no impact assessment, so we really do not know the scope and the extent of the impact of this reduction in rights.

I have two very simple questions, and they echo questions which have already been asked. First, what will be the impact of this on reciprocity and on the livelihoods of UK citizens who have established businesses in or provide services across other EU countries? Secondly, can the Minister clarify whether this does in effect apply retrospectively? As the noble Lords, Lord Oates and Lord Greaves, pointed out, paragraph 2.12 of the Explanatory Memorandum uses phrases such as, “It is anticipated” and “it is not expected”. To this non-legal brain, that does not seem very decisive.

Similarly, in paragraph 2.17 we read:

“This Instrument ensures that Swiss nationals operating a business or providing services in the UK immediately before exit day will not lose residence rights by virtue of the disapplication of the directly effective rights”.


That clarifies residence rights, but I would be grateful if the Minister could confirm that this extends to the right to carry on owning or managing businesses or providing services, because it is not clear.

Like the noble Lord, Lord Oates, I heard the Minister twice repeat that these groups would be able to live, work, study and access services and benefits, but he specifically did not say that they would be able to continue to be self-employed, own and manage companies or provide services. Can he clarify whether this will be the case?

None of this is particularly clear, and it is not surprising that I, like other noble Lords around the House, have been written to by members of the public asking, for example, whether this means that Turkish nationals will no longer be able to own and run a Turkish restaurant.

If there really is no problem here, perhaps the Minister might agree that the Government could be a little clearer about this and clarify the intention behind the SI and its impact on EU nationals who have made their home here. The memorandum says:

“Individuals and businesses will be able to check published no deal planning guidance on gov.uk”—


which is not particularly reassuring to the people around the UK who are concerned.

The Prime Minster has made much in recent speeches and statements about the contribution of EU nationals to the UK and its prosperity, success, culture and economy. This SI seems rather at odds with this newly warm and welcoming tone.

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[Lord Duncan of Springbank]

Goodness me, such words. I like a pun at this time.

We seem to be caught in a situation in which a number of noble Lords believe that this is of significance to the extent that it impacts upon 2.3 million people. It does not. However, if individuals affected by future changes in policy wish to confront the Government, they may be able to use elements of the existing corpus to do so, unless we disapply them. It may seem modest—I am sure the courts will be able to address this and many lawyers will make a great deal of money—but the point I am trying to make is that the change should, in the future, not happen. But it might happen. It is a relatively small adjustment we are talking about here, and it has had no impact assessment because the impact is de minimis.

[The Earl of Clancarty]

I understand that some countries are drawing up legislation to protect the rights of British citizens in those countries. That includes employment rights. Will the Minister comment on that?

[Lord Duncan of Springbank]

Those countries are, at present, unwilling to open discussions with this country and will not do so until the withdrawal agreement has been accepted and we move on to the future relationship negotiations. I hope that not just individual countries will seek to do this but the EU itself, collectively, to protect the rights of British citizens resident abroad—just as we will do exactly the same. I hope we would do so in the spirit of our withdrawal agreement’s evolution into that future relationship that delivers the very thing that each individual here would wish. However, at present, I cannot offer any guarantees in that regard.