Trade (Australia and New Zealand) Bill (Third sitting)

Debate between James Duddridge and Gareth Thomas

Committee stage
Tuesday 18th October 2022 Public Bill Committees

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I beg to move amendment 19, in clause 1, page 1, leave out subsections (2) and (3).

It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate the Minister on being knighted. [Hon. Members: “Hear, hear!”] It is a pleasure to see him and, indeed, his fellow members of the anti-growth coalition in their places this morning.

Labour Members had hoped that the Bill would provide an opportunity for a much bigger debate on the entirety of the trade agreements with New Zealand and Australia. Sadly, however, the way in which the Bill has been drafted means that it is only the procurement chapters of those agreements that we will be able to debate. I shall illustrate why this is a restrictive approach. There are more than 2,500 pages in the Australia deal—a member of my staff has counted them—but only 30-odd of them are on Government procurement. The New Zealand trade deal has fewer pages, but there are more than 500 of them, with only 30-odd pages on Government procurement. Our opportunities to scrutinise are, therefore, far more restrictive than the House would have liked. None the less, we will raise one or two of the concerns that have been put to us about the Government procurement chapters of both deals.

I should stress at the outset that we welcome increased trade with Australia and New Zealand. They are key allies led by strong, progressive, effective leaders in Anthony Albanese and the incomparable Jacinda Ardern. Their legal systems and value systems are similar to ours, and it makes enormous sense to deepen the economic ties between us.

Our concerns about the procurement chapters arise from the fact that the now Prime Minister appeared to be in a bit of a rush when negotiating both deals. Perhaps one or two mistakes were made and a deal of insufficiently high quality was secured. Members will remember the context in which the Australia deal in particular was negotiated. The flaws in the deal that the now Prime Minster had negotiated with Europe were becoming very obvious, and Ministers were clearly desperate to divert attention from them by negotiating a deal with Australia.

Amendment 19 seeks to delete subsections (2) and (3) from clause 1. Those subsections allow Ministers to extend specific provisions that are included in the UK-Australia and UK-New Zealand agreements, and which go beyond provisions of the Government procurement agreement to all covered procurement. They also bring procurement within the scope of the GPA and other UK trade treaties. These GPA-plus provisions of the UK-Australia free trade agreement could be made part of domestic law and would apply to all suppliers, not just those from Australia. On the GPA-plus elements of FTA clauses relating to estimating values of contracts without a fixed term, the UK-Australia FTA requires that all contracts with unknown value are deemed as covered procurement. Other examples of the so-called GPA-plus provisions that this clause makes available to all suppliers include the advertisement of procurement opportunities and the termination of awarded contracts.

Our amendment seeks to prevent Ministers from quietly slipping into law measures that they have negotiated as part of the trade agreements with Australia and New Zealand, in particular the procurement chapters, that they suddenly think should apply generally. The specific concern that has been brought to our attention relates to contracts of unknown value and length.

Let me go into more detail, to help the Minister and the Committee to understand those concerns. Under current UK rules, contracts of an unknown duration or without a fixed term are advertised only if their estimated cost over 48 months exceeds the relevant value threshold. Under the free trade agreement with Australia, those contracts always have to be advertised. To give effect to the FTA, our domestic UK law will have to be reformed as a result of this Bill.

That surely raises two issues. First, more contracts will have to be advertised, and that will benefit not only Australian tenderers but all tenderers in countries that are members of the Government procurement agreement. That is because the contract opportunity will be advertised online and will be in English. I will explain shortly why that raises concerns. Secondly, domestic legislation is being reformed as a result of free trade agreement, which gives rise to the question whether a trade discussion is the most appropriate way in which to address reforming UK contract law. It certainly gives rise to the question of how much consultation Ministers have had, not only across Government but with business, industry and others who might be affected.

Why does the Minister think it is a good idea to extend to very other member of the GPA the so-called GPA-plus provisions negotiated as part of the Australia trade deal? That gives rise to an obvious question: does it mean that every other member of the GPA will offer us the same arrangement?

I have been describing the concerns in technical detail, so let me give some specific examples to bring the concern to life. On contracts of unknown value, a contract for office printing—a pay-as-you-go service—would come under the scope of the concerns put to us. Let us imagine that a local authority did not want to buy or lease printers, but rather preferred an all-inclusive service comprising availability of equipment, maintenance, help-desk services and supply of paper and other consumables. The contractor would be remunerated on a per-printed-page basis—a pay-as-you-go price. Let us say that the contract was for five years and that the contracting authority—a council on its uppers, perhaps, one like Northamptonshire that had either gone bust or very nearly gone bust—had provided an estimate of the average number of pages printed over the last few years, so as to allow tenderers to price their offers up. However, the contracting authority would not know the total value of the contract at the time of advertising because future consumption could vary.

We have been given similar scenarios that could emerge from cloud computing services. In the cases that I have described, regulation 6(19)(b) of the Public Contracts Regulations 2015, which apply at the moment, requires the contracting authority to calculate a likely monthly value of the contract and multiply it by 48 months. If that estimate exceeded the relevant threshold, which is currently just over £213,000, the contract would have to be advertised. If the estimate was below that threshold, it would be possible that no advertisement was required. If the contract was estimated at below £25,000 in value for the next 48 months, there would be no obligation to advertise the contract opportunity at all. The contract could be directly awarded by the local contracting authority, perhaps following a request for tenders to two or three local small and medium-sized enterprises.

Conversely, under the requirements of the UK-Australia free trade agreement’s procurement chapter—paragraph 9 of article 16.2—given that the total value of the contract over its entire duration is not known in the example I gave, there would be an obligation to advertise the contract. Surely that would reduce the chances of local small and medium-sized businesses getting the contract. There seems to be a clear negative potential effect for SMEs that seems at odds with the Government’s declared policy of boosting SME access to public contracts. Paragraph 13 of the national procurement policy statement refers to that, and paragraph 10 notes as a strategic priority the need to improve

“supplier diversity, innovation and resilience”.

It explicitly refers to the goal of creating a more diverse supply chain to deliver the contracts that will better support start-ups and small and medium-sized businesses in doing business on public sector contracts.

The Minister will remember the clear evidence we heard last Wednesday from Lucy Monks, the Federation of Small Businesses representative, who said:

“Small businesses have problems accessing public procurement in the UK as it stands, because they find it technically difficult. They obviously do not have the ability to take the same kind of risks as larger businesses. They might not have the technical departments, lawyers or whoever might support them through that process.”

She went on to spell out, in even starker terms, that

“small and medium-sized enterprises are basically underserved in the UK procurement processes”.––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 5.]

SME representatives are already expressing serious concerns that the people they represent are struggling to win sufficient UK Government contracts. It appears that under clause 1(2) and (3), Ministers are about to make the situation even more difficult for SMEs. That is particularly the case because it is not just Australian and New Zealand businesses that might want to try to win these contracts in future; every other member of the Government procurement agreement could also bid for these contracts.

Although it might seem unlikely that GPA members such as firms based in Hong Kong would want to bid for contracts of unknown value, a business based in the Republic of Ireland, which is part of the GPA, could conceivably think, “Well, now we’ve got an opportunity to bid for a contract in Northern Ireland, Scotland or Wales. It is within the realms of possibility that we could win that contract and offer it for our purposes.” I gently emphasise to the Minister that he needs to explain not only to the Committee but to SMEs across the UK, which are at the moment able to secure contracts of unknown value and length, why he thinks it is in the interests of our country to make it more difficult for them to do so.

If the printing example has not helped the Committee enough, let me give another example from a different economic sector. The Minister will understand just how important procurement is as a means of supporting the UK’s food and agricultural industries. To be fair to the Prime Minister, even she understood that role very clearly when she was in a previous role as the Secretary of State for Environment, Food and Rural Affairs. She published a plan for public procurement, which was designed to help SMEs to win contracts, especially SMEs from the food and agricultural sector.

Public procurement in this type of situation could sometimes involve the direct delivery of agricultural products, perhaps bought in bulk by local government, but that is less likely than the outsourced provision of meal services for schools or the NHS. With that in mind, tenders for meal services can and increasingly tend to include supply chain considerations that can support local agricultural industries through criteria in the contracts that schools and local NHS hospitals set. That involves shortening the supply chains, perhaps as a way of reducing carbon footprint. Again, that is something that one would have thought we all wanted to continue supporting.

Contracts for meal services can be very difficult to price at a tender stage, especially if there is an element of price competition, which is the norm. It might be surprising that school meals are very difficult to price. However, my own offspring often change their minds over whether they want a school meal or a packed lunch, and I imagine that that scenario is mirrored in families across the country. That makes it difficult for those who are setting the tender terms for meal services to be able to guarantee a set amount of products.

[The Minister of State, Department for International Trade (Sir James Duddridge)]

I followed the hon. Gentleman’s printing example, in the main, but on school meals, is he just being illustrative? I cannot quite see how the meals that my children have at their school might be contracted out and delivered from Australia or New Zealand.

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[Gareth Thomas]

Don’t worry—I will come to construction.

[Sir James Duddridge]

I look forward to that.

There were some wide-ranging comments about the Bill. This is a very focused Bill, and I will focus on the procurement element. The Government did not produce a focused Bill by design; we focused the Bill on what there was a legislative need to change. Everything else is done through statutory instrument and there has been wide consultation on the deal overall.

There was talk of GPA-plus. It is in the British interest to have many people tendering, beyond Australia and New Zealand, and to have transparent information. There was also a question about CPTPP, on which I think there is a bit of misunderstanding.

[Gareth Thomas]

I intend to come to some of the tensions between competition and “buy British” in our next group of amendments, but let me give the Minister the example of Essex County Council. He seems to be saying that it is fine for SMEs in Essex to face greater competition if they want to win contracts of unknown value and length as a result of the council’s having to advertise such contracts online and in English, even though we have not secured similar pledges from other GPA countries. Those small and medium-sized businesses that might hope to bid for a contract in, say, France or Ireland do not have the same advantages, as Ministers have not achieved that. Why give that bit of negotiating leverage away at this stage?

[Sir James Duddridge]

I think Essex County Council, which is Conservative-run, would think competition is good. The more people applying, whether they are from Essex, Kent or New Zealand, the better. If that provides better services procured with our money—taxpayers’ money—that is fundamentally good. Clearly, local businesses and SMEs have a competitive advantage because there is less transport and a closer understanding of the marketplace; there is a plethora of reasons why that would work. Competition is also good for driving change. If an SME or an organisation in the UK is not competitive or does not have exactly the right product, by not getting that one contract it will try to develop and improve. That is how we grow as a society—but I am straying slightly from the provisions of the Bill.

Let me return to CPTPP. There are some fundamental points here. The Australia and New Zealand trade deals do not die once CPTPP starts, for two reasons. First, they will remain in place because they will be the way we judge what has happened before; deals done in the period before CPTPP will be judged on the Bill. Secondly, the deals will sit alongside CPTPP, in that some of the provisions in the Australia and New Zealand trade deals will be better than those in the deal with the 11 nations in CPTPP, and we would not want to remove those benefits that we have given to our Antipodean colleagues.

[Gareth Thomas]

The Minister is describing an interesting context—the idea of the CPTPP sitting alongside the Australia and New Zealand free trade deals. Specifically on the issue of contracts of unknown value and length, is that provision contained within the CPTPP as well? We will be a rules-taker. That is the evidence that has been put, certainly to me, in terms of the procurement chapter of the CPTPP. Is it the same provision? I gently suggest that if it is going to be in the CPTPP, with largely the same wording, procurement experts have put it to us that we risk having some legal confusion between the procurement chapter of the CPTPP and the procurement chapters of the Australia and New Zealand FTAs.

[Sir James Duddridge]

The wording is in line with the CPTPP. Australia, New Zealand and ourselves are conscious that while this deal is in all three nations’ interests, it is also a potential stepping stone to a bigger deal. Throughout the negotiations we, on all sides, thought very carefully about what will be replicated in the new trade deal—what goes through—and also what we wish to retain in our special relationship with those two nations. As the hon. Gentleman knows, trade is always evolving. These deals contain some new and exciting provisions. I will focus my comments on amendment 19 specifically and pick up on thematic issues later, if the hon. Gentleman probes me on them.

I reassure the Committee that the scope of these powers is only to make regulatory changes that are absolutely necessary to implement the procurement chapters. Subsections (2) and (3) of clause 1 are there to ensure that the regulatory changes can be made. Some suppliers do benefit from a separate set of regulations to suppliers from other nations, including the UK. These provisions simply ensure that any supplier participating in a tender that is covered by the agreements do so under the same rules and processes. The amendment would fundamentally undermine the bringing forward of the deal that has been done with Australia and New Zealand in relation to procurement. I hope I have provided some reassurance to the Committee.

[Gareth Thomas]

Will the Minister explain how the provisions in the procurement chapter of the Australia and New Zealand FTAs sit with the Procurement Bill, which is going through Parliament at the moment, and whether this requirement to advertise contracts of unknown value and length is also touched on in that Bill? If so, there is a risk of confusion, not just as we accede to the CPTPP, but also from our own domestically introduced procurement legislation.

[Sir James Duddridge]

The Opposition Front-Bench spokesman is tempting me to speak to two Bills under one. When the Procurement Bill goes through, this Bill will not be needed. The trajectory the Government are taking is consistent across the board, but it would be wrong for me to debate a future Bill. We should focus today on what is before us, rather than on what might happen. It is still an active debate. That Bill is not even starting in this House; it is starting in the other place. Therefore, I hope the reassurance I have provided are satisfactory. I ask the shadow Minister to withdraw the amendment.

[Gareth Thomas]

I am grateful to the Minister for his reply. Although I am not 100% convinced by the argument that he advanced, this is a probing amendment and we will reflect on what he said.

We cannot find any evidence that there was a consultation with the FSB or anyone else on the impact of extending contracts of unknown value and length and on the requirement to advertise them online and in English to every other country with which we have a trade agreement, notwithstanding the Minister’s argument and the evidence we heard in Committee that there have been consultations between the Department for International Trade and the representatives of small and medium-sized businesses. I wonder, therefore, whether this so-called GPA-plus provision has had quite the attention it merits.

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[Sir James Duddridge]

It is good to see the hon. Lady in her place. I think it is the first time we have served in Committee together—no doubt, not the last time—and I welcome her to her place.

I also welcome her probing amendment—I assume it is probing, forgive me—but it is unnecessary. Australian and New Zealand suppliers will not gain the benefit of the procurement chapters until the agreements have entered into force, in accordance with the existing framework for domestic legislation.

By way of example, the text of the Australian FTA states that the default date of entry into force of the FTA is 30 days after the date on which notifications confirm completion of domestic procedures on all sides, although both parties may agree otherwise. If for whatever reason we made it 31 days or 29 days, and that was acceptable to both parties, the change could be made to allow for all eventualities.

I argue that the amendment is not necessary and that, were we to pass it, it would remove the flexibility of that small change. I welcome the amendment, but ask the hon. Lady to withdraw it.

[Gareth Thomas]

The hon. Member for Airdrie and Shotts rightly raises an important issue about the linkages between the Procurement Bill and the measures in this Bill. One wonders why Ministers could not get their act together and get that Bill through both Houses of Parliament first. That would have been the sensible thing to do, rather than introducing specific and narrow legislation to implement the procurement chapters of these two free trade agreements, even though they will be completely usurped by the Procurement Bill coming down the line. Does the Minister have any insight into why there has been such a delay in getting the Procurement Bill through both Houses? Is it the chaos in the Conservative party? Is it that there was a need for more consultation with business about the Bill? Why has there been such a delay in the progress of the Procurement Bill?

[Sir James Duddridge]

The Procurement Bill is in the House of Lords. It has still not reached us. I do not wish to be disparaging about the House of Lords, but had the Bill started here and were the hon. Gentleman, the hon. Member for Airdrie and Shotts and I on the case, no doubt we would have sorted it earlier. I ask the hon. Lady to reflect and to withdraw her amendment.

Trade (Australia and New Zealand) Bill (Fourth sitting)

Debate between James Duddridge and Gareth Thomas

Committee stage
Tuesday 18th October 2022 Public Bill Committees

[Gareth Thomas]

That is certainly my understanding of the evidence that Professor Sanchez-Graells gave this Committee, the Select Committee on International Trade in this place, and the International Agreements Committee in the other place.

Let me spell out for the Committee where the problem lies. As I understand it, the Government procurement agreement allows countries to bar access to some but not all remedies, on public interest grounds, for companies that are unhappy with Government procurement decisions, but, crucially, it does not allow a ban on remedies involving compensation. That is the difference with the Australia FTA procurement chapter, which does allow a ban on remedies involving compensation.

Potentially, the firms of other GPA countries will have more comfort and ability to risk tendering for big Australian Government contracts, because they will know that they have some access to remedies if things go wrong in the procurement process and they want to try to get compensation. As my hon. Friend the Member for Brighton, Kemptown rightly says, it takes some skill to negotiate a worse position for British businesses in terms of access to remedies than the situation we have now. That is probably not the biggest mistake that the now Prime Minister has made in her time in office, but it feels like a significant issue, and I look forward to the Minister addressing it.

Government procurement matters enormously. We have touched a little on some of the reasons for that. It helps if Government procurement is done well. One of the reasons why amendment 5 is necessary is to ensure that we do not make the current set-up for Government procurement in the UK worse but, instead, enhance it. Done well, Government procurement can help to build supply chain resilience. We saw the significance of that during the covid lockdowns, when our dependence on China became ever clearer and the need to re-onshore some of our supply chains became a topic for discussion by business and, I suspect, in Whitehall.

We are all too familiar with the horror stories about some of the dodgy personal protective equipment that was procured. We understand the context in which some of those decisions were made, but it is striking that Transparency International, with which I worked when I was a development Minister trying to tackle corruption in developing countries, felt the need to investigate the Government procurement market for PPE. It identified some 73 contracts, worth 20% of all the contracts, that it said raised one or more red flags for possible corruption. That suggests there is work to be done to improve the quality of Government procurement. The National Audit Office also highlighted concerns, where the Government admitted that they were not getting full value for money on PPE.

We also know that good conditions for Government procurement can create more choice and more scope for innovation, and can achieve better value for money. One thinks about the digital procurement expertise that we need, and the potential for artificial intelligence to help revolutionise public services. We need to make sure that the framework under which Government procurement contracts are being offered works well, and that this new injection of uncertainty—but also, potentially, enhanced opportunities for other firms to come into the Government procurement market—does not destabilise the UK procurement market but improves things. A bit of consultation might help in that regard.

I touched on some issues around levelling up, which, to my surprise, prompted murmurs of disagreement from Government Members. I understood from their chuntering that they think everything is rosy with Government procurement outside London and the south-east. However, some figures I have seen from the House of Commons Library suggest that at the moment, there is a clear bias in the Government procurement market towards businesses operating in London and the south-east. The last thing we would want is for the procurement chapters of the Australia and New Zealand trade agreements to exacerbate the difficulties for businesses, not only in London and the south-east but in the west midlands, the north-west, the north-east or the east of England, that are trying to get into the Government procurement market.

House of Commons Library data demonstrates that of the 445 most lucrative contracts awarded by central Government in 2019, 202 went to companies in London or the south-east. That does not suggest that Ministers are using Government procurement to level up. We know they are not doing much else on levelling up, so one would hope that they would take the opportunity to consult more, as our amendment 5 would require them to, in order to ensure that the Government procurement market is not being made worse for businesses outside London and the south-east that want to get involved. It might be an opportunity to look at reforms and think about how businesses outside London and the south-east can be encouraged to do so.

[The Minister of State, Department for International Trade (Sir James Duddridge)]

Would the hon. Gentleman concede that it is possible that the reason those figures are so weighted towards London is that that is where a lot of headquarters are, yet some of those services are delivered from around the United Kingdom and, indeed, from the devolved Administrations?

[Gareth Thomas]

I absolutely concede that point—that is possible, without a doubt—but I gently suggest to the Minister that there are real concerns that, unless there is proper consultation, the procurement chapters of the Australia and New Zealand FTAs could make the situation worse for businesses that are not headquartered in London and the south-east.

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[Gareth Thomas]

This is relevant to clause 5. If we had consulted better with firms across the UK that benefited from the supply chain of the Elizabeth line, they might have been able to highlight their concerns at an early stage, preventing any problems going forward.

If you, Mr Twigg, are not convinced of the relevance of an argument that looks back, let me put to you an argument that looks forward and give the example of a hospital that needs to be rebuilt. Let us say it is the Queen Elizabeth Hospital in King’s Lynn, which we know needs rebuilding. The Australian and New Zealand free trade agreements, and the procurement chapters of both, will be in play at this point, assuming the Bill becomes law. If they are, and an Australian company bids for the contract to rebuild the Queen Elizabeth Hospital, there could be a chilling effect.

Let us say the company is denied access to the contracts, for whatever reason, thinks it has been treated unfairly, tries to put in a bid for judicial review to stop the contract being won and started by the relevant British company, and cannot get judicial review to stop it, because of public interest grounds—because the hospital is falling down. The court might say, “We’ve got to crack on with this.” The Australian company would miss out on judicial review, also on public interest grounds, and the court would be open to rule against giving it compensation. Australian companies would now look askance at the NHS procurement market and think, “We won’t take the risk of bidding for contracts there. We may well miss out because of the terms that have been agreed under the procurement chapter of the UK-Australia agreement.”

It does not just go one way. That same risk is potentially in play in Australia for British firms bidding to rebuild Australian hospitals. If one were falling down and a British company bid and lost out and then thought it had been treated unfairly, it might initially turn to its lawyers and say, “Let’s put in a judicial review bid to stop the contract going ahead while we try to persuade the court to restart the tender process. Let’s at least try to secure compensation for all the money it’s cost us to put the bid together.” In my understanding of the arguments advanced by Professor Sanchez-Graells, under the terms of the UK-Australia free trade agreement, if the contract is not awarded to the UK firm but to an Australian one, and the court decides on public interest grounds that that is fine, the British business would lose an awful lot of money that it might have invested in bidding for the contract.

The irony is that if a French firm bid for the same contract, it might not be able to stop the contract or get judicial review, but under the terms of the GPA, it could argue for compensation. The British firm would not even be able to apply for compensation, but firms from other GPA jurisdictions could. In those circumstances, British firms that specialise in overseas procurement may be tempted to look not at the Australian or New Zealand markets, but at other markets in which they have better protection if future contracts go wrong.

That is a substantive and serious concern, and it would be good to hear the scale of the Minister’s concern about such risk. Ministers and Committee members may still think that companies take risks all the time, so if a contract does not go their way and they cannot secure compensation or judicial review, then tough luck. However, it is also worth considering the effect on the bit of Government that is trying to issue the contract.

I pray in aid the case of Draeger Safety UK v. the London Fire Commissioner, which has been substantially protracted. The London Fire Commissioner wants to upgrade the quality of equipment available for its firemen and women—quite understandably, it wants the best, most modern equipment. Draeger Safety UK lost the contract, thought the contract was unfair, and is trying to secure compensation. That is not an isolated case; similar cases are going through the UK courts.

Adding to the process the complex GPA-minus provisions of the UK-Australia and the UK-New Zealand FTAs could have a chilling—or certainly a delaying—effect on the issuing of tenders. For that reason, I hope that a little more consultation by Ministers with each part of Government around the UK that might want to issue a contract, and a little more thought—perhaps through an impact assessment—about the impact of the GPA-minus provisions that Professor Sanchez-Graells set out, might help to avoid those sorts of problems, and that the procurement chapters of both FTAs could actually be really useful.

I look forward to hearing what the Minister has to say about Professor Sanchez-Graells’s concerns, and I strongly encourage the Minister to support amendments 5 and 22.

[Sir James Duddridge]

rose—

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[Sir James Duddridge]

During long interventions, sometimes Ministers jokingly ask to intervene, but I had been sitting down for so long that I genuinely thought I was listening to a speech.

Relations with the International Trade Committee have not been as good as the Government, the Committee or the House want. That is going to change. We will make ourselves fully available. I know the Secretary of State has already started having those meetings with the Committee. Her diary obviously shifts quite quickly, so I cannot say where she will be, when. I know there is a whole series of activities planned. I am looking at the Public Gallery; there are civil servants looking into how we can link better with members of the Committee. I will play my part as Minister of State at the Department, and will always make myself available to the Committee, if at all possible. It will be my top priority, over and above speaking to the House or taking part in other Committee processes.

The hon. Gentleman said, “You just publish reports. That’s not enough.” If that is all we did, it would not be enough, but it is not all we have done. There are inter-ministerial groups on these issues, which are attended by Ministers from the devolved Administrations, particularly those with responsibility for trade. The forum that we are discussing was established to consider all trade policy, and its effective implementation, and will be able to review and evaluate that policy’s impact.

The hon. Member for Harrow West seems incapable of using the word “effect” or “impact” without prefacing it with the word “chilling”, as if these were haunting issues. We want to evaluate policies, to look at the impact assessment, and to improve all the time. As has been said, the agreements are evolving. They get built on and improved. The forum has met eight times since its inception in 2020. It provides for open discussion about negotiation, and allows Ministers from devolved Administrations to contribute their views directly, both formally and, in the sidings, informally.

[Gareth Thomas]

How many of those meetings have focused purely on procurement?

[Sir James Duddridge]

I have absolutely no idea. As the hon. Gentleman said early on, procurement is a very small section of these matters. Most, if not all, of these meetings were probably open, so I could check the minutes, but I suspect that not every nuance is captured in them. Also, sometimes trade issues can be looked at through lots of lenses. For example, one issue might relate to the motor industry, procurement and Wales.

There are bilateral meetings with counterparts from the devolved Administrations, and there is weekly engagement by UK Government officials. That all helps to build a better relationship. The hon. Member for Llanelli asked whether the relationship could be better. I am unsure of how well sighted she and the Committee can be of the details of that—I think that is what the hon. Member for Harrow West is alluding to—but it would be interesting to look at the Welsh example, in particular; there have been a lot of compliments, with people saying that engagement has increased and is better. That is not to say that it cannot be even better, but let us give credit where credit is due—not to Ministers, but to the Department.

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[Sir James Duddridge]

Absolutely. On unions—I mean unions in the broadest sense; I am not trying to pull a fast one by referring to four regional national farmers unions—my understanding is that six unions, as the hon. Gentleman would understand the term “union”, as opposed to the Conservative and Unionist party, for argument’s sake, are genuinely involved in the trade advisory groups. That is what we would want.

That is on the record. If I am wrong and if I have misread my brief, I will correct the record later and write to the hon. Gentleman with the details of the unions, and perhaps with more information around the issue of the union being invited to something and there being some type of deal, if it is in the public interest to put that out. I want to encourage the unions to come and be part of the process, and I want us to make decisions.

[Gareth Thomas]

To be clear, is the Minister saying that if the TUC, as the representative of the trade union movement, is not on any of the relevant trade advisory committees, he is committing himself to inviting the TUC?

[Sir James Duddridge]

The Minister did not commit to that. I think the question is, will I commit to that? The answer is no. I will commit myself to ensuring that unions are on those trade advisory groups. I think they are on the trade advisory groups—

[Gareth Thomas]

Why not?

[Sir James Duddridge]

Because there are many unions out there. That is not part of the Bill—

[Gareth Thomas]

The TUC is the global organisation for unions—

[The Chair]

Order. The hon. Gentleman needs to intervene properly if he wishes to speak.

[Sir James Duddridge]

This is an interesting question, but the hon. Gentleman, who was an able Minister, would not have made such an on-the-hoof commitment when he was sitting on this side of the Committee without consulting and without thinking about the implications for other unions. However, I am more than happy to go away and look at the issue if that makes him happy. I am picking up the gauntlet to try to bring him onside and get the Bill through, so perhaps that is a nice suggestion.

[Gareth Thomas]

Almost nice. All I would say to the Minister is that I would have known the question was coming.

[Sir James Duddridge]

There were no telepathic Ministers available, so the hon. Gentleman is stuck—

[Gareth Thomas]

Evidence was given—

[The Chair]

Order, thank you.

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[Sir James Duddridge]

I am happy to iron it out. The departmental advisers respectfully disagree with the professor, and I am more than happy to write with their analysis of why they disagree. Clearly, we cannot take evidence from 30 academics and say, “This is an outlier out of 30,” but I will send the Committee that letter.

On the unions, it is slightly more complicated than what the hon. Gentleman asks and what I said. The TUC has already been offered roles on the advisory groups but unfortunately has not taken them up so far. The TUC has been represented on the Department’s Strategic Trade Advisory Group, and in 2021 we offered six unions—that is where the figure six came from—roles on the group. I assumed incorrectly that they had taken us up on that offer. I do not know why, but they have not. They are still welcome, and I am more than happy to write again making that offer, to try to understand why they have not taken it up. We are saying that we want to consult more widely. We have offered the unions a consultation role, and Members say that unions want to have an even bigger role, but they have not come to the table. I am sure that there are complicated, good reasons for that, and we will try to work through those.

Hopefully I have answered the questions sufficiently and have only failed in my lack of telepathic skills to know which questions would come up. I will try harder next time and get the best brains on providing said facility to the hon. Gentleman.

[Gareth Thomas]

I am grateful to you, Mr Twigg, for allowing me briefly to respond. I am grateful for the Minister’s willingness to write to the Committee with a more detailed response to the concerns that Professor Sanchez-Graells raised. I am happy not to press amendments 7 and 20. However, tempting as it is to think that the Minister has given comprehensive answers, he was almost comprehensive but did not give quite enough for us not to press amendments 5 and 22. We will press them to the vote.

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[Gareth Thomas]

Thank you, Mr Twigg. You will understand the frustration of Labour Members present that Ministers are once again seeking to get through a whole bunch of regulations using the negative procedure, rather than the affirmative resolution procedure. Amendments 9 to 18 seek to make it a requirement that the affirmative resolution procedure be used for every set of regulations that Ministers want to propose under the procurement chapters of these two free trade agreements.

In making the case, I note that the affirmative resolution procedure is by no means a perfect process. However, it is better than the negative procedure. Without the affirmative process, Ministers would have carte blanche to introduce regulations based on these procurement chapters without the slightest hint of anything resembling parliamentary scrutiny. The negative resolution procedure that the Government propose is the least rigorous of all parliamentary procedures available to the House for scrutiny.

Having served in government, I can understand the Minister’s appetite to avoid scrutiny. There is very little to be gained for a Minister of State or an Under-Secretary of State in having to come and justify to a parliamentary Committee why particular regulations should be introduced. However, it is none the less important that Parliament has the opportunity to ask questions about regulations that are being introduced and to consider whether they fit with the objectives that were set out for the trade negotiations and actually seek to achieve those objectives.

It is worth remembering that the last negative instrument to be successfully annulled, as I understand it, was the Paraffin (Maximum Retail Prices) (Revocation) (No. 3) Order 1979. With such a small chance of a negative instrument being successfully annulled, I can well understand the appetite of Ministers to use this process.

[Sir James Duddridge]

Does not the evidence that the hon. Gentleman has brought forward actually negate his case? If there was a genuine problem and there had been some error, the Committee would have voted against it or, indeed, the Government would have withdrawn the measure.

[Gareth Thomas]

I gently suggest to the Minister that it is much better not to get ourselves into the position where we have to persuade Members from all parts of the House to vote down an order. One swallow does not make a summer. Just because there is an example in the far distant past that we should endorse negative instrument, a little bit of parliamentary scrutiny and pressure on the Minister, and a few nerves to make the Minister check their brief in more detail before signing off on a set of regulations, would seem sensible. The scrutiny arrangements for the Australia FTA to date have been poor, and we have had no debate on the Floor of the House on the New Zealand FTA, apart from the Second Reading of this Bill. Given that, we should switch from the negative to the affirmative process, and I gently encourage him to adopt an even more reasonable tone than he has adopted up until now.

[Sir James Duddridge]

I am sure the Whips will note with criticism the hon. Gentleman saying that I have been reasonable. In all seriousness, I thank hon. Members for the amendments and I hope to provide reassurance as to why the measures are necessary. The hon. Gentleman says he wants to hold my feet to the fire. He suggested that I may not read the brief quite as closely if I do not have to defend it in Parliament, but I will ensure that I do that anyway. I will regularly check my brief.

It is worth remembering that the amendments would not be a vote on the agreements. They would be a vote on the secondary legislation of a trade agreement. By the time these agreements enter into force, Parliament will already have had the opportunity to scrutinise the obligations of the procurement chapter in these agreements through the process set out in the Constitutional Reform and Governance Act 2010. The Government are certainly committed to transparency in our trading arrangements, and we have put in place a suite of enhanced transparency and scrutiny arrangements that go well beyond our statutory obligations, and we will continue to do so. That includes providing the International Trade Committee and the Lords International Agreements Committee with at least three months to report on the agreements before Parliament scrutinises them more formally through the process set out in the Constitutional Reform and Governance Act, which comes later.

For the Australia agreement, the period was triggered after Parliament had had the deal available to scrutinise for over six months, and it has already been subject to scrutiny through the Trade and Agriculture Commission, which published its report in April 2022. The Department has since responded with the publication of the Australia agreement report under section 42 of the Agriculture Act 2020. In addition, future changes in the procurement chapters will relate mostly to machinery of government changes and the subsequent updating of lists.

This is not a novel procedure. Section 1 of the Trade Act 2021 enabled the implementation of the UK’s membership of the World Trade Organisation agreement on government procurement to operate in a similar way. This approach was acceptable to Parliament, and we received no negative comments from the Delegated Powers and Regulatory Reform Committee. These sessions and holding Ministers to account are useful, but Ministers are a limited resource. We are not an infinite number, and we should perhaps focus on the more critical pieces of legislation rather than just statutory instruments. I therefore ask the hon. Member to withdraw his amendment.

[Gareth Thomas]

I am grateful to the Minister for his response, but I gently suggest that we have not been deluged with regulations from the Department for International Trade, so I do not buy his argument that Ministers or shadow Ministers are so busy that there is no time to discuss regulations. If our amendment is accepted, it may well be that our debates would be relatively short, and they would provide the opportunity to ask questions and raise issues that are slightly outwith this debate but important to a range of stakeholders outside the House. It would make sense to switch from the negative to the affirmative process, so I intend to press the amendment to a vote.

Question put, That the amendment be made.

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[Gareth Thomas]

I beg to move amendment 6, in schedule 2, page 10, leave out lines 31 to 38.

Amendment 6 would delete part 3 of schedule 2. I want to focus on what that would mean. Part 3 says:

“The power to make regulations under section 1 in relation to”

both Government procurement chapters, or

“any modification of either Chapter which requires ratification, is capable of being exercised before the agreement or (as the case may be) modification concerned is ratified.”

The Minister seems to be asking for carte blanche to be able to make any change to the procurement chapters without proper parliamentary scrutiny, and certainly before the UK-New Zealand FTA has been ratified. I am open to persuasion as to why such a requirement is necessary, but I wonder whether Ministers are again seeking to avoid serious parliamentary scrutiny, specifically on the terms of the UK-New Zealand FTA. The Minister will know that there has not been any sustained debate in the Chamber on the whole of that free trade agreement. I look forward to hearing his justification for this particular part of schedule 2.

[Sir James Duddridge]

I hope to be able to provide that assurance. This part of the Bill is there not at the request of Ministers, but at the request of lawyers, to give legal certainty and predictability. It is a necessary part of the process of implementing trade agreements to make the legislation before ratifying.

The amendment would create legal uncertainty regarding the process of implementing the two agreements. Several steps need to be taken to get agreements into force and allow UK businesses and, indeed, consumers to benefit from the significant economic advantages that they provide. Entry into force is the final step. However, the UK can proceed to enter into force only after it has ratified the agreements. In turn, ratification may only be agreed to once all the necessary domestic legislation is in place. Without the provision that the amendment seeks to change, there would be legal uncertainty about whether domestic legislation could be made before ratification. That is the reason behind it. I hope that the hon. Gentleman, having heard my response, will withdraw what I hope will turn out to be a probing amendment.

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[Gareth Thomas]

Amendments 8 and 21 are probing amendments, to understand better how the Procurement Bill and potential accession to the CPTPP might affect the provisions in the procurement chapters of the Australia and New Zealand free trade agreements.

As I understand it, the Minister has touched on some of the reasons why the New Zealand and Australia free trade agreements need to stay on the statute book for considerable time to come, but I want to understand whether the Procurement Bill will provide the opportunity to sweep up the measures proposed by the two amendments, so that this Bill can be taken off the statute book to avoid any legal uncertainty. Clarity on that would be helpful. If there is a chance that the legislation will not be necessary, because the Procurement Bill would take the matter forward, that creates additional opportunities for Members to consider the impact of the trade legislation going forward.

I wonder whether Ministers might be tempted to think, “Let us stick with the Trade (Australia and New Zealand) Bill because we have no idea whether the Procurement Bill will survive in its current iteration.” I say gently that, given the chaos in the Minister’s party, one does not know which legislation will survive if there are further ministerial changes. He will understand that there has been considerable criticism of the Procurement Bill. Clearly, it would not be appropriate to dive into that now, but it would be helpful to understand the interplay between that crucial piece of UK domestic legislation and the two procurement chapters. If the experts in his Department are wrong about the concerns that Professor Sanchez-Graells outlined about possible GPA-minus provisions now being the problem for British exporters to Australia and Australian exporters coming here, the Procurement Bill might provide an opportunity to sort those problems out.

Amendment 21 refers to the CPTPP and the potential accession of the UK to it. It would be good to hear from the Minister how the negotiations are going and what might be a reasonable timeline for the House to have the chance to consider the accession documents to the CPTPP. I ask that because the provisions in the procurement chapter of the Australia free trade agreement appear to largely mirror the provisions in the procurement chapter of the CPTPP. Everything that has been written about the CPTPP suggests that we will be rule takers and will not be able to shape in any significant way the procurement chapter of the CPTPP that we might wish to join. Was that part of the motivation for Ministers deciding to just roll over and accept the request of the Australians for the GPA-minus provisions in the procurement chapter of the Australia FTA? We would simply have to accept them on joining the CPTPP.

The Minister will know that a series of trade experts have suggested that we will be rule takers if the CPTPP comes into force. We will not have much opportunity to influence the negotiations, and that is a considerable concern given that the idea of Britain being a rule taker was a motivation for many to vote for leaving the European Union. I look forward to the Minister explaining the interplay between provisions in the Trade (Australia and New Zealand) Bill and those in the Procurement Bill and the CPTPP.

[Sir James Duddridge]

I welcome the probing amendments tabled by the official Opposition and the amendment tabled by the Scottish National—or nationalist—party. Forgive me, but I forget which word it is. [Interruption.] I will do my homework better next time.

Amendments 2, 8 and 21 would ensure that the power in the Bill expired, even if provision under it was still required. The Bill is about implementing and maintaining our commitments in the procurement chapters of the agreements. That means that we need to ensure day one compliance as well as compliance beyond that. That is why the amendments that would remove the power are inappropriate. Although the amendments would permit the procurement chapters to be implemented, they would remove the power when it might be needed for modifications, and that would not be a satisfactory position to be in. Future modifications in the procurement chapters may relate to machinery of government changes and updating of lists. An example is when the Department for Culture, Media and Sport added digital. I do not think that we would want to come back to this Committee to make such a change.

Let me deal with amendments 8 and 21, tabled by the hon. Member for Harrow West. Bilateral trade agreements, like the ones dealt with in this Bill, sit alongside agreements like the comprehensive and progressive agreement for trans-Pacific partnership and the World Trade Organisation agreement on Government procurement. The procurement chapters of these deals will not be superseded by the accession to the trans-Pacific partnership. Accordingly, the powers in this Bill will still be needed after the accession in order to implement future modifications to both these agreements.

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[Gareth Thomas]

Will the Minister give way?

[Sir James Duddridge]

I will, but I suspect I am coming to the hon. Gentleman’s point.

[Gareth Thomas]

The Minister mentioned the GPA, which provides me with the opportunity to intervene and press him on it. Presumably the Government are still significant supporters of the GPA, but I hope that the Minister accepts my point about the need for the GPA to be a dynamic and more modernised agreement. If he does accept that, what are Ministers doing to try to convene signatories to the GPA in order to start the process of modernising that agreement?

[Sir James Duddridge]

I agree that the GPA should be dynamic. In terms of what Ministers are doing, I can speak for myself: at G20, I met Dr Bright Okogu, Professor Ngozi’s right-hand man in the WTO, and I agreed that I would go to Geneva for probably a week and meet all the officials there to get up to speed with the detail at a quiet time, rather than the busy time of a multilateral agreement, to raise exactly these types of issues, because we believe in a free trading system globally and the value of promoting that for all UK equity—it is not just exports, but the cost of living and also development, which both of us care massively about.

I think that I have covered the issue about the CPTPP. I cannot give a running commentary on negotiations there. It is a high priority for the Government. At my most recent meetings with internationals, I raised it, both bilaterally and multilaterally, and I will continue to do so, as will other Ministers. The Australia deal and this Bill are a stepping stone to get there. As a precondition, we want to get this done so that we are on a firmer footing for the next transition.

[Gareth Thomas]

The hon. Gentleman will be well aware, I suspect, that one of the big concerns about the CPTPP relates to investor-state dispute settlement. One of the mildly reassuring things about the procurement chapters of the Australia and New Zealand FTAs is that they do not allow for investor-state dispute settlement to kick in in a very obvious way. The CPTPP appears to be much more explicitly in favour of ISDS. It would be helpful to understand from the Minister, at a time of his convenience, whether the Government are accepting the principles of ISDS, locked as they are into the CPTPP, or whether he is actively pushing for them to be deleted from the requirements that Britain has to sign up to in order to accede to the CPTPP.

[Sir James Duddridge]

I really cannot, as part of this Bill, give any more to the hon. Gentleman than I have done on my discussions in international forums and my intention to go out to Geneva. I want to go out there open-minded. A number of issues will be discussed in Geneva above and beyond this one, and I want to have an open discussion. I do not want to prioritise the hon. Gentleman’s equities and desires, or anything else; I want to listen openly to what Dr Ngozi says, and talk about how her priorities fit with the Government’s and how we can move forward together. That is the nature of multilateralism: because every member has a vote, the process can easily be held up, so I am resistant to being too strong in accepting what the hon. Gentleman has said. However, I am very sympathetic to it.

[Gareth Thomas]

I am grateful to the Minister for his explanation about his upcoming meeting with the staff of Professor Ngozi, who is a great figure internationally. The Minister—I do not chastise him in any way for this—had to have a discussion with his Whip, the hon. Member for Workington, but the question I asked was whether ISDS was included in the CPTPP. I wonder whether the Minister might be willing to look at the record and perhaps drop me a note about the question I actually asked.

[Sir James Duddridge]

I will certainly do so.

Turning to the question of whether the powers fall away, as ever it is slightly more complicated than yes or no. The powers in clause 1(b) for dealing with matters arising out of, or related to, the FTA chapters will cease to exist for England, Wales and Northern Ireland when the new procurement system becomes law through the Procurement Bill, assuming that all happens; those functions will instead be carried out through the powers in clause 82 of that Bill. It is different for Scotland, because competency for treaty making is at the UK level, but the actual procurement legislation and processes are done by the devolved Assembly. Scotland has separate procurement regulations from the rest of the UK and will retain those regulations after the Procurement Bill comes into effect.

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[Sir James Duddridge]

I have made the point that we want to establish a good relationship with the International Trade Committee, and the Secretary of State giving evidence to it is clearly part of that. The hon. Gentleman will know that Ministers sometimes need to deal with matters urgently. I do not know what other matters are going on, but I am sure that the Secretary of State has apologised profusely and looks forward—as I do—to attending that Committee. I am more than happy to update the hon. Gentleman in a bit more detail, informally—perhaps even later today if I have time to go back to the Department.

[Gareth Thomas]

As part of this new spirit of transparency from the new ministerial team at the Department for International Trade, will the Minister commit to publishing the analysis used to produce the impact assessment that the Government published for the FTAs? As I understand it, Ministers are refusing to publish the modelling used to generate that assessment. That leaves a slightly cynical taste in the mouth. One suspects that the economic model is not being released because the impact assessment was perhaps slightly inflated.

[Sir James Duddridge]

I would like to make it clear that this is not a new plan for transparency. I am being credited, to a degree, with what is just the old order and transparency—[Interruption.]

[Sir James Duddridge]

I am sorry, Mr Twigg. I will stick entirely to new clauses 1, 2 and 3.

I am more than happy to take away the issue of impact assessments, and look at the formula and what was disclosed. I have read the document, but it is very big. I will probe and look at what has already been disclosed before asking the Department to disclose further information.

[Gareth Thomas]

Will the Minister give way?

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[The Chair]

I would like us to stick to the new clauses as well.

[Gareth Thomas]

I suggest to the Minister that he should approach that discussion with his officials in a slightly different way. Why does he not go to his officials and ask, “Is there any reason why we cannot publish all the economic modelling behind the impact assessment?”

[Sir James Duddridge]

I thank the hon. Gentleman for his suggestions but, with respect, I will do things my way if that is okay.

We published impact assessments within the agreements—we have spoken about that already. In the reports, the Department provides analytical evidence as a base, but we will do more. I have already spoken about the five-year and two-year assessments.

On UK suppliers competing for procurements, there is a designated team in the Department—complemented by staff from Australia and New Zealand—who will support UK businesses across the country. I have already seen a bit of that.

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[Gareth Thomas]

May I point out gently to the Minister that the point on GIs is that Ministers secured nothing in terms of protection for British GIs in the Australia deal. That comes on top of a very lengthy delay to get any GIs agreed with Japan. There is a worrying pattern of British businesses and good British products not getting the protection they deserve.

[Sir James Duddridge]

This is not an adverse change. It is just the start of an agreement and not everything can be done on day one.

I have further good news for the Scottish National party. It is slightly outside the scope of procurement, but there will be big benefits from the financial services industry, particularly in Edinburgh. Exporters were very keen, when the Secretary of State went there, to explain that they were happy about tariffs being reduced. That will reduce prices and increase profit. There is good news for Scottish salmon—not for the salmon themselves, as they will be dead—because they are guaranteed to clear customs in six hours. Hon. Members will know that time is an issue with fresh products. Scotland’s services firms, of which there are many, will benefit from access to millions of pounds worth of extra Government contracts. That is good news for the United Kingdom and good news for Scotland.

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[Gareth Thomas]

Further to that point of order, Mr Twigg. On behalf of the official Opposition, I add my thanks to you and to Mr Pritchard for the generous way in which you have chaired proceedings. I must also thank the Clerks for their assistance with drafting, the Hansard staff for the challenging job that they will have to do to understand my notes in particular, and the Doorkeepers for keeping order. I can well understand why the Minister praises his officials; I hope others will understand if I take the opportunity to praise my one member of staff, who has assisted me in preparing for the Committee.

We have had a lively and provocative debate, in which a whole series of serious issues were raised by hon. Members from the Scottish National party and from the Labour party. I am grateful to my hon. Friends the Members for Llanelli, for Nottingham South, for Brighton, Kemptown, and for Sefton Central for their support.

I note that not one Conservative Back Bencher took the opportunity to praise the person who negotiated the Australia and New Zealand deals today—

[Sir James Duddridge]

Will the hon. Gentleman give way?

Draft Asian Infrastructure Investment Bank (Immunities and Privileges) Order 2015

Debate between James Duddridge and Gareth Thomas

Monday 2nd November 2015 General Committees

[James Duddridge]

I could not agree more. Before coming to this place, my hon. Friend established a great tradition of working in that area, and he continues to leverage his expertise as a member of all-party parliamentary groups. I urge him to continue to do that, through his involvement with the fledgling development bank.

The order is part of the UK’s ratification process, and provides the privileges and immunities that will enable the bank to function as an international organisation in this country. It is part of the requirements laid out in the articles of agreement signed by the UK Treasury’s Commercial Secretary in June and is in line with the requirements of other international organisations of which we are a member.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I apologise for the discourtesy of missing the Minister’s opening remarks. He mentioned other multilateral development banks. How does he see the new bank operating with the Asian Development Bank? One would think, instinctively, that there was some overlap or, if not, that there would be some sort of memorandum of understanding between the two. Does the Minister envisage that?

[James Duddridge]

I certainly envisage their working closely together, but equally closely with other international development banks, such as the European Bank for Reconstruction and Development, the African Development Bank and, to a lesser degree, the World Bank, which has a slightly different context and structure in relation to the order. There are plenty of development opportunities in the region and beyond, and I encourage all development banks and all Development Ministers across the world to work together. That is where the greatest rewards are, rather than in operating solely individually. Fundamentally, it is about operating collectively.

[Mr Thomas]

The Minister is aware that Mr Jin Liqun was appointed as the secretary-general of the multilateral interim secretariat of the new bank. Was Britain consulted on the appointment? Is it a genuinely interim one and, if so, will Britain be involved in the interviews for the permanent head of the bank?

[James Duddridge]

I cannot speak for the appointment process as part of the draft order. I am just setting out the basis on which those people will be employed. However, I am more than happy to look at the matter, if it is exercising the hon. Gentleman—as it appears to be doing. In relation to the draft order, I have made the comments that I wish to make and I therefore commend it to the Committee.

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[James Duddridge]

I am terribly sorry to have insulted my right hon. Friend so early in my speech. I apologise profusely. He suggested that I should be working closely with the Department for International Development, which I certainly am. Today I stand here as a Foreign Office Minister with responsibility for protocol. However, I would like to work much more closely across a number of subjects with my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), who kindly deputised for me when I was ill for much of the last year.

I will try to deal with all the points that have been raised in this debate in broad themes. I will touch on individual points, mentioning individual Members, as and when. A number of Members brought up social and environmental issues, and the UK has been involved in discussions on those subjects from an early stage. The UK has encouraged the bank, and members of the bank, to consult widely, and Her Majesty’s Government have specifically had discussions with NGOs—those discussions will continue—on how the bank will operate and on the bank’s standards on social and environmental issues. There have not been specific discussions on the projects that the right hon. Member for Cynon Valley mentioned, but there are wide-ranging discussions encompassing all the issues, including human rights.

The hon. Member for Harrow West asked about the interim appointment. I confirm that Britain was consulted on that, and an election is expected for the full-time appointment. He probed me further on governance more generally, and I confirm that there will be 12 non- resident board members. How they will fit geographically, and the areas they will cover, are still being negotiated. Additionally, there will be a number of vice-presidents, but I remind him that a lot of these development banks have many members—in this case, there are already 57 members. However, Britain is well placed, given the Chancellor of the Exchequer’s early entry.

The policy lead will be through Her Majesty’s Treasury—this issue has been raised by a number of Members—and we will maintain a strong influence, but the exact positions both of the non-executive board and of the vice-presidents are still to be negotiated. However, I note that both in the time of the hon. Member for Harrow West and in current times we have strong experience of multilateral development, and we are well placed to assist the bank.

[Mr Thomas]

Is the Minister aware of any non-Chinese candidates for the permanent position heading the bank? Why does the Treasury have the policy lead? Given that DFID has responsibility for multilateral development banks, why has this particular bank been taken out of its control?

[James Duddridge]

The bank has not been taken out of anyone’s control. The Chancellor has been close to this work, which is perhaps why it is a Treasury lead. I have not been involved, so I am not aware of specific candidates in the longer term. As Minister with responsibility for protocol, I have looked at the governance issue in relation to immunities, privileges, reliefs and exemptions and what that might mean for different individuals.

The question of shareholding gives me an opportunity to address the super-majority. China will have the largest share capital, which translates to a voter shareholding of 26.1%, so the hon. Gentleman is right in his assertion that there is a blocking super-majority. However, the combined shareholding of non-regional members is higher than the Chinese holding, at 26.7%. In relation to the Asian Development Bank, I understand that there is an ongoing discussion about a memorandum of understanding between the two banks.

The hon. Member for East Lothian raised some concerns about the Japanese, and subsequently the hon. Member for Nottingham North raised similar issues about the US position in relation to this bank. The US was initially sceptical but it would be fair to say that its tone has softened over recent months, particularly after the recent Chinese state visit. The US acknowledged the contribution that this new bank could make. It is very much not a zero-sum arrangement. This will be a beneficial addition to the piece.

[James Duddridge]

The point of the order is to lay the foundations for the bank to operate across our jurisdiction in the UK, rather than to draw reference to where it might have other headquarters or regional headquarters.

[Mr Thomas]

With respect, the question of the hon. Member for Gloucester is perfectly reasonable. Where will the bank be headquartered? The Minister must know that. The Chancellor of the Exchequer must have agreed that as part of the agreement on our contribution.

[James Duddridge]

I cannot immediately confirm the location. However, if I am inspired later in my speech, I will clarify that point for the hon. Gentleman. Other hon. Members raised the issue of trade unions and the exploitation of workers. Specifically, labour rights have been and continue to be considered as part of the environmental and social standards that are being negotiated.

In relation to questions from the hon. Member for Nottingham North about the man in the street—clearly the people of west Harrow are better educated on multilaterals than those elsewhere—I gently suggest that perhaps the man on the street or the man on the Clapham omnibus would not know about the intricate workings of the European Bank for Reconstruction and Development or the African Development Bank, which are two similar institutions that do great work.

I said that I would return to the hon. Member for Harrow West on the location of the headquarters. Evidently, the location has already been decided to be Beijing.

The hon. Member for Nottingham North asked about the speed at which we should move. We have moved quickly and we did that deliberately to co-ordinate with an opportunity. The Chancellor has been a visionary in that regard, which will be good for the region and for the UK.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Asian Infrastructure Investment Bank (Immunities and Privileges) Order 2015.