European Union (Withdrawal) Bill

Lord Callanan Excerpts

Committee: 10th sitting (Hansard - continued): House of Lords
Monday 26th March 2018 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, I absolutely recognise that. There are a number of issues which we hope will be part of the agreement. In business, there are what are called goods already on the market, which I believe the transition agreement will cover. There is the arrest warrant. A number of countries forbid any of their nationals being extradited to a non-EU member state, so we could find that if someone who commits murder here hops off to a member state, unless we have this all agreed in the transition deal, they would be free. I understand that the negotiations will say that where a case has started on its track towards the ECJ, let it finish.

There is a raft of things where, if we come out with a bump in the night, and wake up on 30 March with no deal, it will not just be a fall from the bed, it will be a substantial disadvantage. That is why I am confident that we will have a deal, but therefore I am confident that the Minister will accept the amendment.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, I thank the noble Baroness for her contribution.

I have presumed for the purposes of this response that the amendments tabled by the noble Lord, Lord Jay, are intended to ensure that a statute, specifically that provided for in Clause 9(1), is required to approve a situation in which the UK fails to negotiate a deal with the EU.

With the greatest respect, the amendments do not achieve the desired outcome. The statute specified in Clause 9(1) is intrinsically linked to the exercise of the Clause 9 power, which is itself dependent on the existence of a withdrawal agreement. Therefore, in a no-deal scenario, the Clause 9 power and all provisions within it would be unavailable, because there would be no withdrawal agreement.

The amendments would also leave other areas of the Bill inoperable. For example, Clause 7(7)(d) sets out that the power cannot be used to implement the withdrawal agreement. Changing the definition of withdrawal agreement to include the absence of an agreement would therefore leave us unable to use Clause 7 in a no-deal scenario. Vital corrections could not be made in that case and we would be left with many inoperabilities on our statute book.

Of course, I remind the House that, as the noble Baroness, Lady Hayter, and others have said, we are confident that the UK and EU can reach a positive deal on our future partnership—

[Baroness Hayter of Kentish Town]

If the Minister is saying that the amendment does not technically achieve what they want, if we can word it in a way that they want, will the Government then accept it?

[Lord Callanan]

I cannot give the noble Baroness that commitment. I am explaining the amendment and will come to the other implications in a second.

[Lord Hannay of Chiswick]

Perhaps the Minister can give an easier commitment, which is that the Government will use the period between now and Report to draft a provision which has that effect and catches a no-deal situation. I am sure we should be delighted. He has a whole team of draftsmen at his beck and call, so perhaps he could make good use of their Easter recess.

[Lord Callanan]

I am delighted to hear that I have all these people at my beck and call; it seems to have escaped my notice.

I remind the Committee that we are confident that the UK and the EU can reach a positive deal on our future partnership, as we believe that this is in our mutual interest. However, a responsible Government must be prepared for all possible outcomes. To invalidate the Clause 7 power in the absence of an agreement would eradicate a crucial part of our preparations. Putting the issue to one side, I respectfully disagree with the intention of the amendment—that parliamentary approval should be required to leave the EU without a deal. There should be one fundamental fact sitting behind all these debates: the UK is leaving the EU. As noble Lords have heard me say before in Committee, and on which I have been questioned at length, the decision to hold a referendum was put to the electorate in the 2015 general election. That decision was then put into statute in the European Union (Referendum) Act. The referendum was held and delivered a majority in favour of leaving the EU. Parliament then consented to act on that verdict through the European Union (Notification of Withdrawal) Act.

I do not normally read the Observer, but as Keir Starmer had given an interview I thought it would be appropriate for me to read what he had to say on behalf of the Labour Party. It had some interesting quotes. He said:

“Article 50 was triggered a year ago. It expires in 52 weeks and a few days, and I don’t think there is any realistic prospect of it being revoked”.

[Baroness Hayter of Kentish Town]

Article 50 also says that there will be a withdrawal deal which will include the framework for our future arrangements. Article 50, which we triggered, does not say that we are giving notice that we are leaving and that we are leaving without a deal.

[Lord Callanan]

We are giving notice of our withdrawal. The title was in the Bill that we passed to trigger it. Keir Starmer also said:

“Having asked the electorate for a view by way of the referendum, we have to respect the result”.


I agree with him.

I say again only to remind noble Lords so that they can understand my point of view that there has been a legitimate process, marked at intervals by the consent of both Parliament and the electorate. As I said in an earlier debate, amendments that could be perceived as a means to delay or disregard the referendum result carry with them their own risks—people’s faith in their democracy and its institutions. With that in mind, I do not think that it would be right to add an express mechanism within this Bill which might prevent the referendum result being acted upon.

The Prime Minister has been very clear: we are leaving the EU at the end of March 2019. That is not a question of domestic legislation; it is now a question of the EU treaties. While the detail of our future relationship with the EU has yet to be negotiated, I believe that remaining in the EU is the only outcome which cannot be reconciled with the decision taken in the referendum. I do not think that it would be in the interests of either the EU or the UK to open the door to an ever-continuing negotiation process with no certainty that the UK will ever reach a new, settled relationship with the EU. I was going to finish there but I see that the noble Baroness, Lady Ludford, is itching to ask a question.

[Baroness Ludford]

I thank the noble Lord for anticipating my question. He referred to there being a problem with Clause 7(1), which says:

“A Minister … may by regulations make such provision as … appropriate … arising from the withdrawal of the United Kingdom from the EU”.


If it is “may”, it could also mean “may not”. If there are no regulations to be made because there is no deal, and therefore there are no deficiencies in retained EU law to remedy, and that is the Government’s position, that subsection does not need to be invoked.

That is surely different from Clause 9. I do not see the parallel. Clause 9(1) refers to the parliamentary enactment of whatever the final terms are. We are talking about a scenario where there is no deal. As was said by the noble Lord, Lord Hannay, if you are maintaining that it is unworkable in this situation, the Government need to come up with something that they consider a workable formula. The Minister must surely understand that the point is to make sure there is not wriggle room over where parliamentary responsibility and rights reside, and not to be able to dodge Clause 9(1) by saying, “Well, it’s not really final terms of withdrawal because we are crashing out without a deal”.

--- Later in debate ---

[Lord Callanan]

We hope not to crash out without a deal, as I have said. If we do not have a withdrawal agreement, there is nothing to implement in Clause 9—therefore, Clause 9 would not be necessary. As I have said many times before, our position is that we are leaving the European Union on 29 March 2019, because that was what was authorised by Parliament when it authorised the Prime Minister to submit the notification under Article 50.

[Baroness Altmann (Con)]

Does my noble friend truly believe that the British people voted to leave the EU with no deal, with all the implications that that has for the livelihoods and business prospects of this country? That was not on the ballot paper. We have respected the British people’s vote by triggering Article 50 and negotiating with the EU but, if it comes down to the point where we cannot get a deal, surely Parliament must be in control of what happens to the interests of our country in that scenario.

[Lord Callanan]

I believe that the British people voted to leave the EU and we are trying to negotiate the best possible deal to ensure that we leave the EU. To go back to our original argument for all the reasons against the amendment, I hope that the noble Lord, Lord Jay, will consent to withdraw it.

[Lord Jay of Ewelme]

My Lords, I am grateful to those who have spoken in this short debate. I am grateful to the Minister for his reply and for reciting the history, but I simply disagree on the substance of the issue. There is no question of these amendments seeking to countermand the result of the referendum; they are simply to reaffirm the role of Parliament and what I and others believe would unquestionably be the desire of the British people in the event of no deal—that Parliament should take its responsibility and consider these issues before the final decision is made.

There is perhaps a difference of nuance between some of us who have spoken on the likelihood of no deal. I think that David Davis spoke of no deal as a sort of an insurance policy, in case there was a no deal. But I do not think that there is any disagreement among those who have spoken tonight on the consequence of no deal, with the exception of the Minister, or of the need for Parliament to be consulted. I have no doubt that we shall return to this issue at Report, but meanwhile I beg leave to withdraw the amendment.

--- Later in debate ---

I will not add to what has been so well said but I will put a question to the Minister. In a sense, we have covered three things in different groups about the powers given by secondary legislation. One is about the creation of new criminal offences, another is about the setting up of new public bodies, and another, which we return to here, is the ability to raise fees and charges. We do not want to hear, as we come to these amendments on Report, what the Government will do about them. I assume that they will meet us—I hope the whole way, but if not, half way. The Minister may not be able to say that tonight, but he has had notice of it, as we have brought it up before. The time for stonewalling and hearing is now gone. We need to know, before Report, where the Government are planning to move. I hope, therefore, that this evening he will be able to give us an assurance on that.

[Lord Callanan]

My Lords, I thank noble Lords for this commendably brief debate at this not so late hour, and I thank the noble Lord, Lord Adonis, for his commendably brief opening statements. I was delighted to see that he made his way up to Newcastle yesterday but, unsurprisingly, he forgot to ask me to meet him for a drink while he was there to speak to his 200 or so Brexit-disliking supporters.

[Lord Adonis]

Anti-Brexit supporters.

--- Later in debate ---

[Lord Callanan]

The noble Lord is right—I am sorry.

I will try to give a relatively detailed explanation. For any policy to be complete, it must have a practical answer to the question of how it will be funded. Clause 12 and Schedule 4 are that answer here. I hasten to add that they are not the answer to all money matters in relation to Brexit. The withdrawal agreement and implementation Bill will provide the statutory underpinning for paying our negotiated financial settlement with the EU and any other financial matters related to the withdrawal agreement. Before I proceed, I make it completely clear that I have heard the principled and eloquently expressed concerns about the powers in Schedule 4 and their scrutiny, and we will look closely at this ahead of Report. I regret to say that I am unable to provide too much detail on that at the moment, but we will carefully consider this issue.

Clause 12 and Schedule 4 provide that all the money which might flow into and out of the Exchequer as a consequence of the Bill is made “proper”, in line with the rules governing public expenditure and as laid down between the Commons and the Treasury in the PAC concordat of 1932—which I assume even the noble Lord, Lord Lisvane, was not around to take part in. Maybe his maiden aunts were around at the time to take part—who knows? These are obviously provisions relating to spending and charges on the public and were closely examined by the other place, which has privilege in financial matters, before the Bill reached us.

It is evident that the process of taking on new functions from the EU, and in the future running them, will cost money. Some of this will be public measures funded from general taxation—and, I hope, more efficiently than they were funded at the EU level. Some will be paid for by users of services to ensure that taxpayers, both corporate and individual, do not end up unfairly subsidising specialist provision. Where the line will fall is clearly a matter for debate in some cases, and I expect that as SIs come before Parliament for scrutiny, that question will, in a handful of cases, be relevant to the discussion. These provisions of the Bill, however, are key to ensuring that the rest of the Bill can be given real-world effect. I hope noble Lords will agree that without funding, the essential EU exit preparations enabled by the Bill could not be put into practice.

I thank the noble and learned Lord, Lord Judge, and the noble Lords, Lord Lisvane and Lord Tyler, for Amendment 348. The Government, as has been said at other times and in other places, are aware of the risks and concerns posed by any legislative sub-delegation to public authorities, but we remain convinced that conferring powers on public authorities other than Ministers to allow them to make provisions of a legislative character can be an appropriate course of action. I stress that, like any other form of sub-delegation under this Bill, any transfer of legislative power must be approved by both this House and the other place following a debate. It will not be possible for an SI to pass through this place, under the eyes of noble Lords, without a thorough and reasonable explanation of how any sub-delegation will be exercised in practice.

In this exceptional Bill, it is right that, although we must address all the issues that we discussed at Second Reading and which will arise under the Bill, Parliament also keeps a close and strict eye on all matters where any financial burden can be imposed on individuals and businesses. However, I remind noble Lords that this power is only available if the public authority is taking on a new function under the Bill and that the fees and charges must be in connection to that function. This is not a general power for the Government or any other public authority to raise moneys as they please.

The Government envisage sub-delegating this power in limited circumstances—for example, where Parliament has already granted to a public authority the power to set up its own rules for fees and charges of the type envisaged by this power, and, for good reasons, made it independent of the Government.

[Lord Tyler]

Will the Minister clarify one point? As I understand it, the affirmative procedure would apply to secondary legislation under Schedule 4 where there is a new fee or charge, but only the negative procedure would apply in subsequent regulations modifying those fees. That is an important qualification of the assurances he was giving to the Committee just now.

[Lord Callanan]

The noble Lord makes a good point. I will answer his question later. In line with the Bill’s aim to provide continuity, Parliament should have the option of approving the ability of authorities such as the Financial Conduct Authority and the Bank of England to independently make fees and charges for firms that will, after exit and under this Bill, fall under their regulatory remit.

Amendment 349 comes to the heart of the purpose of these powers and I thank the same noble and learned Lords for tabling it. This power is designed to ensure that those using specialist services transferred from the EU to the UK pay for them. This involves providing for fees and charges which, though not taxes in the common sense of the term, are at least tax-like. For the benefit of the noble Lord, Lord Tyler, let me clarify what we mean by tax and tax-like charges in this context. Under the guidance laid down by the Treasury, although fees and charges for services that are set on a strict cost-recovery basis are not taxes, any fee or charge that goes further than direct cost recovery is likely to count as taxation or to be tax-like. This would be the case if it cross-subsidises to construct a progressive regime between large multinationals and small enterprises, if it is a compulsory levy in a regulated and surveilled sector, such as banking, or if it funds the broader functions of an organisation not directly part of the cost of providing a service, such as enforcement.

I hope we can all agree that, as part of providing continuity, this Bill should enable the Government to continue to fund public services in an appropriate manner. Because the Government have directly prohibited the increase or imposition of taxation, including tax-like charges of the type I have just described under other relevant powers in the Bill—particularly Clause 7(1)—we require the ability to do so under this power. To give an example, without this the Bank of England would not be able to bring trade repositories—a vital piece of financial market infrastructure currently supervised at the European level—within the scope of its levy-based funding regimes. This House approved the creation of those delegated regimes through the relevant legislation and I hope that, with the proper information before it, it will approve the relevant power in this Bill, subject to the use of the affirmative scrutiny procedure.

Having said all that, let me repeat what I said at the start. We are looking closely at this matter ahead of Report. We will try to see how we might provide appropriate reassurance to a number of the fairly reasonable concerns that have been raised by noble Lords. Even with that caveat, I recognise that noble Lords may still have concerns but I hope that I have given some insight into the Government’s position and satisfied the House of the honourability of the Government’s intentions. I hope that noble Lords will agree, therefore, to not press their amendments or object to Clause 12 standing part.

[Lord Adonis]

I congratulate the Minister on what was, I thought, an excellent response to the debate. After 10 days in Committee, he has learned from the noble Baroness, Lady Goldie, how to charm the House and we have seen a new side to him that we were not aware of before: his conciliatory and emollient side. He may even, in due course, convert to the anti-Brexit cause at this rate of progress—maybe with another 10 days in Committee we would get there.

However, the Minister did the noble Lord, Lord Lisvane, a great disservice. It is a well-known fact that the noble Lord drafted Magna Carta.