European Union (Withdrawal) Bill

Lord Callanan Excerpts

Report: 1st sitting: House of Lords
Wednesday 18th April 2018 Lords Chamber

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

My Lords, it is a great pleasure for me to resume our debate after the Easter Recess. I hope that all noble Lords enjoyed a good break. I spent most of it studying amendments to this Bill. I hope that some doubts about how seriously the Government take these debates have now been dispelled, as noble Lords will have seen that the Government have already tabled many amendments on key aspects of the Bill. Further amendments will follow, relating to the provisions on delegated powers and on devolution. It is our firm and consistent desire to find consensus in this House on the contents of the Bill wherever possible, and I hope that our debates can proceed on a reasonably collaborative basis.

Unfortunately, as in Committee, we start our proceedings with some amendments to the Bill that the Government cannot envisage accepting—or indeed any variant on them. That is not, of course, to impugn the motivation of those supporting the amendments or to deny the importance of the subject matter. Put simply—this will probably surprise nobody in the House—the Government simply do not agree with the proposed approach.

I am, of course, grateful to all those who have taken part in this debate on the vital issue of our future economic relationship with the EU. As the Prime Minister stated in her Mansion House speech, we are seeking the broadest and deepest possible partnership, covering more sectors and co-operating more fully than under any free trade agreement anywhere in the world today. The Government have been clear that the UK, in its entirety, is leaving the customs union. For the sake of clarity, a customs union—as has been pointed out by many noble Lords—has a single external border and sets identical tariffs for trade with the rest of the world. International trade policy is consequently an exclusive competence of the EU, to avoid the creation of different customs rates in different parts of the EU customs union.

The nub of the issue is this. If the UK were to remain in the customs union and be bound by the EU's common external tariff, it would mean providing preferential access to the UK market for countries that the EU agrees trade deals with, without necessarily gaining preferential access for UK exports to such countries. Alternatively, we would need the EU to negotiate with third countries on the UK’s behalf. This would leave us with less influence over our international trade policy than we have now, and would not, in our humble assertion, be in the best interests of UK businesses.

By leaving the customs union and establishing a new and ambitious customs arrangement with the EU, we will be able to forge new trade relationships with our partners around the world and maintain as frictionless trade as possible in goods between the UK and EU, providing a powerful and positive voice for free trade across the globe. There are real opportunities for the UK from increasing our trade with fast-growing economies around the world. The EU itself predicts that 90% of future world GDP growth is expected to be generated outside Europe—a trend expected to continue over the next five to 10 years.

In assessing the options for the UK’s future customs relationship with the EU, the Government will be guided by what delivers the greatest economic advantage to the UK, and by three key strategic objectives. First, we want to ensure that UK-EU trade is as frictionless as possible. Secondly, we want to avoid a hard border between Ireland and Northern Ireland—a commitment that was solidified by December’s joint report. Thirdly, we want to establish an independent international trade policy.

Last year, in its future partnership paper, the Government set out two potential options for our customs arrangements with the EU. These were reiterated by the Prime Minister in her speech at the Mansion House earlier this year. I will give a few more details of those options.

Option 1 is a new customs partnership between the UK and the EU. At the border, the UK would mirror the EU’s requirements for imports from the rest of the world whose final destination is the EU—including by applying the same tariffs and the same rules of origin as the EU for those goods. By following this approach, we would know that all goods entering the EU via the UK would pay the correct EU duties, removing the need for customs processes at the UK-EU border. But, importantly, we would also put in place a mechanism so that the UK would be able to apply its own tariff and trade policy for goods intended only for the UK market.

The second option would be a highly streamlined customs arrangement under which, while introducing customs processes between the UK and the EU, we would jointly agree to implement a range of measures to minimise frictions to trade, together of course with specific provisions for Northern Ireland. This option would include measures to simplify the requirements for moving goods across borders; it would reduce the risk of delays at ports and airports; and it would see the continuation of existing levels of UK-EU customs co-operation, with mutual assistance and data sharing.

Of course, the precise form of any new customs arrangements will be the subject of negotiation, and this will form a key part of our future economic partnership with the European Union. The Government have formed this policy not arbitrarily but because we do not believe that a customs union is in the best interests of the UK and of UK businesses.

I understand that many noble Lords disagree with our analysis, or believe that our goals are unreachable. However, we cannot support Amendments 1 and 4, tabled by the noble Lord, Lord Kerr, and Amendments 2 and 5, tabled by the noble Lord, Lord Wigley, which would have the effect of requiring the Government to make a Statement to Parliament on the steps taken towards the delivery of an objective the Government have clearly ruled out.

We in the Government are trying to seek the best possible future arrangements for the UK. I am confident we will succeed, and the progress we have made already in areas that many thought impossible demonstrates how all sides have been willing to break new ground in order to move forwards. We have set out our two potential options for a future customs relationship with the EU, but these amendments would send a signal that the Government will not seek to negotiate them, and instead pursue an outcome that the Government have ruled out.

I hope that noble Lords will accept our sincerity in our negotiating goals. I will also add, before noble Lords make a final decision, that I do not seek to give false hope that the Government will reflect further between now and Third Reading. I therefore hope that the noble Lords, Lord Kerr and Lord Wigley, will not press their amendments.

[Lord Kerr of Kinlochard]

I thank all noble Lords who have taken part in this fascinating debate. Some made speeches that were more predictable than others, and the Minister’s was a classic restatement of the position that the Government have explained all along; I am grateful to him for repeating so clearly what he has said so many times before.

I ought to pay tribute to my past—my various masters from the past—who are marking my homework so harshly. I owe the noble Lord, Lord Lawson, an apology. I am sure that he explained to the country at large the truth about the customs union and that he did it every day, morning, noon and night, but I am not sure that the country was listening. What I remember is the man who is now the Foreign Secretary telling the country, “Nobody is even talking about leaving the single market”. He published that the day after the referendum, having said it throughout the referendum campaign. So I exonerate the noble Lord—I have to; he was my boss.

As for the noble Lord, Lord Lamont, and a number of others, including the noble Lord, Lord Howarth, I ask them to please read what the amendment says. We are not asking for Britain to stay in the EU customs union—we cannot. As a non-member of the EU, we cannot be a member of the customs union. We are asking for an arrangement that enables us to participate in “a” customs union, and I say to the noble Lord, Lord Lamont, that it does not follow that we can only get the deal that the Turks got. At the time, Turkey’s main concern was the export to the EU of its walnuts. I do not believe that that would be the principal concern if the Government were to act on this and start negotiating for a customs union. I cannot answer the noble Lord, Lord Forsyth, but he is much better informed about Labour Party policy than I am.

In the course of my speech I was very worried to see the noble Viscount, Lord Ridley, nod enthusiastically. I hesitated, but I realised that it was only because I had cited Professor Patrick Minford. I will know not to do it again.

Although the Minister’s response was a beautiful restatement of government policy, it did not deal with any of the arguments advanced by those of us who tabled the amendment. The best argument made in the debate was that of the noble Lord, Lord Wigley. The customs union was not fully debated in the House of Commons as it dealt with this Bill. It is the job of the House of Lords to give the House of Commons the opportunity to debate whether we should seek a customs union. There are plenty of customs unions of various kinds between various countries around the world, and they are all sui generis. I do not know what terms we could get but we will never know unless we find out. I should like to test the opinion of the House.

--- Later in debate ---

[Lord Low of Dalston (CB)]

My Lords, I did not move my Amendment 11A because the noble Baroness, Lady Hayter, had already referred to it in such approving terms. I did not want to take up the time of the House unnecessarily but perhaps your Lordships might permit me a small indulgence to say something about the substance of the amendment. I am also grateful for the endorsement of my amendment by the noble Baroness, Lady Smith of Newnham.

If delegated powers are used to make changes, I underline the importance of construing the list of areas requiring the enhanced scrutiny procedure as including changes to human rights. As the Bill currently stands, such changes can be made without that added assurance. Many areas of human rights are currently protected by EU law, such as rights to privacy under the Data Protection Act 1998 and regulations made under it which give effect to EU law; children’s rights; and protection from trafficking. It is therefore essential that the list of areas requiring the protection of the enhanced scrutiny procedure is understood as including human rights protection in EU retained law.

[Lord Callanan]

My Lords, we now reach a point that has been of considerable interest throughout the Bill’s passage in Parliament: how retained EU law, once it forms part of our domestic law, will be amended and how those amendments can be scrutinised to ensure that rights remain protected. There is no doubt that retained EU law, including EU-derived domestic legislation, retained direct EU legislation and anything saved by virtue of Clause 4 will contain within it important rights and protections that are currently relied upon daily by individuals and businesses. As such, for the Bill to achieve its aim of continuity within UK law following exit day, it is crucial that these rights and protections are not diluted or weakened as we withdraw from the EU.

I believe that that is what the noble Lady, Baroness Hayter, aims to achieve with her Amendment 11, which seeks to put in place an enhanced scrutiny procedure for regulations made under powers that amend retained EU law in certain defined policy areas—both powers in the Bill and those that exist or will exist elsewhere. As we have heard, the policy areas covered are employment, equality, consumer standards, health and safety standards and environmental standards.

As I have said, I understand and support the noble Baroness’s intention to protect this law, and I and my ministerial colleagues have all repeated the Government’s commitment to effective parliamentary scrutiny and to maintaining the UK’s long-standing tradition of upholding the rights and protections in these vital areas. However, I believe the Government have already taken steps to address those concerns, potentially in ways that are even stronger than the noble Baroness’s amendment. Through the package of amendments that we tabled for Report, which will be discussed in more detail on a later day, the Government have actively and constructively responded to the concerns that have been raised in this House and have proposed putting in place suitable protections against the erosion of rights within retained EU law.

For example, by the powers contained in Clauses 7, 8 and 9, modifications to all retained EU law, not just in the specific policy areas listed in Amendment 11, will be subject to numerous scrutiny procedures, including where relevant the new sifting committees within both Houses. Ministers will also have to comply with a number of important statement requirements for each piece of secondary legislation, which will be published in the Explanatory Memorandum when the SI is laid, to explain fully why the instrument has been made for the consideration of Parliament and the public.

The Government, recognising and responding to the concerns on how retained direct EU legislation will be amended beyond the life of the Bill powers, have also tabled further amendments that address the use of existing and future delegated powers to modify this law. These amendments alter the circumstances and procedures concerning how it is or is not possible to amend retained direct EU legislation by other domestic powers, reflecting the hierarchy of EU law. EU regulations and rights that are saved by Clause 4, which are higher up this hierarchy and are likely to contain more fundamental rights, rules and provisions, will therefore be amendable in a way akin to primary legislation. EU tertiary legislation and decisions, on the other hand, which contain more technical and detailed provisions, will be amendable in a way akin to subordinate legislation.

I believe that in many ways those amendments can be seen to go a step beyond the noble Baroness’s amendment, in that they seek to protect all the rights and protections contained in EU regulations and those that are retained by virtue of Clause 4, not just rights within a particular policy area. I also believe the Government’s amendments represent a more effective approach. Referring to broad but undefined policy areas could produce unclear or differing views about which provisions of retained EU law would actually be covered. This would not only lead to uncertainty within our domestic statute book but risk creating significant litigation as individuals and businesses sought clarity about how retained EU law should be treated.

I look forward to discussing in detail the Government’s amendments on this subject during later days. I believe they strike the right balance between protecting retained EU law from erosion and allowing us sufficient flexibility to ensure that we can deliver an operative and stable domestic statute book. Having said that, beyond the Government’s amendment I cannot give false hope that I will reflect further on this issue between now and Third Reading, so if the noble Baroness wishes to test the opinion of the House, as I suspect she does, she should do so now.

[Lord Elton (Con)]

If this amendment is accepted, will it prevent the passage of the Minister’s amendment that covers the same ground?

[Lord Callanan]

No, I do not think they are mutually exclusive. I think the amendments can both stand.

[Baroness Hayter of Kentish Town]

I thank the Minister for his clear answer today. I wish the amendments he drafted were equally clear—I have had three very good lawyers sit and explain them to me. I have to say that they do not do what he says. There is not a hierarchy in status between EU regulations and EU directives, and the extra protection he has put in will not affect the directives. There are particular directives, such as the ambient air quality directive, the habitats directive and the working time directive, that are not covered by the government amendments. There is enhanced scrutiny for stuff coming over now, but for the future it does not cover those really important directives. I have had three different lawyers look carefully at his wording and, believe me, all three tell me that it does not meet the promise of the Prime Minister.

The Prime Minister said that we will bring over everything, but after that it will be for Parliament—not a statutory instrument but Parliament or the devolved Assemblies—to decide whether there is any change to working time law. The same is true for the environment. It is, I am afraid, not good enough to leave this to secondary legislation. We need to make sure that these really important provisions are safeguarded and that only primary legislation can amend them. I wish to test the opinion of the House.