Interchange Fee (Amendment) (EU Exit) Regulations 2018

Lord Falconer of Thoroton Excerpts

Tuesday 15th January 2019 Grand Committee

[Lord Falconer of Thoroton (Lab)]

My Lords, I missed the whole of the statement of the noble Lord, Lord Bates. I thought the beginning of the debate was at 3.30—which it was—and I arrived at 3.32. If the noble Lord, Lord Bates, takes the view that I should not intervene, I would quite understand. However, I am interested in this and I wonder if he would allow me to do so. Or perhaps the noble Lord, Lord Young, as the guardian of the procedure, will allow it. If he says no, I will accept that. I leave it to the noble Lord. I throw myself at the mercy of the Whips. Please say no if you do not want me to intervene.

[Lord Bates]

I am content of course to hear the noble and learned Lord, who is a senior Member of the House.

[Lord Falconer of Thoroton]

I am obliged. Is my understanding correct that there will be an impact assessment that covers a range of SIs—including this one—but it will be published after we have considered this?

[Lord Bates]

This specific SI, to which the noble and learned Lord refers, does not have a direct impact assessment of its own because it fails to reach the de minimis threshold of £5 million. Remember, we are seeking to transpose what already exists into UK law, and the costs of doing this are meant to be de minimis. A wider group of assessments is currently going through the regulatory reform process, which will look at the impact of these SIs as a group. This is one of potentially 45 affirmatives and 14 negatives which are coming through. That work will be helpful in satisfying noble Lords on this.

The noble Lord, Lord Tunnicliffe, asked whether the SI will be repealed if there is a deal—which, I underscore, we hope there will be. In the event of an implementation period—which will be delivered through separate legislation; the EU withdrawal agreement Bill—this legislation would not come into effect in March 2019 and would be delayed until the end of that period. It could be amended to reflect an eventual deal on the future relationship or a no-deal scenario at the end of the implementation period.

The Government re-laid the Explanatory Memorandum to include additional information requested by the Lords’ Secondary Legislation Scrutiny Committee on impacts. Therefore we do not consider it necessary to publish the de minimis impact assessment at this stage.

[Lord Falconer of Thoroton]

I am trying to follow this, but is the Minister saying that all of these no-deal regulations assume that there is a deal and will therefore be repealed by the EU withdrawal implementation Bill—which is a requirement under the European Union (Withdrawal) Act at the moment—to implement a deal, or is he saying something different?

[Lord Bates]

I am saying that the SIs we are dealing with derive their power from the EU withdrawal Act—in Section 8(1), as we have been through many times before. They are necessary because that Act, in whose passing the noble and learned Lord was an active participant, contains a repeal of the European Communities Act 1972. It will therefore be necessary to have something to supplement that. In the event of a deal it is anticipated that there will be an EU withdrawal agreement Bill, which would pass through both Houses, and within which provisions would be made to address the continuation of these arrangements into an implementation period. The noble and learned Lord is looking at me—

[Lord Falconer of Thoroton]

I am bewildered by this for the following reason. I understand that these regulations are required because if there is no deal, there is no implementation period. If there was an implementation period, everything would continue as before. Separately from that point, Section 13 of the EU withdrawal Act requires another Act of Parliament after a deal is approved by the Commons to give effect to the deal, whatever it is. I do not want to be too pressing but I am not getting clarity from the Minister about what the Government envisage—assuming we do a deal—in that Bill, which is required by the EU withdrawal Act. Will they simply repeal all these no-deal regulations? This instrument is a good example of the reason it matters. If it continues in force when there is a deal with a two-year implementation period, two regimes will on the face of it apply to the capping of the charges that can be put on consumer credit transactions via debit and credit cards. I may have misunderstood this but it is quite important that we know how the Government will prevent there being two regimes in practice.

[Lord Bates]

I do not think the noble and learned Lord has misunderstood it. He makes a fair point as to how this will operate. The clarification I offered in my previous comments is that the withdrawal agreement Bill, which we are talking about, will delay the need to implement the provisions and allow them to be amended or repealed. It effectively gives a choice as to how these SIs would be handled. This instrument would not be required or in force during the implementation period. In that event, current EU law would continue to apply. I think it was on that point that the noble and learned Lord sought an on-the-record response.

The noble Baroness, Lady Bowles, gave a helpful analysis of the situation with regard to why we did not cap interchange fees for UK card issuers. At the moment, the interchange fee regulations maintain symmetry for payment service providers. If HM Treasury applied the interchange fee caps vis-à-vis the EEA without corresponding commitments from the EEA, that would constitute a policy change. The noble Lord, Lord Tunnicliffe, has been consistently assiduous throughout our engagements on these matters in ensuring that there should not be—