Trade Bill

Lord Stevenson of Balmacara Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 23rd January 2019 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

16: After Clause 2, insert the following new Clause—
“Regulations under section 2: state aid
(1) If regulations under section 2(1) make provision in relation to the issue of state aid for the purpose of implementing a free trade agreement, then a statutory instrument containing those regulations may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.(2) The Secretary of State may not lay a draft of the instrument containing regulations under this section until—(a) he or she has consulted—(i) each devolved authority,(ii) public bodies, businesses, consumer groups, trade unions and non-governmental organisations which, in the opinion of the Secretary of State, have a relevant interest, and(iii) the public, and(b) he or she has laid a report of the consultation under paragraph (a) before both Houses of Parliament.”

[Lord Stevenson of Balmacara (Lab)]

My Lords, Amendment 16 in my name deals with state aid and whether it will continue under any new arrangements brought forward by the Government. It is essentially a probing amendment. I welcome the Minister to the Dispatch Box for his first response on the Bill. I look forward to working with him on this and related topics.

The reason for proposing the amendment is because we have very little information about what the Government’s intentions are on state aid, which is arguably a key component of all trading activity and can materially affect how and in what ways individual companies can operate and be successful within the home market and abroad. It has been operating since we joined the Common Market in 1972 and is a very strict and well-observed rule. It relates primarily to whether goods can circulate freely in the EU area, or the EEA, although there are some quite interesting exceptions, mainly on a cultural level, where changes are made relating to support for indigenous and widely spread cultures. Indeed, this country has benefited considerably from support for the arts, particularly film, theatre and television. State aid has also extended to fringe areas such as horseracing. For example, in France, it has been ruled that the support of a horserace betting levy system not unlike our own is a cultural exception to single market rules. That rule has been applied for the last couple of years, and is now being followed within the United Kingdom. It is an interesting area.

It appears that the Government have already decided that the existing rules will continue. Why was that decision made and on what statutory basis? Is there any opportunity for parliamentary procedure and process to be involved? It has also been announced that the Competition and Markets Authority will be responsible for ensuring trade rules within the state aid area. This was decided without any debate, discussion or consideration of alternative bodies. Again I ask: what was the statutory basis for that and is there an opportunity for parliamentary scrutiny, now or at some future stage?

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[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join others in thanking the noble Lord, Lord Stevenson, for moving this amendment. In response to my noble friends Lord Trenchard and Lord Lansley, I think that the noble Lord intended this as a probing amendment, as he said, to give the Government the opportunity to put some issues on the record. It has been very timely, not least because under the EU withdrawal Act, mentioned by the noble Lord, Lord Purvis, on Monday we laid the regulations on state aid before the House. That 77-page document will now make its way through the rigorous scrutiny of the Joint Committee on Statutory Instruments and then the Secondary Legislation Scrutiny Committee. Then, of course, it will be subject—because it is by the affirmative procedure—to scrutiny later in this House. For that reason some of the specific issues referred to by my noble friend Lord Lansley and the noble Lords, Lord Purvis and Lord Lea, might be usefully dealt with in that area.

Clause 2 is not about making changes to existing agreements, and the regulations cannot be used for future free trade agreements, as my noble friend Lord Lansley rightly identified. In answer to the noble Lord, Lord Stevenson, we also need to recall that the Competition and Markets Authority has been given this responsibility domestically, across the UK jurisdiction. When it comes to free trade agreements and the EU, the Trade Remedies Authority would undertake that responsibility.

To provide further reassurance that we do not expect to need to use these powers to set up a domestic state aid regime, I can inform the Committee that we have laid the instrument I referred to. This instrument, the State Aid (EU Exit) Regulations 2019, will be made under the European Union (Withdrawal) Act 2018 and establish a domestic state aid regime that will work for the whole of the UK at the point that this is required. No doubt Noble Lords will be offered an opportunity to scrutinise this in detail.

Subsection (2) of the proposed new clause requires the Government to consult relevant stakeholders prior to laying implementing regulations under Clause 2 which make provision on state aid. We have been clear that proportional consultation is of the utmost importance to us. We have engaged with a large number of stakeholders through our programme of trade continuity. The Government will always consult stakeholders as appropriate, so to set out specific provisions concerning consultation on state aid is not needed at this stage. The Bill already requires the Government to lay reports before Parliament in which we will provide detail of any real-world changes to free trade agreements. These will be laid before the agreement is ratified or regulations are laid under the Clause 2 power in relation to that agreement, whichever comes first.

Any significant differences in agreements that are relevant to state aid would be identified in these reports and Parliament would then be in a position to take an informed decision in relation to the making of the regulations or the conduct of the ratification process. I say again that we do not expect to need to make regulations under this power in order to implement state aid commitments in existing free trade agreements.

I turn to some of the specific points that were raised. My noble friend Lady McIntosh raised the horserace betting levy and the tripartite agreement. This is something we will come to in Amendment 48 in a later group, so perhaps I can leave it to the lead Minister, my noble friend Lady Fairhead, to respond, but the relevant provisions of the horserace betting levy were notified to the Commission and approved by the Commission under state aid rules. I confirm that the TRA—the Trade Remedies Authority—will not be responsible for state aid prioritisations in FTAs. It will be a matter for individual free trade agreements to establish a dispute mechanism.

[Lord Stevenson of Balmacara]

I was going to ask the Minister about the TRA—I am glad that he tried to clarify what he had said, because he did raise a doubt about what was arranged. Have I got it right? I would be grateful if he could confirm that we are proceeding on a continuity basis and using the withdrawal Act to ensure that, under the statutory instrument he mentioned, the existing set of rules that currently apply, because of EU directives and regulation, will be applied under UK law after exit day. Therefore, that process does not require any further discussion or debate, because of the reasons he has given, and he is not saying that in future trade agreements there will be a specific role for state aid rulings by the TRA—that will remain with the CMA—but there will be an opportunity to discuss that broadly when we get to the point at which we are, post continuity, talking about the real world and what is actually going to happen in trade. Is that right?

[Lord Bates]

That is correct. I am grateful to the noble Lord for setting that out. My noble friend Lord Trenchard mentioned the Government’s commitment to the state aid system. That point is contained in Command Paper 9593, The Future Relationship between the United Kingdom and the European Union, which says in section 1.6.1:

“The UK has long been a proponent of a rigorous state aid system—this is good for taxpayers and consumers, and ensures an efficient allocation of resources”.


Moreover, the political declaration which accompanies the withdrawal agreement points out in section XIV, paragraph 79:

“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards”.


That will all be fleshed out as the future economic agreement is worked on. Again, I thank the noble Lord for the opportunity to clarify some points on the record.

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[Lord Stevenson of Balmacara]

I am grateful to all those who have contributed to this debate. It was indeed a probing amendment and an attempt to elicit a series of responses from the Minister. We have those on record and I am grateful to him. Having said that, we have raised one or two issues that need consideration in the non-continuity mode, if we ever get to that point, about exactly why we are doing what we are doing, how it might be modified in future, and what the appropriate regulation would be. The point made by the noble Lord, Lord Purvis, is absolutely right. We have to avoid getting ourselves into the wrong side of the argument that relates to engaging those who have trade responsibilities. There will be significant and important trade responsibilities when they eventually end up with Scotland, Wales and Northern Ireland, and they should not be excluded from proper consideration and debate. With that, I beg leave to withdraw the amendment.

Amendment 16 withdrawn.

Moved by

[Lord Stevenson of Balmacara]

17: After Clause 2, insert the following new Clause—
“Regulations under section 2: Joint Ministerial Committee
(1) In making regulations under section 2, the appropriate authority must have regard to, and take into account, the views expressed by a Joint Ministerial Committee appointed by the Prime Minister.(2) The Prime Minister may, for the purposes of this Act, determine that the Joint Ministerial Committee shall consist of representatives of the governing authorities of the United Kingdom, Scotland, Wales and Northern Ireland.”

[Lord Stevenson of Balmacara]

My Lords, we are moving to a point that has already been raised and given a small trailer by the noble Lord, Lord Purvis. We need a system in place, although I am sure that the response from the Government at this stage will be that this is not necessary for continuity issues. However, we have already seen that there will be issues around trade and related matters for which we need to be sure that structures are in place that will allow for those resolutions.

Amendment 17 seeks to place a duty on the Government to consider a formal structure under the joint ministerial committee system that would allow debates on trade—particularly future trade arrangements, but I think other issues as well—to be dealt with in a systematic, transparent and trustworthy way. In that sense, I do not think that we differ from where the Government would like to be. What we lack is any understanding of where the Government are on this matter and what negotiations are coming forward. This is a probing amendment to try to make sure that we have some sense of that as we go forward.

In an attempt to help the Government, the noble Lord, Lord Purvis, and I have also put down Amendment 76 as a way of expressing in the Bill what the different agencies involved in this can and cannot do. Currently this is dealt with by a convention known commonly as the Sewel convention, although it has been overtaken by other legislative approaches. It attempts to set out, in this Bill at least—although it may apply to other areas—a set of rules allowing certainty on under what conditions and with what powers the UK, in operating its reserve powers, may or may not legislate on devolved matters where it is agreed that responsibility lies with the devolved areas.

I understand fully that the Minister will feel that many of these issues are subject to discussions elsewhere that are probably way above his pay grade. I do not seek to diminish him in any respect with that, but we want to flag up the importance of this matter to our trading relationships, not just because trade is important but because we are moving into an era where, irrespective of how and under what conditions we move from our current position with the EU, trading responsibilities will be applied in Scotland, Wales and Northern Ireland in a manner that has not been seen before. Issues that are specific and germane to those countries will be raised. We do not have a robust structure under which this can be resolved, and it is time for us to move forward on that. I beg to move.

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[Viscount Younger of Leckie]

I can help the noble Lord. I was very careful to use the word “forum”—but perhaps I should have used “fora”, which of course is the plural. The reason for that is that the process is designed to mirror what has worked with the EU up to now. We want to replicate the terms that are used for EU negotiations by not calling it a joint ministerial committee. But I understand the intention behind the noble Lord, Lord Stevenson, using that term.

[Lord Stevenson of Balmacara]

I am on the same page as the noble Lord, Lord Purvis. Why is it so complicated? The joint ministerial committee system has, as he said, worked well for more than 20 years. It provides an opportunity for those who are required to be present around the table to sit down, discuss and arrive at conclusions. In a debate on an earlier Bill, the noble and learned Lord, Lord Mackay of Clashfern, suggested a way of developing that into a formal structure within which there would be appointed chairs or elected chairs and rotating responsibilities. We seemed to be heading down that route, but now we are talking about this rather curious IGMF, which I had not heard of before. It is nice to know that it does indeed exist and may be working on EU matters. But I have always understood the relationship around EU matters as being—as the noble and learned Lord, Lord Mackay, picked up rather cleverly—around a settled set of responsibilities, where there is not the problem of geography meeting functionalism. That is the problem here, because as soon as we have a situation where the responsibility is devolved because it is not reserved, and there is a need to arbitrate and barter out the various competing interests across the nations of the United Kingdom, there has to be some formal structure. I do not think a forum provides that.

[Viscount Younger of Leckie]

We may be dealing with semantics here, but I will certainly write to the noble Lord, Lord Stevenson, and the noble Lord, Lord Purvis. My understanding is that there is a reason, but it is not a particularly big reason, which is that the difference between a joint ministerial committee—the expression that the noble Lord, Lord Stevenson, has just used—and a forum is that for a forum the devolved Administrations are seeking and are getting more regular and frequent conversations with us in the UK Government. I think a letter should clarify that.

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This follows a long-standing convention between the UK Government and the devolved Administrations. However, to place this convention in statute, as the amendment seeks to do, would be legally unworkable. It would lead to numerous and complicated issues around the legal interpretation of “not normally”, as was found in the 2017 Supreme Court judgment on the Miller case. Along with my commitments to the Committee that we will abide by the existing convention, I hope that this provides sufficient assurance for the noble Lord to withdraw the amendment.

[Lord Stevenson of Balmacara]

I am grateful to the Minister for that full reply. I am looking forward to the letters, which I will read very carefully.

It is sufficient to leave the position on Amendment 17 as it is at the moment. It is more complicated than can be dealt with within the confines of the Trade Bill. It needs a much wider conspectus of views and to be informed by other debates elsewhere. The principles that we have been articulating are important. I hope the Minister recognises how valuable they will be within what appears to be the Government’s view that rolling forward existing trade arrangements on the continuity model will be uncomplicated and not difficult. I have my doubts—“I hae ma doots”, as I would normally say. Hansard will not necessarily pick this up.

The key is: how does it work in practice? It is really important to use our words carefully, as the Minister has done, to assure ourselves that we are not getting into exactly the same position as we did on the withdrawal Bill. In effect, he said that the Government will not normally legislate in areas that are devolved. Of course, the key is: what does “normally”’ mean? How exceptional does it have to be before we see an extraordinarily difficult situation leading to contests between the two agencies? He went on to say that they would not do so without the consent of the devolved Administrations. Consent is a crucial word. The noble Viscount, Lord Trenchard, used the word “consult” as if that took both meanings, but it does not. Consult is one thing; consent is so different. We have to be sure exactly where we are. The discussion and debate around this would then result in an agreed position between both Parliaments as to how it would operate in practice. That is the Sewel convention.

If we accept everything that has been said in this debate—and we will get contributions on other Bills and issues of policy as they come forward—why do the Government not look very carefully at the wording of Amendment 76? It was provided to us by the Welsh Government as a proposal for reaching a point of unanimity on this issue. Why is it not appropriate to put it in this Bill, or, if not, in some future Bill very closely aligned to this? I think it will be required. My guess is that we will need it quite soon. It is not legally unenforceable. It is what we do. So let us get it right. I beg leave to withdraw the amendment.

Amendment 17 withdrawn.

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[Baroness Fairhead]

My Lords, I know the European process in outline; I cannot say that I understand it in the depth that the noble Lord, Lord Hannay, does, given his experience in that area. I want to differentiate between the continuity agreements and future trade agreements. Because we are talking about rolling over existing agreements, we expect to replicate the effects as closely as we can, so as not to disrupt trading patterns, so this is a different type of progress report. The noble Lord makes an important and valid point about the scrutiny of future trade agreements and we will discuss that later in the debate.

[Lord Stevenson of Balmacara]

I go back to an earlier question asked by the noble Lord, about whether or not the Government are in a position to notify those who are directly involved in this in a no-deal situation, which we all hope does not happen but in which we are out of the EU at 11.01 pm on 29 March, to be accurate. What conditions need to be satisfied before those who are directly involved in trade on that day and at that time get access to information about the proposed tariff arrangements? Absent that, we are talking about a very short period for those who have businesses to organise, decisions to make and loans to raise, as has been said. The other half of this is that if we are talking about continuity arrangements at that stage, when will we be in a position to know exactly how many countries are ready to do a deal with us at 11.01 pm on 29 March, how many are not and how many will take time to get their own arrangements sorted? Without that information we are not really in a position to judge whether or not the Government are making a good fist of this.

[Baroness Fairhead]

My Lords, on the 11.01 pm—or one minute past midnight—point, technical notices have already been sent out and no-deal planning has been ramped up, as the noble Lord will have seen in the Prime Minister’s announcement. Communications are planned for businesses and there are training programmes to make sure that the Civil Service and various departments are ready with information as required. Clearly, our primary focus is on achieving plan A and a deal, and therefore this is contingency planning, but that planning has been ramped up in the event—that we do not want—that there is no deal. I cannot say the exact moment that those notices will come out but I understand the noble Lord’s concern, and businesses’ concern, about what will happen in the following hour. Obviously, that will be taken into account.

As for third countries and where they are, I do not think I can add to what I said, which is that we are actively engaged and if there is a deal followed by an implementation period, we will be an awful lot more comfortable about the process.

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The Government and Ministers from the department are rightly banging the drum about the importance of trade agreements post Brexit, and about how leaving the EU will provide us with new opportunities, but these future trade agreements will not be a success until the Government lay down a clear strategy for how businesses, a wide range of stakeholders and Parliament will be involved and also ensure that this is clearly communicated so that we all know what is happening and what our own role will be. It is absolutely essential that the Government and the DIT set out their thinking about how they will keep Parliament, businesses and other stakeholders informed, both about the current negotiations and later about new trade negotiations and their likely effect. Thus far, I have not been very reassured about what is happening. I hope that the Government will think again about this aspect and that the Minister will come back, whenever Report takes place, with some more substantive provisions for this Bill, in keeping with the importance of trade agreements. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, my noble friend has done us a great service in introducing this amendment with considerable verve and in such detail that nobody feels it necessary to pick it up. I put on record that we support what she is saying. There must be an advantage in having a proper external scrutiny system. These things should be done with independence and a wider concern for the issues than can be done from internally within the department. My noble friend makes the point—others have made it before—that we have a long way to go if we are to emulate the EU in its current practices, let alone try to get best practice going. I hope the Government, if they cannot accept the wording here, will at least take the sentiment behind the amendment and think about how that can be brought forward, both in the narrow work required in the department and its relations with Parliament but also in trying to improve the way this information is made available to the wider world.

Also in this group, I have given notice of my intention to oppose Clause 3 stand part. The reason is not directly related to the amendment tabled by my noble friend Lady Henig, because the substance of what she proposes is very much in line with the work done in the Commons to try to improve the reporting requirements, and I do not dissent from that. My reason for giving notice of my intention to oppose Clause 3 stand part is that later in the Bill we will discuss the broader question of what happens when we are talking not about continuity but about free trade agreements more generally. At that stage I have Amendment 33, which gives in some detail a possible way of doing this. It is certainly not in any sense meant to be the prescriptive answer, but it does raise all the issues raised within the terms of the current procedures under Clause 3. When it comes to later amendments, I will also talk about Clauses 4 and 5.

[Baroness Jones of Moulsecoomb]

My Lords, I should have stood up earlier, but I was being polite. It seems the system set out in this Bill has been rendered obsolete by the passage of time and the sheer urgency with which the Government now have to act. The amendments from the noble Baroness, Lady Henig, do a good job of trying to plug some of the gaps, but I really think the Government have to go back to the drawing board on all of this. A government amendment is needed on Report that proposes a realistic set of procedures that can be used without undue delay while ensuring proper safeguards and accountability. This should not be a battle but something we can all work on together. This Bill has dragged on for so long that we all have the benefit of hindsight. A quite prescient question has emerged: where will the Government ever find time to use the procedure set out in Clause 3? I really think we need a lot more drafting on this Bill so that at some point we might get it on to the statute book.

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[Baroness Henig]

My Lords, I will be extremely brief—I am sure that noble Lords will be happy about that—in moving Amendment 22 and speaking to Amendment 23. They are two very short probing amendments for the particular circumstances when Ministers do not feel the need to lay a report before the House. Once again, given the importance of trade agreements and the need for scrutiny, this is something that the Government need to consider carefully. Can it really be right for the Government to lay regulations before Parliament without informing us what they are and what impact they might have?

We can deal with the matter fairly straightforwardly. The Government will know in advance of the proposed changes to an agreement, not just at the point of laying it. There is therefore no reason whatever why we cannot be told what the change is at the time, as part of whatever reporting system there is. That is the purpose of Amendment 22.

In relation to Amendment 23, I say that the phrase “as soon as possible” is far too vague. I appreciate that the Government have many issues to consider and to juggle, but they should have the means to tell us what is being proposed. We need to know within a clear timeframe so that we can scrutinise the Government effectively. I have to hear a convincing reason from the Government as to why they need the wide-ranging powers under this clause. I therefore propose these amendments to seek further information from Ministers, and to signal the kind of openness and levels of scrutiny that I am sure Parliament will demand in terms of both these rollover agreements and the new trade agreements. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, once again I support the amendments of my noble friend Lady Henig; I will also speak against Clauses 4 and 5 standing part of the Bill. Counterintuitively, I will deal with Clause 5 stand part first, simply because it follows exactly in the same vein as the reasons I gave for suggesting that Clause 3 should not stand part. Clause 5 deals with reports to be laid with regulations under Section 2(1). In an expanded, more amplified and better and more rounded policy dealing with both the continuity of free trade agreements and the new free trade agreements, we would have a completely different system sitting in place, so Clause 5 would be otiose, which is why I put this forward. I will not press this and I do not need much response from the Minister because we will return to this issue later in group 13.

However, I wonder about Clause 4. It seems at a superficial level to give the Government a “get out of jail free” card in relation to any reports that they might feel obliged to make, particularly if they are expanded in terms of my noble friend Lady Henig’s original proposal under Clause 3. Clause 3 states:

“Before the United Kingdom ratifies the proposed agreement, a Minister … must lay before Parliament a report which gives details of, and explains the reasons for, any significant differences between—


(a) the trade-related provisions of the proposed agreement, and

(b) the trade-related provisions of the existing free trade agreement”.

But Clause 4 states:

“Section 3 does not apply to a free trade agreement if a Minister of the Crown is of the opinion that, exceptionally, the agreement needs to be ratified without laying before Parliament a report which meets the requirements”.


I stress that phrase,

“a Minister of the Crown is of the opinion that”,

and the use of “exceptionally”, which is an interesting word. In other words, you do not have to do it if you have sufficient gravitas and the ability to convince Parliament that you are not of that opinion and that it is exceptional, so you can get away with it. That is not satisfactory drafting.

This is not a good clause to be in a Bill of this nature. It certainly does not meet the questions that we have been raising about proper transparency, accounting and independence of reporting. When the Minister comes to reply, I hope that she will consider taking this away. If she cannot bring herself to agree that this needs redrafting, perhaps she can write to me explaining why it does not.

[Baroness Fairhead]

My Lords, I too will try to give a short response to the amendments before us, and first on Amendment 22 tabled by the noble Baroness, Lady Henig. Clause 4 creates an exemption from the reporting requirement so that, in exceptional circumstances, the Government may seek to ratify an agreement without having first published the associated report on changes made to it. Let me categorically reassure noble Lords that we intend to draw on the reporting exemption provided for in the Bill only if we are in exceptional circumstances.

I am sure the Committee will agree that we may find ourselves in exceptional times. We cannot predict the speed with which continuity agreements will be ready for signature. Moreover, the exemption is narrow. It does not remove the requirement for a report to be laid. It simply provides a little leeway to enable a trade agreement to progress to avoid a cliff edge. The Government would still be required to lay a report as soon as possible following ratification. I hear the noble Lord, and will reflect on the drafting, but in a sense it was because of the uncertainty about the speed.

Amendment 23 would ensure that, if this exemption is invoked, the report would have to be laid no later than 10 days after ratification. Again, to be clear, we have drafted this exemption for use in only the most urgent of circumstances. If we were to need to rely on this, it would be necessary to ensure that we could continue to operate in the most uncertain of contexts, and avoid that cliff edge.

Clause 5 will ensure that the Government lay their report 10 days in advance of using the Clause 2 power to implement any obligations of a continuity agreement. That will ensure that Parliament is wholly informed about how we intend to deliver continuity for an agreement before it is required to consider implementing legislation. If we removed Clause 5, as the noble Lord, Lord Stevenson, suggested, the Government would not be bound in any way to report, so we should set that aside.

Before I conclude on this point, I would like to inform the Committee about an amendment that the Government will bring forward on Report. As the Committee is aware, the purpose of the Government’s trade continuity programme is to seek continuity of the effects of existing EU free trade agreements as far as possible as we leave the EU. The vast majority of these existing trade agreements, which we are part of as an EU member state, are already in operation and have been scrutinised by Parliament. Let me make it clear to the Committee that we do not expect to need to change existing domestic equalities legislation as part of this programme. In the unlikely event that we choose to make minor or consequential changes to this legislation, we will aim to ensure that this does not result in reduced protection against unlawful discrimination or diminution of equality rights.

However, to ensure suitable transparency and accountability on this particularly important issue, we intend to provide that a ministerial Statement is made alongside any draft statutory instrument laid under the Clause 2 power. The Statement would outline whether the statutory instrument repealed, revoked or amended any provision of the Equality Acts 2006 and 2010 or any subordinate legislation made under them. In addition, I am happy to confirm that the reports under Clause 3 will explain any changes that would be required to equalities legislation as a result of our shift from an EU to a UK agreement if, and I stress if, any changes are needed. My officials have agreed to work together with the Equality and Human Rights Commission—and I put on record our thanks for its efforts in helping us to design the process so far—on designing the content and templates for these reports.

I hope that that reassures the Committee and I ask the noble Baroness to withdraw her amendment. Additionally, I commend that Clauses 4 and 5 stand part of the Bill.

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Moved by

[Lord Stevenson of Balmacara]

24: After Clause 5, insert the following new Clause—
“Customs union
It shall be the objective of Her Majesty’s Government to take all necessary steps to implement an international trade agreement which enables the United Kingdom to participate after exit day in a customs union with the European Union.”

[Lord Stevenson of Balmacara]

My Lords, this amendment, for which I am grateful for the support of the noble Lords, Lord Patten of Barnes, Lord Purvis of Tweed and Lord Kerr of Kinlochard, has a long and distinguished history in that it has been discussed over a number of years. In moving it today, I first apologise for the drafting. It was devised by committee, which of course is never the right way to go about these things; it was a very good and small committee, but nevertheless the drafting reflects some of the tinkering involved. It probably does not stand the test of time and, if we were to return to this at a later stage—and we might want to do that—slightly different wording might emerge. But in proposing it I am in no sense worried about the central principle. I hope to spend a little time introducing the amendment and will then listen to the debate that comes forward.

The question of whether the UK should remain in a customs union has become an issue around which many people can agree. It does not involve them all, but includes many MPs, businesses, trade unions and the wider public. The reason is not hard to find. It would provide the certainty that we need to protect UK jobs, secure opportunities for our industries and create prosperity at home. It would also give us a voice, front and centre, at the world’s most powerful trade negotiations and help to ensure that global goals on development, climate change and the natural environment are met and continue to be met. On Northern Ireland, Ministers are bending over backwards to explain how exactly the backstop they have agreed to and have been supporting will actually work in practice. But at a stroke, a customs union would properly guarantee the peaceful legacy of the Good Friday agreement. That alone must make it a most important issue.

At present, the Government are steadfastly ruling out a new customs union. However, the trade unions, the CBI and other business interests are highly supportive of the idea, saying that a new customs union will protect jobs. The Scottish and Welsh Governments are also on board, as are a growing number of members of the Cabinet. At a time of seemingly insurmountable division in our country, the opportunity to unite in common purpose should be grasped with both hands. I beg to move.

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[Lord Bates]

The Committee will come to rules of origin shortly, but on that point, that is the reason why, in the agreement that we are proposing—the deal that is on the table—we propose that to ensure that trading goods between the UK and the EU remains frictionless in the UK, there will be no routing requirements for rules of origin on trading goods between the UK and the EU. What we are talking about with Israel is consistent with that.

[Lord Stevenson of Balmacara]

My Lords, it is impossible to summarise what has been a very wide-ranging discussion. It certainly ended up in a rather more heated and fetid atmosphere than I expected when we set off. I have to say to the Minister, for whom I have the greatest respect, that it is fine to listen to what he is saying about what we ought to be doing and how we should do it, but he should point behind him when he is talking, because we do not get the arguments in the same way.

We started off with a description of hell, and what it might be to be listening to the same debates and discussions. I think we have justified the argument that we have moved on. The interesting thing that I took from this debate was how positions are being nuanced and changed as we move forward. There is an attempt from all sides to try to find common ground, and I wish that had reached all of our speakers. We are in a place that might be redolent of hell, with the colours that surround us and the flames leaping around, but I actually quite enjoyed being here. I am bound to go to hell anyway because of my previous life, so if this is what it is like, I quite like the prospect. But not yet—not yet. I call on the aid of the right reverent Prelate at this moment.

So what have we got out of this? We have got a sense around the Committee that there is something here that needs to be pushed to the next stage, and the Government should take away from this that this is a matter that will not go away, irrespective of what happens next week. By the time we get to Report, I am sure this will still be bumping around. I hope that by that stage we will have picked up on some of the points made by the noble Lord, Lord Lansley. We are getting hung up on what we mean by “customs union”, when we should be thinking behind the name—thinking about the process. It may be that we are likely to be close to, if not necessarily aligned with, EU current practice—and we ought to be, because, as my noble friend Lord Liddle said, size matters in these negotiations. Size matters, and always will, in any trading arrangement.

We are not really talking about tariffs. Tariffs are probably the 20th-century problem. The 21st-century problem is the regulatory barriers, and working on services to try to ensure that there is proper and fair trading, and that the issues at the heart of negotiations are rights and responsibilities, and the opportunities for providing benefits all round—a sort of development agenda meets trade, and coming together for the benefit of both.

The short, sharp intervention by the noble Viscount, Lord Ridley, was the most difficult to answer. I hope that, if he has the time, he will come back for the next group, when we will talk about some of these issues in more detail, and I will be able to give him a response. However, the truth is that I am quite happy with where the EU has got to with some of these trade deals. They are very good, and they would not be achieved by any smaller country on its own. We must not lose them, whatever arrangement we finally come to.

[Viscount Ridley]

The noble Lord has mentioned size twice. Can he explain why Chile, which is a smaller country than the European Union, has more trade deals with bigger countries than the European Union has?

[Lord Stevenson of Balmacara]

Maybe Dr Fox has an analogue that we do not know about, hopping around. “I do not know” is the answer.

[Lord Patten of Barnes]

Perhaps I can help the noble Lord. One reason why Chile has such good agreements around the world is that the agreement between it and the European Union—which is a very good agreement—was negotiated by your humble servant, as well as by others.

[Lord Stevenson of Balmacara]

In a spirit of mutual congratulation, I think it best to say that on this occasion we will withdraw the amendment—but we will probably want to look at the debate carefully and think about the wording of a future amendment. The subject will come back.

Amendment 24 withdrawn.