European Union (Withdrawal) Bill

Robert Neill Excerpts

Committee: 1st sitting: House of Commons
Tuesday 14th November 2017 Commons Chamber

[Robert Neill (Bromley and Chislehurst) (Con)]

rose—

[Sir William Cash]

I am sure that my hon. Friend will be making this point, but I will try to anticipate it. There are circumstances in which the pooling of sovereignty by virtue of, for example, NATO is claimed to be a genuine pooling, but it is not, because it is possible to withdraw from it. The whole point about the European Communities Act is that it is not possible to withdraw from it except by repealing it in this manner. That is what we are doing now.

[Robert Neill]

My hon. Friend has strongly emphasised the importance of the sovereignty of the House, and I agree with him. Is it not all the more important that, as we leave, this sovereign House should have a meaningful vote on the terms on which we leave, rather than there being a “take it or leave it” vote at the end of the process? Is that not the ultimate expression of sovereignty, and will my hon. Friend therefore support it?

[Sir William Cash]

The answer is that I am supporting the outcome of the referendum, which, by virtue of our sovereign Acts of Parliament, we decided that we would pass over—

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[Yvette Cooper]

My hon. Friend is right. That was the evidence we heard. Parliament has a responsibility to have a contingency plan. Whatever it is that we hope might happen over the course of the next 12 months, we have a duty to ensure that we have plans in place for every eventuality and that Parliament itself can take some responsibility.

Right now, with the Government’s amendments made and without my amendment, it would theoretically be possible for us to just drift towards exit day without any substantive opportunity for Parliament to step in perhaps to amend the withdrawal terms in the Bill or maybe to require the Government to change their plan or to go back and negotiate some more. That would be up to us in Parliament to decide, but we will not get the chance to decide under the Government’s current plans.

[Robert Neill]

Has the right hon. Lady noted the sensible comments of the chairman of the Policy and Resources Committee of the City of London corporation? While an orderly Brexit might not be the desired outcome for the right hon. Lady and I, an orderly Brexit with a proper transition and with this House having a proper say is manageable for our financial services sector. However, a disorderly Brexit that was the result of our inability to extend negotiations for a short period if need be, for example, would be a disaster for this country and is regarded by some firms as being on the same level as the threat to cyber-security. On that basis, is it not foolish for the Government or the right hon. Member for Birkenhead (Frank Field) to try to put a leaving date on the face of the Bill?

[Yvette Cooper]

I share the hon. Gentleman’s concerns. As Select Committee Chairs, he and I have both heard evidence about security and wider issues, and I also share with him my personal views about the importance of having a transition period and a smooth process. To be honest, whatever people’s views on whether there should be a transition and on how we should respond to different negotiating outcomes, it should still be for Parliament to debate and to decide before exit day, not after. That is what Parliament should be for. Frankly, the Government would be irresponsible not to give Parliament the opportunity to debate and take a view on the terms and on the timing once they have been agreed.

There is a con in what the Minister said earlier, because the Government actually do recognise that there may be circumstances in which exit day has to be changed. The Minister said that clause 17 will not apply and that somehow it will not allow the Government to change the exit day through regulations after it has been agreed in the Bill, but that is not the advice I have had—it is not the advice the House of Commons Library gave me this afternoon, for example. In fact, the combination of clause 9 and amendment 383 will still allow Ministers to change exit day, if they so choose and if they think it appropriate. That is the impact of the Henry VIII powers throughout the Bill.

We understand why Ministers might want a provision to be able to come back and say that exit day needs to change because we have reached the 11th hour, because the negotiations need to be extended by an extra month or because the process needs to be changed. Ministers have kept that power in the Bill for themselves, but why should the power be reserved just for Ministers? Why cannot Parliament have that power, too? That is the flaw at the heart of the Bill. If in unforeseen or difficult circumstances Ministers need to change the timetable, they can, but Parliament will have no choice, no say and no ability to do so.

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[Mrs Gillan]

My right hon. and learned Friend, who is also my constituency neighbour in Buckinghamshire, knows that I have been preoccupied with this for some time. Of course, there is also that principle of UK law called legitimate expectation, which is based on the principles of natural justice and fairness, and seeks to prevent authorities from abusing power, and I think that that is most important.

Essentially, this principle ensures that the rules cannot be changed halfway through the game if an individual had a reasonable expectation that they would continue. Changes to UK law can only happen prospectively—in other words, they can only apply from a point in the future onwards—and cannot be applied to the past. This means that anyone lodging court proceedings can do so knowing that the rules that applied at the time they lodged those proceedings will apply to their case. If that was not so, the law could be retrospectively changed in favour of the state.

[Robert Neill]

My right hon. Friend is making a most powerful case, and I absolutely agree with her about the need to deal with the Francovich issues. She serves as a member of the Parliamentary Assembly of the Council of Europe, as I did in the past; does she agree that to leave people without a remedy in these cases, and to breach that important rule of law of legitimate expectation, would hardly be consistent with our people being given their full entitlement under our commitments as part of the Council of Europe?

[Mrs Gillan]

My hon. Friend served with great distinction on the Council of Europe and I am thrilled to have been put back on the Council of Europe today, along with several colleagues across the House. I happen to think that this is extremely important, as is our membership of the Council of Europe, and my hon. Friend is right that that situation would be looked at with some suspicion by the other 46 members of the Council of Europe. For that reason, it is important that if we change the law through this Bill, changes that result from the Bill only apply from a point in the future, so that individuals can rely on the law as it stood up to the point when the law changed.

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[Dominic Raab]

The Chair of the European Scrutiny Committee eloquently makes his powerful point. We need to avoid bear traps, cliff edges and potholes, and that is what this Bill does. That is a common goal that we all ought to be trying to pursue, on both sides of the House—whether we voted to leave or remain. I am not convinced that the amendment of the Chair of the Justice Committee would achieve that aim. Despite his best intentions and his rather ingenious drafting, I fear that the amendment would, in practice, create considerably more legal uncertainty, not less.

[Robert Neill]

I will not claim credit for all the ingenuity of the drafting, as I hope I shall make apparent in due course, but what if I told my hon. Friend that it is based on the work of the International Regulatory Strategy Group—one of the most distinguished groups of practitioners in this field? Would he think again about totally dismissing the thing, recognise it as a serious point that needs to be addressed here and engage with it?

[Dominic Raab]

I absolutely will not dismiss it. I am happy to think twice, thrice and as many times as my hon. Friend wants to talk to me about it. But let me make a couple of points to illustrate the risk of uncertainty that his amendment would cause. Subsection (A3) of amendment 357 begs the question of whether retained EU law restrains acts or omissions that start within the UK but that may have effects outside of it. Equally, subsection (A5) conflates functions conferred on public bodies with those of the Secretary of State. They are not the same thing. I sense that, underpinning this, he is trying to legislate in advance for unknown unknowns. I understand that temptation but if we go down that path, there is a countervailing but very real risk of increasing, rather than mitigating, the legal uncertainty. With respect, I hope that he can be persuaded to withdraw his amendment.

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[Robert Neill]

In order that I might reflect on that as the debate goes forward, perhaps my hon. Friend would like to give me an example of the circumstances in which he thinks my amendment might increase the legal uncertainty, rather than assist it. I will obviously listen to that.

[Dominic Raab]

Well, I have just given two examples regarding subsections (A3) and (A5) of my hon. Friend’s amendment, but I would be happy to sit down with him and give some illustrative examples of how, in practical terms, I think that this is not actually the avenue or legal cul-de-sac that he wants to go down.

If my hon. Friend will forgive me, I will now turn to some of the other amendments in order that I give them due consideration in this important debate. In particular, I want to turn to amendment 278 and linked amendments 279 to 284 concerning exit day, which are from the Leader of the Opposition and other hon. Members.

The Prime Minister made it clear in her Florence speech that

“The United Kingdom will cease to be a member of the European Union on 29 March 2019.”

It is clear that the UK will leave the EU at the end of the article 50 process—some of the suggestions around the caveat are wildly unrealistic. The Government have tabled an amendment to make sure the drafting of the Bill is crystal clear on this point and to give the country—businesses and citizens alike—additional certainty and a measure of finality on it.

These amendments would replace that clarity and finality with uncertainty and confusion. They would alter the meaning of the term “exit day” in the Bill, but only for the purposes of the provisions of clause 6. For those purposes, but for those purposes alone, the UK would not leave the EU until the end of the transitional period. I am afraid that that would create damaging legal uncertainty, and the amendments are flawed. They would have the effect that, for the duration of any implementation period that might be agreed—and we hope one will be, sooner rather than later—all the important provisions on the interpretation of retained EU law set out in this clause could not apply; they could take effect, if I have understood correctly, only from the end of that period. Since we have not yet agreed an implementation period with our EU partners, the effect of the amendments would be to create an indefinite and indeterminate transitional period, which rather raises the question of whether the Labour party is really serious about facilitating the process of a smooth Brexit at all.

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[Helen Goodman]

My hon. Friend is absolutely right. It is not just one alternative system; it is 58. It is one with the EU and another 57 with everybody else. This is really not going to happen, and Ministers need to get their heads round the fact that they have some hard choices to make, and they need to be straight with their own Back Benchers and with the public about what those choices are.

The Government are being irresponsible in wanting to repeal the European Communities Act 1972, which is the basis of our membership, and in setting the date at the beginning of the transition period, before they can tell us how they are going to handle that period. It would be great if they could give us a proper explanation because we have not had one yet. Ministers say that the whole purpose of the Bill—the very thing that the Bill is driving at—is legal certainty, but they cannot tell us what the legal position will be in 18 months’ time. The Bill is flawed and I urge Ministers to look constructively at the amendments tabled by the Opposition Front Bench.

[Robert Neill]

I approach the Bill in exactly the same spirit as my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) made clear earlier in the debate. However much I think we have harmed ourselves with the decision to leave the European Union, we have to ensure that we deliver it in an orderly fashion. That is critical in the legal area and in the business area.

The City of London is the financial hub of the whole of Europe, and we want it to stay that way, but it requires legal continuity and certainty to do so. Now, I accept that the Bill seeks to do this—I have no problem with the intentions behind the Bill—but it is worth stressing the importance of the sector and, therefore, the importance of the detail. Bear in mind that euro clearing involves transactions being processed every day through London to a value which exceeds our annual contribution to the European Union by a significant sum, and which significantly exceeds any likely divorce bill figure that has been bandied about.

The fact is that we are the basis for the euro bond market and we clear a great deal of euro business, and that generates and supports thousands of jobs. Some 36% of the population of my constituency are employed in financial and professional services. I am not going to do anything that puts their jobs at risk or reduces their standard of living. Those who voted to leave did not vote to make us poorer for the sake of a bit of ideology. We now have to find a practical means forward to ensure that we have, as the chair of the City of London’s policy and resources committee put it, an orderly Brexit as opposed to a disorderly one. Therefore, the test of the Bill’s contents is whether they achieve the Bill’s stated objective of trying to assist in that orderly Brexit and withdrawal. Well, it does up to a point, but my contention is that it only goes so far. There are number of areas where the Bill is lacking, which is why it needs improvement, and this set of amendments deals with precisely one of those areas.

The incorporation of the acquis into UK domestic law is accepted all round as being necessary, but the debate has highlighted a number of significant areas where there is still uncertainty and where the current wording may not achieve its objective. I want to see a deal on the basis of the Florence speech. I hope that all Government Members will stand behind the Florence speech and will not attempt to rewrite it, refine it, add to it or subtract from it. If we do that constructively, we can make good progress. I am sure that the Ministers on the Treasury Bench wish to achieve that too—well, almost all of them. But to do that we must ensure that we give the courts and contracting parties the certainty that they need.

My final example is that derivative contracts are generally written over a three to five-year period. Unless there is certainty as to the enforceability of those contracts, people will not contract with counterparties in the European Union. Crashing out without a deal would not give them that certainty any more than going on to WTO terms will give the financial services any certainty. It would not give the London legal services sector any certainty, doing nothing to address the establishment directive or the recognition of professional rights that currently enable British lawyers to gain and earn millions of pounds for this country annually in the work that they sell into the European Union.

All those things need to be done. I doubt whether we could get the detail done by the end of March 2019, and that is why a significant and proper transition, in which we can work out the details, is absolutely necessary. Let us make sure, then, that we enable the Bill to achieve that through some additions and changes to what is in it.

[Stephen Kinnock (Aberavon) (Lab)]

The hon. Gentleman rightly points out that a transition deal is required and that the Prime Minister’s Florence speech said that that would be on the basis of the jurisdiction of the European Court of Justice, and the EU institutions have also said that it has to be on the basis of the ECJ. With that remarkable degree of alignment between the British Government and the EU, should we not now get the Government to confirm once and for all that the transition deal is on the basis of ECJ jurisdiction?

[Robert Neill]

I must confess that I do not see what some people’s difficulty is with the jurisdiction of the ECJ for a short period. At the end of the day, as everybody concedes, there has to be an arbitral mechanism. I rather agree that it will be difficult to invent one in time, and there may be alternatives, but, as the Justice Committee’s report in the last Parliament pointed out, the involvement of the ECJ in these areas is often extremely limited in terms of the overall amount of our jurisprudence in the courts. It would be foolish to rule out accepting it for a limited period to see us through transition.

Let me move on to the specific points here. We do need to pick up on certain areas. We have to have greater clarity on the interpretation of retained EU law. With every respect to Ministers, I do not think that the Bill will achieve that in its current form, although I think that it can, with further work.

[Stephen Hammond (Wimbledon) (Con)]

Like my hon. Friend, I am keen to see that one of our major industries is preserved. Is not the overwhelming merit of his amendments 357 and 358 that they would preserve the Government’s ability to modify the regulations but give certainty on day one because they would deliver a functioning set of rules that could be on the statute book and would therefore take into account some of the cases he mentioned earlier? The key thing for the financial services industry is to have that certainty on day one.

[Robert Neill]

That is absolutely right, and it is critical. With respect to the Minister of State, that is why I do not think the financial services sector will take much comfort from his rather high-level dismissal of these proposals earlier.

Let me just say what these two amendments, in my name and that of my hon. Friend the Member for Wimbledon (Stephen Hammond), seek to do. They seek to give a general interpretive tool to assist the transposition process. We all accept that that has to happen in that domestication into the statute book. They would interfere with the powers to make regulations conferred by clause 7, but they would reduce the need for regulations. I should have thought that it was preferable not to have to operate by regulation if we could avoid it. If we have a known and established interpretive code, that will save the need to make lots of regulations under clause 7. However, it would also, as the Minister rightly observed, provide a backstop, and that would deal with gaps that are identified but that are not picked up in the transposition process. That is what subsections (A1) and (A2) of amendment 357 would achieve.

These changes draw on rules of interpretation that, as I indicated in my intervention earlier, were proposed by the International Regulatory Strategy Group. That body is co-sponsored by the City of London corporation and TheCityUK, and I am indebted to the Remembrancer’s Office of the City of London corporation for the drafting of these amendments—it takes the credit for the ingenuity.

[The Solicitor General]

I absolutely take the spirit in which these amendments are made, and I am grateful to the Remembrancer’s Office, but does my hon. Friend not agree that we need to be cautious? He thinks that this general interpretive approach will, of itself, amend deficiencies, but does the fact not remain that we would still have to amend deficiencies in legislation, even with these otherwise helpful-looking provisions?

[Robert Neill]

I do not disagree with the Solicitor General about that, but I suggest that it is not an either/or scenario. I very much hope that he will indicate that he is prepared to continue working with me and the authors of the amendments to take this forward. I see that he nods his assent, and I am sure that we can find a constructive means of doing so.

Let me explain why this is important. The first of the rules, in subsection (A3), would confine the territorial scope of the retained EU law to the UK. That would put it on the same territorial footing as domestic law, therefore ensuring that as a general principle, retained EU law would no longer enable or require people or businesses in the UK to do, or to stop doing, something in an EU country. It is perfectly logical from that point of view.

The second rule would ensure that reference to a member state in an EU law that has been domesticated was taken, post Brexit, as a reference to the UK. That would ensure that domesticated EU law would in fact fully apply in the domestic sphere, removing any ambiguity on that point. That will be necessary in a large number of instances to avoid the situation in which the UK will, in effect, be treated as a third country for the purposes of its own laws where retained EU law is currently framed by reference to the whole EU. That would be an absurdity, and we are seeking to remove that risk.

The third rule, in subsection (A5), would transfer all the functions exercised by EU bodies to the Secretary of State. I take the Minister’s point that not all those will necessarily be exercised by the Secretary of State. It is not prescriptive in that way—it need not be, and we can talk about that—but it would deal with the many instances where such functions are transferred to an appropriate Secretary of State as well as providing, again, a legislative backstop to cater for circumstances where the alternative arrangements had not been put in place in time, so that there is no cliff edge in that regard.

The fourth rule deals with the many situations where domestic authorities are required, either outright or as a precondition, to exercise their own functions to deal with EU bodies or authorities in member states. What does that mean in practice? It covers, for instance, cases where the UK body has to notify, consult or get the approval of an EU body before taking a particular course of action.

[Stephen Hammond]

Is not the overwhelming advantage of this rule not that it would put any legal constraints on an authority but that it would allow flexibility to co-operate, making it more likely that we would achieve an equivalent regulatory solution more quickly?

[Robert Neill]

That is entirely right. That rule would preserve the flexibility to co-operate with European partners and to trade into the European markets—regulatory equivalence will be critical to achieving that—and it would do so without the risk of facing any inappropriate legal constraints on the UK’s own operations once we have left.

I am not suggesting that the answer to everything is in this amendment. It is tabled in the spirit of wanting to work with the Government as we move forward, but it does go a long way towards delivering, in a relatively simple manner, the objective of having a functioning statute book on exit day.

Amendment 358 deals with what those who worked on this perceive as a potential gap concerning the interpretation of domesticated EU law. Clause 6(3), as has already been observed, will preserve the effect of case law laid down before exit day. Clause (6)(2) will provide discretion, and we have talked a lot about taking that into account. I listened with interest to the speech by the hon. and learned Member for Edinburgh South West (Joanna Cherry) regarding her amendment on that point. Again, this amendment does not provide the whole answer, but it raises serious issues that need to be looked at, and I hope that Ministers will do so.

[The Solicitor General]

For the sake of clarity, I think that my hon. Friend will find that schedule 8(25) contains enough scope for other documents of the type that he mentions to be considered by the courts. I hope that I have given him enough reassurance on that point.

[Robert Neill]

I am grateful to the Solicitor General for that clarification. Perhaps he could confirm that he is happy to meet me and we can discuss that. [Interruption.] He says that he is of course happy to do so. I am grateful to him for that very constructive response, and characteristically so. That will enable us to deal with things like negotiating texts, which we sometimes know of as the travaux préparatoires within the EU context. [Interruption.] Again, the Solicitor General confirms that that is the sort of thing that we can discuss.

Why is that important to the International Regulatory Strategy Group, and why is the group central to this? Its membership includes virtually all the significant representative institutions of the London financial community: the stock exchange, the Association for Financial Markets in Europe, the Association of British Insurers, the British Bankers Association, the City of London corporation and major commercial organisations such as Credit Suisse, Aviva, Allen & Overy, Allianz, Fidelity, HSBC and Lloyds. The list includes all the key underpinners of the City’s operation.

We need to take those important matters into account, and I am grateful to the Solicitor General for his willingness to meet and discuss them. I commend to him and other Ministers the observation made by my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) about the Francovich cases. It clearly cannot be the Government’s intention to remove people’s opportunity to seek remedies for wrongs that were done prior to our departure. My right hon. Friend raises a critical issue, and it is important to get this right.

I hope that Ministers will observe that the guidance in clause 6(2) is clearly not sufficient to meet the concerns of our senior judiciary and that they have said as much. When Lord Neuberger, a distinguished President of the Supreme Court, says that, ironically, the discretion is so wide that it puts judges at a degree of risk of political attack, he has to be taken seriously. Several right hon. and hon. Members have praised the quality of our judiciary, and I totally agree with them. We ought to listen very carefully when our judiciary say that, as a matter of protection against malicious attack of the sort that they have suffered in the past, they look to Parliament to safeguard their ability to function independently in cases that are quite politicised.

[The Solicitor General]

I am listening with care to my hon. Friend. Will he accept from me that there is another danger, namely that by using too many prescriptive words in the Bill, we could fetter the discretion of the courts in a way that they would find equally unacceptable? There is a balance to be struck here.

[Robert Neill]

There is, and that is why it is all the more important—perhaps unusually so—for Government to talk quietly with the judiciary to find out what they are saying. They cannot compromise their independence, but those of us who are in touch with them want to make sure that the Government understand the root of their concerns. I am sure that there is a constructive way forward on that.

I know that the Solicitor General will be aware of the problem, because it was referred to in the Justice Committee’s report in the last Parliament. I also draw his attention to the concerns raised by Lord Thomas of Cwmgiedd, the recently retired Lord Chief Justice, in the evidence that he gave only a couple of days before he retired from that post. He gave a pretty clear steer on the sort of thing that could be helpful and posited various types of language. I hope that the Solicitor General accepts that we need to look further at the matter, and I hope that we can do that constructively as we take the Bill forward.

[Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)]

Many of my constituents and the businesses in my constituency have raised the importance of a transitional period. The UK transition will inevitably bring with it changes to the way in which goods and services are traded between the UK and the EU, and, although businesses on both sides are beginning to anticipate and plan for change, the scope and nature of the changes are as yet unclear. The consequences could range from moderate to significant disruption to current rights and freedoms. The issue goes far beyond banking and impacts on any business that sells goods or services between the UK and the EU.

The negotiation of a new future relationship is a process separate from the article 50 negotiations, and at present there is no indication that a new long-term agreement on trade and services will be in place at the point of exit. Businesses in the UK and the EU face three unknowns: what the future will look like, when the arrangement will be in place and what will happen in the period between the end of the current EU framework and the start of the future framework. That is why transitional arrangements are essential to avoid a damaging cliff-edge effect at the point of exit.

Businesses, customers and regulators will need time to adapt and settle into a new framework. A transition period would reduce the risk of businesses making potentially premature decisions about the structure of their operations. This is why negotiating and embedding transitional arrangements in a withdrawal agreement between the UK and the EU would give both sides a greater degree of visibility and certainty in planning for the future. Clause 6 of the Bill makes it clear that the UK courts will not need to keep even half an eye on the case law of the ECJ. In legislative terms, this is as clear a statement as we can get that the UK courts will not have to follow ECJ decisions, directly or indirectly, post-Brexit.