European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Wednesday 21st February 2018 Lords Chamber

[Lord Warner]

My Lords, I rise as a co-signatory of Amendment 8, moved by the noble Lord, Lord Hunt. I do not want to repeat all that he has said; I want to talk about this from the point of view of the industry. The industry’s legal opinion is that leaving the EU did not require the UK to leave Euratom. The noble Lord, Lord Hunt, has set out all the conflicting arguments that the Government have had over their attitude to the ECJ. I will not go over those this evening, though I will not be able to resist the temptation tomorrow morning to go over them again with the Minister.

The fundamental point that I wish to make is that the Government have set out on this reckless course without taking the nuclear industry with them and without allowing sufficient time to put an alternative nuclear safeguards regime in place. I want to quote a few extracts from the excellent briefing provided by EDF, which after all provides 20% of the electricity generated in this country and is the Government’s preferred contractor for delivering new nuclear power stations, including Hinkley Point C. My first quote from the briefing is:

“The best thing for the UK nuclear industry would be for the UK to remain within Euratom. However, if the UK exits Euratom, new arrangements must be in place before existing arrangements are terminated, and there must be a smooth and orderly transition to the new arrangements”.


I have to say, from the Second Reading debate, you would not have been very confident about some of that.

My second quote is:

“It is absolutely essential that following the UK’s exit from Euratom and its EU wide safeguards regime, the nuclear sector in the UK is covered by a UK Safeguards regime. There can be no gap in coverage – the new regime must be ready for deployment on exit day, having already been reviewed and accredited by the IAEA, to ensure the UK can continue to fulfil its international obligations for nuclear non-proliferation”.


It has just about a year to achieve that.

My third quote is:

“An IAEA accredited nuclear Safeguards regime is a ‘must have’ – it is a pre-requisite for the movement of nuclear materials (including fuel) and for the agreement of NCAs”—


nuclear co-operation agreements with other countries outside the EU, such as the US, Japan, Canada and Australia. You would have to be one of life’s great optimists to have listened to the debate so far on the Nuclear Safeguards Bill and be confident that all those objectives set out by EDF will be achieved.

My final point is that, on the evidence so far provided by the Government, it is almost a racing certainty that by 29 March 2019 the UK will not have in place a nuclear safeguards regime equivalent to that provided by Euratom. Perhaps more worryingly, there is no published plan with clear milestones showing how the UK will have in place by exit day a nuclear safeguards regime accredited by the International Atomic Energy Agency. This is absolutely essential, as EDF has made plain, if the UK is to have nuclear co-operation agreements with a wide range of other countries, as it has said. These agreements are absolutely essential for nuclear trade with these other countries once we leave Euratom. The agreements have to be reached in time for them to be ratified by the political and governmental processes in the various countries. In the case of the US, they have to be ratified by Congress and even, I am told, be approved by the White House—there is a thought for noble Lords.

We are travelling very dangerously in this area, not least because of the timescales that the Government have allowed for putting in place alternative arrangements to Euratom membership. I suggest that we have a duty to make amendments to the Bill and to the Nuclear Safeguards Bill to give the Government a chance to pause and think more carefully about what they are doing. The amendment of the noble Lord, Lord Hunt, is the very least we should do in the Bill. I suspect that we may well need something stronger on Report which reflects the outcomes of our consideration of the Nuclear Safeguards Bill.

[Viscount Trenchard (Con)]

My Lords, this issue is not quite as simple as the noble Lord, Lord Hunt, claimed. I too was present at the briefing referred to by the noble Lord, Lord Warner, given by the Nuclear Industry Association and EDF, which was very valuable.

The issue is not as simple as the noble Lord, Lord Hunt, said—namely, that Euratom is the most marvellous institution and we have to remain a member of it or continue to apply standards equivalent to those which have been developed by it. I recall that EDF explained that the international standards are set by the IAEA, and that it is absolutely necessary that before exit, other than by virtue of a transition or implementation period, which of course applies more generally to the EU, in order to exit from Euratom and continue to be able to trade in nuclear equipment and fuel, we need an IAEA-accredited—not Euratom—safeguards regime. We need nuclear co-operation agreements with four countries: the United States, Canada, Australia and Japan, a nuclear agreement with the European Union and an export licence regime. Euratom’s nuclear safeguards regime concentrates heavily on verifications, whereas the IAEA places more emphasis on process, operations and compliance with international standards.

The noble Lord referred to isotopes. It is essential to ensure a secure and consistent supply of radioisotopes. Molybdenum-99, for example, has a half-life of 66 hours, similar to human organs, and therefore cannot afford to be delayed by customs at ports and airports. There can be no delay at all. We obtain about 60% of our radioisotopes for medical use from the EU, to which the noble Lord referred, but we obtain 40% of our isotopes from non-EU countries, principally South Africa, which the noble Lord did not refer to. I understand that the procedures for importing both those from the EU, which come through the Channel Tunnel without, obviously, any customs procedure, and those from South Africa, which come through Heathrow under a fast-track procedure, are virtually identical; there is no significant difference at all. Our membership of Euratom does not in any significant way influence our access to the world market in isotopes. Therefore, our leaving the EU does not make much difference to how we get in our medical isotopes.

However, we need to have this IAEA-accredited regime, and, obviously, there is not enough time for the four essential nuclear partners to get NCAs through their Parliaments before March next year. But given that the Government have committed to an implementation period, we should be able to agree with Euratom that we remain a member of that organisation and therefore we will be able to continue to operate under its standards for that period.

[Lord Warner]

I am sorry to interrupt the noble Viscount’s flow, but does he remember that the Government voted down in the Commons an amendment which would have given him more time for a transition period on this issue? So the Government have turned their face away from allowing more time to a transition period to get things right. Whether one believes that the Government have taken the right course or not, they have committed themselves to do all this by 11 pm on 29 March next year. Does the noble Viscount accept that that is an impossible objective because at the moment the Government have not agreed to a transition period for the subject area?

--- Later in debate ---

[Viscount Trenchard]

I am not familiar with the amendment which was voted down in the Commons. I believe it is perfectly possible for the UK to develop its own IAEA-accredited safeguards regime within the next few months, and I understand that a lot of work is being done on that already. I understand that Euratom’s treaties are mixed up with the EU treaties; therefore, is it not natural that, if there is an implementation period for putting into practice what comes afterward with the EU, the same will apply for Euratom?

[Lord Teverson (LD)]

My Lords, I am also a signatory to this amendment, and I thank the noble Lord, Lord Hunt, for having brought it before the House today. There is another explanation about why this has happened. Soon after the referendum, I submitted a Written Question to the Government to ask whether it was intending to leave Euratom. The answer I got back, after a little bit of foreplay, was that the people of Britain voted to come out of the European Union. It was quite clear that the Government did not realise that Euratom was not part of the European Union. They had not even thought about it. That is the answer that came back. I had to go back and ask the question again, at which point the Government answered that they were still thinking about it. Indeed, during ministerial conversations, there was a full admission that we should be able to remain part of the Euratom organisation. However, at that point it was legally impossible, for some reason which I do not understand at all. Euratom has its own separate Article 50 system, Article 106a; it is an entirely separate treaty, which did not come together during the Maastricht process when the other treaties came together, partly because there was a concern that Austria and Germany, which were anti-nuclear nations at that time—Austria still very much is—would not agree for that treaty to be integrated into the rest of the system.

I think that the Government agree that it is a good organisation. Coming out of it will certainly cost taxpayers a lot more money in terms of safeguarding and, as the noble Lord, Lord Warner, said, we have a real problem regarding the timescale. As I understand it, it is the Government who are saying that they want Euratom standards. That is their position; it is not ours. It is one that I agree with but the Government’s position is that we need Euratom standards, not purely International Atomic Energy Agency standards. We have a very difficult timetable here.

--- Later in debate ---

[Lord Adonis]

My Lords, there are 101 reasons why people voted for or against leaving the European Union. As the great Lord Salisbury, the last Prime Minister to serve in this House, famously said after a general election, the problem is:

“When the great oracle speaks, we are never quite certain what the great oracle said”.


However, I have not yet met a single person in any walk of life anywhere who told me that they voted to leave the European Union so that they could leave Euratom. Indeed, I imagine that there were not many people outside the confines of your Lordships’ House and the nuclear industry who were even aware that there was this organisation called Euratom, where the final court of appeal was—wait for it—the European Court of Justice.

There is always a problem about loss of face. I have sat on that Bench, too. I know that Ministers do not like having to change their mind. But I do not think the Minister will have any problem with any loss of face with anyone, including those who have been so keen to see that we leave the European Union because of the instruction from the British people, if he were to announce that the Government intend to withdraw the notice under Article 106a of the Euratom treaty and put this complete nonsense behind them. I do not mind what hour of the night he announces it. I would be perfectly happy for him to announce it at 2.30 am if that ensures that it gets less coverage.

The Minister will have noticed that there has been no support at all from behind him. The noble Earl, who is not given to criticising the Government, made a devastating speech. Although the noble Viscount said that he thought the consequences might not be as bad as people had said, I did not detect him saying there would be any positive advantages from leaving Euratom. The noble Baroness gave an equally devastating speech.

[Viscount Trenchard]

I certainly said that Euratom was not the marvellous organisation that it is made out to be. I actually think it would be very good if we can find a way to continue the current arrangements until such time as we put in place the necessary independent arrangements with IAEA accreditation. But I did not say that I thought Euratom was marvellous. I know of one senior officer in the nuclear industry who thinks we should remain in the EU but leave Euratom.

[Lord Adonis]

My Lords, it is not part of the human condition to think that institutions are marvellous. They can always be improved. But I did not take the noble Viscount’s clarification to be raising the banner for abolishing Euratom because there were going to be such great advantages to the public from us—in the words of the noble Lord, Lord Bridges, to the House a few weeks ago—walking the “gangplank into thin air”.

However, I have a specific question for the Minister. Can he confirm to the Committee that Her Majesty’s Government can withdraw the notice of withdrawal from Euratom under Article 106a of the Euratom treaty and that they can do that unilaterally? As he knows, I am slightly persistent in these matters. I always thought that part of the argument from those who were in favour of Brexit was that we were going to restore the sovereignty of Parliament. It is not too much to expect that Parliament should be able to see and study the legal advice on which Ministers make decisions. I ask him yet again whether he will make available to the House before Report the legal advice which his department has on the legal basis on which the Government can act in withdrawing the notice of withdrawal under Article 106a of the Euratom treaty.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 26th February 2018 Lords Chamber

[Baroness Brown of Cambridge (CB)]

My Lords, I support these two important amendments and I apologise to the Committee for having being unavailable to speak at Second Reading. I therefore take the opportunity to declare my interests as chair of the Henry Royce Institute, a member of the Committee on Climate Change and chairman of the Adaptation Sub-Committee of the Committee on Climate Change. As we have heard from many noble Lords, the Horizon 2020 and Erasmus+ programmes are critical to our world-class academic institutions, to research and to our students. I will not take up any time by repeating the arguments but I remind the Committee that historically UK students are some of the least internationally mobile in Europe, particularly young people from less advantaged groups. If we are to compete ever more widely on the international stage after leaving the EU, ensuring that UK students from all backgrounds have the kinds of experiences that are enabled by the Erasmus+ programme should surely be a national priority.

We have not heard much about what Horizon 2020 does outside our outstanding academic institutions. It is a key funding source for industrial collaboration, supporting important initiatives such as helping Rolls-Royce develop new generations of more efficient and environmentally friendly aero engines. It also plays a key role in supporting innovation and entrepreneurship schemes, such as the knowledge and innovation communities, with a great example at Imperial College: Climate-KIC, which has already seen a number of new entrepreneurs with low-carbon technologies start to develop businesses in the UK.

In my own area of interest, Horizon 2020 supports environmental research. The UK wins around £147 million per annum for environmental research. Sadly, that rather dwarfs the £5 million investment in the new northern forest. Other EU funds, such as Interreg and LIFE, are important not only for environmental research but to cross-border collaboration on the island of Ireland; for example, supporting shared environments through the cross-border Loughs Agency, as well as other types of cross-border community projects. This is hugely important work that the House of Lords EU Select Committee was able to see and hear about at first hand on our recent visit to both sides of the Irish border. It is a really important element of the peace settlement on the island of Ireland.

These funding mechanisms play a critical role in our economic growth, as we have heard; in cross-border relations and well-being in Ireland; and in helping the Government achieve their stated aim to leave nature in “a better state” for the next generation. For these reasons, the amendments have my very strong support.

[Viscount Trenchard (Con)]

My Lords, I would not wish to disagree in any way with all those noble Lords who have said how excellent the Erasmus+ and Horizon 2020 programmes are. Undoubtedly, the United Kingdom contribution to them is very significant, just as the United Kingdom’s gains from being a participant in them are hugely beneficial. Nevertheless, one thing that has not been said by any noble Lord is that after Brexit we will have considerably more money to spend on important programmes than we have while we are making net contributions to the European Union of £10 billion to £12 billion a year. I have never been one to use the £350 million a week figure because that was the gross contribution, but the net contribution is about half that.

My noble friend Lord Patten pointed out that our contribution to the Horizon 2020 programme is about £5 billion but we receive £8 billion back. Presumably, this means that the organisers of the Horizon 2020 programme appreciate that the United Kingdom knows better than some other participants how to use the money wisely. Indeed, we continue to use the money from such programmes extremely well. Furthermore, if one looks at the participants in Horizon 2020, there are 17 countries which are not EU members. The European Commission website makes it clear that non-members participate on exactly the same terms as members. Therefore, I see no reason at all why we should not be welcomed as a continuing participant in Horizon 2020.

[Lord Hannay of Chiswick (CB)]

Does the noble Viscount not understand that if we participate from outside the European Union, instead of getting more back than we put in we will get exactly the same back as we put in?

[Viscount Trenchard]

I hear what the noble Lord says but I am not sure whether that follows at all. As far as the Horizon 2020 programme is concerned, presumably our contribution would still be assessed and valued in the same way that it is now. The deservability of the programmes for which we seek support would also be considered on the same basis as now, so I do not see why it should make any difference. But overall, we will have a considerable amount more money to spend, not less, because we will not be making the very large net contributions to the European Union budget that we make at present.

[Lord Patten of Barnes]

Can I clarify for my noble friend the position of countries from outside the European Union sharing in the European Research Area? I am sure he is aware that while some of them participate—I mentioned Switzerland and Israel– they play no part whatever in managing the programmes. They do not determine the priorities or what the money will go on. We could negotiate membership of the research council, I guess, although it would be with the financial consequences that the noble Lord, Lord Hannay, mentioned and the additional consequence that we would have no say in managing the programmes.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 28th February 2018 Lords Chamber

[The Earl of Listowel (CB)]

My Lords, in considering how to deal with this legislation in future, will the Government keep very much in mind the impact on families? The Minister may be aware that in Germany there is no Sunday opening and that after 8 pm businesses are not allowed to send emails to people who work in their offices, yet it is the most productive of nations. I would say that part of that is attributable to the care that it takes about family life and finding a balance between that and work. The risk is that, in driving towards greater immediate remuneration and productivity, we fail to take the long-term view and think through carefully what changing these regulations would do and the impact that would have on family life.

In Germany, 15% of children grow up without a father in the home; in Britain, it is about 20%; in America, it is 25%. If we keep on putting pressure on families to be more and more active in the job market, the risk is that this will contribute to family breakdown and we will be shooting ourselves in the foot in the long term. I agree with Amendment 21: we should think very carefully and go through as strict a process as possible before removing these protections. Of course, it is a complex argument, because employment can reinforce family life and protect from family breakdown, but it needs to be carefully thought through. The Germans, with their better life balance, seem to be more productive than us, so we may need to keep that lesson in mind in legislating in such areas in future.

[Viscount Trenchard (Con)]

I agree with what the noble Earl said about the balance between work life and family life, particularly with regard to the recently adopted hours which are becoming commonplace in your Lordships’ House, but I regret to say that I cannot support the amendments, because they do not achieve their intention.

As the noble Baroness, Lady Hayter, recognised, the intention of her amendment is to ensure continuity and certainty in the law both before and after exit day. She worries that the powers granted to Ministers to amend retained EU laws should be both restricted and subject in each case to an enhanced scrutiny procedure, which would also provide for a period of consultation with the public and relevant stakeholders. But the effect of the amendments is to increase uncertainty and, ironically, reduce the likelihood—the certainty that is needed—that retained law will continue to provide exactly the same protections as before. Indeed, the period of public consultation to be provided in the enhanced scrutiny procedure gives the impression that policy changes may also be entertained. As we have heard from Ministers, the Bill is not about policy change.

Without these powers, there are huge risks that retained EU law will be defective for technical reasons—for example, due to the enormous number of references to Union institutions, which all need to be changed. Such changes would take so very much longer if each change was made subject to the enhanced scrutiny procedure proposed by the noble Baroness. That is just one area in which the amendments are counter productive.

[Lord Judd (Lab)]

My Lords, I shall speak to Amendment 23A but, before I do so, I should like to say how much I admired the clarity with which my noble friend introduced the lead amendment in the group and how warmly I support the amendment in the name of my noble friend Lady Kennedy on the issue of human rights.

I have two points to make. The first is that the anxiety out there in British society should not be underestimated. There is a great deal of anxiety among extremely good quality people who are doing dedicated work in the spheres with which we are concerned. Secondly, as a layman in no way involved in practising law, I have always understood as a citizen that what is terribly important about the law is its clarity and transparency. As we consider the amendments we must therefore not inadvertently allow doubt and misgiving as to whether there has been full transparency, and full commitment to that transparency, to creep into our future.

It is therefore very important, and I make no apology for proposing it, to get written into the Bill the fact that we seek to protect existing rights of citizens in the spheres affected. I shall read to the Committee the points that Amendment 23A says should be, and seen to be, central to the deliberations and negotiations that lie ahead. They include: human rights and equality, in which we have made great progress; privacy and data protection, which we have debated at great length in this House; and immigration and asylum protections—I am certainly one who believes there is much more to be done in that realm, but the Bill is not about that. My amendment is therefore not about that either but about protecting what we have. The other points are,

“criminal justice protections … employment protections … environment and public health protections … consumer protection … access to housing, education and health and social care”.

I want to feel confident, in the immense amount of work lies ahead, that those issues will be in the Bill as primary considerations. I hope that the Minister, for whom my admiration increases all the time with the clarity with which he responds to amendments, will be able to reassure me that there will be some way to ensure that these things are not just implied in what is proposed but are there specifically.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Committee: 6th sitting (Hansard - continued): House of Lords
Monday 12th March 2018 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I listened with interest to the amendment proposed by my noble friend Lord Carrington of Fulham and supported by the noble Baroness, Lady Falkner. I accept that my noble friend is trying to be helpful to the Government, but for various reasons I nevertheless feel unable to fully support his amendment. I understand well that the amendment reflects the proposals put forward by the IRSG in its paper published last September, prepared in collaboration with Hogan Lovells. That report has been endorsed by TheCityUK and the City of London Corporation, which support IRSG.

The reasons why I cannot support the amendment are, first, that it is not appropriate or helpful to put into legislation, at this stage, the detail of any future regulatory collaboration with the EU, let alone on financial services. Secondly, the report which the amendment would require the Government to prepare, like other reports which other amendments discussed today have called for, would be quite onerous and time-consuming. Thirdly, it is not helpful for our negotiators if we argue against ourselves, and especially unhelpful to incorporate amendments into law which appear to accept that it is desirable, even necessary, to treat continuing alignment with EU regulations as being a greater priority than aligning our regulations with those of the SEC in the United States, the FSA in Japan, or other regulators in other countries with significant financial markets. Fourthly, the Government have already stated their intention to negotiate an implementation period following exit day when things would be largely the same, including, as I understand it, for the financial services sector. This amendment appears to assume that everything changes on exit day.

In his excellent recent speech at the Mansion House, the Chancellor referred to a framework to supervise,

“separate evolution of rules to deliver the same results”,

and to resolve disputes. I believe there is a danger that this would place too much pressure on UK regulators to continue to align completely the UK’s rule book with that of the EU 27. This would make it more difficult to agree any kind of mutual recognition of standards with other financial regulatory regimes around the world. For example, the City Corporation and Tokyo Metropolitan Government have recently entered into a memorandum of understanding to collaborate more closely on financial services, and this could be developed in future to include some kind of mutual regulatory recognition of standards.

Of course, the City will survive if there is not a deal which covers financial services. The EU regulators have forced upon us Solvency II, AIFMD and MiFID II, to name but three directives which have cost the City dear in terms of higher costs, fewer jobs and fewer revenues than would otherwise have been the case. We should not agree to align more closely to EU rules than to US rules, Japanese rules or the rules of any other major financial centre in the world. Once our regulators recover their independence from the EU regulators, their influence in shaping best practice rules at the global level will be enhanced, not diminished. Of course, while the inclusion of financial services in our FTA would be better than its exclusion, our negotiators need to be very aware of the significant upside for the City in recovering our regulatory independence.

The amendment, in proposed new subsection (2)(a), refers to the degree of alignment “necessary” between the regulatory provisions of the EU and UK. I submit that this is a rather subjective concept. What is important is that our regulators will establish the best regulatory regime for our markets, retaining the highest standards for which London is rightly held in high regard and participating fully in discussions with regulators of the other major financial markets, within IOSCO and other bodies, with a voice commensurate with the size and scope of our markets.

As my noble friend Lord Hill of Oareford said in his interesting speech at Second Reading, our withdrawal from the EU is allowing Europe already to move in directions that we have traditionally resisted, whether that is a financial transactions tax, more screening of overseas investment or more centralisation of supervision of financial services. As we now have to choose between effectively remaining in the single market and being free to make our own rules where we want to, we must surely place a greater priority on being able to shape our own future than on preserving the status quo.

Mark Hoban, chairman of IRSG, has proposed a forum for regulatory alignment, referred to by my noble friend, whereby the UK and the EU can work together to implement new global and international standards. That is fair enough, although I do not think it is in the City’s interests to do this with the EU exclusively. Furthermore, my noble friend’s amendment is silent on the proposed forum’s relevance to new global and international standards and relates only to a perceived need to maintain regulatory alignment with the EU alone. If I were a banker in the EU 27 or the finance director of a major EU 27 company wishing to raise money in the capital markets, I would certainly not want the EU to impede my access to the UK’s financial markets, but I have not yet heard of any proposed EU regulation or directive requiring the Commission to continue to align closely to UK regulations.

My noble friend’s amendment indicates a frame of mind which I believe casts us too much in the role of supplicant, where we do not need to be. Does the Minister recognise that the City would worry less about the downside and show more confidence in the upside of Brexit if the Government showed more leadership and enthusiasm for the City’s role as the leading international financial centre, unfettered by the EU’s cumbersome and somewhat dirigiste regulatory framework, while maintaining the high standards and proportionate regulations that provide the necessary protections and financial stability for investors and borrowers, but without burdening market participants with unnecessary costs or with measures that inhibit the innovation that has helped to make London the great success it is?

[Baroness Kramer]

My Lords, the noble Viscount, Lord Trenchard, speaks a commonly held Brexiteer view. I take a very different view—that if we were to follow the course he just recommended, in 10 years’ time the UK would no longer be the premier centre for financial services in Europe, and certainly not for those generated within the EU, which is one of the largest economic and trading blocs in the world, and perhaps the most important as regards feeding financial services.

I understand the amendment in the name of the noble Lord, Lord Carrington, but I cannot support it because, as I think he would say, it is quite limited. Financial services depend not just on passporting: for the asset managers it is delegation, for the fintechs it is the e-commerce directive, and for the insurance and trading world it is the mutual recognition of contracts. There are so many complex features at so many different levels that create the ecosystem that has enabled London to thrive, essentially on the basis that it has sitting behind it the resource of a 28-country 510 million population who turn to it as their primary financial centre. However, the way in which the Government respond to Lord Carrington will be critical. It is a matter of timing.

The industry, as the Minister well knows, has been in some despair to try to persuade the Government that how they structure the relationship, should Brexit take place, is absolutely critical. The large companies in the industry have been going ahead with contingency planning that, so far, has been in a relatively preliminary phase. They have identified new real estate, taken out leases, and negotiated licences and other authorisations that they need to be able to expand either their field of business or to be able to expand business. However, almost every one of them has said, I think to many noble Lords in this House, that by the end of March—we are now talking about a matter of days—they will have to push the button on the next phase. That is the fitting out and purchasing of the very extensive and expensive equipment that has to go in, and the setting up of the recruitment process to staff out those new operations. From that there is no return. We therefore reach a point of no return for a significant portion of financial services which will be transferred to continental Europe with, frankly, no possibility of reversal, in a very brief period of time.

The industry has coalesced around the idea of mutual recognition as the one possible route. If we leave the single market—that is key; if we stay in the single market, it is not an issue, although the Government say that we will not—mutual recognition is the only possible route to limit the damage. It is nowhere near equivalent to the access that we have today, but it could perhaps be negotiated so that the damage is to some degree limited. Every major company I have talked to says that it does not understand how this new form of mutual recognition will work. It seems highly problematic. I have said in this House before that when the EU first began to bring together and create aspects of the single market in financial services, it began by using mutual recognition. However, it turned out to be completely inadequate to deal with the complexity of so many different kinds of issues, so much competition, so much size and so much depth.

So mutual recognition is seen not as a successful strategy but as the failed strategy for these arrangements that is now being revived in a new form. Because the industry is listening, it is important that we get from the Government something that provides some meat and bone on how this mutual recognition could function. If we do not hear that today, we will in many ways be accepting that we will not have any kind of significant arrangement around financial services, and the consequences for this country, which is essentially a service economy in which financial services are the most significant part and the largest exporter, will be highly significant. We need to understand today whether we are looking at something that is real and has the prospect of achieving success or whether we are simply tossing around an idea that has PR attractions but, frankly, offers no meaningful route to keeping access to the European market for our financial services industry.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Committee: 8th sitting (Hansard - continued): House of Lords
Monday 19th March 2018 Lords Chamber

[Lord Broers (CB)]

My Lords, the amendment would ensure that we maintain the resources needed to remain competitive in nuclear research and development beyond 2020. If we do not, we will almost certainly lose the ability to replace and increase the nuclear baseload needed to underpin our intermittent renewable sources. Our large wind and solar resources will leave us in the dark on windless nights—at least until full-scale storage or fusion power become realities—unless we replace nuclear power with fossil fuel plants and thereby miss our legally binding target of reducing emissions by at least 80% by 2050.

Indeed, we would find ourselves in the situation that exists in Germany, as described by the noble Viscount, Lord Ridley, in today’s Times, where, because the Germans decided to abandon nuclear power, they are now being forced to build coal-fired power stations to back up their renewable sources, thereby counteracting the purpose of building the wind and solar facilities in the first place. At least we have not got that far. We are pressing ahead with our nuclear baseload and all looked well until we made the incomprehensible decision to withdraw from Euratom, despite the fact that our withdrawal was not legally required by our withdrawal from the EU. Until now, we had sensibly been relying on our membership of Euratom to improve our capabilities to manage and dispose of nuclear waste, improve radiological protection, keep up to date with the progress being made on advanced fission reactors—including small modular reactors, or SMRs—and remain major contributors to the development of fusion power, particularly extensions to the Joint European Torus, or JET, at Culham and the International Thermonuclear Experimental Reactor, or ITER.

Let me say a few words about fusion. Controlled release fusion was first achieved in JET at Culham in 1991. In my opinion, this could well turn out to be one of the most important advances in experimental physics ever made. This was the earliest successful experiment; however, it produced only two short pulses when fusion power of one megawatt was verified for a fraction of a second. By 1997, things had moved on and JET produced a peak of 16 megawatts of fusion power, with fusion power over 10 megawatts sustained for over half a second. This gave everyone the confidence to proceed with JET’s successor, ITER, which had been talked about since the mid-1980s but was escalated into a multinational project that had been estimated to cost about €13 billion—interestingly, about the same cost as has been estimated for the finding of the Higgs boson. ITER is currently under construction in southern France and is designed to produce 500 megawatts of fusion power and 10 times more fusion power than the power put into the plasma.

I mention this background to show that progress has been made but this is a very long-term project. Construction of ITER will not be completed until 2020; the initial plasma will not be created until 2025; and the first fusion experiments will not be carried out until 2035. Few noble Lords will see that happen. Many challenges face the project but there are potential answers to all of them. At present, there are no experimental or theoretical showstoppers identified. By the middle of the century, it could well demonstrate that fusion power is practical and capable of delivering unlimited quantities of clean, carbon-free energy.

Through what I see as government neglect or lack of support, we have lost our expertise in a disturbing number of vital technologies, of which microelectronics is one. We are leaders in designing microelectronic chips—that capability is now owned by Japan—but we cannot make chips. More recently there was the decoding of DNA, where we do retain expertise but have lost the business of DNA decoding to the USA.

Let us not lose our expertise in nuclear power. These matters are too important to leave to chance and words of promise. Let us this time ensure that we remain internationally competitive in nuclear technologies and lead rather than follow in seeking truly clean energy for our planet. The amendment would ensure that our nuclear technology continues to receive support at its present level. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I share with the noble Lord, Lord Broers, many of his concerns about the future of our nuclear energy programme. Like him, I regret very much that we have lost so much expertise. Part of the result of our withdrawal from Euratom is that the ONR will have to recruit a large number of scientists qualified in nuclear matters. Perhaps we will also have another opportunity to debate these matters tomorrow in the Nuclear Safeguards Bill, so I will not detain the Committee long, except to say that although I basically agree with the noble Lord, Lord Broers, about the importance of nuclear power, and the fact that it is not subject to intermittency makes it much more reliable than renewable energy, I do not go as far as him in saying that it is necessarily deplorable that we withdraw from Euratom.

Many scientists and senior executives who have worked in the nuclear industry consider that Euratom is a rather bureaucratic organisation that is too cumbersome in its approach to verifications and too much concerned with understanding the detail of what all its members are doing, rather than helping to ensure a proper, adequate nuclear safeguards regime. I believe the noble Lord’s amendment does not recognise the upside of our withdrawal from Euratom—we will ourselves be able to decide where to commit funds in nuclear research and development. For example, we might want to spend money on small modular reactors instead of on ITER. Anyway, if we want to be in ITER, besides the EU/Euratom countries, China, India, Japan, Korea, Russia and the United States all participate. It will be good to be able to decide which projects we commit funds to in nuclear research and which we do not, whereas at present we have no independent right to decide.

Besides that, it is clear that we will need a transition or implementation period for the Euratom treaty as well as the EU treaties, so we do not have to decide any of this by exit day anyway. We will take some time to decide the detail as to which projects to go on with after we have recovered our right to decide where we will commit our funds in nuclear research.

[Lord Teverson (LD)]

My Lords, I find that slightly strange from the noble Viscount. We do have a choice over our expenditure on the JET programme because we finance a significant proportion of it outside of Euratom. We already have that independence to a large degree. In fact, as I understand it from the Government’s policy, we are already offering to extend that financial contribution up to 2020. I have to admit that it did not seem a great come on to the European Union or the EU 27 to offer the same terms if it happened to keep its research in Culham as it has at the moment.

I did not the read the amendment as saying half the things that the noble Viscount mentioned. I understand it very sensibly to be saying that we want the Government to tell us in no uncertain terms how we are going to remain in the various programmes of Euratom. That does not stop us doing other things such as small modular reactors or whatever we might want to do in addition—I really do not see that problem.

It is important to remember that Euratom has a research budget of €1.6 billion from 2014 to 2018. As it is part of the industrial strategy of the United Kingdom, we should want to stay a part of that. Although some of us can be slightly sceptical about fusion, as someone concerned with non-carbon energy I see it as one potential pathway to the future which the United Kingdom should be a part of. I went to Culham earlier this year. There are 1,300 jobs there, 600 of which are high-skill, with employees drawn from all European countries and beyond that. I hope that the Government will find uncontentious a sensible amendment such as this and that we can remain a part of this community, see what it offers and be a part of its success in the future.

It would be a dead end if we continued to contribute to the JET funding and to be a part of it until 2020 only to throw all that investment away and not be a part of ITER. To be a part of ITER, we have to plan ahead, which is what this amendment calls for. It is entirely logical and a very good way for the Government to take forward this agenda openly and constructively and to keep Parliament informed as it happens.

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

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

[Lord Adonis (Lab)]

I defer to the noble Viscount in his knowledge of millionaires. Maybe he is right, maybe he is wrong, but I do not think that they particularly enter into it. It is ordinary, hard-working people who will, of course, suffer the consequences if our trade collapses, and they are the people we should have at the front of our minds. However, on the point about trade with the wider world, almost two years ago a very thorough analysis of our trade and trade policy was made by a prominent politician in a speech. This is what she said:

“It is tempting to look at developing countries’ economies, with their high growth rates, and see them as an alternative to trade with Europe. But just look at the reality of our trading partnership with China—with its dumping policies, protective tariffs and industrial-scale industrial espionage. And look at the figures. We export more to Ireland than we do to China, almost twice as much to Belgium as we do to India, and nearly three times as much to Sweden as we do to Brazil. It is not realistic to think that we could just replace European trade with these new markets”.


That was the current Prime Minister speaking on 25 April 2016, and I do not think anything has changed since.

[Viscount Trenchard (Con)]

My Lords, I am not quite sure exactly what this amendment means, in spite of the eloquent speeches by the noble Lord, Lord Kerr, and my noble friend Lord Patten. It would require the Government to lay before Parliament a statement outlining the steps taken to negotiate an arrangement which enables the UK,

“to continue participating in a customs union”.

I do not think this is at all helpful to our negotiators. Even if remaining in a customs union were one of the Government’s possible objectives, which it is not, the amendment does not even set a condition that such negotiations must be successful. I expect that those of your Lordships who believe that we should remain in a customs union, which I believe is now the policy of the Labour Party, will not wish to support this amendment in its present form.

I believe that noble Lords who think that we should stay in a customs union are misguided because it would prevent us establishing our own tariff schedules at the WTO. As my noble friend Lord Lawson mentioned, we would be in an unenviable position similar to that of Turkey, which is bound to accept imports from third countries, agreed to by the EU at similar tariffs to those decided on by the EU. Turkey, however, does not even benefit from any preferential tariff rates for its own exports to such third countries which become available to EU countries through agreements made by the EU with third countries.

It is essential that the UK, after the end of the implementation period, should be free to implement bilateral and multilateral free trade agreements with third countries. Failure to be able to do this would negate the whole upside potential of recovering our sovereignty in international trade matters and it would be pointless for the UK to leave the EU on such a basis. A major benefit of leaving the EU will be acquiring the freedom to reduce and ultimately eliminate tariffs on essential products, which represent a high proportion of the budget of poorer people, as mentioned by the noble Lord, Lord Howarth, my noble friend Lord Ridley and others.

One of the two possible customs arrangements the Government have said they are considering is a customs partnership with the EU, under which the UK would mirror the EU’s requirements for imports from third countries where their final destination is the EU. It seems to me that if such a customs partnership required the UK to retain a high degree of regulatory alignment with the EU, it would make the UK unattractive as a potential trade partner for third countries and prevent us becoming a powerful advocate for free trade around the world and exercising our considerable influence on ensuring that developing global—rather than European—standards represent best practice in consumer protection in a way that does not inhibit innovation, as excessively bureaucratic regulatory regimes tend to do. I look forward with interest to hearing what my noble friend the Minister has to say about the Government’s current thinking on the option of customs partnership. In any case, the inclusion of any of these amendments in this Bill, which is largely technical in nature, would unnecessarily tie the hands of our negotiators in a manner detrimental to the UK’s interests.