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European Union (Withdrawal) Bill

Volume 789: debated on Monday 12 March 2018

Committee (6th Day)

Relevant documents: 12th Report from the Delegated Powers Committee, 9th Report from the Constitution Committee

Clause 7: Dealing with deficiencies arising from withdrawal

Amendment 84

Moved by

84: Clause 7, page 6, line 13, at end insert—

“( ) No regulations may be made under this section which make changes to EU-derived domestic legislation concerning the regulation of clinical trials until the Secretary of State has laid a report before both Houses of Parliament assessing the costs and benefits of adopting EU Regulation 536/2014.”

My Lords, Amendment 84 in my name and those of the noble Baronesses, Lady Thornton and Lady Jolly, and the noble Viscount, Lord Ridley, is a very simple amendment that seeks clarification about how the Government intend to deal with the clinical trials regulation when it comes into force. The amendment is not designed to be political, or to interfere with the aims of the Bill. It has been tabled to bring to the Government’s attention a very specific issue with the forthcoming clinical trials regulation as the UK withdraws from the EU and the implication that will have on clinical trials.

The CTR is a significant improvement on the existing regulations governing clinical trials that it will replace, the clinical trials directive. It has the potential to benefit both patients and the research environment in the UK, yet it is also in a somewhat unusual position with regard to the Bill. It will reform the governance of clinical trials across the European Union. The UK was central to its development, with both the MHRA—the Medicines and Healthcare products Regulatory Agency—and individual researchers contributing their expertise. It was adopted in 2014, with the UK’s full support. However, due to a minor technical delay with the set-up of the data-sharing portal it will not come into effect until late 2019, rather than this year as planned. As such, it will come into effect after exit day and will not be covered by Clause 3 and what it converts into UK law. It will be the existing clinical trials directive that is covered by the current Bill.

If we do not take steps to adopt the CTR, we will fall out of alignment when it comes into effect and our ability to undertake collaborative clinical trials with our EU partners will cease. To reduce the uncertainty that is of concern to the research community and pharma, the Government should commit to aligning with the CTR when it comes into effect, and provide details of how they will seek to do this.

The CTR is a major improvement upon the current clinical trials directive, harmonising the approach to conducting clinical trials across the EU. It will include a co-ordinated, centralised approval process and a portal which decreases the administrative burden for clinical trials and support. It is transparent and, since it is a regulation, it will immediately come into law across member states, ensuring clinical trials governance across the EU. The current divergence in how the clinical trials directive is applied in member states results in substantial delays in opening trials involving more than one country.

The CTR allows for a more risk-proportionate approach to trials and authorisation, extending them to investigational medicinal products and enabling the optimised use of medicines that already have marketing authorisation. Other benefits include quicker trial set-up, ambitious timelines for review, flexibility and the simple reporting of adverse reactions leading to improved patient safety. Patients also benefit from being involved in clinical studies, which are the gold standard for developing evidence to see whether a new intervention is suitable to become standard practice. They also provide patients with opportunities to access innovations at an early stage in their development. Through enhanced collaboration, the CTR would provide increased opportunities for UK patients to access clinical trials. Collaboration is particularly important on rare diseases, where patient pools are smaller. Streamlined co-operation on trials looking at these diseases is crucial in making progress in research and improving outcomes.

The CTR also has implications for UK science and innovation. The Prime Minister said in her Statement last week that,

“our partnership will need to cover agreements in other areas, including … a far-reaching science and innovation pact”.—[Official Report, Commons, 5/3/18; col. 28.]

The UK’s life sciences are strong and the UK is a world leader in medical research. Looking at existing medicine, for instance, around 25% of the world’s top 100 prescription medicines were discovered and developed in the UK, while three of the five top-selling drugs to treat rheumatoid arthritis and other inflammatory conditions globally are innovations based on UK science. Unfortunately, we did not commercialise them so we do not get the billions with which they now benefit pharma.

The Government’s recent Life Sciences Industrial Strategy sets out the UK’s ambition to strengthen the environment for clinical trials. The strategy mentions opportunities to improve translational science and attract more clinical trials from industry. Alignment with the CTR will facilitate this ambition to come to fruition sooner.

The MHRA’s efforts to streamline approvals for clinical trials have already been acknowledged by the life sciences sector deal. These efforts have been made under the impression that the CTR will be implemented. The CTR includes a mechanism for UK researchers to participate in and co-sponsor a clinical trial. Trial leadership is especially important for non-commercial trials, which are often run by academic institutions. UK academics have expressed concerns due to the inability to lead on clinical trials, including the impacts on reputation and funding prospects without alignment with the CTR.

UK research is also beneficial to the EU. The UK undertakes a huge amount of clinical trials activity, both in national and pan-EU trials. Currently, the UK conducts the third-largest number, after Germany and Spain, of cross-national clinical trials with EU partners. It has the highest number of phase 1 trials in the EU, where treatments are first tested on humans, and the second-highest number of phase 2 and 3 trials, where treatments are tested for efficacy against current options. For example, 28% of 200 clinical trials funded by Cancer Research UK involved patients from other EU countries.

The UK and EU also collaborate through the sharing of scientific ideas and expertise. The European Medicines Agency, the EMA, hitherto based in London but which will move to Amsterdam when we exit the EU, and the UK Medicines and Healthcare products Regulatory Agency, the MHRA, worked closely together on the regulation of clinical trials. The MHRA is respected by industry and other peer institutions across Europe as a good source of knowledge and scientific advice on conducting clinical trials. As well as authorising clinical trials and regulating medicines and medical devices, the MHRA shares knowledge and expertise with the EMA. Maintaining this valuable working relationship is crucial to both the UK and Europe as we leave the EU.

In the UK, we are in the fortunate position of currently leading the world—I do not exaggerate—in several areas of biomedical science, such as genomic medicine, stem cell medicine, regenerative medicine, data science as it applies to health, health informatics and many others. Clinical trials are an important part of the discovery process of getting medicines to patients. The British scientific community has heavily contributed to the development of the CTR and has planned on its implementation. It is only because of a cruel quirk that it will not automatically apply here under the auspices of the Bill. The Government need to act to ensure that we can align with the regulation and maintain the cross-national collaboration which is crucial for patient outcomes, for supporting our vibrant research environment and, possibly, for our life sciences industry.

In responding to the amendment, the Government need to put on record that they fully intend to adopt the CTR when it comes into force and that they clearly understand the implications of it for the UK’s ability to lead on clinical trials. I beg to move.

My Lords, my noble friend Lady Jolly has added her name to this amendment, but unfortunately she cannot be in her place today. She has asked me to speak in her stead, and I am delighted to do that. I declare an interest as chair of the Association of Medical Research Charities and of the Specialised Healthcare Alliance, which campaigns on behalf of people with rare diseases. Both these organisations have a direct interest in this amendment.

As the noble Lord, Lord Patel, made clear, the UK has a tremendous record in medical research, in both basic blue-sky research and in translation into treatments. We live in a golden age for medical research, and this golden age is driven very largely by the UK, by efforts in our universities and in our hospitals. There are many reasons for this pre-eminence: world-class university research, world-class medical institutions, the unique NHS system and a funding structure unlike anywhere else in the world, where medical research charities contribute £1.6 billion each year to research, sitting alongside public and private funding.

All this makes our medical research achievement one of the undoubted successes of the United Kingdom. This success has a simple and direct consequence: it produces very significant improvements in health and well-being and very significant improvements in our ability to cure and to treat disease. The chief mechanism by which research turns into cures or treatments is the mechanism of clinical trials.

The UK has long been, and remains, attractive to the pharmaceutical industry, for example, because of the NHS’s ability to run extensive clinical trials. The UK has been able to recruit the very best researchers—again partly because of the NHS. Another reason why clinical trials in the UK are important to researchers, as the noble Lord, Lord Patel, made clear, is our alignment with the other 27 EU states under the existing EU clinical trials directive of 2004.

This alignment is absolutely critical. It allows wide and varied datasets, it creates standard procedures and protocols, and it makes research into rare diseases possible. This last point is of huge importance. Some diseases, very often serious diseases, are so rare that there is not available in any one country a sufficient number of patients for research to take place. But because we are aligned across the EU by the 2004 directive, we can and do find sufficient numbers across 28 countries to carry out effective research.

Pancreatic cancer is a case in point. This is one of the hardest cancers to treat and has an appallingly low survival rate. Just 1% of people diagnosed with pancreatic cancer in England and Wales survive for 10 years or more. The European Study Group for Pancreatic Cancer recruited more than 700 patients from the UK, Germany, Sweden and France to a large-scale clinical trial. The results showed that an extra 13% of the patients on the trial lived for five years when given the tested combinations of chemotherapy and drugs. This is a huge result for patients and for the future of pancreatic cancer treatment, all made possible by, and only because of, the ability to run trials across 28 countries under a common regime. I should add here that the European Study Group for Pancreatic Cancer is led by an outstanding team at Liverpool University.

The 2004 clinical trials directive has proved invaluable. But it has also proved to have many deep and fairly obvious flaws, which we in the UK have been instrumental in trying to correct. After the introduction of the directive, the number of applications for clinical trials fell by 25% between 2007 and 2011, administration costs rose by 98% and delays in actually launching a clinical trial rose by 98%. All this was recognised in 2012 when, with a great deal of UK lobbying, work began on a revision to the directive.

This revision became, in 2014, the new EU clinical trials regulation, referred to in the amendment before us. As the noble Lord, Lord Patel, said, the benefits of the new regulation are straightforward: it speeds up the process for launching new clinical trials; it establishes a more proportionate regulatory regime, with much less red tape; it recognises the concept of co-sponsorship of trials; it simplifies the rules for critical multicountry trials; and it streamlines reporting requirements. This means faster and cheaper trials, faster results and faster delivery of any benefits to patients. All these are of course very good things.

Although the new regulation was agreed in 2014, it was estimated that it would apply only from 2017-18. That was to allow time to get in place the mechanisms needed to make it work properly. But this application date, as has been mentioned, has been delayed yet again, and the EU now says that the regulation will come into force in the second half of 2019. This presents the problem that the amendment addresses. The Bill assumes that we will have left the EU on 29 March 2019, so the new regulation will not be incorporated by this Bill into UK law. Without the amendment, though, the old directive will be, or could be, incorporated. Either way, that means we will not be aligned to the new regulation when it comes into force in the second half of 2019. We will not be part of a group of 28 member states when it comes to conducting clinical trials; we will be a group of one outside a group of 27. The consequences of that for clinical trials in the UK would be disastrous, as they would for UK medical research, for research in the NHS and for our attraction as a research base for pharmaceutical companies.

The amendment of the noble Lord, Lord Patel, takes no political stance and no view about the merits or otherwise of Brexit. It simply says that the Government must not incorporate the old, defective clinical-trials-directive-derived legislation into UK law before the Government have reported to both Houses about the costs and benefits of adopting the new EU clinical trials regulation.

I entirely support the amendment and believe it to be necessary, but I also believe it does not go far enough in ensuring that we are compliant with the new regulation from the day that it applies. That is what we need, not just to protect existing trials but to make certain that we are part of the new regime, which after all we were instrumental in creating. I very much hope that the Minister will take the amendment as the beginnings of a conversation about how to adopt or realign with the new regulation on day one of applicability, and I hope that he will be able—on Report if not today—to make a firm commitment to aligning the UK with the new regulation from the day that it becomes applicable.

My Lords, I have added my name to this amendment. Unlike many amendments to the Bill, this one really is intended to be helpful to the Government and the Bill. Unlike many, it has a genuine point to make and is not merely an excuse to filibuster. Unlike some speeches in support of the amendments, when I say I shall be brief I shall mean it.

As the noble Lord, Lord Patel, says, the Prime Minister’s speech 10 days ago removed the need for lots of amendments to the Bill. In saying that we intend to join or align with the European Medicines Agency if possible, I think she has effectively indicated that the amendment is welcome. However, it is worth pressing the point briefly to get clarity. The background, as the noble Lord, Lord Sharkey, has said, is that the EU passed a disastrous clinical trials directive in 2004, destroying much of a thriving British clinical trial industry almost overnight—a crown jewel of our world-leading biomedical sector. It was not one of Brussels’ finest hours. None the less, the UK remains the leader in Europe and one of the leaders in the world in discovering, developing and testing new treatments for diseases, thanks to our strong pharmaceutical industry and our superb academic sector.

The UK’s MHRA—I shall not spell it out; we know what it stands for—in particular has been instrumental in designing and delivering a robust regulatory environment across the EU, providing an attractive and harmonised framework for clinical trials. It is the senior agency relating to the EMA. This includes reviewing the shortfalls of the clinical trials directive and putting its considerable expertise towards drafting the new clinical trials regulation that is coming along to undo some of the harm done by the 2004 directive.

We have already agreed to the CTR in full but, as the noble Lord, Lord Patel, says, due to a minor delay we risk not only failing to adopt its vastly improved principles in data sharing and expedience but, in the process, losing alignment with our European partners on vital shared research. The CTR will be applied in late 2019, as opposed to this year as originally planned. It will therefore not be covered by the EU withdrawal Bill as it stands. The resulting uncertainty is already having an effect. Clinical trials can run over many years and require significant planning. Uncertainty is already having consequences.

The Government have sent out strong signals that the UK should be a leading centre for the life sciences through the life sciences industrial strategy and associated sector deal. Aligning with the CTR and allowing collaboration to continue to underpin the UK’s thriving research sector will help the Government to achieve that ambition. I and many others are rightly concerned about new regulations that could come in during the implementation period that the UK will have no say in. The clinical trials regulation is categorically not one of those. It was devised with enormous input from British research expertise, was fully agreed to by British representatives in the EU and is regarded as a significant step forward for the governance of cross-national clinical trials. So I hope the Minister will be able to reassure us and the vital biomedical sector in this country by clarifying that we will align with the CTR, as implied by the Prime Minister 10 days ago.

My Lords, I support the noble Lord, Lord Patel, on his amendment. As we have heard, the proposed revision to the clinical trials directive, the agreed clinical trials regulation, is vital. Despite many positive aspects of the directive, which was applied in the United Kingdom in 2004, it is regrettable that our contribution to clinical trials globally in the period from 2000 to 2010 diminished from 6% of all patients who went into clinical trials in 2000 to just 1.4% in 2010. That was why clinical researchers from not only the United Kingdom but throughout the European Union came together to undertake a thorough revision which resulted in the 2014 clinical trials regulation.

The regulation is quite complicated. It has two attendant regulations: one, 2017/556, deals with the regimen that will be applied to inspection of clinical trials in the European Union after the regulation comes into force; the other, 2017/1569, deals with the manufacturing standards that need to be applied to interventional products that are being assessed in clinical trials. Those two regulations also need to be considered along with the 2014 regulation.

The real concern, from looking at information available about the regulation, is that for non-member states of the European Union, there is an obligation to continue to apply the 2004 clinical trials directive, also recognising elements of the new regulations once they come into force across the European Union. How do Her Majesty’s Government intend to deal with the broader issue? The amendment is designed to ensure that once the regulation is fully adopted across the European Union in late 2019, so it will be applied in the United Kingdom. There are other considerations about being a non-member of the European Union with regard to what is stated about the standards that need to be applied to clinical trials. What approach do Her Majesty’s Government propose to take there?

It seems counterintuitive that, as things stand, if no action is taken, our country will be left with a clinical trials directive that was considered throughout the European Union to be in need of revision. That revision has been undertaken in such a way that it will make the performance of clinical trials more effective, efficient and responsive to the different nature of trials being undertaken and provide an appropriate level of bureaucratic intervention for individual trials to ensure the protection of patients. It would seem completely wrong, having led the revision of the clinical trials regulation, for our country to be left behind with a directive on its statute book that continued to make clinical research more difficult.

These are vital matters, because often when designing a clinical trial there is a long lag period. One takes one or two years beforehand to develop a protocol, identify participating sites and determine what regulatory framework the trial is to be conducted under. Therefore, early reassurance in these matters is critical. A failure to provide that early reassurance may lead for some years to a diminution of the contribution that our country can make to clinical research. As we have heard, that would be detrimental to our entire life sciences industry.

My Lords, as a former pharmaceutical and life sciences Minister, I rise to support the modest amendment moved by the noble Lord, Lord Patel. I have done my time in the salt mines of trying to streamline the processes for undertaking clinical trials in this country. Despite what the noble Viscount, Lord Ridley, said, it was not just the 2004 directive that caused problems for clinical trials in this country; it was sometimes the sheer bureaucracy of securing agreement to undertaking them, which has contributed to the departure of clinical trials and sometimes investment by big pharma in this country. It is all very convenient at present in some quarters to lay the blame at the door of the EU, but there are historical facts that support a more balanced view of the 2004 clinical trials directive.

From my experience, I know how critical it is for securing a flourishing pharmaceutical and life sciences industry in the UK, and the investment and jobs that that brings. For a decade or so, we have struggled to maintain the level of clinical trials undertaken in this country, and the pharmaceutical industry’s investment in the UK has been dropping. A number of people have made that point time and again in this House in debates with the Government on this issue. The new EU clinical trials regulation will have an incredible impact on the system for conducting clinical trials across Europe with its new single data portal. That point has been made very clearly by the noble Lords, Lord Patel and Lord Kakkar. We have to be a part of this future development if we are to protect our position on clinical trials and life sciences inward investment. That is why it is so important to have an amendment of this kind in the Bill.

I do not think it is fair to say that the Prime Minister’s speech of a fortnight ago is sufficient guarantee that everything will be all right on the night. We have had a number of those speeches on a number of subjects, which tend to show that it will not necessarily be all right on the night. The show may go on but UK participation in the show may be sadly absent in some areas that are critical to this country, as this particular sector of industry is. That is why we have to look a little more carefully at what sort of guarantees we want and that the spirit and meaning of the noble Lord’s amendment is guaranteed in the future.

I do not think we can just rest on ministerial assurances. It has been a convention in this House—I have been in it for nearly 20 years—that we accept ministerial assurances. However, on Brexit, ministerial assurances, while well-intentioned, are not always good enough to ensure that British interests will be guaranteed after we have left the European Union. That is why we need more than simply ministerial assurances. I would like to hear the Minister’s explanations of what the Government’s policies are and what they will do. I for one want to see an amendment of this kind to the Bill before it leaves this House. This issue is too important for a major sector of our economy. It is one of life’s great ironies that we, who have been a moving force in improving clinical trials with proposals for such trials in the EU could, by one of the strange fates of history, be unable to benefit from those improvements if we are not very careful. I hope the Minister will give us an explanation, but it will need just a bit more than warm words to give us guarantees on this issue before the Bill leaves this House.

My Lords, I am not an expert in clinical trials but there are remarkable similarities between the discussion on this Amendment 84, moved by the noble Lord, Lord Patel, and words expressed by the noble Lord, Lord Kakkar, at Second Reading on that group of directives and regulations that will have been adopted but not implemented at the time of Brexit. We had a full discussion, which I will not repeat at this time, but which was spoken to very eloquently by the noble Lords, Lord Wigley, Lord Judd, Lord Liddle, and, I think, the noble Baroness, Lady Young of Old Scone. The noble Lord, Lord Wigley, mentioned 23 directives identified by the House of Commons Library that fall potentially into this category. This is too important an area for us to risk being out of kilter, whether in clinical trials, the circular economy—as identified by the noble Baroness, Lady Young—or a number of environmental directives, to which I referred. This is too important an area—where Britain has been at the forefront of and party to all discussions at earlier stages—for us no longer to be aligned at the point of Brexit.

My Lords, I support the amendment because I think it is very important after all the points that have been made by previous speakers.

In my Second Reading speech, I referred to something slightly different: a loss of some £32 million to nuclear research, which would have gone to 25 university institutions, as a consequence of leaving Euratom and the Horizon 2020 project. The key benefits of the CTR are the improvement in collaboration, information sharing and decision-making between member states, as well as maintaining high safety standards for all participants in EU clinical trials. Withdrawing from these arrangements will have a negative effect on UK research and clinical trials.

The PM’s speech has been mentioned. It is worth reading because this is perhaps about holding her to account. She said:

“We will … explore … terms on which the UK could remain part of EU agencies such as those that are critical for the chemicals, medicines and aerospace industries”.

There is an opportunity here to hold her to account because it sounds as if the decision that was made early on to withdraw from Euratom was rather hasty and the consequences of it are only now beginning to dawn. The amendment is essential to re-establishing the research collaboration that we need with the EU, which has benefited us greatly in the past.

My Lords, much has been said in support of the amendment. I do not see how the Government can argue against us going along with the flow of modernising regulation.

I hope that in responding the Minister might consider what we will lose if we do not go down this route. Quite apart from losing the ability to attract pharma here and so on, it is important to record that many research groups that currently collaborate with European researchers know that their only future to pursue research—and want to do so under the new, better framework—means that they will effectively have to move, either to Dublin or Amsterdam. Those are the two main university hubs currently being looked at, although others in other parts of Europe are too. It becomes very easy for very high-powered researchers to move into different academic units, yet if we do not have biological and life sciences research here as new discoveries are made, we will not reap any economic rewards from those discoveries—quite apart from then not having the industries to produce whatever has been discovered.

I hope the Minister will consider very carefully that the amendment is absolutely essential going forward. Irrespective of what we think of Brexit, we need to be part of this group. If we are not, we will massively become a loser.

My Lords, I entirely support the main thrust of the amendment in the sense of seeking, if at all possible, to secure the benefits of the agreement already entered into—but not yet implemented—to which the noble Lord, Lord Patel, referred. This is not the only one that we have come across in the course of our discussions to date. The amendment does not actually produce anything except a sort of stop, so I wonder whether it would be possible, indeed acceptable, to Her Majesty’s Government to amend the Bill to allow discretion to use EU proposals to which we have already agreed and, in some cases, initiated and worked out in great detail—this is certainly a very important one, but there are others; that is, an amendment that would move, in a sense, the centre of the Bill. Of course, the Bill is a snapshot of what happens on Brexit day, but unfortunately some of the good things may escape because they are not yet implemented in time for Brexit. I therefore wonder whether it would be feasible to introduce an amendment to the Bill to give the Government a discretion to put into effect, in our law, agreements already made which are judged to be of use to this country after Brexit.

I strongly support the view that clinical trials are an absolutely essential aspect of our life. From time to time I have been involved in seeing just how complicated they are. One of the bureaucratic difficulties is that if you have a number of clinical trials in different hospitals for the same matter you have to get the consent of the ethics committee in each one. They all have an ego of their own so getting agreement is not always easy. The proposal which the EU has adopted, and which will come into effect in due course, is an extremely important step forward. I would like to see the power to implement and use it being adopted in the Bill. I suggest, as a possibility, that the Minister should have discretion to adopt such measures of EU law which are agreed to but not yet in force. This deals with a point debated earlier at the instance of my noble friend.

I will add a brief note of agreement with the amendment, for the obvious reason that this country’s pharmaceutical industry is our most important and must be involved in drug trials. I have seen this myself, having been involved with various clinical trials in the past. These have been of benefit to British patients and, subsequently, to our economy.

My Lords, I have a tentative question. If it is true that we do not trust our own legal environment with medical research in which, as has been said, we have great expertise, why should we trust ourselves with anything else? Across the whole of the Bill, responsibility is being transferred to this country. Why should we not be able to do that for medical research as much as for anything else?

This benefits all patient populations, and is particularly important for paediatric and rare cancers—diseases which, precisely because they are uncommon, are among the hardest to research and treat. You therefore need a larger pool than the 66 million people who live in this country: Europe has a combined population of 510 million to draw on. That is nothing to do with trust; it is to do with how clinical trials need to be carried out. You need a larger pool of patients to test these drugs.

I was pleased to add my name to the amendment in the name of the noble Lord, Lord Patel. I raised this issue in my speech at Second Reading and will mention only one additional matter, which is to do with rare paediatric illness; tumour types which affect relatively few people; and rare cancers which translate to over 20% of all cancer diagnoses across the world. If the UK is to make progress on therapies for paediatric and rare cancer, it is vital that we can work closely with EU nations on clinical trials. Cross-border collaboration is crucial to paediatric and rare cancer clinical trials. Some 75% of clinical trials in the EU involve cross-national collaboration, rising to 86% for rare disease trials. As noble Lords have remarked, that is because of the patient population across Europe. We will be doing a huge disservice to our children, and to the cancers which threaten a few of them, if we fall out of this system. It is as simple as that.

The BEACON clinical trial system is an example of how cross-national collaboration is fighting back against rare paediatric cancers. Neuroblastoma is a form of cancer that affects around 100 children, mostly under the age of five, every year in the UK. More than half the children with aggressive forms of the cancer will see it return and, for these children, there are few treatment options left. In 2013, Cancer Research UK scientists and paediatric cancer specialists launched the BEACON-neuroblastoma trial to find the best chemotherapy treatment for children and young adults with recurring neuroblastoma. To do this, it is bringing together clinicians and scientists from 10 European countries and two international consortia, with funding from Cancer Research UK and European partners. It is a fantastic example of successful European collaboration. The rarity of this neuroblastoma and the low number of patients means that trials could not have happened in a single European country. It is vital that this type of cancer trial—

Given the noble Baroness’s expertise on this issue, I wish to ask her a question. As I understand it, medicine is becoming more and more personalised and customised. Therefore, by definition, the pool for a far wider suite of diseases is becoming smaller and smaller because of that much narrower customisation and personalisation. Therefore, the situation with rare diseases today is about to become the norm across a very wide range of diseases. Does the noble Baroness read it that way?

I absolutely agree with the noble Baroness. In fact, several noble Lords who are much more expert on this have already mentioned that aspect. The noble Baroness is absolutely right. I do not think I need to say anything more. I think this amendment is the remedy. I hope that the Government will respond positively to it. The case is unanswerable.

My Lords, when she replies, will the Minister comment on the remarks of her noble and learned friend Lord Keen of Elie on 28 February, when we discussed this issue in the context of directives whose implementation date was beyond exit day? The noble and learned Lord addressed this issue, partly because the noble Baroness, Lady Hayter, mentioned regulations. In his reply, he said something rather interesting: namely:

“There are examples of regulations … where we accept that the regulation has come into domestic law but its actual operation is deferred, perhaps until 2020”.

I think that date was given just as an example. The noble and learned Lord continued:

“That regulation … will form part of our domestic law at the exit date, even though the operative provisions come into force only after the exit date”.—[Official Report, 28/2/18; col. 690.]

Will the Minister clarify whether she believes that the clinical trials regulation falls into the category envisaged by the noble and learned Lord, Lord Keen of Elie? If not, why not?

My Lords, I am very grateful to the noble Lord, Lord Patel, for raising this extremely important issue, and to all your Lordships who have contributed so authoritatively to the discussion on this amendment. It provides me with the opportunity to set out the Government’s position on the regulation of clinical trials and the introduction of the new EU clinical trials regulation.

As I am sure the noble Lord is aware, the MHRA is working towards the implementation of the new clinical trials regulation. The new regulation, agreed in 2014, is a major step forward as it will enable a streamlined application process, harmonised assessment procedure, single portal for all EU clinical trials and simplified reporting procedures, including for multi-member state trials. This has been widely welcomed by the industry.

A key priority for the Government throughout the negotiations is to ensure that the UK remains one of the best places in the world for science and innovation. Noble Lords will be aware that the life sciences sector in the UK is world-leading, a point emphasised by my noble friend Lord Ridley. It generates turnover of over £63.5 billion per annum and the UK ranks top in major European economies for life sciences foreign direct investment. There are over 5,000 life sciences companies in the UK, with nearly 235,000 employees, and the Government are determined to build on this success as we leave the EU.

But it is not just UK industry that benefits from a thriving life sciences sector. More importantly, UK patients benefit from having access to the most innovative and cost-effective treatment available. That is why the Secretary of State for Health and Social Care committed to a post-exit regulatory system underpinned by three key principles: first, patients would not be disadvantaged; secondly, innovators should be able to get their products to market in the UK as quickly and simply as possible; and, thirdly, the UK should continue to play a leading role in promoting public health.

The UK has a strong history of collaborating with European partners through EU, pan-European and other multilateral and bilateral initiatives. I entirely agree with your Lordships that it is in the interest of patients and the life sciences industry across Europe for the UK and the EU to find a way to continue co-operation in the field of clinical trials, and for continued sharing of data and information, even if our precise relationship with the EU will by necessity change.

As the Prime Minister outlined in her Mansion House speech on 2 March, the UK is keen to explore with the EU the terms on which the UK could remain part of EU agencies such as the European Medicines Agency. Membership of the European Medicines Agency would mean investment in new, innovative medicines continuing in the UK, and it would mean these medicines getting to patients faster as firms prioritise larger markets when they start the lengthy process of seeking authorisations. But it would also be good for the EU, because the UK regulator assesses more new medicines than any other member state. These matters are all key components of the negotiations.

Can I ask for clarification on the subject which we discuss fairly frequently in this House: the jurisdiction of the European Court of Justice? Is it the Minister’s understanding that any disputes under this new regulation, when it is in operation, would be settled under that jurisdiction whether or not the UK was in the EU? Would she therefore accept that there is a risk that we might not always be able to benefit from the advantages in this set of regulations?

I thank the noble Lord for his intervention. This is an area where a dispute resolution procedure will have to be agreed, and that is currently part of the negotiations.

I will continue with the point I was making; there were many frankly authoritative contributions to this debate. I cannot pre-empt the negotiations, nor can I disadvantage the UK’s position in these negotiations by giving premature guarantees at this time.

Could the noble Baroness answer the question that was posed by the noble Baroness, Lady Ludford, and the noble and learned Lord, Lord Mackay of Clashfern? She seems to think that this will be a matter for negotiation. However, if the Government were to rule that we would bring within the scope of the Bill European laws which had been adopted but whose date of entry into effect fell after the exit date, you would not need to negotiate at all. Have not the Government enough things to negotiate about?

With respect, I am not sure that I entirely agree with the noble Lord. I am coming to the points raised by the noble Baroness, Lady Ludford, and my noble and learned friend Lord Mackay of Clashfern.

I assure noble Lords that the Government will continue to seek the best possible deal for the UK and that the Government continue to undertake a huge amount of preparatory work relating to the UK’s exit from the EU under all scenarios. This includes correcting any deficiencies that could arise from withdrawal in relation to the regulation of clinical trials where the UK’s exit from the EU would result in the retained EU law which governs the regimes being deficient or not operating effectively. The application date of this regulation is linked to a new EU portal and database being in place. As a number of your Lordships have observed, this has been delayed on multiple occasions, and the latest intelligence suggests that it will apply from March 2020. Perhaps I may clarify for the noble Baroness, Lady Ludford, that, for that reason, it is almost certain that this regulation will not be caught by Clause 3 of the Bill. The existing UK legislation, based on the current EU clinical trials directive, will be corrected using the—

At this point, we are not entirely in control of matters regarding the future. I know that it is frustrating for many of your Lordships, but that is where we have to deal with the negotiations.

I am not an expert in any of these matters, but it is a bit of a puzzle. Why would we want to bring into our legislation regulations which everyone accepts are not fit for purpose, and not bring into effect immediately—

I am referring there to the old regulations. The new regulations would provide for a better regime and—this is the most important point, which I hope my noble friend will deal with—enable people to plan ahead for their clinical trials in the future. They need to know which regulatory regime will apply.

I thank my noble friend for his intervention. I was about to say that the existing UK legislation based on the current clinical trials directive will be corrected using the powers in this Bill so that that regime continues to function properly when the UK is no longer a member of the EU. This will mean that there is no interruption in UK clinical trials approval. Perhaps I may deal with the point raised by the noble Lord, Lord Kakkar.

I thank the Minister for letting me ask her a question. First, how will that operate if we continue to apply the directive and the other member states apply the updated regulation? There is a rather peculiar situation in justice and home affairs where that is envisaged, although I have never been sure how it is supposed to operate. Perhaps she can tell us how it will operate for clinical trials and how we will avoid a bumpy playing field. Secondly, can she explain what the noble and learned Lord, Lord Keen of Elie, meant? What category of regulations was he talking about if he was not talking about the clinical trials regulation?

Taking the last point first, I will need to check that out in Hansard because I do not recall in detail the point to which the noble Baroness is referring. I say to my noble friend Lord Forsyth that the practical difficulty we have is that we have something that we all agree is very good but is not yet functioning EU law. Of course, this Bill is concerned with a snapshot—making sure that we do not go down a large legislative hole with gaps in our body of law. The Bill means that we have to bring over what is there at the point that we leave. One consequence of being in charge of our own legislative functions after Brexit is that we are free to make such changes as we wish. Perhaps I may try to deal with the point—

With all respect to the noble Lord, Lord Warner, I will come back to him but I am trying to deal with a point that has been raised. I think that two issues are getting conflated. My noble and learned friend Lord Mackay raised an interesting point about alignment of our law post Brexit. As I have just been trying to explain, to that extent matters lie in our own hands, and obviously any Government would legislate in the best interests of the UK. However, my noble friend’s question also embraces matters which, under the new clinical trials regulation, will reach into the EU. They will concern EU agencies and regimes, and these will be capable of being embraced by the UK only if we can negotiate that.

I think the noble Baroness might want to have a conversation with the noble Lord sitting on her left. As a former pharmaceuticals and life sciences Minister, I know only too well that the pharmaceutical industry, including the biotech industry, makes decisions on planning its clinical trials quite a long way ahead. It would be a pretty strange company that, knowing there were going to be a new set of rules for 27 countries in the EU, which it would be of much greater benefit to participate in, entered into clinical trials with the one country that was not in that set of arrangements and which was using the 2004 clinical trials directive. Can the Minister explain how she expects big pharma and biotech companies to make sensible investment decisions on the basis of the sorts of assurances she has given the House in this debate?

I think these businesses understand the very real and practical challenges that confront the Government in the unprecedented complexity of a process to leave the EU: that is, when we leave, we will not be part of the body of EU member states nor its regimes, agencies and institutions. However, there is no reason to imagine that in the UK post Brexit we will not continue to be at the forefront of the life sciences or that we will not have the most excellent regime of clinical trials regulatory structures. These will fall within our control.

I am increasingly puzzled by this conversation. If you are doing a clinical trial, you have to harmonise all the arms of that trial for it to be randomly and properly assessed and for its statistics to be valid. Is the noble Baroness suggesting that we do our own small trials, irrespective of what is going on in a much larger pool of people? Does she not understand that, given the genetic diversity of the European population, the more people who are involved in the same trial, the more relevant the answers to the trial are, particularly in cases such as cancer, where they are all under the same rules?

I am not in any way diminishing the important point that the noble Lord makes. I am pointing out that there are many types of clinical trials—for example, at the moment we are engaged in partnerships with non-EU countries. However, the Prime Minister has made it clear that we desire to have the closest possible relationship with the EU. We think that the systems we have been engaged in around clinical trials have been very strong, good and important.

My Lords, it was not my intention to intervene. I am sorry to do so but it has been forced upon me. I think there is a fundamental failure of understanding here. Clinical trials are planned over a long time: it takes at least six to eight months to plan a clinical trial; it takes a lot of collaboration to find out whether we will be able to recruit the same category of patients; and we are required to understand whether the people who volunteer to join the trial have the necessary patience to do so. Because of this time lag, my amendment seeks to raise a very simple question. We had agreed to a regulation—the new clinical trials regulation—and we believed that it would come into force this year and therefore would be incorporated into the current European Union (Withdrawal) Bill. By a quirk of fate, that will not happen. But we have already agreed to have it in the Bill, so, as the noble Lord, Lord Forsyth, said, what is the problem with incorporating it in the Bill?

The problem is that the Bill is intended to transfer a body of law from A to B. At the moment, this regulation is incomplete: it has not been enacted and it is not currently in the body of EU law. That is why there is a risk that it will not be covered under this Bill.

I wonder whether the noble Baroness will take this slightly different point. If, as is argued, the clinical trials regulation will not form part of the applied European law at the time of exit, clinical trials will still have to be conducted under some form of law in our country, and that will be the 2004 directive that currently applies. If that goes forward, what ultimately will happen is that everything we know that is wrong with that directive, and which has been corrected by the new regulations, will apply in our own country. Even if we continue to be active participants in clinical research, we will be so under the less satisfactory situation of the current 2004 directive unless the Government decide to modify that directive. As there must be a legal basis for undertaking clinical research, does it not seem logical simply to apply what we have already agreed is a sensible approach rather than having to reinvent a new basis for legal provision to undertake clinical trials in our country?

I partly agree with what the noble Lord is saying because if this regulation has not become law before we leave, we can use Clause 7 of the Bill to attend to deficiencies, amend or correct, and that is what we will do to keep our own regime of law up to date. However, at this point it is impossible for the Government to go further than that and embrace matters which are potentially directly enactable under this new regulation and involve the EU, which implies that you have to be a member of the EU and a part of the agency. We have a strong desire to see that kind of partnership continue, but it can only continue if it is successfully negotiated.

Does not the Minister consider there to be a substantial risk? As I understand it, non-member states of the European Union are obliged to be fully compliant with the 2004 clinical trials directive. If we become non-members of the European Union and do not have an agreement in this area prior to leaving, will we not be forced to continue under the 2004 directive if we wish to participate in the data and information generated from clinical research being applicable more broadly for those who wish to take their arguments for adoption of those findings, and authorisation of new medicinal products as a result of those findings, in the European Union?

My noble friend Lord O’Shaughnessy, who is advising me, says that once there is a new regime in Europe, all non-member states will have to make a decision about whether or not to be compliant with that. We hope that in our Brexit negotiations we have made clear—the Prime Minister has emphasised this—the huge importance we attach to these issues. They are massively important and we want to get a positive outcome in the negotiations, but it would be premature at this stage to incorporate into this Bill the anticipated enactment of the new regulation because it might be inert law.

I have already written to the Minister asking for a meeting to discuss this issue and have copied the letter to many noble Lords. It is important that we have the meeting before the next stage of the Bill.

I am happy, as are my colleagues, to engage in and attend meetings and to listen to the views expressed.

I was going to make an observation about the amendment of the noble Lord, Lord Patel. The noble Lord, Lord Kakkar, made an important point about how we deal with whatever law we will have if this new regulation has not become law when we leave. It is important that we have the flexibility in the Bill to deal with such matters but, under the amendment of the noble Lord, Lord Patel—I am sure it is not intentional—there could inadvertently be a delay in dealing with them as we leave because his amendment stipulates that Clause 7 powers could not make regulations until a report had been laid before both Houses assessing the costs and benefits of adopting the new EU regulation. We do not know when that is coming through. We think it might be March 2020—we do not know—but in the meantime we could be in limbo in trying to do the very things that noble Lords want us to be able to do in respect of the existing law. For these reasons, I urge the noble Lord to withdraw his amendment.

Can the noble Baroness clarify her constant references to Clause 7? As I understand the clause, it is intended to allow Ministers for a period of two years to introduce regulations to remedy deficiencies that come to light during that two-year period. But if we know patently, as has been illustrated in this debate, that there is a severe deficiency that we know about before Brexit, Clause 7 is not designed for that at all and the noble Baroness should not be relying on it. She should instead accept an amendment of this general kind.

Clause 7 is designed to address identified deficiencies post Brexit where our existing clinical trials regime may include references to EU bodies and institutions, but those would no longer be correct or competent and an amendment would be necessary. In response to the point made by the noble Lord, Lord Carlile, it goes back to what may be, and I hope will be, a very positive outcome to the negotiations. In that case, many of these fears will be assuaged, but I cannot second guess the negotiations and I cannot give premature guarantees that might be completely inappropriate.

My Lords, I do not think that I am the only Member of the Committee who is listening with increasing bewilderment to my noble friend’s reply to this amendment, particularly her constant references to negotiations. This is not an issue for negotiation, this is an issue where we have agreed to the new directive and there is nothing to negotiate; rather, we will implement it in the best and most effective way we can. Is she suggesting that if we say we wish to implement the directive, the European Union will come back to us and say, “No, you can’t”?

With the greatest respect to my noble friend, it is a matter for the negotiations. We cannot remain part of the European Medicines Agency unless that is agreed in the negotiations. The other aspects of the regulations, if they are subsequently enacted, will require us to adjust and adapt our UK law to be consistent with whatever the regulation provides.

My Lords, perhaps I may make what I hope is a helpful suggestion. This is not a unique regulation. There is a class of regulations and directives, some of which have now been agreed but not implemented and others that, as the noble Lord, Lord Wigley, and others have observed, are currently moving through the policy-making process and may or may not have been agreed by March 2019. The Government must have a list of all of these and must have a clear idea of which ones they think we automatically ought to accept, others that we would prefer not to accept and those about which they are not entirely decided. Since we are all concerned about giving business as much certainty as far ahead as possible, will the Government commit to publishing that list so that we can see where we are and come back on a more informed basis to discuss which of these directives and regulations that have been passed but not yet implemented automatically ought to go into British law and which of those going through are or are not thought to be in the national interest?

Perhaps I may draw the noble Baroness’s attention to Clause 3(3)(a):

“For the purposes of this Act, any direct EU legislation is operative immediately before exit day if—

(a) in the case of anything which comes into force at a particular time”.

The regulation came into force in June 2014, 20 days after its publication in the Official Journal and is stated to apply from a later date—that is, 2020 when the EMA certifies that the portal and the database are ready,

“it is in force and applies immediately before exit day”.

This regulation is not only in force, but it applies before exit day according to the Government’s own proposed legislation. Have I misread Clause 3(3)(a)?

I am looking at the provision and my understanding is that technically, the character of the regulation that we are discussing is that it is not currently in force.

Forgive me, but according to Article 90-something of the regulation, it came into force 20 days after it was published in the Official Journal. That was in May 2014. Therefore, it was in force some time in June. It applies from a date to be specified once the EMA has done its homework.

I am certainly interested in the point that the noble Baroness raises. I suspect that we have probably exhausted all possible aspects of this discussion, but I undertake to look at that point. As I said, I do not have technical information available, but I will certainly have that point clarified.

We have established in this debate and in the earlier debates on Amendments 18 and 81 that precisely what the Government may wish to do, and what this amendment and Amendment 18 try to do, to which my noble and learned friend Lord Mackay has given a very elegant solution, are not permitted by the Bill. There is no legal basis. Will my noble friend come forward with a form of words to cover the 23 eventualities in the form of directives identified by the Library and other situations in the directive that apply to regulations, such as this, to give a legal basis to permit the Government to have the discretion where they choose to do so to implement the content of those directives and regulations at that time?

If Clause 3(3) will not do the trick, will the Minister please take advice about whether we need to add EU regulation 536/2014 to the group of matters raised in Clause 2(2)?

I must apologise to the noble and learned Lord; the Chief Whip sat down and bumped into me, so I was distracted from hearing what he had to say. I certainly offer to come back to that point.

My Lords, it is difficult for me to sum up. The message is quite clear to me, although that might merely be perception, that my friend, the noble Baroness, Lady Goldie, is in some difficulty. It is quite clear to all those who understand the amendment—and, more importantly, the European trials regulation and the law as specified in the Bill—that there is no reason why we cannot incorporate this into the Bill.

The noble Lord, Lord Warner, suggested that we might need to bring another amendment; I suppose he means with the view to having a vote. That was not my intention when I tabled the amendment. It was merely to clarify the Government’s position on importing the European trials regulation into the Bill as we are the prime movers of the regulation and we are formulating it. The solution identified by the noble and learned Lord, Lord Mackay of Clashfern, seems to be the answer to cover all such regulations that we might have agreed to and might come into force. This is not the first time that he has come to my rescue. He has done so twice before, on admixed embryos and on mental health having equal esteem. Both times they were put to the vote and the votes were won—so that is a warning.

I hope the Minister might agree that more work needs to be done on this by Ministers. I am glad to understand that the noble Lord, Lord Callanan, is to meet with Cancer Research UK and others at some stage in March, I assume to discuss this and other science issues. I hope he will agree that there might be a place for the Ministers to meet and see whether there is a solution. Otherwise, I fear that either there will be an amendment in the form suggested by the noble and learned Lord, Lord Mackay, or, if it is not me, somebody else will table an amendment. We can tell from the support this amendment received even from strong Brexiteers such as the noble Lords, Lord Lawson and Lord Forsyth, and the noble Viscount, Lord Ridley, that such an amendment might be carried.

As a result of this debate, could the noble Lord consider the possibility that he, I and the other supporters of the amendment have been doing so on false pretences—that is, on the assumption that some action is needed to make it come into law—whereas, if the noble Baroness, Lady Ludford, and the noble and learned Lord, Lord Judge, are right, perhaps it automatically does? That might explain the problems that we have got into today, and we would have wasted an hour and a quarter on something that might not matter.

I thank the noble Lord. That is why I hope the meeting will help the noble and learned Lord, Lord Judge, and others to clarify that the amendment was not necessary, in which case we are saying that any such regulation that we have agreed to stands. On that basis, I beg leave to withdraw the amendment.

Amendment 84 withdrawn.

Amendment 85 not moved.

Amendment 86

Moved by

86: Clause 7, page 6, line 15, at end insert “fees or charges,”

My Lords, I shall speak sparingly to this amendment and others in this group given the expertise and experience of those others whose names are on them. Of course, it is traditionally not for this House to decide anything on the raising of taxes, but we have a role in considering the powers to raise fees or charges. This is the nub.

Without having spelled out why they consider that such powers need to be created and to whom they might be given, Ministers have decided that they should by mere secondary legislation be able to levy funds from—we assume—business and individuals. I shall leave it to those whose names are on the amendments to spell out rather more than I will their disquiet over such powers. I will then listen with great interest to what excuses the Minister is able to dream up to explain this particularly extraordinary Henry VIII power. I beg to move.

My Lords, I regret that I was unable to attend all of Wednesday’s Committee stage, thereby missing a number of important speeches, but I have the opportunity now to speak on behalf of the noble Lord, Lord O’Donnell. I hope that your Lordships will accept that one Treasury ex-Permanent Secretary is a fair swap for another.

I particularly admired the speech of my immediate predecessor, the noble Lord, Lord Wilson of Dinton, who set out the proliferation of players and organisations who could have the right to make secondary legislation out of this Bill and the low hurdle they have to get over. These amendments raise important issues on the scope of secondary legislation, some of which has important constitutional implications.

The report of the Delegated Powers and Regulatory Reform Committee has pointed out that it is a long-standing principle—of some 330 years—that the introduction of taxation or its increase should not be permitted simply by secondary legislation. Amendments to Clauses 7, 8 and 9 rightly insist that levying of taxes and increasing them should not be covered by these powers. They also point out that some fees and charges are equivalent to taxation and should be subject to the same constraints.

One can break down taxes, fees and charges into different categories. There are those that simply cover the costs incurred in administering a particular service—for example, passports. One can test this principle by looking at the annual trading account that an organisation produces to ensure that no surplus is generated. Secondary legislation may be appropriate for fees or charges which satisfy this condition.

Will the noble Lord help this Committee as to the distinction in law between a fee and a charge? At the moment, I am rather puzzled.

I am about to get to that. There are other fees and charges which, as a matter of policy, raise more than enough to cover costs and these should be treated as taxes. I think that in the national accounts, even if the words “fee” or “charge” or “levy” are used, statisticians look at the facts of the case. If there is this surplus generated beyond the simple covering of costs, then it would be classified as a tax.

If something generates a surplus, it is equivalent to a tax and should be covered by the same legislative understandings about taxes.

There is a third category, where a conscious policy relates the fee not according to how much it costs to administer that piece of service to a business or a household but to something like wealth or income. The most egregious example of this was the recently introduced change in the schedule of probate charges, where larger estates are being asked to pay not what it costs to administer the probate but according to the size of the estate, producing charges many times greater than the pure costs. We need to decide in this amendment whether all fees and charges should be treated as taxes—that would be the simplest thing—or whether it is possible to make a distinction between those fees which are purely covering costs and those which go beyond, either in the total or in their social distribution. I hope that the Minister will agree to come back to this House with amendments which make that distinction.

The issue will resurface when we get to Amendments 348 and 349, which deal with Schedule 4, where we have the possibility that secondary legislation could be used to introduce fees and charges by a body that was itself created by secondary legislation. I should say that that would put us not just in double jeopardy but jeopardy squared. We are going to have to deal with the problem of these two points in our work on the Bill.

My Lords, I have put my name to Amendments 86 and 127. I will be very brief because the noble Lord, Lord Turnbull, has described the problem we have over fees, charges and legislation. I remember that, when I was on the board of Transport for London and we brought in the congestion charge, it was the alliterative nature of the word “charge” that led us to use it, rather than any legal definition. So my answer to the noble Viscount, Lord Hailsham, is that there may well be legal definitions but I think they are now observed in the breach on many an occasion.

The noble Viscount gives a superb example. We can think of parking charges and a whole wide variety. That is why it is really important that there is clarity over when a statutory instrument is the appropriate mechanism and when, frankly, it is not. The Bill as it stands does not give that clarity.

I also put my name to these amendments for another reason. Most in this Committee will remember the time of the tax credit debacle, a major policy change that most of us regarded as a change that should have been introduced as part of a welfare Act. The Government sought to accomplish that through a statutory instrument attached to a Finance Bill. Because of the nature of charges and money-type instruments, it is very possible to use them to affect very broad policy issues and not just the narrow issue of revenue raising. That is why Amendment 127, for example, is an important amendment, as are others in this category. We are all concerned about the inappropriate use of Henry VIII powers, since this Government have actually tried to use these to achieve those much broader policy ends in the past. We have to be sure that we are not leaving a mechanism by which that could be repeated, because that really would be a coach and horses through many of the concerns and issues that have been raised.

My Lords, I support the amendments in the name of the noble Baroness, Lady Hayter of Kentish Town, and I shall speak to Amendment 126, which is in my name and those of my noble and learned friend Lord Judge, my noble friend Lord Pannick and the noble Lord, Lord Tyler. Amendment 126 would bring Clause 8 into line with Clauses 7 and 9.

Taxation matters can be dealt with by statutory instrument. For example, they can restrict relief from Customs and Excise duties or VAT under the Customs and Excise Duties (General Reliefs) Act 1979. But taxation, as it is normally and properly understood, is undoubtedly a matter for primary legislation. What is troubling here is the potential width of these powers and the lack of indication of how the Government intend to use them.

The Delegated Powers Committee’s 12th report says:

“At committee stage in the House of Commons, the Parliamentary Under-Secretary of State for Exiting the European Union (Mr Robin Walker) indicated that the power to tax by statutory instrument in clause 8 was needed because the power was not available under clause 7”—

that is true enough. It continued by saying that,

“furthermore, taxation might be needed to ‘comply with international arrangements’”.

The committee then pointed out, and I entirely endorse what it said:

“The question which remains unanswered is why taxation by Ministers in statutory instruments is an acceptable alternative to taxation”,

approved by Parliament, with the normal rigour of the process, in primary legislation.

The Minister will need to give your Lordships some very hard examples of why a statutory instrument would be used and not primary legislation. If that is not known at this stage, the withdrawal and implementation Bill we are promised might well be the vehicle for making those changes in primary legislation, if the precise requirements are known at that stage. But this potentially wide power to tax by statutory instrument is, as I say, more than troubling. I am not suggesting that indications of how a power is expected to be used will in themselves suffice, although they should give your Lordships a clue to why the power is required, which is perhaps a more important question to address. What matters, of course, is what ends up in the Act. The use of the power then will not be trammelled by reassuring indications of how, at this stage, it is expected to be used.

Perhaps I may finish by enlarging on my noble friend Lord Turnbull’s masterly catalogue of fees and charges and their various characteristics, to add another category. In the financial procedure of the House of Commons, a fee that is levied and then applied for the good of the industry as a whole is not treated as a tax, so it does not require ways and means cover. As I say, that is merely a footnote to my noble friend’s excellent speech.

My Lords, I am a co-signatory to Amendment 126, as the noble Lord, Lord Lisvane, said. I want to underline a couple of the points he has made. This amendment derives, as he said, from the work of the Delegated Powers and Regulatory Reform Committee of your Lordships’ House, which, I remind the House, is cross-party and non-party. It is entirely devoted to advising the House on important issues relating to the way we handle secondary legislation.

The noble Lord, Lord Lisvane, has been characteristically modest in not quoting the committee’s specific comment, which is very powerful. It said at paragraph 20(c):

“The Government should demonstrate a convincing case (if one exists) before the supremacy of the House of Commons in financial matters gives way to taxation by statutory instrument”.

This may be only a minor incident, but it is part of a much bigger pattern. I worry—I am getting old, I think—that Ministers and civil servants do not seem to have spent quite so much time with their history books as I used to when I took a degree in that subject. The power of Parliament to hold the Executive to account in matters of taxation goes back beyond even the 300 years to which the noble Lord, Lord Turnbull, referred. It could be said to go back to Magna Carta or Simon de Montfort’s Parliament, or indeed to the decision of our colonial cousins to declare independence: “No taxation without representation”.

This is very sensitive territory. We are surely entitled to demand a full explanation of why the regulations under Clause 8, unlike those under Clauses 7 and 9, may impose new taxation or increase taxation, allowing the supremacy of the House of Commons in financial matters to give way to taxation by secondary legislation.

The noble Lord, Lord Lisvane, referred to some discussions that took place in the other place on 13 December, when the Minister, Robin Walker, sought to explain why the provisions of Clause 7 could not apply and why Clause 8 was necessary. I shall quote him in detail because I think it is important:

“In addition, there are restrictions on the use of clause 7 relating to, for example, taxation that might, in some circumstances, prevent important changes to comply with international arrangements from being made. We need this power because we need to be prepared for all eventualities”.—[Official Report, Commons, 13/12/17; col. 557.]

There are three triggers there: “taxation”, “important changes”—this is not just trivial stuff—and “all eventualities”. Throughout discussion on the Bill, we have constantly been told that Ministers require a great deal of room for manoeuvre and flexibility; they need to be able to move fast. In this case, they have made the case themselves for proper discussion and consideration. Matters relating to taxation in these circumstances require the most composite and careful care. We should be seeking comprehensive scrutiny, not the usual approval of SIs.

If any noble Lords on the Conservative Benches think these are trivial issues, I invite them to consider how a future Government of a distinctly different colour might choose to use these unprecedented powers in relation to taxation. The very important role of Parliament is here before your Lordships’ House today. I know we will be told of the need for speed, flexibility, expediency et cetera, and that all the usual excuses for slipshod legislation will be trotted out, but this is an issue of considerable principle and of considerable responsibility for your Lordships’ House and the other place, and we must do what we can to assist it to fulfil that responsibility. Whether or not Brexit actually happens, these amendments to this clause are of huge long-term importance. We could be establishing a precedent for taxation being treated as a secondary issue, rather than as a matter that should always come in the form of primary legislation.

I was disappointed not to have been able to be here last Wednesday for the Committee, but I noted with admiration the range of expertise from all over the House and the eloquence with which it was deployed. This is not an area we can simply wave through as though it were just some small technical question. This goes to the very heart of the balance between government and Parliament. I think it was the noble Lord, Lord Cormack, who last week quoted the late Lord Hailsham warning of a slide towards “elective dictatorship”. We are back there again this afternoon, and I say amen to that.

With some timidity, may I offer a cruder and less specialised perspective, somewhat along the lines of the noble Lord, Lord Tyler? Taxation and mandatory fees and charges are surely, in principle, cardinal to the social contract and the liberty of the subject—that is, the subject cedes liberty as part of a democratic deal. In the past when monarchs have attempted to impose taxes, Parliament has continually rebelled. It is Parliament’s job to decide taxation, fees and charges, through primary legislation. I deeply support these amendments.

My Lords, I support the amendments in this group, most notably Amendment 86, the lead amendment. The first thing to perhaps acknowledge is how wide the power is in Clause 7. I acknowledge that the Minister will make this point. The power proposed under Amendment 86 would be governed by the overarching provisions of Clause 7, but it is also fair to point out that Clause 7 has a very wide scope. If one looks at Clause 7(3), one sees that the Minister has a power to enlarge the interpretation of the legislation in question.

The second point is that if one looks at paragraph 2 of Schedule 7, one finds that a fee—an important word in this context—imposed by a public authority can be created only by the affirmative procedure. What the Committee needs to address, however, is the distinction between a fee and a charge. The noble Lord, Lord Turnbull, suggested a difference, which I think was that a charge involves a surplus, so that perhaps it should be treated as taxation. But I am not sure that definition is recognised by law.

I do not think I was making a distinction between fees and charges—they are just words. They broadly mean the same thing and both suffer from the same defect.

I am very grateful to the noble Lord and I am sorry if I misunderstood him, but I understood that he sought to suggest that a charge that creates a surplus in effect amounts to a tax. However, I am bound to say that if he is right and these things are essentially the same, that creates a very major problem. Paragraph 2 of Schedule 7 says that an instrument that allows the imposition of a fee by a public authority can be created only by affirmative resolution. But then, I ask rhetorically, what about a charge? If the fee is governed by the affirmative resolution procedure and a charge is not, we are in an extremely difficult situation. What is a charge? Incidentally, I am not sure this really helps the noble Lord, Lord Turnbull, but if one goes to paragraph 6 of Schedule 4, one finds the phrase “fees or other charges”, which rather suggests to me that there is a distinction between a fee and a charge.

I have a number of specific questions for my noble friend the Minister. First, what is the difference between a fee and a charge? Secondly, related to that, does the provision of paragraph 2 of Schedule 7, which insists that a fee can be imposed only after the creation of a power by an affirmative resolution, also apply to a charge? If it does not, we have a wonderful situation whereby the fee can be imposed only if the power is created by a statutory instrument of the affirmative kind but that is not true of the charge.

May I throw another word into this taxation Scrabble? What about the word “contribution”? Most of us in this House have paid national insurance contributions for most of our lives. Is that a tax, a charge, a fee or a contribution?

The point is a very sound one, although of course most of us no longer pay national insurance contributions. There is of course another word that one could use, which is “imposition”, as in a financial imposition. The real truth is that we are entitled to a proper definition.

Having focused on some specific narrow points, I would just like to look at one or two general ones. The first is the point that I made on Wednesday, and I shall keep a firm grip on it: any power given to Ministers and officials will be abused. That is an absolute cardinal rule of politics. Secondly, the degree of ministerial and parliamentary control on any statutory instrument is minimal. I speak as one who has considerable authority for saying that: for 10 years I was a Minister and I do not know how many scores of statutory instruments I signed off, but it must have been a very large number.

My noble friend Lord Forsyth was also guilty, I hasten to say; we were the same in that respect.

The third point is that statutory instruments are not amendable by either the negative or the affirmative procedure. Moreover, and this is the point that we dealt with on Wednesday, the regulation-making power is triggered if the Minister thinks it appropriate. I remember very clearly the way that my noble friend Lord Callanan dealt with the argument that we should delete “appropriate” and insert “necessary”. He did not like it, but he is left with this: if a Minister, by affirmative or negative resolution, thinks it appropriate to levy an imposition—a charge, a contribution, a fee—on a citizen, he can do that. I regard that as a very unhappy state of affairs and, should this come to Report, I will not be supporting it.

My Lords, I was once estimably advised by the noble Lord, Lord Turnbull. I want to look at this amendment from the point of view not of the civil servant but of the Minister. I think your Lordships’ House has already understood how difficult it would be for a Minister to understand what he could or could not do under this part of the Bill. First of all, he would have to turn to the modern equivalent of the noble Lord, Lord Turnbull, to ask him what the distinction between a fee and a charge was, and I am not sure that the noble Lord’s equivalent could be entirely precise as to what that distinction was because it is almost impossible to tell.

The noble Lord sitting next to the noble Lord, Lord Turnbull, got up and pointed out the word “contribution”. Of course when talked of in terms of national insurance a contribution is manifestly a tax, but it does not cover the cost of the service to which it is actually appended. It must therefore be possible to have a fee that does not cover the cost but is in fact a tax. That suggests that this part of the Bill—I do not speak of any other part—has not been entirely well thought through.

I do not wish to prolong this but I have been reflecting on the definition by the noble Lord, Lord Turnbull, of a tax. He said that it was if you made a surplus. Does that mean that if a charge were being made for a service and the body concerned cut its costs so that it was making a surplus, it would then turn into a tax?

It seems to me that almost any circumstance does not fit this part of the Bill; indeed, I find it difficult to find a single circumstance that does. I hesitate to put this to my noble friend because on the last occasion when I tried to be helpful he found me more unhelpful than usual, so I shall be very careful, but I ask him to imagine that this particular clause was being proposed by a monarch who simply said, “I want to have the powers to decide what kind of word I am going to use for taking money out of your pocket without proper parliamentary control”. I think I know what our forefathers would have said to that monarch. He might indeed have been in fear of his life, for this is precisely what Parliament is about.

We ought not to deal with this merely in the reasonably light-hearted way in which we have pointed out that this is an ill-conceived, utterly ill-thought-through and entirely indefensible bit of the Bill. We should take it one stage further and say that it is fundamentally unacceptable in a democracy that any mechanism can give Ministers the power to decide on taxation without representation. This is what we are here for. This is what Parliament is here for.

It is no good my noble friend reading out, as he will, the carefully phrased answers, because the people who have written the answers have caused the problem in the first place. They are the ones who have not understood that taking back control does not mean giving it to my noble friend. It means, if it is necessary—I do not think it is, but if it is—giving it to Parliament. This is part of the Bill which does not so do. The amendments attempt to put right what is, in the immortal words of some Members of the House, a dog’s breakfast, which is rude to dogs.

This is entirely unacceptable, but there is one bit that I find more unacceptable than any other. If this is necessary in order to carry through our international obligations, which is an argument that has been used, it is a peculiar addition to a Bill which is removing us from international obligations. The one place where this should not be is in the withdrawal Bill. We are withdrawing from international obligations on the basis that we do not want to have them, but writing in an ability to assert international obligations by secondary legislation.

My noble friend Lord Forsyth, who has followed me so far, did not like my little comment about the EU, but I am sure he agrees that we should not be using secondary legislation to impose taxation as a result of international obligations. That is not what it is about.

My last point is very simple. I have always found the word “expediency”, when used by Ministers, a red flag. Ministers always say that something is necessary because it is expedient. Expediency is always the excuse for doing something which you cannot do properly but which you get through on the basis that this is an emergency, it is urgent, or it has something to do with terrorism—we can find some reason or other that means we cannot wait for the proper process.

I was a Minister for 16 years. We are three former Ministers. None of us thinks that this power should have been given to us, so just think how little we believe it should be given to people with a different political view. I say to the Minister, who is well to a different part of the Conservative Party from me, that he should be the last person to give these powers to Ministers.

My Lords, I make two short suggestions. One is that all the words that we have heard today should be treated exactly the same. The second is that Parliament should deal with all of them.

My Lords, my noble friend Lord Deben, in his scintillating speech, referred to the power of arbitrary monarchs. I do not need to remind him—or anyone else in your Lordships’ House—that 369 years ago something happened to a monarch who had sought to exert those powers absolutely. The ultimate end of ship money was outside Banqueting House in Whitehall on 30 January 1649. I do not want to make too many historical diversions, but I was grateful to the noble Lord, Lord Tyler, whom we missed last week when we really began these debates on Wednesday, for referring to what I had sought to say then. This is the specific consequence of the generality that we abhorred last week—giving to Ministers, effectively, arbitrary power.

One of the reasons why I want to make a brief contribution this afternoon is that I am extremely sad that my noble friend Lord Higgins is unable to be here. His name is on one of these amendments, and I know why. As a former Treasury Minister, and one of very considerable distinction, who among other things was responsible for bringing VAT into our law, he believes that this really is a step too far. I cannot begin to make a speech based on the expertise that he has had for so many years, but it is significant that such a former Treasury Minister should have wanted to nail his colours to this particular mast. It is significant that we have three experienced former Ministers on the Bench below the gangway who all took some pleasure in exercising their powers but who all believe that this is a step and a power too far. We are doing today what we were seeking to do on Wednesday of last week—to put down markers to protect the House of Commons. Your Lordships’ House does not have power—nor should it have—to impose or withhold taxes. That is the ultimate power that is vested in the House of Commons by the electorate.

My noble friend mentioned VAT. Is that not an example of where Parliament no longer has the power to reduce the rate of VAT below 5% because we have given that to the European Union? Is not our leaving the European Union an example of restoring the authority of Parliament to impose taxes?

Our leaving the European Union is an exceptionally unfortunate measure that will do great damage to this country, in my opinion. But the answer to my noble friend’s specific question is that it was enacted by Parliament—a Parliament of which he was not a Member but of which my noble friend Lord Deben and I were—and that, knowing the consequences, we voted for it because we believed that it was in the general interest of our country. We were behaving as Members of the House of Commons should behave. It was properly debated, thoroughly approved and it came on to the statute books as other things have done.

I go back to what I was saying when my noble friend interrupted me. We have a duty to protect and to urge the other place not to abdicate the central power of an elected House—to deal with taxation. I hope that when my noble friend replies we will have a slightly more satisfactory and understanding reply than we had last Wednesday. I hope, too, that he will ensure, if not today, that we have a glossary of all these terms, including charges, fees, taxes, contributions and levies. At the end of the day they all mean something very similar: imposing an obligation to pay. People should never fall under that obligation unless it is imposed by their representatives in Parliament. We have a duty, as the second Chamber—the unelected Chamber—to say to our colleagues at the other end of the Corridor, “Please do not abdicate; please flex your muscles; please do not give to Ministers—the 109 whom we talked about the other night—or to other bodies or authority a power that is only rightly yours”.

My Lords, my name is to Amendment 126. I do not want to say very much. I can think of another word to add to that great list and I could give my view of the history of how taxation became the weapon for democracy, ultimately. Taxation is the ultimate control that the Commons has over the Executive. Just reflect on the set-to in the United States of America a few weeks ago: Senate and President at odds over money. These issues must be resolved at parliamentary level and House of Commons level—not by regulation.

The general principle referred to by the noble Lord, Lord Turnbull, which has been very clearly enunciated by the courts, is that no public authority, including local authorities, has the power or statutory authority to exact money that exceeds the amount that the local authority—or other person making the imposition—sets. The charge the person is required to pay must be just equal to the amount that will be needed to carry out the service, or other thing. If it does exceed it, it is taxation and that covers all forms; it does not matter whether it is a payment, charge, fee or anything else. That is a general principle. Therefore, the provision in Clause 7(7), preventing the regulations imposing or increasing taxation, prevents any local authority or other power having the power to make any such imposition.

On the amendment proposed by the noble Lord, Lord Lisvane, I wonder whether the first part of the clause —Clause 8(1), I think—is the subject of Amendment 126. My noble friend Lord Deben wondered why we were talking about this in a withdrawal Bill, but the clause says that we may have an international obligation that is breached by withdrawal; it therefore seems reasonable to deal with that in the withdrawal Bill because it is a consequence of withdrawal. That amendment implies that this power cannot be used to make any financial settlement that would cause a cost to the United Kingdom because, if it did, it would inevitably require taxation—presumably, whoever makes the settlement does not intend to defray the cost out of his or her own pocket. It is a fundamental restriction on the way in which these matters of international obligation may be resolved. I think I am right in that, but no doubt the noble Lord will tell us its effect on the amendment in due course.

My Lords, Amendments 86, 126, 127 and 155—in the name of the noble Baronesses, Lady Hayter and Lady Kramer, and the noble Lords, Lord Turnbull, Lord Lisvane and Lord Higgins—concern Clauses 7, 8 and 9 and the ability to provide for taxation or fees and charges under those powers.

Let me start by saying that the Government are aware of the concerns of many noble Lords about the raising of fees under these powers. On Report, we will look closely at how we can resolve those concerns. Let me explain the various issues, beginning with Clauses 7 and 9. I am glad to be able to reassure noble Lords that the restrictions in Clause 7(7)(a) and Clause 9(3)(a) already prevent Ministers establishing charges of a type that would involve any element of taxation or tax-like provision under these powers. Beyond that specific issue, I want to set out the Government’s intentions with regard to those fees and charges.

Will my noble friend tell the Committee what, in his view, is the essential difference between a fee, a charge and a tax? The Committee must understand the expressly defined difference.

If my noble friend will stay with me, I will come on to that. Beyond that specific issue, I will set out the Government’s intention with regard to fees and charges. We have included the powers in Schedule 4 to provide for fees and charges in order to be clear and transparent. It is, however, necessary for the powers in Clauses 7 and 9 to interact with existing regimes to correct deficiencies within them, and to properly modify them to reflect the withdrawal agreement. Without prejudice to our negotiations, an example of such a correction might be modifying a fee in relation to the authorisation of a credit rating agency so that the fee becomes payable to the UK financial regulators rather than the European Securities and Markets Authority. That might be argued to amount to the imposition of a new fee.

The requirements to pay new fees and charges established under Schedule 4, and the ability to modify existing regimes, will depend on deficiencies being properly corrected and on functions being transferred. Clauses 7 and 9 are not primarily aimed at imposing fees, and they cannot impose other kinds of charges, but sometimes that will be part and parcel of the correction. In answer to the questions about fees and charges from the noble Viscount, Lord Hailsham, the noble Lord, Lord Deben, and the other poachers turned gamekeepers—if I may refer to them as that—on the Privy Council Bench, a fee is a payment only for a service received. By a charge, in paragraph 6(2) of Schedule 7, we mean anything which goes beyond cost recovery. Clause 7 cannot create a charge. In addition, creating either a fee or a charge is subject to the affirmative procedure.

The argument against a tax restriction—

There is a large number of fees that are paid to, for example, the Environment Agency, to carry out certain services. We have no idea whether those fees are equalled by the amount of work that is done. The Environment Agency says: “We want this amount of money because we need it”. There is no proof. If one were to prove that the agency spent less money than the fee, does it then become a charge or a tax? There is a real issue here. My noble and learned friend Lord Mackay points to the fact that one may define it like this but how does one prove it, and how does the House deal with it? Is it not better to not have this distinction at all?

Before the Minister responds to that point, could he also answer my question? He has sought to make a distinction between a fee and a charge. Could he explain why, at page 761 of the latest edition of Erskine May, there is no distinction made between fees, charges, impositions, contributions or anything else of that sort? The test which is set out there, and is reflected in the current practice note from the Office of the Parliamentary Counsel—available on its website—is whether or not those payments are,

“akin to taxation in their effect and characteristics”.

I suggest that an additional test needs to be applied to the template which the Minister has offered.

I am sorry for my noble friend, but he did say that both the fees and the charges were subject to the affirmative procedure. I know that the fees are, but I am not sure where in the Bill I find the provision that charges are subject to the affirmative procedure. Will he tell the Committee?

I do not have the specific clause in front of me, but I am sure that is the case and I will write to the noble Viscount about it. I am not an expert on Erskine May and the precise legal definitions, but I will have a look at the matter towards which the noble Lord, Lord Lisvane, has pointed me.

The argument against a tax restriction on Clause 8, made by the noble Lord, Lord Lisvane, is altogether different. The Clause 8 power is predicated on the fact that when we leave the EU, without further action we may inadvertently end up in breach of certain international obligations which have been affected by our EU membership, as a number of noble Lords have pointed out was said in the other place by my honourable friend Robin Walker. It is possible that some of these obligations may be in the field of tariffs, although it is, of course, impossible to know the full picture until our future relationship with the EU has been negotiated. If Clause 8 had a tax restriction as the other main powers do, we may not have the capability to remedy these breaches in all circumstances. As I hope noble Lords will appreciate, we are committed to international relationships and a key part of that is ensuring that we are fully compliant with our international obligations.

A number of noble Lords have rightly asked me to be more specific, so I will illustrate that point with a concrete example. When we leave the EU, the UK will take up its independent seat at the World Trade Organization. As a WTO member, we will continue to be subject to WTO rules, notably the most-favoured nation principle. That principle is set out in Article 1 of the General Agreement on Tariffs and Trade in respect of the UK’s trade in goods, and Article 2 of the General Agreement on Trade in Services in respect of the UK’s trade in services.

Upon exiting the EU, the UK could find itself in breach of the MFN principle, because, in some cases, the conversion of EU law into UK domestic law could preserve favourable treatment of goods or services from the EU as compared with other WTO members. Under the MFN principle, that sort of favourable treatment is not allowed unless an appropriate regional trade agreement is in place, such as, potentially, the agreement on the UK’s future relationship with the EU. Therefore, the power in Clause 8 of the Bill allows Ministers to deal with any breaches of the MFN principle and other WTO rules. It allows Ministers to take steps to remedy such a breach until two years after exit day. Of course, it is subject to the sunset clause. The Government have said that we are focused on getting a good outcome, one that works for the people and businesses of the UK and for those in the EU. In the light of our successful phase 1 agreement—

That is a very interesting point. Would that be remediable if we were to stay within the European Economic Area, which would classify us as part nevertheless of a regional economic arrangement? Is that one of the things that perhaps we and the Government should take into account in considering this transition?

If we were part of the European Economic Area, I assume that we would not need to do that. However, as we are not going to be part of the European Economic Area, it may perhaps be necessary. I hope that the noble Lord will listen to my next point.

In the light of our successful phase 1 agreement, we are increasingly confident that we will secure a deal with the EU and that the prospect of leaving negotiations with no deal has reduced significantly. It is in both the UK’s and the EU’s interests to secure a good deal for both sides. However, as a responsible Government, we have a duty to plan for the unlikely scenario in which no mutually satisfactory agreement can be reached. I hope noble Lords agree that that is common sense. If we do not have this power, and in exiting the EU we are unable to correct a breach of the MFN principle, another WTO member could bring a dispute against the UK in the WTO. That is a situation that we want to avoid, and which could result in a loss of trade for UK business through retaliatory measures by other WTO members or claims for compensation against the UK.

The noble Lord makes some very good points about how we might need to levy charges or fees, or whatever he wishes to call them, but he has not made any case as to why this should be done by secondary legislation as opposed to primary legislation.

Because in such circumstances we will need to react quickly in the light of the events as they happen, depending on—

It would be totally appropriate and, indeed, necessary to do so in the circumstances. We are in a difficult position in that we are trying to plan for all eventualities. It is one of those powers that we hope we will never use because, of course, we want, and seek, a good agreement with the EU.

There is a different eventuality using the same example that the noble Lord gave—namely, the eventuality of the Government’s proposal for what I think is called an implementation phase; most of us call it a transition or standstill phase—lasting about two years. Is he suggesting that we might be in breach of our WTO obligations if we reach an agreement with the European Union on that basis, because it is about to be reached, is it not?

No, I am not suggesting that we might be in breach of our international obligations. However, as the noble Lord knows, we are currently negotiating for the implementation period, and as soon as we have an agreement—I hope within the next few weeks—we will be sure to report back to the noble Lord and others.

For those reasons, which I set out earlier, the Government therefore cannot accept these amendments to Clause 8. The power can be used only for the specific purpose of ensuring continuing compliance with international obligations to which this House has already consented and which would be affected by the UK’s withdrawal from the EU. It is available only for a limited period of time, and any further restriction risks increasing the primary legislative burden on this House and weakening the UK’s promise to the rest of the world that we are ready and able to honour our commitments.

However, having said all that, I repeat the point I made at the start of this debate: that we are listening carefully to what noble Lords have said, that we will look closely at how we can resolve many of the concerns that have been raised by noble Lords throughout this debate, and that we will come back to the issue on Report. In the light of those assurances, I hope that the noble Baroness will feel able to withdraw her amendment.

My Lords, will the Minister take the message from this House that we are very happy to have this burden imposed on us? Although we appreciate his concern at the weight of business which we might have to undertake if we had to pay attention to primary legislation in respect of fees and charges, we will be very happy to assume that heavy burden.

Might my noble friend point out to the noble Lord that, if it is about taxation, that burden would not be placed on this Chamber anyway?

My Lords, since we are discovering the enormous complexity of all this, on the previous amendment I asked the Government whether they would be willing to share with us their own calculations on the process of policy-making for directives and regulations, some of which are in force but not implemented, and others of which are about to come into force but will not be implemented until after March 2019. What view have the Government formed on those? That would be helpful to us and others in understanding how the Government are coping with this complex process.

The noble Lord makes a good point. I was speaking to my noble friend Lady Goldie about the matter when he asked her the question earlier. I will have a look at this for him. I think it is fair to say that most of our negotiating positions on the existing directives and regulations are already public. We share our positions, the issues that are being discussed are transparently available on both our website and the EU’s website, and many of the issues that will come to fruition over the next year or two are already in early formative phases. I therefore genuinely do not think that there is much about this process that is secretive, but I will certainly have a look at the issue for the noble Lord.

My Lords, I think it will be obvious why I spoke so briefly at the beginning of this debate, as I have now heard far better speeches on this group than I would ever have made. I am sorry that the noble Lord, Lord O’Donnell, who “salivated”—his word at Second Reading—at the thought of being able to raise money by SIs, was not here. However, he and the other “guilty men”, as they were called, who used these in the past, have made the case well that this would be quite a move from our traditional way of raising money. Whatever the name of the charge—the noble Lord, Lord Deben, said that it was basically “taking money out of your pocket”, and the noble Lord, Lord Cormack, called it an “obligation to pay”—we know what we are looking at.

The noble Lord, Lord Deben, said that this had, “not been entirely well thought through”. I hope that that, rather than anything more untoward, is why this power has crept in there. As everyone has said, it is for Parliament to decide whether to raise funds—whether to pay for some WTO obligation or for anything else. The example of the American situation is very valid: it is how, ultimately, you stop Governments doing what you do not want them to do.

Earlier in this debate the noble Lord, Lord Lisvane, said that we need some hard examples. I do not think that the WTO example is the hard example to justify these powers. I think that his second point was that, if we do not get those hard examples to convince the House, surely it is much better that we leave this to the withdrawal (No. 2) Bill, by which stage we will know exactly what in the withdrawal agreement had led to the need to raise a particular fee, charge, imposition or whatever. That seems more appropriate.

Speaking about the WTO, I think that the Minister said that he thought the Government might be in a difficult position. I have to advise him that I think the Government are in a difficult position now on this power in the Bill. I hope that the Government will bring forward their own amendment on Report. That would be a way of taking matters forward. I am sure that there are far more expert noble Lords in the House than me who might meet the Minister to see whether we can find some such amendment. I hope that we do not have to repeat this debate on Report and that the Minister will bring something back because, if he does not, I can assure him that we will. For the moment, I beg leave to withdraw the amendment.

Amendment 86 withdrawn.

Amendment 87

Moved by

87: Clause 7, page 6, line 17, leave out “relevant”

My Lords, the amendments in this group go to a simple but crucial issue. The Bill proposes to give the Minister the power to create criminal offences by regulations. The proposal is slightly obfuscated by language, with the Bill saying that the regulations may not,

“create a relevant criminal offence”,

but the intention is that they will and the words are good enough to do so.

I know that your Lordships have kindly listened to me on this subject on a number of occasions and I will not go on about it more than I have to, but there is a simple principle: it is wrong for a criminal offence to be created without proper—not notional and not theoretical—parliamentary scrutiny. The fact that it has happened before, which it has, merely signifies—I am sorry to say this—that Parliament, including this House, was not sufficiently alert to the deviation from constitutional principles.

My objection is to the lack of scrutiny. Very recently during debate on the Sanctions and Anti-Money Laundering Bill, your Lordships gave a very strong indication to the Government that this was a concern that occupied the attention of all sides of the House. The result is now a significant government amendment to the original proposal. In the subsequent debate in the Public Bill Committee in the other place last week, on 6 March, the Minister, Sir Alan Duncan, acknowledged that the Government accepted,

“that the powers of the Executive to create criminal offences and regulations should be subject to appropriate parliamentary scrutiny”.—[Official Report, Commons, Sanctions and Anti-Money Laundering Bill Committee, 6/3/18; col. 119.]

Although he did not say so, the Government must have implicitly accepted that the theoretical arrangements for parliamentary scrutiny were inadequate, because the Minister then went on to reflect on possible options for improving the processes. It was this that culminated in the government proposal that, if offences were to be created by regulations, there must be “good reasons” for their creation and, once the Government had concluded that there were indeed good reasons, they then had to be justified by a detailed explanatory and open report to Parliament.

I leave open the argument that “good reasons” should give way to “necessary” but that is for another occasion. However, I acknowledge that, in the context of that Bill, this was a significant advance that would greatly increase the opportunity for genuine scrutiny by Parliament and therefore diminished Executive control. Today, I shall not set out the details of the proposed amendments to the Sanctions and Anti-Money Laundering Bill because they are government amendments, but it would make a great start for the Minister if he would indicate that, at the very least, the government proposals in the sanctions Bill will be carried into this one. I beg to move.

My Lords, I had intended to stand up before the noble and learned Lord sat down to respond to his kind invitation. Perhaps it would be to the benefit of the House if I note that, as the noble and learned Lord has pointed out, this issue has been debated previously in the debate on the sanctions Bill. As with the issue we debated last Wednesday—the appropriate test for the use of delegated powers—the solutions found in the sanctions Bill are at the forefront of our minds in this regard and we intend to meet noble Lords to discuss the issue over the coming weeks. I will set out the Government’s views at the conclusion of the debate on this group of amendments. I very much look forward to hearing what noble Lords have to say but I thought it would be helpful to say this at the start.

My Lords, in view of what my noble friend has said, I can be very brief. I support the first four amendments in this group, to which I have set my name, and have ventured to put forward a sort of default position in my Amendment 340. As the Committee will appreciate, the purpose of the first four amendments is to ensure that the regulatory power now under discussion cannot be used to create a criminal offence, and the noble and learned Lord, Lord Judge, has set out very clearly the reasons for this. Amendment 340, which stands in my name, is the default position, so that if by any evil chance this Committee or your Lordships’ House decided that it was right to create a criminal offence, it should be one that does not attract a custodial sentence.

We need to be quite plain about what we are talking about. The Bill as presently drafted enables the Minister, if he deems it appropriate and subject to the affirmative resolution, to create a criminal offence that attracts a custodial sentence of up to two years. Two years is not an insignificant period, and it is very important that one reminds oneself that the test is whether the Minister thinks it is appropriate. Furthermore, we must go on reminding ourselves that the procedure—that is the affirmative resolution procedure—is simply not subject to amendment. So this is, in effect, the power to introduce a criminal offence which attracts a custodial sentence by fiat or declaration. I find that profoundly unattractive.

As a former Minister who signed an awful lot of statutory instruments, I know that the degree of ministerial oversight is extremely limited. As I said, if this Committee decides that a criminal offence should be creatable in this way, then surely it should not attract a custodial sentence of any kind.

My Lords, my name has been added to a number of the amendments in this group and I appreciate the Minister’s intervention, which should make this debate fairly short. I want to take up an earlier point made by the noble Viscount, Lord Ridley: he said that he thought some of the speeches were too long and bordering on filibustering. That set a little alarm bell ringing in my mind. I have sat in on some of the debates and I have read others, and I think that this Bill is being handled by this House in the appropriate way that it deserves. Some of the speeches, from all the Benches, have been among the best I have heard in parliamentary debate.

The Minister, in referring to his Privy Council Bench, said that they were poachers turned gamekeepers. I say, en passant, that I look on them as sinners turned penitents, but that is a matter of taste really.

As I say, there have been some magnificent debates, but I worry where we are going on this. Sometimes I wonder whether the Ministers are adopting the tactics of the great boxing champion Muhammad Ali. His “rope a dope” strategy was to take all the punishment in the early stages and then have his own way in the later stages of the fight.

I hear what many noble Lords have said—the noble Lord, Lord Cormack, among them—that of course the House of Lords can go only so far with its opposition in the face of the Commons. The contribution from the father of the noble Viscount, Lord Hailsham, who warned of an elected dictatorship, comes into play here. So too does something I have mentioned on a number of occasions over the past 20 years that I have sat in this House: this House has the right to say no. We must ask ourselves why successive Governments, some with very large majorities in the House of Commons and some who have reformed this House from time to time, have left it with the right to say no. The reason is that unless we retain the right to say no, we would become a debating Chamber and the Government could simply use their Commons majority to force things through willy-nilly, regardless of whether or not we oppose them. I realise that, in some areas, we bow to the wishes of the elected House, even when we do not want certain things to go through.

As happened in the past two sittings of this Committee, we have discussed in great detail two very important constitutional issues: the right to impose taxation and, now, with this group of amendments, the right to create criminal offences. The proposals go to the very heart of our constitutional settlement and, in my opinion, to the very heart of the responsibilities of this House. Therefore, although I appreciate that a considerable promise was made at the opening of this debate, I say this to Ministers and to colleagues who have made outstanding speeches: regarding our red lines about the right to impose taxation and to create criminal offences, somewhere down the line, if what the Government come up with is not satisfactory, in our responsibility to defend the constitution this House must reserve the right to say no.

My Lords, I want to add one short point to what has been said about sentences of imprisonment. It is likely that if the Government think it necessary to introduce new criminal offences, they are not going to be offences of assault or anything of that kind, but offences that relate to the conduct of business between the United Kingdom and the European Union. What we are talking about here are possibly mainly regulatory offences, for which sentences of imprisonment may not be necessary at all. However, such offences may affect severely the conduct of companies and the relationships between them, the conduct of local authorities and so on. Therefore, I ask that included in the scrutiny that the Minister has very helpfully promised is a slightly more sophisticated test that bears in mind the effect of potential new offences on the business community and the economy.

My Lords, I support what the noble Lord, Lord Carlile, has just said and ever so slightly disagree with my noble friend Lord Hailsham. Whatever the nature of the offence, it is wrong that it should be created in this way. I agree with the noble Lord, Lord Carlile, that custodial sentences are highly unlikely, but that is not the point. To create any sort of offence in this way is fundamentally wrong and we should not have anything to do with it.

My Lords, I agree with what the noble Lord, Lord Cormack, has just said. As the noble and learned Lord, Lord Judge, the noble Viscount, Lord Hailsham, and my noble friend Lord McNally explained, the Bill as drafted would permit Ministers, when they consider it “appropriate”—a point made by the noble Viscount and a word discussed at length last Wednesday—to create by regulations new criminal offences carrying up to two years’ imprisonment for wide and diffuse purposes. As discussed last week, regulations could also be used to make any provision that could be made by Act of Parliament. The Henry VIII powers are as all-embracing as could be imagined. This is all the more shocking in the context of the creation of new criminal offences. These may concern individual liberty, certainly; reputation, always; and the conduct of business, as the noble Lord, Lord Carlile, has pointed out.

The report of the Delegated Powers and Regulatory Reform Committee—on which I sat for a number of years—described the powers as “wider than we have ever seen”. It described Clause 7 as notable for its width, novelty and uncertainty, and the same can be said of all three of the clauses in question. The principle is simple: it is in general not acceptable for the Government to have the power to create new criminal offences by regulation without an Act of Parliament. That principle was treated as cardinal when I was on the Delegated Powers Committee.

In 2014 the committee produced a document headed Guidance for Departments, directed principally at memorandums for the departments. However, on the question of criminal offences it was considered so out of order that new criminal offences would be created by regulation that the guidance did not even address that possibility. The committee said:

“Where a Bill creates a criminal offence with provision for the penalty to be set by delegated legislation”—

that is, the Bill creates the offence—

“the committee would expect, save in exceptional circumstances, a maximum penalty on conviction to be included on the face of the bill. Therefore, where this is not the case, the memorandum should explain why not, and at the very least the Committee would expect the instrument to be subject to affirmative procedure. Similarly, where the ingredients of a criminal offence are to be set by delegated legislation, the Committee would expect a compelling justification”.

However, this Bill potentially permits the creation of a new range of criminal offences. Both the Bill and the Explanatory Notes are silent about everything to do with such offences as might be created except for the broad statement of their purpose in the three clauses, in the most general terms, and with no indication of what offences are envisaged, except that the maximum penalty must not exceed two years imprisonment—which, as the noble Viscount, Lord Hailsham, pointed out, is a not insubstantial period.

The basic principle was enshrined in Article 39 of Magna Carta: that no one should be imprisoned or stripped of his rights or possessions or deprived of his standing in any way except by the lawful judgment of his equals or by the law of the land. These are constitutional principles as old as this Parliament, and we should be very careful in dealing with the issue of allowing the right of Parliament to insist on a say over criminal offences being created by the diktat of Ministers.

My Lords, in this context, I draw attention to the paragraphs in the Delegated Powers and Regulatory Reform Committee report which deal with tertiary legislation because it is important that this aspect should be understood. The Bill confers powers on Ministers to make law by regulations, and the secondary legislation can do anything that Parliament can do. This would allow people, bodies or Ministers to make further subordinate legislation—tertiary legislation—without any parliamentary procedure or any requirement for it to be made by statutory instrument. Where tertiary legislation is not made by statutory instrument it evades the publication and laying requirements of the Statutory Instruments Act 1946 but it is still the law.

Nothing in the Bill limits the power of creating tertiary legislation. It can be used for any purpose—for example, to create new bodies with wide powers, which could introduce criminal offences in many of the areas currently governed by EU law, including aviation, banking, investment services, chemicals, agriculture, fisheries and medicines. They may only provide the skeleton provisions in relation to a particular activity, leaving the detailed regime to be set out in tertiary legislation made not by Parliament or Ministers but by one of the new bodies so created.

The committee made the important point that there is no two-year limitation period imposed by paragraph 28 of Schedule 8. The two-year limitation would not apply. Perhaps I may illustrate this by recounting something which happened to me on 1 February. It was a quiet Thursday and I was asked to take through this House on behalf on my party the Legal Services Act 2007 (General Council of the Bar (Modification of Functions) Order 2018. Essentially, it is an application by the Bar Standards Board, in the name of the Bar Council, to obtain statutory powers for itself. The Bar Standards Board had disciplined barristers in the past on the basis of the contract between them but now feels that it should have statutory powers, so this application was made.

The Bar Standards Board was granted the powers to make disciplinary arrangements, including disciplinary rules in relation to barristers. Paragraph 6(2) states:

“The disciplinary arrangements…may, amongst other things, make provision for”,

the disbarment of a barrister. You might expect that. It continues by referring to,

“the imposition of a fine”,

on a barrister,

“not exceeding £250 million in relation to a relevant authorised person which is a body and £50 million in relation to an individual”.

In my career I can remember a High Court judge imposing a £1 million fine on my client—I did not do a very good job—for polluting the Mersey, which was thought to be the largest fine that had ever been imposed. However, here, by tertiary legislation, the Bar Standards Board has the power to administer a fine of up £250 million. If these regulations are passed, this will not come back to Parliament for approval but to the Legal Standards Board—and that is it.

The Minister, the noble Baroness, Lady Vere, who had the unfortunate duty of replying, said this:

“The maximum levels of fines may appear to noble Lords to be very high, as indeed they do to me—I cannot conceive of having that much money—but we must understand that some of the alternative business structures in particular will contain significant amounts of capital and may grow quite large … It is important that we have the right incentives to make sure that people do not contravene the rules”.

So barristers, if they contravene the rules, can be fined up to £25 million. She continued:

“The amounts are absolute maximums and it will be for the BSB to consider and consult on what fining regime and fine levels it should have in the future. As with all proposed rules, the fining regime will need to be approved by the Legal Standards Board. This safeguard keeps coming back: the Legal Standards Board has to approve the issues that we are talking about today”.—[Official Report, 1/02/18; col. 1729.]

That has nothing to do with Brexit—but translate that way of thinking into the tertiary legislation that could arise under this Bill, with the possibility that a body, without any time limitation, could impose fines and criminal offences of up to two years imprisonment with little regulation. Those are the dangers the House is facing.

My Lords, I am sorry that there are too many speakers from this part of the Chamber, but I should like to point out that, although some advances have been made in the Sanctions and Anti-Money Laundering Bill with regard to the proposals that have already been mentioned, that is in the context of a particular Bill that has already received some scrutiny—and indeed some policy amendments—which make the application of criminal offences a little more palatable. There is, for example, the stipulation in the anti-money laundering part, which is the bit that has two years and is more akin to the instance envisaged within the withdrawal Bill, that there has to be a mental element. I do not see that safety here.

I further wonder why things that were not previously subject to criminal sanctions have to be made into criminal offences. It is a big policy change to say that any administrative or other misdemeanour is henceforth going to be criminalised with a two-year prison sentence. I do not call that “no change”. It has to be looked at in the context of each individual offence and how it may arise, otherwise you are saying that any regulatory breach will henceforth carry two years in prison. Moreover, you do not know the detail of what those regulatory breaches may be—how big or how small, or who may be on the other side of them. This would cover every piece of single market legislation. Some of these things will be quite small, and were not criminal offences before. What has changed through Brexit that suddenly we have to criminalise everybody for everything?

My Lords, because the case was made so clearly by the noble and learned Lord, Lord Judge, with the added detail provided by the noble Lord, Lord Marks, I shall not try to add anything to the substance of the argument. I just want to express my regret at the lack of preparation and forethought that went into the drafting of this power. Indeed, I was alarmed by it on the very day I first read the Bill and started blogging about it back in the summer. I then tabled Questions for Written Answer in October asking the Government what other instances there were of new criminal offences being created by secondary legislation. In the replies I received on 2 and 23 October, the noble and learned Lord, Lord Keen of Elie, was unable to list any.

I went on to ask the then Minister, the noble Baroness, Lady Anelay, the same question. The noble Lord, Lord Callanan, had by then taken over and replied in her stead on 14 November—but again gave no examples. The letter merely noted that “existing” criminal offences “in our law”—those are his words—which relate to the EU might need to be transferred to another body: for example, an offence not to notify an EU institution of something important relating to health. The letter ended by saying that the offence might have to be changed to a failure to notify the equivalent UK body. I understand that, but that is an existing offence, not a new one, and alters only to whom the report should be made. No case was made for, and no example given of, where new offences might be needed as we leave the European Union—much less one with the threat of up to two years in prison on first offence.

Noble Lords will not be surprised that I did not let this drop. I raised the issue again with the lucky noble Lord, Lord Callanan, who had another meeting with me in January—he has all the fun. On Wednesday last, when we anticipated dealing with this group, just before we broke for lunch I received an email from his department in response to my request in January. But again the email failed to answer why any new offences might be needed. It commented only that,

“existing criminal offences may require widening or amending, or new offences may need to be created to fix deficiencies in retained EU law”—

but provided absolutely no examples. The only example given in the email was of an existing offence where a business fails,

“to provide an EU authority with certain information”,

and therefore such an offence may,

“need amending to ensure they continue to operate effectively post exit day, for example by changing references from an EU authority to a UK one”,

and to ensure that businesses are complying with the law. Again, that is a change rather than a new offence. It is true that the email goes on to state:

“Previous case law”—

here I shall look to others to look into the detail of this—

“has created some uncertainty as to whether actions such as these would amount to creating a new offence rather than amending an existing one, and there could be differing legal views on this point”.

As I read the email, it seems that on that basis alone—that there is possibly a legal issue as to whether an amendment to an offence is a new offence—the Government have written themselves powers to create brand new offences that are punishable by up to two years in prison. So I think we are agreed that that will not do and that these powers have to go. Moreover, they have to go more completely than the Government allowed for in the sanctions Bill because, as was said in the debate at the time, anything there would follow an international agreement to which we would be a party as a Government—so there would have been that earlier stage. But these powers will not be part of that, and therefore I hope that, when the Minister responds, he will say that these powers are going to be taken out of the Bill.

First, I thank the noble and learned Lord, Lord Judge, and my noble friend Lord Hailsham for bringing the matter of creating criminal offences under the powers in Clauses 7(1), 8 and 9 to the attention of the Committee through their Amendments 87, 128, 156, 339 and 340, which seek to amend the relevant provisions in the Bill. As I said, I understand that similar concerns were raised during the debates on the Sanctions and Anti-Money Laundering Bill, but that a mutually agreeable outcome has since been reached, with the Government bringing forward a requirement on Ministers to make additional statements alongside their statutory instruments. Of course, the offences envisaged under that Bill were different and carried considerably greater sentences. I hope that I can satisfy the concerns that noble Lords have expressed during this debate. However, the Government are still looking very closely at how the powers in the Bill are drawn and how they will be exercised—and, as I say, we are open to discussion on finding similar solutions in this Bill.

I shall start with the reassurance that the three main powers in the Bill are explicitly restricted from creating a “relevant criminal offence”, which is defined in the Bill as an offence for which an individual who has reached the age of 18, or in relation to Scotland or Northern Ireland the age of 21, is capable of being sentenced to imprisonment for a term of more than two years. A vital part in achieving continuity and consistency for businesses and individuals as we leave the EU is to ensure that criminal offences continue to operate effectively after exit. As such, the Clauses 7(1), 8 and 9 powers can create criminal offences punishable by imprisonment for two years or less. In applying this two-year limit, the Government have sought a balance between appropriately limiting the three main powers and providing a functioning statute book on exit day.

The amendments would see that no criminal offences—or no criminal offences punishable by any term of imprisonment at all—could be created under the three main powers in the Bill. However, it is important that these powers are able to create certain criminal offences, as I shall come on to explain. For example, criminal offences provide an essential function of ensuring compliance with regulatory regimes which provide crucial protections for businesses and individuals. Some of the regimes criminalise particular conduct relating to the EU and some offences may no longer operate as intended after exit day if they are not corrected, particularly where functions transfer to a UK authority. For example, it could be an offence for a business to fail to provide an EU authority with certain information, but after exit day the authority collecting that information might be a UK one instead. Continuity would seem to demand penalties remaining in place—

I wonder if the Minister could help us. He seems to be arguing what might be a coherent case for some offences needing to be redefined to have the same effect as they would have had before exit day. Surely it cannot be part of what he is describing to create offences that did not exist simply to ensure that the statute book after exit day has the same effect, in terms of the criminality that people would face, as it had beforehand. Does that not need him to approach this differently and try to find a way of defining the process so that it is not about the creation of new criminal offences?

I understand the noble Lord’s concern, which comes on to the same point made by the noble Baroness, Lady Hayter. I will come on to deal with what constitutes a new offence and what does not in a second.

Continuity would seem to demand penalties remaining in place for what would substantively be the same misconduct. Currently, certain types of financial services firms are regulated at an EU level. Depending on negotiation outcomes, we may need to bring such firms into the UK regulatory regime. Under these circumstances, we would want the UK regulators to be able to regulate such firms in a way consistent with their current regulatory framework, in line with their statutory objectives. Where appropriate, this may include bringing firms within the scope of existing criminal offences to which UK financial services firms are already subject.

To give another example, Her Majesty’s Treasury is considering amending the existing offence in Section 398 of the Financial Services and Markets Act 2000 of “knowingly or recklessly” giving a regulator,

“information which is false or misleading”.

This would make it an offence, as a consequence of transferring functions from the European Securities and Markets Authority, for third country central counterparties to mislead the Bank of England in connection with recognition applications. In direct response to the noble Baroness, Lady Hayter, and the noble Lord, Lord Beith, a view could be taken that this creates a new offence as it will be a new function for the Bank of England and extends this offence to central counterparties established in third countries to whom it did not apply before. Her Majesty’s Treasury is also considering making similar provision for the FCA—as a consequence of transferring functions from the European Securities and Markets Authority relating to trade repositories—and similar considerations apply. We therefore need the power in its current shape to provide certainty that we can make such statutory instruments.

As an alternative example, marketing authorisations for medicinal products are currently granted at both EU and UK level. Post exit—again, depending on negotiation outcomes—it is possible that the best way to provide continuity for businesses marketing medicines in the UK will be to convert EU marketing authorisations into UK ones. Under Regulation 95 of the Human Medicines Regulations 2012, it is currently an offence to provide false or misleading information in connection with applications for marketing authorisations as this information is key to assessing the safety, quality and efficacy of medicines. The offence is punishable with a fine or imprisonment for a term not exceeding two years. It is vital that, if we need to, we are able to amend the existing offence or create a comparable one. I think we can all agree that it remains important that false or misleading information is not supplied in connection with the process of converting EU marketing authorisations into new ones, and that the public’s health is protected.

Noble Lords will see from the examples that the intent here is largely to ensure that the same types of conduct carry criminal penalties as before, or that we can create criminal offences to deal with the post-exit world. Previous case law has, though, created some uncertainty as to whether widening an existing offence would amount to creating a new offence, and there could be differing legal views on this point.

The noble Lord just used a different word—“widening”—but I think his earlier example was making a notification to a different organisation. “Widening” suggests that the scope of what might be a crime would be extended. Is that what he meant?

No, that is not what I meant.

It is therefore vital that the Bill can provide for “creating” criminal offences to ensure that no offences that are needed fall away as we leave the EU, and that businesses and individuals continue to comply with the law.

Any statutory instruments made under Clauses 7(1), 8 and 9 which create or widen the scope of a criminal offence will automatically be subject to the affirmative procedure so that they will be subject to a debate and vote in this House and in the other place. The Government accept that this level of scrutiny is important here and, as I said at the beginning of my remarks, I hope we can consider further safeguards. Therefore, I hope that with those assurances I have demonstrated why we think this element of the power must remain part of the Bill and that noble Lords will feel able not to press their amendments.

My Lords, I am troubled by just one observation made by the Minister. I think someone has been advising him incorrectly. Speaking for myself, I have never come to a mutually agreeable arrangement relating to the Sanctions and Anti-Money Laundering Bill. I have certainly welcomed an advance by the Government relating to these issues, but, as I said at the beginning, I leave open the argument that “good reasons”, which are proposed, should give way to “necessary” and I have added that there is an advance.

Beyond that, I am very grateful to all noble Lords who have taken part in this debate. We really must not return—can we make up our minds now not to?—to the constitutional aberration of unexplained, and effectively unscrutinised, regulations creating criminal offences. That is the constitutional principle. In view of the observations made by the Minister, however, I beg leave to withdraw the amendment.

Amendment 87 withdrawn.

Amendment 88

Moved by

88: Clause 7, page 6, line 18, at end insert—

“( ) amend, repeal or revoke the General Data Protection Regulation, the Data Protection Act 2018 or any subordinate legislation made under that Act,”

My Lords, in moving Amendment 88, which is in my name and those of the noble Lords, Lord Warner and Lord Clement-Jones, I will speak to the related Amendments 129, 157 and 338. These amendments are probing in nature, and I look forward to hearing the Minister’s response. Their purpose is to add a prohibition to the Bill equivalent to the one found on page 6, line 19, for the Human Rights Act so that it is not possible for Ministers to amend or revoke the GDPR, the Data Protection Bill when it comes into force, or subordinate secondary legislation arising from it. In that sense, it follows the discussions that we have been having in Committee on recent amendments.

One of the first Brexit Bills to reach Parliament was the Data Protection Bill, which completed its Lords stages earlier this year and has just had its Second Reading in the other place. It is a Brexit Bill in two senses: it brings in the legislation needed to give effect to the EU’s general data protection regulation, the GDPR, which will be in force here before and after Brexit; and it aspires to ensure that the rules governing personal data in the UK will satisfy the European Commission that our legislative framework gives a level of protection of fundamental rights and freedoms that is essentially equivalent to that guaranteed in the EU, or the Union, as it is called. This is what is called an adequacy agreement.

The importance of getting an adequacy agreement from the European Commission cannot be overstated. Without it, it would be illegal to continue to exchange personal data with other EU countries after we leave. As well as being worried about whether the DP Bill will be enacted in time before 25 May 2018, this is the biggest issue raised by the industry—investment, location of its businesses and future growth are intimately tied into what happens to our EU adequacy agreement.

To be clear on the timing issue, as an EU regulation, the GDPR will be directly applicable in the UK without the need for an Act of Parliament from 25 May 2018, but how we transition into the post-Brexit world is key to the question of adequacy. One of the judgments we will face is the extent to which our data protection regime has varied from the EU since 25 May 2018. As things stand, this can be done by secondary legislation under the powers outlined in the Bill. To the extent that this is foreshadowed within the Data Protection Bill there can be no objection, provided that these changes are within the scope of the Bill once it is given Royal Assent. Clearly, it is crucial that the powers exist to correct any deficiencies that arise as a result of the current text being retained post exit, since much of it relates to EU structures and organisations that have to be translated. It is also right that there is a power to replace specific articles of the GDPR and, dare I also mention, the recitals that would be deficient and possibly confusing in a UK-only context. But corrections and adjustments in a Bill that has been approved by Parliament are not the same as wholesale changes made by Ministers, which, although there are safeguards, are not prevented under Clause 7 of the Bill before us.

My first argument is that, as with the Human Rights Act, the Data Protection Bill, dealing as it does with important rights of individuals over their personal data, should be protected against changes to that regime made through secondary legislation. It might be argued that similar kinds of changes will need to be made to a wide range of EU-derived legislation to ensure a smooth exit and that there is nothing particularly special about data protection in this regard. But is that right?

I want secondly to argue that there is something special, something extra, about data protection which warrants it being given the additional treatment outlined in the amendments. Remarkable though it may seem, I believe that I have the support of the Prime Minister on this. In her statement on our future economic partnership, she said,

“I am proposing the broadest and deepest possible future economic partnership, covering more sectors and involving fuller co-operation than any previous free trade agreement. There are five foundations that must underpin our trading relationship”—

the fourth of which was—

“an arrangement for data protection that goes beyond an adequacy agreement”.—[Official Report, Commons, 5/3/18; col. 26.]

There is not much detail on what she means by going beyond an adequacy agreement, other than when she said in her Mansion House speech that she wanted to see,

“an appropriate ongoing role for the UK’s Information Commissioner’s Office. This will ensure UK businesses are effectively represented under the EU’s new ‘one stop shop’ mechanism for resolving data protection disputes”—

a modest, though not unimportant, request.

It is not hard to see why data protection is being treated as a special case. Forty-three per cent of EU tech companies are based in the UK and 75% of the UK’s data transfers are with the EU member states. They need us as much as we need them, and everybody wants early certainty. It is an important part of our economy and it would be mad not to do whatever it takes to allow those companies to thrive and grow within the United Kingdom.

However, we now know that the EU takes a fundamentally different stance. In the draft negotiating guidelines circulated only last week, the text reads:

“In the light of the importance of data flows in several components of the future relationship, personal data protection should be governed by Union rules on adequacy with a view to ensuring a level of protection essentially equivalent to that of the Union”.

Like the words of the Prime Minister that I quoted earlier, this is obviously preparatory to a negotiation and it may be possible in time to reach a satisfactory compromise, but that passage reads to me like a setback to the UK position. We are being told that there has to be an adequacy agreement of the type offered to any and every third country—as we will become—which is all that is on offer. Surely the sting is in the final section, where the message is: EU rules apply. Of course, initially they will apply because of the GDPR as implemented on 25 May 2018, but, as time goes on, there will be changes not just in the text but through court judgments and other mechanisms.

An EU adequacy agreement is in effect the granting of a general permission to move data across national borders where the Commission has recognised the data protection standards of the third country as being adequate, but it is by all accounts quite a formidable exercise and it takes time. At the end of the process, there is no graduation. If you pass, there are no distinctions, merits or first-class honours; it is just pass or fail, and you are judged adequate or not adequate. Not adequate means the end of any UK-based data processing industry—financial services comes to mind—as far as intercountry personal data transfers are concerned.

We also know that an adequacy assessment of the UK by the EU will not only evaluate our data protection and privacy laws but examine the totality of UK domestic law, including UK security law and the UK’s international commitments, to determine whether there is a level of protection of fundamental rights and freedoms that is “essentially equivalent” to that guaranteed within the EU. This does not require identical law but laws which offer substantially the same level of protection. Despite the welcome changes made in the Bill, we know that there will be some issues of concern in the area of national security and defence.

The Prime Minister says that she wants an arrangement for data protection that goes “beyond an adequacy agreement”. So what could we do to help here? What would “adequacy-plus” look like? In some senses, the solution is not adequacy agreements but a treaty—however, we can only guess, given where we are in the process. Given that the DP Bill will contain substantial amounts of EU retained law, it surely follows that the regime that it establishes needs to be properly safeguarded and not subject to vicarious amendment if we are to be able to trade data as at present.

If we want to be helpful to the Prime Minister, and I am sure that the noble Baroness, Lady Goldie, would want that, we should make sure that the Government accept these modest amendments. After all, what would strengthen more our chances of an adequacy-plus ruling or provide a basis for a treaty that reassures all those working in this area than ensuring that the DP Bill when it is an Act can be amended only by primary legislation after full scrutiny by Parliament? I beg to move.

My Lords, I have added my name to the amendments and agree entirely with what the noble Lord, Lord Stevenson, said. I do not intend to traverse the same ground as him and may not be quite as helpful to the Prime Minister as he has been.

I want to add a dimension on data protection from the perspective of someone who has been a Minister and a senior civil servant. It is very easy for even the most well-intentioned Minister to overlook the importance of data protection and privacy to some of our fellow citizens when we are trying to push through what is seen as a measure of great collective benefit. We have seen how easy it is for free-speech arguments to trump individual privacy considerations. In the rush to secure medical advances through research, it is easy to see people who are nervous of giving their medical history to a researcher they do not know as Luddites to be overruled. That is why the Data Protection Act 1998 was a landmark Act. It calls on bureaucracies to stop and think and to become more thoughtful about citizens’ rights to privacy and individual data protection. Since that Act, case law has extended those protections in many cases. We do not want any backsliding, and there are plenty of powerful interests who would backslide if these legal protections were diminished. It is for similar reasons that the successor to the 1998 Act needs to be fully protected following our departure from the EU, and that protection needs to be set out clearly in this Bill. This is even more the case given that the Government have set their face against protecting the transfer into UK law of the Charter of Fundamental Rights, which contains privacy provisions.

As I said on an earlier amendment on clinical trials, we need overtly to protect existing rights and provisions important to our fellow citizens from casual vandalism later. That means being sceptical about assurances from Ministers, even the Prime Minister, in relation to this Bill and relying on future actions to preserve safeguards. We have to put more guarantees in the Bill before it leaves this House, as I said on Amendment 84. I want before I sit down to draw the attention of those who were not present for the debate on that earlier amendment to two important points made respectively by the noble and learned Lords, Lord Judge and Lord Mackay. My noble and learned friend Lord Judge, as I understood him, ventured the view that the new EU regulations of concern under Amendment 84 could be added to Clause 7(7). That seems to give support to this amendment. If we went down that route, we would be doing exactly the same for data protection issues as for clinical trials. That suggests that there is scope in the Bill for specific EU regulations to be given particular protection where it is considered of such importance to the rights and safeguards of citizens.

Similarly, on the same amendment—I would need to read Hansard to check that I understood it correctly—the noble and learned Lord, Lord Mackay of Clashfern, made a contribution that was extremely helpful to the Minister, who, if I may put it delicately, was in a little trouble over that amendment. He suggested that, where there were new provisions and some ambiguity about whether the full protections would be safeguarded, it would be open to this House and the Government to consider putting a list of regulations requiring special protection in some form in this Bill.

If that course of action commended itself to the Government before Report, I would respectfully suggest that data protection should be on that list as something that will be given particular protection. I think there is a very strong case, as the noble Lord, Lord Stevenson, has argued very convincingly, to give some special protections in the Bill to data protection. Regardless of whether this amendment is precisely the right wording, or whether there is another way of doing it, I think that the noble Lord has made the case, just as I think that we made the case earlier this afternoon on clinical trials regulations. I think the Government need to think, in the way that the noble and learned Lord, Lord Mackay of Clashfern, was saying, about the kinds of issues that merit that kind of protection if we are to safeguard well-earned citizens’ rights and protections that have built up over time.

My Lords, it is a pleasure to follow the noble Lord, Lord Warner, and speak to Amendment 88 and the other amendments in this group. I very much support the words and the very comprehensive introduction that was given by the noble Lord, Lord Stevenson. It is vital to many key sectors—manufacturing, retail, health, information technology and financial services in particular—that the free flow of data between ourselves and the EU continues post Brexit with minimum disruption. With an increasingly digital economy, this is critical for international trade. TechUK, TheCityUK, the ABI, our own European Affairs Sub-Committee and the UK Information Commissioner herself have all persuasively argued that we need to ensure that our data protection legislation is treated as adequate for the purpose of permitting cross-border data flow into and out of the EU, post Brexit.

Fears were expressed in Committee and eventually the Data Protection Bill was amended on Report and at Third Reading to show that some principles, at least, were incorporated in the Bill, despite the fact that the European Charter of Fundamental Rights will not become part of UK law as part of the replication process in this Bill. The noble Lord, Lord Stevenson, quoted the Prime Minister’s recent Mansion House speech, a speech that I am sure will be quoted many times, when she said that,

“we will need an arrangement for data protection. I made this point in Munich in relation to our security relationship. But the free flow of data is also critical for both sides in any modern trading relationship too. The UK has exceptionally high standards of data protection. And we want to secure an agreement with the EU that provides the stability and confidence for EU and UK business and individuals to achieve our aims in maintaining and developing the UK’s strong trading and economic links with the EU. That is why”—

this is exactly what the noble Lord, Lord Stevenson, said—

“we will be seeking more than just an adequacy arrangement and want to see an appropriate ongoing role for the UK’s Information Commissioner’s Office”.

Whether or not something more than adequacy will be available—the noble Lord, Lord Stevenson, also dealt with this—depends on the EU, which states quite clearly, in paragraph 11 of its recent draft negotiating guidelines:

“In the light of the importance of data flows in several components of the future relationships, personal data protection should be governed by Union rules on adequacy with a view to ensuring a level of protection essentially equivalent to that of the Union”.

I have slightly more extensively quoted paragraph 11 of the recent guidelines, but the difference between those two statements is notable. Both the statements recognise the fact, as many of us emphasised in this House during the passage of the Data Protection Bill, that the alignment of our data protection with the EU is an intensely important issue. There will be a spotlight on the question of whether we meet an adequacy assessment by the European Commission, which I think we all agree is necessary and essential.

As I said on Report and at Third Reading of the Data Protection Bill, the Government added a new clause designed to meet the adequacy test in future, yet this Bill also gives Ministers power to make secondary legislation to amend any retained EU law, which would include laws governing data protection rights. So the Government could give with one hand and take away with the other. This amendment, as the noble Lord, Lord Stevenson, emphasised, is exactly designed to avoid a situation where our data protection law does not meet the adequacy test, to the great disadvantage of our digital economy and other sectors. Set against this danger, it cannot be necessary or desirable to exercise any of the powers in Clauses 7, 8 and 9 to repeal any part of our data protection legislation, which we have so carefully crafted and adopted. These are probing amendments but I certainly hope the Minister can give us the necessary assurance to make sure that such amendments do not reappear on Report.

My Lords, I thank the noble Lord, Lord Stevenson, for bringing before us what are undoubtedly very important issues. I am grateful to the noble Lords, Lord Warner and Lord Clement-Jones, for their contributions. I say by way of preface that the general data protection regulation comes into force on 25 May this year. Noble Lords will be aware that there is, as the noble Lord, Lord Stevenson, referred to, a Data Protection Bill currently before Parliament which fully implements the current EU framework, including the GDPR. We would not have chosen to legislate in this way if we were not committed to that EU framework. To be fair, the noble Lord, Lord Stevenson, was gracious enough to acknowledge that. I also say that to seek to reassure the noble Lord, Lord Warner. Let me try to help a little further.

As the Prime Minister has set out, the Data Protection Bill will ensure that we are aligned with the EU framework, but we want to go further than that and further than the typical adequacy agreement—I think that this was the concern of the noble Lord, Lord Stevenson. We want to seek a bespoke arrangement to reflect the UK’s exceptionally high standards of data protection. To reassure the noble Lord, Lord Clement-Jones, this would include an ongoing role for the UK’s Information Commissioner’s Office and effective representation for UK businesses under the EU’s new one-stop shop mechanism for resolving data protection disputes.

Even with that background and that backdrop it is nevertheless crucial that we have powers to correct any deficiencies that arise as a result of the current text of the GDPR being retained in the UK, post exit, word for word. For example, at its simplest we will need to replace references to “Union law” and “member states” with references to “UK law” and “the UK” respectively. We will also need to replace specific articles that do not make sense in a UK-only context; for example, article 3 on territorial scope. These are, of course, exactly the same kinds of changes that will need to be made to a wide range of EU-derived legislation to ensure a smooth exit. Where I slightly differ from the noble Lord, Lord Stevenson, is that while data protection is extremely important, there is nothing particularly special about data protection in this regard.

The difficulty about the amendments tabled—we have to be quite clear about this—is that they would remove the powers that allow the Government to remedy these deficiencies or make any other adjustments to the GDPR to ensure we have complied with our international obligations or implemented the withdrawal agreement. Alarmingly, this would damage the integrity of our regime and put at risk the data flows between the UK and the EU, which are crucial, I think we all agree, for our shared economic prosperity and wider co-operation, including on law enforcement. It is essential that we have the powers to ensure that the UK legislation framework remains functional after our exit. Of course, I accept that exactly how the powers in Clauses 7 to 9 will be used in relation to data protection depends on the outcome of negotiations, but I hope it is helpful to noble Lords to have the illustrative examples I have provided on the record.

I hope I have reassured noble Lords of our commitment to both data protection and the flow of data between the UK and the EU and in these circumstances I urge them not to press their amendments.

My Lords, since we are in Committee I have a question for the Minister. She has said that there may be some need to slightly alter data protection legislation, but this is very broad. Surely, there is scope for a much narrower formulation, so that those adjustments could be made without any radical changes to our current data protection law.

I say to the noble Lord that a phrase I used last week was that we need the powers to be broad enough to be useful and to let us cope with what will arise, but not so narrow as to restrict us in doing what we have to do. The difficulty is trying to quantify exactly what may require adjustment and tweaking once we leave; that is a genuinely challenging logistical problem.

Could the Minister say something about the points I made in drawing on the debate we had earlier today on Amendment 84? Will the Government consider the rather thoughtful interventions of the noble and learned Lords, Lord Judge and Lord Mackay of Clashfern, about issues similar to the issue of data protection which might be given special protection in the Bill?

I say to the noble Lord that I am still recovering from the debate on Amendment 84. I listened very carefully to it, as I know my colleagues did—my noble friends Lord O’Shaughnessy and Lord Callanan, the Minister on the Bill—and as did the officials. We will certainly look at the suggestion that my noble and learned friend Lord Mackay made.

My Lords, I thank the noble Lords, Lord Warner and Lord Clement-Jones, for their contributions. The interesting exchange we have had here went a bit wider than we perhaps needed to do on this Bill. But I am afraid that it reflects our concern on two, or perhaps now three, sides of the House that we may have missed something quite important in relation to the Data Protection Bill and its assurance of the fundamental rights involved in it.

The Minister said that she felt that the Government had fully implemented the GDPR through the Data Protection Act—but I do not think that is right. This is for another time, but the amendment to Clause 2 that was made on Report, which we welcomed and signed up to, flagged up that the Government had not quite yet got to the bottom of the argument. The rights deficit that arises with the failure to ensure that Article 8 of the Charter of Fundamental Rights is in place as a back-stop or underfloor element to the Data Protection Act means that there may be dangers going forward. That was the starting point for this amendment. If it is possible to see it more fully worked in the way that was suggested creatively by the noble Lord, Lord Warner, building on an earlier suggestion from the noble and learned Lord, Lord Mackay, with the Bill picking out high-risk areas in our public life which need to be given extra protection, that might be a solution to one of the issues raised.

I know that the noble Lord is coming back to an issue which was much discussed during the course of the Data Protection Bill. The charter, in particular, was raised in that context. But one of the difficulties pointed out during those debates was that the charter is expressed in generalities, as opposed to the Data Protection Act we now have, which is far more specific. The noble Lord once again invokes the charter. He will not have forgotten that the Human Rights Act and Article 8 are expressly preserved by Clause 7(7). Does he not agree that we are trying to have as clear a position as possible? The Minister explained that Clause 7 is of a limited but important purpose: to enable that clarity to be achieved.

I am grateful to the noble Lord for his intervention, because it allows me to refer back to the recently received JCHR report, Legislative Scrutiny: The EU (Withdrawal) Bill: A Right by Right Analysis. I am sure he is familiar with it. It says, if I can find the paragraph—I will talk quickly until I do—that there is still some doubt as to whether the treatment accorded to Article 8 of the Charter of Fundamental Rights is covered in the Data Protection Act. The report says:

“The Government … relies heavily in its analysis”,

on the GDPR,

“as a means of incorporating Article 8 of the Charter into domestic law. The GDPR and the Data Protection Bill contain numerous rights for data subjects. However, the Bill does not explicitly incorporate Article 8 … Given the vast number of exemptions and derogations from these rights provided for in the Bill, there is a question as to whether the Bill offers protection that is equivalent to Article 8 of the Charter”.

I put it to the noble Lord that this is an open question.

I know that I am straying into territory that we do not need to, but I started doing that because I was aware that my noble friend the Leader of the Opposition had not yet arrived to take the Statement. I have now been caught going a bit further than I should have, and I apologise to your Lordships’ House. I will sum up quickly. I accept the good intentions from the Minister. May I suggest to her that it might be worth one further discussion on this issue before we finalise our consideration of this Bill and the Data Protection Act? With that, I beg leave to withdraw the amendment.

Amendment 88 withdrawn.

Amendments 89 and 89A not moved.

House resumed.