House of Lords
Wednesday 2 December 2020
The House met in a hybrid proceeding.
Prayers—read by the Lord Bishop of Carlisle.
Arrangement of Business
Death of a Member: Lord Kerr of Tonaghmore
My Lords, I regret to inform the House of the death of the noble and learned Lord, Lord Kerr of Tonaghmore, on Tuesday 1 December. On behalf of the House, I extend our very sincere condolences to the noble and learned Lord’s family and friends.
Arrangement of Business
Belfast International Airport
My Lords, the measures taken in response to Covid-19 have been unprecedented, enabling airlines, airports and ground handlers to benefit from a very significant amount of taxpayer support. This includes, but is not limited to, the Coronavirus Job Retention Scheme and financing facilities. In Northern Ireland, airports have also benefited from business rates relief.
My Lords, Belfast International Airport is the largest airport in Northern Ireland, with 70% of all Northern Ireland travellers passing through it. It is an easyJet hub for the whole of Europe, and it is open throughout the night, with extensive essential flights for Royal Mail, the air ambulance, the military, security and freight. Yet, despite opening throughout the pandemic, it has not received any Department for Transport money or Northern Ireland finance support, even though a tiny Londonderry airport was allocated £1.2 million last week, and Aer Lingus at Belfast City Airport was supported for three months through the public service obligation. Can the Minister look into this and see what more the Department for Transport can do to ensure equal treatment for Aldergrove?
Can she also tell Northern Ireland passengers why, as it stands at the moment with the protocol, from 1 January, duty-free and tax-free goods will be available on all flights from GB airports to the EU, except from Belfast—and yet when flying from Dublin to London, you will be able to purchase duty-free? Will the Minister take this up as a matter of urgency with the Chancellor of the Duchy of Lancaster, who sits on the joint committee, as this is just not fair?
My Lords, a number of issues were brought up there, and perhaps I will take away the last issue and write to the noble Baroness. Financial support for airports is of course a devolved matter for the Northern Ireland Executive, but it is the case that all of the airports—Belfast International Airport, Belfast City Airport and the City of Derry Airport—have benefited from the business rates relief. It was also the case that, for a very short period, there was an additional PSO in place, which operated from Belfast City Airport. This was put in place because that was the last remaining flight and therefore it needed to be protected, but that support was needed only for a very short period.
My Lords, our regional airports, such as those in Tees Valley, Newquay and Exeter, play an essential role in aiding regional connectivity. They are vital for both business and leisure and contribute to local economies. Would my noble friend the Minister agree with me that the business rates relief announced by the Government would help to ensure that, with this support, our aviation industry has a fighting chance of survival in these turbulent times?
My noble friend is quite right, and my department was delighted to be able to support the announcement of the business rates relief, which will be open for applications shortly. It is the case that up to a maximum of £8 million will be available per eligible site, and this will help support our commercial airports and ground handlers.
My Lords, the connectivity of travel between the four nations within the United Kingdom is essential. The people in Great Britain have the option of rail and road connections, as well as air travel; in Northern Ireland, we have no such options. Will the Minister please pass on to the department responsible the request that air passenger duty is removed from domestic flights from the three Northern Ireland airports—not from the international flights from Northern Ireland but from the domestic flights from Northern Ireland to Great Britain?
My Lords, I back the noble Lord, Lord Kilclooney. Those of us who live in Great Britain can get around by train and by car, but people in Northern Ireland can get over here only by air—at least until the Prime Minister builds his bridge, which may take some time. So will the UK Government now treat this as a special case and put some UK Government money into helping Belfast airport?
I have already addressed this point. It should be pointed out that Belfast International Airport is owned and operated by VINCI Airports, which owns and operates 45 airports worldwide and is a very large company. There are various interventions that Belfast International Airport is able to avail itself of at the moment.
My Lords, there has been a lot of focus on potential disruption at ports after 1 January but very little on the impact on airports and, in particular, Belfast airport. Can the Minister explain what the Government expect the situation to be, both with and without a deal with the EU?
My Lords, conversations around a deal or otherwise are ongoing, but trade with Northern Ireland will of course continue according to the “unfettered access” under the Northern Ireland protocol. It is worth noting that Belfast International Airport is a significant freight airport, and while it suffered a 79% reduction in passengers in October, it has seen an 8% increase in freight, so that is good news.
During the pandemic, smaller airports such as Belfast International Airport have suffered most, as airlines have consolidated their operations to the larger hubs. Am I to take it from the Government’s responses to this Question so far that they actually think they have done enough to ensure that no further smaller airports in the United Kingdom will face the financial pressures that Belfast International Airport has?
I apologise if I have given the noble Lord that impression; that was not my intention at all. The Government are well aware that both large and small airports are experiencing significant difficulties at the moment, which is why the expert steering group has been established. It is working on a strategic framework for the medium and long-term recovery of the aviation sector in the form of a recovery plan. This group does engage with the DAs.
My Lords, could the Minister look again at air passenger duty and provide us with a specific timetable for when that consultation will begin? Aviation is central not only to our transportation strategy but to our economic strategy through jobs in aircraft building and associated businesses.
My Lords, I am not able to provide any further details of the timing of the APD consultation. However, I recognise the noble Baroness’s point that aviation connectivity is important. That is why it will be an important part of the union connectivity review, which was announced on 30 June and will be led by Sir Peter Hendy. This will look at connectivity across all modes, including aviation, across the four parts of the United Kingdom.
My Lords, I congratulate the Government on the measures they have introduced, such as business rates relief and the other facilities that my noble friend mentioned, of which small airports can avail themselves. Will my noble friend tell the House what impact the Government expect on Belfast International Airport if we were to leave the EU without a deal at the end of December?
I am not aware that the Government have done any specific assessment of Belfast International Airport. It may be the case that the Northern Ireland Executive have, and perhaps I will ask them to be in touch if they have any further details.
[Inaudible]—Belfast International Airport to Dublin, because of the abolition of air passenger duty in the Republic. Therefore, Belfast International Airport was facing an uphill battle competing with Dublin Airport. The airport is the hub for international travel in Northern Ireland. In March, the Government announced a recovery plan for aviation. What specific financial assistance has been forthcoming to ensure the survival of Belfast International Airport?
My Lords, I have outlined the support that Belfast International Airport and various airports in Northern Ireland have already had, but I can give a little more detail. For example, the business rates relief which was offered by the Northern Ireland Executive totalled £2.2 million, of which Belfast International Airport received the lion’s share, at £1.7 million. The City of Derry Airport received £1.23 million from the NIE, but the reason behind that is that it is owned by the council, and local authority airports cannot access the same support as private airports, such as CBILS, the CJRS and so on.
Children: Online Grooming
My Lords, the rise in self-generated indecent images of children is extremely concerning. These images can have devastating impacts on young people, putting them at risk of blackmail, coercion and, of course, further abuse. Through the online harms Bill we intend to publish a new duty of care for online companies towards their users, overseen by an independent regulator. Our response during the pandemic includes amplifying messages to stakeholders to help children to stay safe online.
My Lords, professionals working in child protection, such as those at Barnardo’s and the NSPCC, have been raising concerns about the impact of the lockdown on children, which has created a perfect storm that has led to an increase in online child abuse. The Internet Watch Foundation has warned of a rise in self-generated illegal images of young children which it has had to take down, up almost 50% on last year. What steps are the Government taking to ensure that there is a renewed focus on prevention and the protection of children, who are spending more time online, to guarantee that they are properly supported with high-quality online safety advice, funding and resources?
I agree whole- heartedly with the noble Baroness: she is absolutely right that the figures she quotes are staggering and worrying. I commend the Internet Watch Foundation for the work it is doing. I know that officials are engaging very closely with the IWF to explore what more we can do to tackle this sort of online grooming. I also know that RSE in schools is another area through which we can engage with children to prevent this sort of thing happening in the first place.
My Lords, the UK Safer Internet Centre recently reported that in one week alone earlier this year 700 young girls, most of them between 11 and 13 years old, were coerced into filming their own abuse and posting it online, where it is easily shared, repeating the trauma and victimisation time and again. What progress have the Government made in getting social media companies to take down all such images, including those that have been shared, as they are reported? Which companies are not complying with this process? Can the Minister also confirm that funding for the UK Safer Internet Centre has been secured as a result of the Chancellor’s Statement last week?
I cannot confirm the answer to the noble Lord’s question about the funding for the UK Safer Internet Centre, but I will confirm it to him in writing. The figure that he quoted of 700 girls in one week is just staggering in its magnitude. Of course, this is a problem of this generation: my children were certainly not subjected to this type of coercion, either by their peers or by groomers online. This is the double concern. I know that Five Eyes are working together with some of the internet providers and social media sites and that the Home Secretary has been engaged in this work, specifically with Facebook.
My Lords, in April 2017, three and a half years ago, the Digital Economy Act included measures to protect children online. In 2019, the Government decided not to commence these measures, wanting instead to wait for the online harms Bill. A year on, we are still waiting for that Bill. When will it be published, and can the Minister explain to the House how this three and a half year-delay is the Government seeking to protect children online?
I cannot disagree with the noble Baroness that the sooner the online harms Bill comes our way, the better. I certainly know that the response to the consultation will be published very shortly. The sooner we can get on with this, the absolute better for our children.
I have to say to my noble and learned friend that in local authorities, particularly when local authority systems are being used, there are firewalls to prevent some types of abuse, but if a child has a smart phone with such things as Messenger or Snapchat on it, it is incredibly difficult for local authorities to keep tabs on children who are at the end of such coercive behaviour. The noble Baroness, Lady Kennedy of Cradley, talked about the online harms Bill next year: that is going to be crucial, because it will place a duty of care on service providers and social media platforms to actually protect vulnerable people from this sort of thing.
My Lords, following up on the Minister’s reply to the noble Lord, Lord Harris of Haringey, she may be aware that industry compliance in taking down child abuse images fell by 89% in the first month of lockdown. What tools are the Government using, or threatening to use, to ensure that social media companies such as Facebook design and deliver platforms and services that put child protection front and centre?
I can guess at several of the factors, but one might be the ever-increasing use of encryption, so that not only can parents not see what their children are doing, but nor can the local authority or, actually, the internet providers themselves. This is at the heart of what the Home Secretary and Five Eyes partners are trying to discourage going forward.
My Lords, following up on the question from the noble Baroness, Lady Walmsley, my noble friend may be aware that Facebook and Facebook-owned apps such as Instagram and WhatsApp account for more than 50% of online abuse. What conversations are specifically taking place with Facebook in relation to its platforms being the preferred method and platform for this kind of abuse?
Well, Messenger, which is a Facebook app, had not to date been encrypted, but Facebook has announced its intention to encrypt Messenger from, I think, next year. This is precisely the type of discussion that the Home Secretary and Five Eyes partners are having with Facebook, because not only will law enforcement bodies and the National Center for Missing and Exploited Children in the US not be able to look at what is going on there, but nor will Facebook itself, and that is the crucial thing here.
My Lords, these are horrific crimes. Frankly, is it not time to give the directors of the companies that are hosting these images legal civil and criminal responsibility for the content they host? I suspect we would see much swifter action if this were the case, and nothing short of this will do to deal with this abuse.
The question we really want answered is whether the Home Office is pressing for, and the Government are going to provide parliamentarians with, the opportunity to vote in Parliament to create criminal sanctions against the internet companies that are failing to deal with this depravity.
My Lords, we will continue to work closely with our European partners to tackle shared security threats, promoting the safety and security of all our citizens. We also continue to work closely with operational partners to ensure that we are ready for a range of possible outcomes at the end of the year. The UK will continue to be a global leader on security and one of the safest countries in the world.
My Lords, does the Minister agree that we are threatened by cybercrime, other forms of serious crime, violent extremism and terrorism and that, if we leave the EU without a sensible deal on security co-operation, we will lose access to data, the European arrest warrant and Europol? On access to data, will she confirm that we use the Schengen Information System 600 million times a year? Surely our membership of the European Court of Justice, which is a government red line, is trivial compared to the need to keep our people safe and save lives in this country.
We have always said that there would be a mutual loss of capability in the event that the UK no longer had access to SIS II. That is why we have offered to reach an agreement with the EU that delivers a similar capability. The Commission has stated its view that it is not legally possible for a non-Schengen third country to co-operate through SIS II and that a future agreement between the UK and the EU need not provide similar capabilities. We regret this and have maintained our offer to the EU.
My Lords, the sharing of intelligence and the importance of close co-operation between the UK and our friends throughout Europe is well proven. I could cite several examples clearly showing that it keeps us all safe and has prevented terrorist attacks throughout the continent. What assurance can the Minister give your Lordships’ House that there will be no lessening of this close partnership after the end of the implementation period on 1 January 2021?
I assure the noble Lord that the UK will continue to work with our European partners to counter, as he said, the terrorist threats we face in Europe and beyond. We have world-leading expertise on counterterrorism and countering violent extremism, which we will continue to share with EU member states as appropriate.
My Lords, how much of our data exchange with EU member states now takes place through Europol? Does my noble friend agree that, having left the EU, we should rebuild our security and intelligence exchange arrangements on a bilateral basis with member states rather than exchanging sensitive intelligence through Europol, and that our security will be enhanced rather than diminished as a result?
My Lords, the UK is not seeking membership of Europol or Eurojust. That is not how third-country arrangements with these agencies work. We have not sought membership of either agency, but we are negotiating at what is clearly a very sensitive and late stage. In general, there is a good degree of convergence between what the UK and the EU have been seeking to negotiate.
My Lords, can the Minister give a clear assurance that, from 1 January, the police will continue to have unfettered access to the various EU databases which help them track and prevent transnational crime such as the trafficking of drugs, arms and people? Over 50 million requests are made of these databases every year from UK police forces. National security would clearly be at risk without access to them.
I agree with the noble Baroness about our capabilities. We are in the very late stages of negotiating an agreement on law enforcement, criminal justice and, as she says, those data exchanges that are so important. I cannot say more than that, but we have had some very useful discussions in this area and I am hopeful of a good deal.
The noble Baroness strays slightly into the area of defence, but I can say that the foundation of European security since 1949 has been the NATO alliance. Our intelligence services already have highly effective co-operation to build on outside those EU structures. We also have the Five Eyes group and the Counter-Terrorism Group. We are well placed going forward.
The European arrest warrant is used exclusively by EU members, obviously. We have proposed that an agreement with the EU should provide for fast-track extradition arrangements, based on the EU’s arrangements with Norway and Iceland but with appropriate further safeguards for individuals.
My noble friend has rightly stated that the safety and security of our citizens is the top priority and that the UK will continue to be a global leader in security. One therefore hopes that our European friends will continue to work closely with us to ensure the safety of all our citizens. In the unlikely event that we leave without a deal, can my noble friend confirm that there are well-developed and well-rehearsed plans in place to ensure the safety and security of the British people?
I can confirm that for my noble friend. I also reiterate his point that the safety and security of our citizens is the Government’s top priority. We are negotiating an agreement on law enforcement and criminal justice with the EU to equip our operational partners on both sides with the capabilities to protect citizens and bring criminals to justice.
The National Police Chiefs’ Council has warned that, post Brexit, with the loss of access to EU databases,
“even with contingencies in place, the fallback systems will be slower, provide less visibility of information/intelligence and make joined up working with European partners more cumbersome.”
The National Crime Agency has said that, in both a negotiated outcome and a non-negotiated scenario,
“the alternative measures are less automated and more unwieldy to use.”
Do the Government agree with the National Police Chiefs’ Council and the National Crime Agency? If so, what do they intend to do about it?
I reiterate that there will be a mutual loss of capabilities for the UK and the EU in a non-negotiated outcome. I do not think I have made any secret of that in this House. We are therefore working very hard—I know it is late in the day—to secure a negotiated outcome.
My Lords, the Minister has confirmed that the security of their citizens is the number one priority of the Government. If that is the case, are we going to have access to the European Criminal Records Information System, which we make almost 200,000 requests to in a year? Are we going to have access to the Schengen Information System II, which, as noble Lords have said, has required access of up to 500 million times a year? What about Europol, which was mentioned? What about the European arrest warrant? Does the Minister agree that, deal or no deal, if we do not have these things, they represent a risk to public safety and security?
I can only admire the noble Lord’s ability to get about seven questions in his one question. Going back to SIS II, which we spoke about earlier, the Commission has stated its view that it is not legally possible for us, as a non-Schengen country, to co-operate through SIS II. As set out in the UK’s published approach to negotiations, we believe an agreement should provide for the fast and effective exchange of criminal records data between the UK and EU individual member states.
Ethiopia: Northern Tigray Region
To ask Her Majesty’s Government, further to the announcement by the government of Ethiopia on 30 November that military operations in the northern Tigray region are complete, what assessment they have made of the situation in that region; and what access they have (1) requested, and (2) been granted, to the region to establish (a) humanitarian needs, and (b) any evidence of war crimes.
My Lords, an initial Tigray humanitarian preparedness plan has been prepared by the United Nations. A comprehensive assessment of the humanitarian needs across Tigray has not yet been possible. We are encouraged that an assessment mission co-ordinated by the UN is scheduled to commence later this week, and this follows efforts by the UK and others to press for implementation of the assessment. We have also contributed to the UN guiding principles presented to the Government of Ethiopia on humanitarian access, with a view to the delivery of assistance for civilians.
My Lords, I thank the Minister for that reply. Can I press him further on the issue of the humanitarian corridor? Will this conform to United Nations principles of neutrality, and will access be granted to our diplomats to visit Tigray? Secondly, how do we intend to hold to account those who have been responsible for the torture of refugees, the forced reform of refugees and some pretty barbaric acts which have been carried out against some of those who have escaped from Tigray?
My Lords, on the noble Lord’s second point, of course the situation at the moment does not allow for a full assessment. But let me assure him of this: we will certainly continue to press that any perpetrators of such acts are brought to justice. On his point about humanitarian corridors, we are liaising closely with the UN humanitarian organisations to establish what, if any, additional support is needed to press for diplomatic channels in particular—which we have been doing—to allow for the principles that he has articulated. It is integral to the principles laid down by OCHA, which the UK supported the development of.
My Lords, does the Minister agree that there is a real prospect of the Ethiopian conflict getting right out of control, especially given the Horn of Africa’s strategic importance, with Gulf countries, China, the US and others jockeying for influence, or even becoming a Libyan nightmare of war crimes, war lords and ethnic cleansing? Can the Government redouble efforts to broker negotiations through the United Nations, the African Union and the EU?
My Lords, first let me assure the noble Lord that I share his concern, when we see the challenges faced in neighbouring countries, about the importance of containing this and seeking a peaceful settlement. On the channels he has mentioned, my right honourable friend the Foreign Secretary discussed co-ordination with our EU partners on 23 November, and we are in discussions with key African partners, including Uganda, Somalia, Kenya and, importantly, South Africa. At the UN, we also participated in the Security Council debate on 24 November.
My Lords, given the risk to stability in the region, does the Minister agree with former US ambassador Carson when he said yesterday that the battle cannot be won militarily, and that it is vital that neighbours do not become embroiled through the use of their bases or airspace? Could he spell out which EU countries the United Kingdom is working with to secure these aims via the UN?
My Lords, all too often, women and children are the greatest victims of conflict. The UK is leading the way in the implementation of UN Resolution 1325, which recognises the importance of women’s involvement in peacekeeping. I visited and saw first-hand the UK contribution to the Peace Support Training Centre in Addis but, in light of recent events, is now the time to increase our commitment to that centre?
My noble friend speaks with some insight and, of course, great expertise. I share his view that one of the real successes has been the women, peace and security programme run by the Ministry of Defence and the FCDO. On his specific question on whether we increase capacity, obviously the situation at the moment is very fluid on the ground, but he makes a very important suggestion, which I will certainly take back and update him on accordingly.
My Lords, what assessment have Her Majesty’s Government made of the Ethiopian premier’s assertion in Parliament on 30 November that his forces “have not killed a single civilian” during the conflict in the Tigray region? That followed a statement by the International Committee of the Red Cross on 29 November that Ayder Referral Hospital in the Tigrayan capital was “running dangerously low” on stocks and body bags due to an influx of wounded people, and that 80% of them had suffered unspecified trauma injuries. What can be done to help the supply of medical equipment much needed for that hospital?
My Lords, I assure the noble Baroness that I have been speaking directly to UN agencies, as have other colleagues within the FCDO. I share the important point she raised right at the end of her question, and we are pressing for unfettered humanitarian access. The number of fatalities is unclear, but there is clearly also a high level of internally displaced people. I assure her that we are using all good offices and lobbying directly with the country, as my right honourable friend the Foreign Secretary has done, to ensure unfettered humanitarian access to the region.
Picking up the last point the Minister mentioned, on the number of internally displaced people, has there been an assessment of how many there are? Have conversations taken place with the Governments of Sudan and Eritrea over the support that could be given to refugees at the border as well?
My Lords, on the noble Lord’s second point, the short answer is yes. We have raised it on a bilateral basis, as have international agencies. One figure I can share with him is that we now estimate that more than 45,449 people have fled Ethiopia for neighbouring Sudan—that is the latest figure I have. That is an example of the figures we have been able to make an assessment on.
My Lords, given that this is, in essence, a political and economic conflict, and given also that the Chinese Government are the biggest economic investor in Ethiopia, are Her Majesty’s Government working with the Chinese Government to see what influence they can bring to bear to calm matters and to bring about a potential negotiation between Ethiopia and Eritrea?
Prior to the conflict, Tigray was a safe haven for Eritrean refugees afraid to return home because of fear of persecution. With Eritrea’s rumoured involvement in the conflict against the TPLF, what assessment have Her Majesty’s Government made of the validity of claims that the Eritrean military are forcing refugees into trucks and abducting them back to Eritrea?
The right reverend Prelate is right to raise those concerns. This too is part of the conversations that my right honourable friend the Foreign Secretary has had with the Eritrean Government. They, of course, refute any such programmes or policy, but we continue to raise our concerns directly with them.
My Lords, I first visited Ethiopia with the Commons International Development Committee. We had a long meeting with Meles Zenawi, who was very impressive, and was often described as Tony Blair’s favourite African dictator. He, of course, has been gone for many years. However, when I visited last year, although there was greater prosperity there was still grinding poverty. Can my noble friend assure me that henceforth, when we pour in billions and billions of pounds in aid, as we have done in Ethiopia, for humanitarian reasons and for education and health, we will also look at what is happening to the defence budgets of such countries? I am afraid that what has been happening is fungibility. We have been giving aid for education and health—they have been spending money on arms.
My noble friend raises an important point about transparency in development spending. That is why the new structure at the FCDO will pursue that very point, ensuring that development support is intended for those who are suffering, and gets directly to them.
In answer to the question asked by the noble Baroness, Lady Northover, the Minister said that the Government were in touch with France and Germany. Are the Government in touch with any power in the region itself that might be an influence for good, and what response have they had from the African Union about the role that it might play?
Let me assure the noble and right reverend Lord that yes, we are in touch with some of the countries I have already listed, such as Kenya, Uganda, Somalia and South Africa. We are dealing with those countries in the region at the most senior levels of government.
I totally agree with the noble Baroness. The United Kingdom has been at the forefront of involving women peace mediators. Indeed, we have launched several initiatives, and I agree that when women are involved in bringing about peace and sustaining it, peace agreements last much longer. The evidence is there for all to see.
Arrangement of Business
Conduct Committee Report
Motion to Agree
My Lords, I should start by explaining that I am moving this Motion as a member of the Conduct Committee on behalf of my noble and learned friend Lord Mance, because this particular report raises matters in which he personally has interests and has therefore recused himself from deliberations upon it.
This report builds upon an earlier report that the House approved in July about Members’ dealings with foreign Governments. It is, indeed, the latest in a series of changes that we are proposing to the House in order to increase transparency around Members’ overseas interests, reflecting increasing levels of concern about foreign state influence on our politics. Not least, your Lordships will recall, such concerns were raised by the long-awaited ISC report in July. After a good deal of deliberation, the committee is now proposing that Members should be required on an annual basis to disclose their earnings—I quote paragraph 9 of the report —from
“governments of foreign states (including departments and agencies), organisations which may be thought by a reasonable member of the public to be foreign state-owned or controlled, and individuals with official status (whether executive, legislative or judicial) in foreign states when acting in that capacity”.
One of our key challenges was to find such a definition that properly caught all that we wanted and thought we needed to capture.
Although the registrar may be consulted, Members will be responsible for judging whether an organisation or individual in fact meets that definition. In case of doubt, they should err on the side of registration. Members will be able to disclose the exact amount that they have been paid or simply indicate into which of the several bands set out in paragraph 12 of the report their earnings fall.
The committee is aware that in some professions there is a clear duty of confidentiality that would prevent some Members from disclosing all the information required. Obviously, they may include doctors, arbitrators or perhaps other lawyers. Rather than try now to come up with a definitive list of such professions in the code, we propose that Members should apply for an exemption as far as necessary. To do that, they will be asked to consult the registrar, who will provide advice on the basis of detailed guidance, which we, the Conduct Committee, shall give him. The committee is currently drawing up such guidance, with a view to publishing it early next year.
If the House agrees this report, the registrar will email Members to explain these changes, which will then take effect from 1 January 2021. Registerable earnings between then and the end of the financial year, 5 April 2021, would need to be disclosed no later than 31 January 2022. Registerable earnings in the next financial year would then need to be disclosed by 31 January 2023, and so on. All that is set out in paragraphs 10 and 11 of the report.
Finally, we propose also to add to the guide some cautionary wording for Members with regard to their dealings with foreign Governments and entities. Paragraph 17 deals with that. I beg to move.
My view is that all money received by Members of the House of Lords should be declared. This report tries to do what is virtually impossible, which is to lay down a code of conduct that, by its own nature, is vague. I have a number of questions.
As regards the guidance on dealing with lobbyists, the report states:
“Members should be especially cautious when coming into contact with representatives of corrupt or repressive regimes”.
The noble and learned Lord who introduced the report is a lawyer. He will know that the word “representatives” is certainly capable of challenge. What is a representative? What is a corrupt regime? What is a repressive regime? Is Hungary a repressive regime? If someone is in contact with a representative of the Hungarian Government, at what level does the rule apply? Is the ambassador of Hungary a representative of a repressive regime? This report is shot through with problems.
The next page covers the level of remuneration in respect of the interests falling within this category that need to be disclosed only where they are received from the Governments of foreign states. What do we mean by “foreign states” or “controlled by”? Is Huawei controlled by the Chinese Government, as is alleged by some, or is it not controlled by them, as is said by the Chinese Government? What about what I would call “parastatal” regimes—in other words, bodies that are set up at arm’s length by Governments such as the British Government to provide services? Is Serco a parastatal regime and company, or is it not? This is just not good enough.
On applying for exemptions, how will we explain to the British public that Members of the House of Lords can take earnings from organisations and not declare them? That is what this says: earnings do not have to be declared because of confidentiality. We can have confidential agreements made by legislators who can subsequently intervene on legislation, but there is no public record of that. It is not good enough.
My final point is about
“disposing once in respect of each financial year.”
If I visit Turkey, which I did not so long ago, I have to declare that within two months. Why, if we have this system, could someone earn money in May 2021 and not have to declare it until January 2023? Why the sudden difference? I do not think that this is acceptable.
I will not vote against the report because that is not the done thing, but I do not think that it answers the question that was put before it, which is to make the proceedings of this House and the activities of its Members more transparent. I am sorry to rock the boat again, but these things need to be said.
My Lords, I am grateful to the noble and learned Lord, Lord Brown of Eaton-under-Heywood. I have two points: both have been touched on by the noble Lord, Lord Balfe, but in a slightly different way. I have a query about paragraph 16 of the report which states:
“Members should be especially cautious when coming into contact with representatives of corrupt or repressive regimes, ensuring that they uphold the integrity of the parliamentary process and the reputation of the House of Lords at all times.”
That is a bit unclear—I am not sure what it means or who would make that decision.
My other point is on the paragraph about confidentiality, which might more appropriately be called exemptions. The noble and learned Lord might be able to help me to understand this. The report states:
“We are aware that in a small number of professions there is a duty of confidentiality”—
I can think of only one, which is the medical profession, and I am not sure whether the others might possibly be to do with the legal profession. The report goes on
“which would make it difficult for members to disclose the identity of the government”
but then proposes that
“members … would be able to apply for an exemption from the registration requirement.”
Does that mean that they would not have to register anything at all, not even having received any money if that was the case? I can understand that there might be an element of confidentiality, although I struggle to understand whether that is essential, but I do not see why that should completely exempt Members from the registration requirement.
I also have concerns about the personal services company element because I am not clear about how it will work. The report states that Members
“need to register the type of client involved but without naming the particular client in question.”
I am not convinced that that is 100% helpful to the House or to those looking at this, but my main question is who makes the decision. In paragraph 9 under definitions, it states:
“Although the Registrar may be consulted, members will be responsible for judging whether an organisation or individual meets this definition, and in case of doubt they should err on the side of registration.”
The noble and learned Lord, Lord Brown, helpfully said that the Conduct Committee will issue guidance for the registrar, but I am not clear who will make the decision that an exemption is appropriate. Given that exemption brings with it the opportunity not to make any form of registration at all or to provide any information, I would like some clarity on who will make the decision. If it is the same as in paragraph 9, which states that the individual Member can make that decision, that seems somewhat unhelpful to this House and to the issue of transparency.
I will not seek to divide the House or to vote against the Motion because it is an important step forward and there are a lot of areas in which the report is helpful, but I would like clarity on those points if the noble and learned Lord is able to give them to me.
My Lords, I am most grateful to the noble Lord, Lord Balfe, and the noble Baroness Lady Smith, not least because, if I may say so, they have effectively confirmed that there are real difficulties in reaching the necessary degree of definition in this highly complex area of our code—[Inaudible.]
I apologise, although I do not believe it to have been my fault. As I was saying, the noble Lord, Lord Balfe, and the noble Baroness, Lady Smith, have established what we have long felt—that this is an extremely problematic area of our code on which we have deliberated long and hard to try to achieve these definitions.
On the main question raised by both speakers, of course there are difficulties in deciding whether a particular organisation is controlled by the Government. These matters are dealt with in Paragraph 9 of the report. But as the report is at pains to show, there are two guiding principles. The first is that what reasonable members of the public might suppose to be the position here, along the lines of Huawei and so forth. If it may be thought by the public that an organisation is foreign state-owned or state-controlled, there is a clear and categoric obligation to disclose that fact. However, there is always the power of consulting the registrar, so there is help from that quarter. There is also the enduring obligation that in case of doubt, a Member should err on the side of registration.
We have not felt able to be more specific than that. If anyone feels that they have a clear solution to this riddle, we would be delighted to hear it. In the meantime, we feel that this is the best that we can offer.
With regard to corrupt and repressive regimes, your Lordships will see that this was dealt with in an earlier report. Paragraph 1 of the report points that out. We are trying to help further, in paragraph 17. Of course, these are highly difficult concepts, but this is open to Members—and one hopes that they will avail themselves of this—to consult the registrar and, if in doubt, an obvious course would be to effect the registration. As to the date of earnings, we have tried to be helpful and to minimise the administrative burden on Members by taking the same date and concept for declaration of earnings as one uses for one’s tax returns annually, to 31 January—to do one’s earnings in relation to the tax year. That is why the first proposed registration is for 1 January to 5 April 2021.
I hope that deals with most points. Your Lordships will have seen that we continue to consult on this and deliberate in this field. On the question of guidance for the registrar, it is the registrar whose decision ultimately rules on the question of exemptions. Again, it is difficult to see how one could improve on that. To address a point made by the noble Lord, Lord Balfe, I hope this is not an absurd, fanciful and unhelpful suggestion, but if we assume that one of our enormously distinguished doctors in the House, who contributes greatly to the proceedings of the House, has as a patient some foreign head of state, Prime Minister or whatever, and is consulted by him professionally—that must surely be confidential. He cannot possibly say: “I’ve been treating that king for piles” or whatever it is. It would be a gross abuse of professional privilege and confidentiality. That is the sort of situation one could get into. Therefore, if you had this report without the possibility of exemption, you would require somebody such as that doctor to take leave of absence and cease to participate in the House. I am not sure that I can do any better than that. I fear that nothing I can say will entirely satisfy all the questions that such a report inevitably raises.
My Lords, I have listened carefully to the noble and learned Lord, Lord Brown. He has tried to answer, and he has hit the nail on the head when saying that it explains the difficulties. However, the committee must look again at two things that he referred to as a matter of urgency. This report takes us some way forward, but not far enough. The point he made about a medical person who contributes to the work of this House but who is treating somebody in confidence does not explain why there cannot be any registration at all. Surely the registration could be declared. The confidentiality of who is being treated might be an issue, but who makes that decision? That is the central point. At present, the person who makes that decision is the Peer. When we talk about exemptions, that is not acceptable. I do not intend to divide the House against the report, which takes us a step further forward, but there are inadequacies in it which I hope the noble Lord will take back to the committee and address as a matter of urgency.
We will certainly take back and consider all the points that have been made. On the substantive question that the noble Baroness raises, I have no doubt whatever that the Member would say that he practices as a doctor in a given field for clients internationally as well as at home. I do not know whether that would be regarded by her as satisfying that aspect of the register of interests. Subject to that, of course, we will look afresh in the light of all the helpful comments made by Members.
Animal Welfare and Invasive Non-native Species (Amendment etc.) (EU Exit) Regulations 2020
Food (Amendment) (EU Exit) Regulations 2020
Agricultural Products, Food and Drink (Amendment etc.) (EU Exit) Regulations 2020
Motions to Approve
Definition of Qualifying Northern Ireland Goods (EU Exit) Regulations 2020
European Union Withdrawal (Consequential Modifications) (EU Exit) Regulations 2020
Motions to Approve
That the draft Regulations laid before the House on 7 and 21 October be approved.
Relevant document: 31st Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the first instrument). Considered in Grand Committee on 30 November.
Official Development Assistance
The following Statement was made in the House of Commons on Thursday 26 November.
“Madam Deputy Speaker, I will make a Statement to the House on official development assistance. The House will know that my right honourable friend the Chancellor updated the House yesterday on the economic challenges posed by Covid-19. It is a truly sobering assessment. The UK is facing the worst economic contraction in almost 300 years and a budget deficit of close to £400 billion—double what we faced in the last financial crisis. Britain is responding to a health emergency, but also an economic emergency, and every penny of public spending will rightly come under intense scrutiny by our constituents.
Given the impact of the global pandemic on the economy and, as a result, the public finances, we have concluded after extensive consideration—and, I have to say, with regret—that we cannot for the moment meet our target of spending 0.7% of gross national income on ODA, and we will move to a target of 0.5% next year. Let me reassure the House that this is a temporary measure. It is a measure we have taken as a matter of necessity, and we will return to 0.7% when the fiscal situation permits.
The relevant legislation, the International Development (Official Development Assistance Target) Act 2015, envisages circumstances in which the 0.7% target may not be met, particularly in the context of economic pressures. The Act provides for accountability to Parliament in that event, and I will of course report to the House in the proper way. Equally, given the requirements of the Act, the fact that we cannot at this moment predict with certainty when the current fiscal circumstances will have sufficiently improved and our need to plan accordingly, we will need to bring forward legislation in due course.
We are not alone in facing these painful choices. All countries are reconciling themselves not just to the health impact of the pandemic, but the economic impact of Covid-19. It is worth saying that on the 2019 OECD data, only one other G20 member allocated 0.5% or more of GNI to development spending, and that was before the pandemic. Many countries are reappraising their spending plans, as we have been forced to do. As a result, we nevertheless expect our development spending next year to total around £10 billion, maintaining our status as one of the leading countries in the world in ODA spend.
I can reassure the House that we will retain our position as a leader in the global fight against poverty. We will remain committed to following the rules set by the OECD’s Development Assistance Committee, and we will ensure the maximum impact from our aid through the strategic integration we are driving as a result of the merger at the Foreign, Commonwealth and Development Office, the strategic thinking that is informed by the integrated review, and the further changes we are now making on how we allocate ODA to support a more integrated and overarching approach.
Let me say a little more on that integrated approach. Our starting point is the integrated review, with which we are setting the long-term strategic aims of our international work, based on our values and grounded in the British national interest. To achieve this, we will be taking a far more joined-up approach right across the breadth of government. That is why the Prime Minister created the Foreign, Commonwealth and Development Office, bringing diplomacy and development together, in lockstep with the work of our other departments. ODA is a vital, central and absolutely indispensable element of that strategic approach, but to maximise its effectiveness it must be used in combination with our development policy expertise, our security deployments and support abroad, and the strengthened global co-operation that we drive through our diplomatic network. We make our aid go further by bringing it together with all these other elements, and by making sure that they are all aligned and pushing in the same direction.
Last week, the Prime Minister set out how we are strengthening our defence and security capabilities. That will boost our standing in the world, while also contributing to our development efforts, including our soft power abroad. The clearest illustration of that is the peacekeeping that we do. We have British troop deployments in Afghanistan, South Sudan, Somalia, the Democratic Republic of the Congo and elsewhere, which work hand in hand with our development and diplomatic efforts. Indeed, we are demonstrating that with our latest deployment of 300 UK troops to Mali. Our security and defence budget also helps countries to deal with new, emerging and evolving threats, for example, in supporting Nigeria and Kenya to assess and strengthen their cybersecurity resilience. We will set out the full detail of the integrated review early in the new year, as we launch our presidencies of the G7 and COP 26, with 2021 a year of leadership for global Britain as a force for good in the world.
This new strategic approach will allow us to drive greater impact from our £10 billion of ODA spending next year, notwithstanding the very difficult financial pressures we face. I will prioritise that £10 billion of spending in five ways. First, we will prioritise measures to tackle climate change, protect biodiversity and finance low-carbon and climate-resilient technologies, such as solar and wind, in poor and emerging economies. I can reassure the House that we will maintain our commitment to double international climate finance, which is vital to maintain our ambitions in this area as we host COP 26. We will leverage our aid support through our diplomatic network, to galvanise global action and to make sure that countries come forward with ambitious, game-changing commitments in the lead-up to November next year.
Secondly, we will prioritise measures to tackle Covid, and promote wider international health security. We will maintain our position as a world leader, investing in Gavi the Vaccine Alliance, COVAX, the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the International Finance Facility for Immunisation. We will continue to support and strengthen the World Health Organization, as the second largest state donor; I spoke to Dr Tedros just yesterday about our efforts in that regard. We will also use all our other levers to maximise British impact. For example, we have magnified our COVAX contribution through our diplomatic efforts, which helped to convince the board of the World Bank to announce additional funding last month of up to $12 billion for Covid vaccines, tests and treatments. Again, I spoke to World Bank president David Malpass just last night about our important collaboration in that area.
Thirdly, we continue to prioritise girls’ education, because it is the right thing to do and because the fortunes of so many of the poorest countries depend on tapping the full potential of all their people, which must include women and girls in education. Our global target, working with our partners, is to get 40 million girls into education and have 20 million more girls reading by the age of 10. It is a major priority for global Britain as a leading supporter of the Global Partnership for Education, and just next year we will raise $4 billion globally, including through our UK-Kenya summit.
Fourthly, we will focus ODA on resolving conflicts, alleviating humanitarian crises, defending open societies, and promoting trade and investment, including by increasing UK partnerships in science research and technology, because these are the building blocks of development and they require a long-term strategic commitment.
Finally, at all times we will look to improve our delivery of aid in order to increase the impact that our policy interventions have on the ground, in the countries and the communities that they are designed to benefit and help. We will strengthen accountability and value for money, reducing reliance on expensive consultants for project management and strengthening our in- house capability to give us more direct oversight and control, including by removing the total operating cost limits that were introduced when the Department for International Development was established—a limit that applied only to DfID.
As a result of this spending review, the FCDO will take on a greater role in ensuring the coherence and co-ordination of development-related spending right across Whitehall. To maximise the strategic focus that I have talked about, I will run a short cross-government process to review, appraise and finalise all the UK’s ODA allocations for next year in the lead-up to Christmas.
This is a moment of unprecedented challenge. On all sides of the House, we are defined by our willingness to make the difficult choices, not just the easy ones. With the approach that I have set out, we will maintain our international ambition. We will deliver greater impact from our aid budget at a time of unparalleled financial pressure.
Like many in the House, I am proud of our aid spend. I am proud of the big-hearted generosity of the British public, which we amplify with our diplomatic energy on the world stage. I am proud of the huge amount we do to support the poorest and the most vulnerable, right around the world. The United Kingdom is out there every single day—our people on the ground in the disaster zones, in the refugee camps, tackling famine and drought, helping lift people out of poverty, striving to resolve conflicts and striving to build a more hopeful future for the millions of people struggling and striving against the odds. Even in the toughest economic times, we will continue that mission. We will continue to lead. I commend this Statement to the House.”
My Lords, I would like to mention the noble Baroness, Lady Sugg, to start with. Like her, I feel immensely proud that the United Kingdom has been a development superpower and contributed so much to the world. Our support and leadership on development has saved and changed millions of lives. Last week the Minister told this House that the development priorities would remain the same, but a cut from 0.7% to 0.5% would represent a 30% reduction in funding. NGOs have estimated that, if applied across aid spending in areas previously managed by DfID, could mean that each year 5.6 million fewer children will be immunised and 105,000 lives will not be saved; 940,000 fewer children will be supported to gain a decent education; 7.6 million fewer women and girls will be reached with modern methods of family planning; 2 million fewer people will be reached with humanitarian assistance; 3.8 million fewer people will be supported to access clean water and better sanitation; and 16.5 million fewer women and children will be reached with nutrition programming.
I am also proud of the UK’s contribution to the global efforts to tackle Covid-19, particularly on vaccine development through Gavi and the breakthrough at Oxford, but does the Minister agree that these efforts will be hampered without strong health systems to deliver and administer vaccines, and that UK aid is critical to this?
As the noble Baroness, Lady Sugg, said, our ODA spend in tackling global issues, such as the pandemic, climate change and conflict, has been firmly in our national interest. She emphasised that cutting UK aid risks undermining efforts to promote a global Britain and will diminish our power to influence other nations to do what is right.
Is the noble Lord familiar with the words of General James Mattis, who said that if development funding gets cut,
“then I need to buy more ammunition”?
Does he share my concern that the effect of this cut in aid spending on instability will be to reduce the impact of the Government’s announced increase in defence spending? It will make it harder for us to pursue our national interest and to create a safer, healthier, fairer and better world for us all.
We know that we need a dramatic acceleration in the pace and scale of global climate action. As we approach 2021, when the UK will host both the G7 and COP 26, the UK has an opportunity to lead the response to the Covid pandemic and the climate crisis. This cut reduces the funds available for both these efforts and shows that the UK is stepping back when its support is needed most. For the climate conference to be a success, we must harness the political will of other countries. As hosts, it falls to the United Kingdom to lead by example, not to withdraw,
Does the Minister agree with President-elect Joe Biden that effective foreign policy relies
“not only on the example of our power, but on the power of our example”?
The example that these cuts set is of stepping back when, in the midst of this global pandemic, we should be stepping up.
Mark Lowcock, UN under-secretary-general for humanitarian affairs, has this week made clear that the impact of these cuts will not only affect the world’s most vulnerable but damage the UK’s global reputation. Have the Government abandoned their plan for a global Britain? What plans do the Government have to legislate for this cut to aid spending, in the light of the responsibilities outlined in the international development Act 2015? When do they plan to bring a Bill forward, and do they intend to include a sunset clause to ensure a return to 0.7%—the agreed OECD global target?
The noble Baroness, Lady Sugg, understood that this decision is not a necessity but a political choice by this Government. I will work hard with her and with all like-minded Peers across this House to oppose this ill-conceived, short-sighted decision.
My Lords, I thank the Minister for bringing this Statement to your Lordships’ House. In her resignation letter to the Prime Minister, the former FCDO Minister, the noble Baroness, Lady Sugg, called the cut to the aid budget “fundamentally wrong”. She could not in all integrity defend the betrayal of a manifesto commitment made less than a year ago. Her view is endorsed by many others in the Minister’s own party in both Houses. No fewer than five former Prime Ministers—three from the Minister’s own party—and the most reverend Primate the Archbishop of Canterbury have said that this cut to international aid is morally wrong and harmful to Britain’s standing on the international stage. Not so long ago—in July and again in September—the Secretary of State, Dominic Raab, agreed.
To tie the cuts in the aid budget to the £4 billion increase in the defence budget is to rub salt into the wound. The Secretary of State would do well to heed the words of the noble Lord, Lord Dannatt, in your Lordships’ House last week. He said that the UK’s influence comes,
“largely through the integration of our hard power ... with our soft power”,
and that reducing the international development budget will significantly
“reduce the impact of so-called global Britain”.—[Official Report, 25/11/20; col. 250.]
In his Statement, the Secretary of State says that the cut to the aid budget nevertheless means that Britain’s aid spend remains at No. 2 among the G20. This misses the point. The outcry is because the Government are reneging on an unequivocal manifesto commitment and cutting aid over and above the fall in GNI at a moment unprecedented in global history. Future generations will rightly be appalled. It is akin to kicking someone when they are down. The British people have a strong sense of fair play. It is wrong to suggest, as I have seen in the press, that public opinion is on the side of these cuts. There is no evidence to support this assertion.
The 0.7% of GNI aid target, enshrined in law, is a proud Liberal Democrat achievement. It was spearheaded in the other place by the Private Member’s Bill from my right honourable friend Michael Moore. In your Lordships’ House, it was ably led by my noble friend Lord Purvis of Tweed, supported by my noble friend Lady Northover—then a DfID Minister in the coalition Government. Do the Government intend to change that law to reduce the aid target to 0.5%? If so, do they intend to use a Finance Bill as the vehicle for it?
Can the Minister state categorically that the 0.7% will be met this year? I regret that I need to ask this, but doubt remains. Will any shortfall caused by the overenthusiastic £2.9 billion cut announced in July be managed in a way that alleviates poverty and offers taxpayers value for money?
The Secretary of State does not mention scrutiny either in this Statement or in his letter to the noble Baroness, Lady Anelay, chair of the International Relations and Defence Committee. Can the Minister assure your Lordships’ House that monitoring and assessment of the effectiveness and value for money of ODA spend will not be the preserve of internal FCDO processes, but rather subject to independent, open and transparent scrutiny, including by parliamentarians?
What assessment have the Government made of how many UK international NGOs will go under next year as a consequence of the economic situation and of this cut? How many jobs will be lost in the UK? Does the Minister agree that these NGOs, particularly the small ones, have the trust of local community leaders and so have been able to go that vital last mile to deliver essential healthcare, nutrition and—crucially today—vaccines? Surely he accepts that the COVAX initiative will fail unless we can get supplies to where they are needed. We must have robust health systems on the ground to vaccinate people. I fear that this Statement shows that joined-up thinking is not currently a strength of the new FCDO.
My Lords, first, I thank the noble Lord, Lord Collins, and the noble Baroness, Lady Sheehan, for their comments. I also thank them for making time last week, in calls that I and colleagues made, to discuss their obvious concerns about this cut, some of which they have articulated today.
I say at the outset in responding to both the noble Lord and the noble Baroness that, as my right honourable friend the Foreign Secretary mentioned specifically in his Statement, the decision was taken given the effects of the global pandemic on the economy and, as a result, the public finances, but it was taken with deep regret. It was felt that at the moment we cannot meet our target of spending 0.7% of GNI on ODA next year. The Statement was very up front, setting out the Government’s intent. As my right honourable friend the Foreign Secretary made clear in the Statement, it is our intention to return to that target as soon as the fiscal situation and the challenges permit. As I am sure the noble Lord and the noble Baroness acknowledge, those challenges are immense.
They both mentioned the manifesto commitment. Like many in your Lordships’ House and in the other place, and like many people across the country, we are proud that the Conservative Government enshrined the 0.7% target in law. Equally, the commitment in the manifesto at the time of the election did not for a moment predict—I do not think that anyone could have done so—the challenge not just to the UK but to the world of a health pandemic, coupled with the challenges to the economy that we face.
I shall pick up, first, on some of the specific points made by the noble Lord, Lord Collins. Rightly, he talked about the impact on aid. I do not deny that if you have a reduced pot of money, you will spend less on many of the important causes that we are currently engaged in around the world. I have seen for myself the importance and strength of those contributions. Our development spend brings about stability in countries, ensures that peace agreements are sustained and, importantly, empowers communities around the world.
The noble Baroness, Lady Sheehan, mentioned the importance of transparency. I do not agree with her on that. As someone who started his life in the Foreign Office as a Minister of State, was then a double-hatted Minister across both departments and is now a Minister at the FCDO, I have seen in my portfolio, and have direct experience of, the benefits of bringing together the important tools of diplomacy and development. In ensuring that decisions are expedited, we can make more efficient decisions, and the focus of those decisions can more readily be seen in the different parts of the world with most need.
In particular, I emphasise to the noble Baroness and the noble Lord that we remain absolutely committed to helping the world’s poorest. The measures that the Government have announced will ensure that every penny that we spend goes as far as possible towards sustaining our position as a world-leading development power, notwithstanding the cut that has been announced. The noble Baroness acknowledged where we stand.
I have always felt that the importance of any spend lies in its effective delivery on the ground. We stand with pride in comparison with many of our G20 and G7 partners, and it is important to recognise that we have seen some real benefits from our spend over many years. In particular, we will continue to spend over £10 billion on many of the key priorities which I know are close to the hearts of the noble Lord, Lord Collins, and the noble Baroness, Lady Sheehan.
The strategic framework on ODA spend that my right honourable friend the Foreign Secretary is setting up—the double lock, which he announced with my right honourable friend the Chancellor—will ensure that the money spent is targeted on achieving many of the key goals highlighted by the noble Lord and the noble Baroness, including being at the forefront of meeting the challenge of the Covid pandemic. In that regard, I am proud that when my right honourable friend the Prime Minister returned to work following his own challenge from Covid, one of the first events in which he participated and led on was the Gavi summit. That raised over $8 billion—far in excess of the estimate.
Equally, the Gavi summit ensured that the vaccines and the support that they will give to many vulnerable communities, including those that I often see on my own patch—I give the specific example of polio eradication in places such as Afghanistan and Pakistan—are sustained at a time of great challenge for people across the world. Specifically on the Covid-19 pandemic, we have also been at the forefront of the COVAX Facility. I believe we all welcomed the news this morning about the further progress that has been made on developing vaccines.
I also assure the noble Baroness and the noble Lord that, as these vaccines come on line, including the important Oxford-AstraZeneca one, we are committed to ensuring a scaling up of vaccine production. Indeed, the FCDO has been instrumental in facilitating the agreement reached between AstraZeneca and the Serum Institute of India for that very purpose—to scale up production of a vaccine that, through the COVAX Facility, as well as through direct distribution, will allow vulnerable communities to be reached as quickly as possible.
In addition, the noble Lord, rightly raised our chairmanship of the G7 and the important leadership that we are showing as president-elect of COP 26 in Glasgow next year. I have a personal interest in this, in that I was the one who stood up at the UN and declared the £11.6 billion of climate financing. We will stand by that over the five-year period. It is important that we show leadership on these issues.
We remain very committed to the SDGs as the basis of our aid. There are many challenges, but arguably the biggest two international challenges in the area of development are the Covid-19 pandemic and facing the climate emergency. The United Kingdom continues not just to lead the narrative but to provide support through direct financing for both initiatives, to ensure that the most vulnerable communities and developing states benefit from our continuing support.
The noble Baroness mentioned the 0.7% target. As I have mentioned to her previously, and as I believe I said in responding to a Question last week, our spend this year will meet the target of 0.7% of GNI. She also raised the issue of scrutiny of ODA spend. The fact that I appear before your Lordships’ House today, as do colleagues in the other place, and the fact that we continue to have discussions and debates about this, shows that scrutiny takes place. I fully acknowledge and respect that. During my discussions last week, I talked directly to the commissioner of ICAI, not only to reassure her about our commitment to our development programmes but to gain a sense from her of what this means for the independent assessments that ICAI is able to make. As noble Lords will be aware, the Government have committed to ensuring that ICAI retains its role in making sure that our development spend is appropriately scrutinised.
Finally, I come to the important point that the noble Lord, Lord Collins, and the noble Baroness, Lady Sheehan, raised about the importance of legislation. Again, I fully understand why that was mentioned, and it was raised also by noble Lords in other discussions. At this juncture, I acknowledge not only what the noble Lord and the noble Baroness said but the important work done by my noble friend—not just my noble friend but my very good friend—and colleague Lady Sugg in the development sphere. She will be missed at the FCDO. It is often said in the context of your Lordships’ House that it is much more welcome to have two hands on the pump rather than just one. I will personally miss her insights, experience and friendship, but I respect the decision that she took. Equally, I acknowledge the work of the noble Lord, Lord Purvis, in enshrining in law the 0.7% target.
It is right that noble Lords ask questions about the Government’s recognition of their statutory obligations. As I said only last week, we are cognisant of our duties to Parliament. Under the 2015 Act, the Secretary of State is under an ongoing legal duty to ensure that that 0.7% target is met. However, as has been acknowledged by noble Lords, the framework of the Act envisages that 0.7% may not be met in certain circumstances, including by reference to economic and fiscal circumstances.
On that basis, it is permissible to depart from the duty where the fiscal and economic circumstances justify doing so, reporting to Parliament under the Act. The noble Lord, Lord Collins, and the noble Baroness, Lady Sheehan, asked me specifically about this issue. I assure noble Lords that we are considering legislation in the context of the projected long-term fiscal circumstances and the need to plan over successive years. That kind of long-term planning is not easy to square with Parliament’s intention as set out in the framework of the Act, and therefore I believe it is right in the context of that planning to ensure that we engage further with Parliament by bringing forward legislation.
The noble Lord and noble Baroness asked me specifically about timing. All I can say is that we intend to bring forward legislation in due course because, at the current time, it is difficult to predict the end date and this 0.5% figure moving back to 0.7% in light of the fiscal circumstances. It is right that we look carefully at that. As I said, we are considering the issue and will bring forward legislation in due course. As the noble Lord, Lord Collins, and the noble Baroness, Lady Sheehan, know—and I look forward to hearing from other noble Lords on this issue—I understand the strength not just of the sentiment but of the principle behind 0.7% and its value in establishing the UK as both a respected partner and a development power in the world.
Regarding the merger and the bringing together of the Foreign, Commonwealth and Development Office, the noble Baroness talked about defence spend. Earlier today we had a Question on the importance of women, peace and security. That is why the integrated review, on which further announcements will be made earlier in the new year, brings together all the key strands of our diplomacy and defence to ensure that the UK has been, is and will continue to strengthen its position as global Britain on the world stage.
My Lords, does my noble friend share my concern about the whole principle of hypothecation of revenues being spent on particular areas of public spending? Why should overseas aid be so deserving rather than health, education or any other area? Surely this seriously inhibits the ability of the Chancellor to deal with crises, such as the one that we are facing now in the finances of this country, if money is hypothecated for certain causes? Secondly, does my noble friend welcome the fact that the British people are some of the most generous when it comes to giving their money to good causes that they choose? That is not the same thing as government Ministers using other people’s money to spend on causes that the Government choose.
My Lords, my noble friend raises two points. Respecting his insights and his own experience as a Minister, I say to him that I have seen myself the direct benefit that our development spend has brought in the field and the opportunities that it has brought to communities in different parts of the world. I am proud of the fact that our development spending has lent itself to strengthening the opportunities for different communities, but that also has a knock-on positive impact on what we as the UK are trying to achieve in the international arena. Our development spend and our commitment to it, our commitment to the SDGs and our commitments to alleviating poverty, providing support for famine relief and ensuring that girls are educated wherever they might be in the world are things that we can proudly stand up and say the UK has supported and will continue to support.
I agree with my noble friend in as much as I accept that the British people are among the most generous in the world—we see that in the pandemic that we are currently facing—but equally we as the Government are trustees of public spending to ensure that, as we look at our priorities domestically, we also look to invest wisely internationally, including in supporting the most vulnerable communities and people around the world.
My Lords, I declare my interests as set out in the register, and I echo the comments made about the much-respected noble Baroness, Lady Sugg.
The scale of these cuts will be brutal for those affected but also, I believe, damaging in the long term to this country and its interests. The Statement gives priorities in general and I welcome the commitments on climate change, girls’ education and health, but it is very short on detail. So I have a specific question: will the Government be honouring their other commitment made in their manifesto—namely, to lead the fight against malaria? Will they do so by maintaining investment in malaria at its present level?
My Lords, I commend the work of the noble Baroness’s campaign to eradicate malaria. We have worked together on this, particularly in relation to the last CHOGM. She asks for quite specific details on the programmes and prioritisation. My right honourable friend has laid out the framework for how we will look at those priorities. I cannot give her a specific commitment on a particular programme on a particular issue, but I can say, where we have given commitments in the past, we will ensure that we look at how we can sustain our support, whether technical or financial. In due course, as decisions are made on how we prioritise our aid spend specifically, I am sure that we will return to these questions. I regret that I cannot give her a specific commitment on the issue of malaria at this time.
My Lords, I ask the Minister to answer the question from the noble Lord, Lord Collins: will Her Majesty’s Government include a sunset clause in any legislation amending the International Development Act? Secondly, do the Government intend to produce and publish any impact assessment of the reduction in spending on official development assistance?
My Lords, I cannot go into the details of the legislative proposals that will be coming forward; as I said, I am not party to them yet, but they are being looked at. He asked some specific questions about sunset clauses, as did the noble Lord, Lord Collins, which I have noted, but beyond what I have said about the status of the legislation there is little more that I can add at this juncture.
My Lords, I too am concerned about the lack of clarity about where the axe will fall on the UK’s very effective aid programme. Is the Minister able to give specific examples of where the severe cuts may occur? For instance, will women’s education funding be at the same sort of level or a much lower one? In health, will maintaining help with Covid mean reducing HIV/AIDS projects when their importance was very much emphasised yesterday on World AIDS Day? The Government really owe those receiving assistance and those delivering it much more proper transparency.
My Lords, I assure the noble Baroness that as we look at our priorities for spend in 2020 those will become much clearer. My right honourable friend the Foreign Secretary is looking quite specifically at the issue of ODA spend for next year. The noble Baroness is right to raise the important gains that we have seen on key priorities that the UK has supported. I assure her that we will look at each programme to ensure that we can sustain not only the leadership that we have shown but the gains that we have made. Again, I have to say to her that I cannot give her details about specific programmes and projects at this time.
My Lords, when asked about the domestic economic situation, the Minister for Africa, James Duddridge, told the House of Commons:
“We are bound by law to spend 0.7%, so it is not a choice; it is in the law, and we will obey the law.”—[Official Report, Commons, 30/6/20; col.147.]
We now know that the Government believe it is a choice and they will break the law. As the Minister said, they will in fact bring forward legislation to repeal that law, which does not sit with what the Government said about it being a temporary measure. So will the Minister give me this commitment: will the Government publish the fiscal criteria that will have to be met in order for the 0.7% commitment to be re-met before any legislative proposals to repeal the 2015 Act? If they do not, how can we believe the Government in the same way that we believed James Duddridge in June?
My Lords, the noble Lord, again, asked quite specific questions and understandably, I cannot share with him information on the nature and detail of the legislation at this point. I assure him that, as I have said before, the Government fully recognise their obligations to Parliament. As I said earlier in my response to the noble Lord, Lord Collins, and the noble Baroness, Lady Sheehan, this is important and we are looking at legislation to ensure that we fulfil those obligations to Parliament.
My Lords, I entirely support the 0.2% reduction in our development spend in the light of the economic emergency that we all face. It is also right to strengthen our defence and security capabilities, working hand-in-hand with our soft power. In line with this strong, integrated approach, does the Minister agree that if those in the party opposite are serious about protecting the world’s poor, it is incumbent upon them—unlike their colleagues in another place—to support the overseas operations Bill when it comes to your Lordships’ House? That Bill will support our Armed Forces, some of whom are risking their lives in some of the most dangerous places in the world, such as Mali, South Sudan and Afghanistan—places where, every day, they seek to work hard with our soft power to save and change millions of lives.
My Lords, my noble friend raises an important point with which I totally agree—and I am sure that many other noble Lords would also agree—regarding the important role that our Armed Forces play in bringing about and sustaining peace and in ensuring humanitarian corridors. The increase in spending that we have seen in other areas—including in the MoD budget—testifies to the important role of the military when it comes to peacekeeping operations and sustaining humanitarian corridors. We can all be proud of the role that our military plays in delivering support to the most vulnerable communities around the world.
My Lords, a detected lie is the clock striking 13: it is wrong and it casts doubt on all past and future chimes. In June, the Prime Minister formally renewed the 0.7% commitment on the record in the other place. I was reassured, but it turns out that I was deceived. The aid community around the world was reassured, but it turns out that they were deceived. I suspect that the noble Baroness, Lady Sugg, was deceived: she was an excellent Minister and will be much missed. The cut to our aid projects now is 30%; the cut to our credibility is much greater. I ask the Minister: why do we lie?
My Lords, as I said earlier, we are proud of our commitment to 0.7%; it was a Conservative-led Government who brought that into legislation. I can assure him that we made this decision after very careful consideration. We needed a temporary reduction in order to meet the unprecedented challenges that we face in terms of both health and the economy. I reassure him, however, that our intention is to return to 0.7%.
My Lords, does the Minister agree with me that there are few parts of the world where our continued development assistance is needed more desperately than in Afghanistan? Does he further agree that any reduction in our support for that country—given the decades of conflict, the huge numbers of displaced people and our deep involvement there, both militarily and economically—could have devastating effects? Can he assure us that, whatever changes are envisioned in our aid budget, the funding for Afghanistan will remain a top priority?
My Lords, just recently, I participated in the pledging conference where we announced a further £155 million in development support for Afghanistan for the next year, contingent, of course, on the situation with the peace talks. Equally, we have committed a further £70 million to the important strides that we are making in ensuring the security situation in Afghanistan. As the Minister for Afghanistan, I recently discussed this with President Ghani directly. We remain committed to ensuring that the gains that have been sustained in Afghanistan continue through our security support as well as our development support.
My Lords, I draw attention to my entry in the register of interests. Does the Minister agree that severe cuts on top of the departmental merger and the fundamental restructure of delivery are likely to prove deeply disruptive for development programmes? Strengthening management and capacity within the department, referred to in the Foreign Secretary’s Statement, may well be essential, but does the Minister accept that the success of UK aid delivery has been built on a model of partnership with the UK’s world-leading NGOs and development specialists? These cuts will test their resilience. How soon will the department be able to provide clarity on bidding and programme-planning to enable the Government’s development partners to manage their own capacity to ensure that crucial aid and development work can be sustained and that resources on which the Government depend for delivery will still be there when called upon?
My Lords, I agree with the noble Lord that we have great development expertise. Where I differ from him is that, in bringing the departments together and creating the FCDO, I believe that we have further leveraged the expertise of our development officials in contributing to our diplomatic priorities as well. Let me further assure him that I have spoken directly to a range of international partners, both within the UN context and key NGOs. We will continue to liaise with them on specific allocations; those decisions are in progress, and we will update NGOs and other key partners on them as they are taken.
My Lords, does the Minister agree that, while we build back better at home, we now have an opportunity to give back better overseas by addressing significant cost inefficiencies in our aid programmes? Will he confirm that humanitarian commitments, such as ensuring distribution of a Covid vaccine to Rohingya refugees, will remain a priority?
My Lords, I formally welcome my noble friend: this is the first time I have answered a question that he has posed. I agree with him on both fronts. The creation of the FCDO allows for things to be done more efficiently. As the Minister for Bangladesh, I am directly engaged on the Rohingya issue, which I know is close to my noble friend’s heart. We gave a further commitment to Bangladesh of £47 million—£37 million for Rohingya support and £10 million for support for Bangladesh itself—at the recent pledging conference that we hosted.
My Lords, we are still among the world’s richest countries. If the problem is finding the money, let us adjust the top level of income tax to share the fiscal burden fairly. The Government were elected on a manifesto pledge to maintain overseas support. If this manifesto pledge can be jettisoned, can this House, too, pick and choose which manifesto commitments we should respect?
My Lords, will the Minister be so kind as to respond to the very forceful letter that was sent to the Foreign Secretary by your Lordships’ International Relations and Defence Committee last Wednesday, arguing that the decision taken was wrong economically and wrong politically? Does he not think that it is shameful that in none of the statements made by the Government, including his own answers to questions, has it been admitted that we have already cut £2.9 billion from our aid by applying the 0.7% calculator, and that all that is proposed now comes on top of, and in addition to, that?
My Lords, I agree with the noble Lord on his final point. The reduction in GNI has meant a circa £2.9 billion reduction in the current aid spend, but we will fulfil our commitment to the GNI for this year. I also accept the principle that the proposal of 0.7% going down to 0.5% for 2021 presents an additional reduction. I know that the letter from my noble friend Lady Anelay to the Foreign Secretary is in the course of being responded to.
My Lords, I draw attention to my entry in the register of interests. There is another aspect of the ODA which the Government continue to neglect: the amount of taxes which are avoided in emerging economies and low-income countries. Last year, they lost $144 billion due to tax avoidance by corporations and the rich. The tax avoidance industries in the UK and the Crown dependencies and overseas territories are particularly responsible for that. What steps will the Minister take to ensure that the emerging economies get the taxes which are due to them? That would give them plenty of resources for development.
My Lords, what the noble Lord calls the “fiscal situation” that we are currently in was already apparent when reassurances were given, until a very few days ago, on our commitment to development by a department—DfID—renowned for its efficiency and transparency, including working on governance and tax collection. We could be in this so-called fiscal situation for the next decade or generation, because of Covid and Brexit. Can the Minister honestly say that he anticipates that we will ever return to 0.7% of GNI for development?
Having hope and optimism is part and parcel of what defines the Government’s thinking. While we have been challenged this year, and our decision on this issue reflects that, as I have already said, it is our intention to return to 0.7%. We have recently seen news on the Covid vaccine, and the steps that are being taken. I again underline the United Kingdom’s leadership on the important issues of facing up to the Covid challenge and ensuring that, through the COVAX facility and other support, we access vaccines and provide them to the most vulnerable. This underlines this Government’s commitment to ensuring that the most vulnerable and those who need assistance continue to get the support that they need, notwithstanding the challenges and this decision.
Arrangement of Business
My Lords, the Hybrid Sitting of the House will now resume. Some Members are here in the Chamber while others are participating remotely, but all Members will be treated equally. I ask all Members to respect social distancing. If the capacity of the Chamber is exceeded, I will immediately adjourn the House.
I will call Members to speak in the order listed in today’s list. Interventions during speeches or “before the noble Lord sits down” are not permitted, and uncalled speakers will not be heard. Other than the mover of an amendment or the Minister, Members may speak only once on each group. Short questions of elucidation after the Minister’s response are permitted but discouraged; a Member wishing to ask such a question, including Members in the Chamber, must email the clerk.
The groupings are binding, and it will not be possible to degroup an amendment for separate debate. A Member intending to press an amendment already debated to a Division should have given notice in the debate. Leave should be given to withdraw amendments. When putting the Question, I will collect voices in the Chamber only. If a Member taking part remotely intends to trigger a Division, they should make this clear when speaking on the group.
United Kingdom Internal Market Bill
My Lords, before the House begins its Third Reading on the United Kingdom Internal Market Bill, it may be helpful to say a few words about Third Reading amendments. In line with the procedure agreed by the House, the Public Bill Office advises the usual channels that Amendment 2 in the name of the noble Baroness, Lady Ritchie of Downpatrick, on the Marshalled List for Third Reading today, falls outside the guidance in the Companion on Third Reading amendments. On the advice of the Public Bill Office, the usual channels met and have recommended to the House that Amendment 2 should not be moved. The noble Baroness, Lady Ritchie, was informed of the view of the usual channels. She has confirmed to my office that she will not move her amendment today.
I am grateful to the noble Baroness and the other signatories of the Report stage amendment and for the positive engagement with the noble Baroness that took place yesterday with my noble friend Lord Callanan and Ministers in the Northern Ireland Office, of which the House will hear more later.
My Lords, I am required to inform the House that on 7 October the Scottish Parliament voted not to grant legislative consent because of its assertion that the Bill negatively impacts the devolution settlements. We have remained open to engagement with the Scottish Government on the contents of the Bill, and this offer still very much stands. The Senedd and Northern Ireland Assembly have not yet voted on legislative consent, but we have continued to engage with both Administrations on the Bill’s contents in recent weeks. This engagement has been fruitful, and the Government have listened closely to concerns. It has resulted, for example, in the Government tabling an amendment to ensure that the devolved Administrations have a strong role in appointments to the Office for the Internal Market panel, in light of Welsh Government proposals.
We appreciate the significance of the UK Government legislating without consent for this Bill. Our ambition, of course, remains to secure legislative consent Motions for the Bill. As I have said throughout the passage of the Bill, the UK Government remain open to discussions with all the devolved Administrations.
Clause 12: Modifications in connection with the Northern Ireland Protocol
1: Clause 12, page 8, line 30, leave out subsections (6) and (7)
My Lords, my original Amendment 21 on Report, also signed by the noble Lords, Lord Anderson and Lord Wigley, and the noble Baroness, Lady Bowles, on which I spoke on 18 November 2020 and moved formally on 23 November 2020, replaced the original Clause 10 with a new clause listing public interest derogations from market access principles. I was pleasantly surprised and grateful that the Government accepted the amendment without a Division. The clerks subsequently advised us that the amendment required some consequential changes to the Bill to remove minor inconsistencies. These changes are set out in the amendments before your Lordships’ House today. Amendment 1 removes two subsections on page 8 and Amendment 3 removes Schedule 1 entirely. I beg to move.
Amendment 1 agreed.
Amendment 2 not moved.
Schedule 1: Exclusions from market access principles
3: Schedule 1, leave out Schedule 1
Amendment 3 agreed.
I thank noble Lords from across the House for the quality of the debates and the scrutiny provided throughout the passage of this Bill. I am grateful for the constructive engagement from many noble Lords from all parts of the Chamber that we have had both in and out of the Chamber, and hope that we can continue these discussions in the same spirit. I extend my thanks to other members of the ministerial team: my noble friends Lord True, Lady Bloomfield of Hinton Waldrist, Lady Scott of Bybrook and Lady Penn, as well as Shreena and the rest of the excellent civil servants on the Bill team.
I have said throughout the debates that this Bill is essential for guaranteeing the economic and political integrity of the United Kingdom. It will ensure much-needed certainty for businesses as we leave the transition period. It will preserve our ability to trade freely across all parts of the United Kingdom. Having listened to all the debates in this House on this Bill, I believe I can say that all noble Lords share this objective. While noble Lords and I may not have always agreed on every single point—to put it mildly—the challenges posed by noble Lords and debates we have had have always been conducted in a constructive and courteous manner—except, obviously, the noble Lord, Lord Foulkes, but we accept his contributions.
On a related note, I want to touch briefly on an amendment in the name of the noble Baroness, Lady Ritchie of Downpatrick, referred to by the Leader of the House. As I committed to do on Report, I facilitated and joined a meeting on this issue between my honourable friend Robin Walker, Minister of State in the Northern Ireland Office, the noble Baronesses, Lady Ritchie, and Lady Suttie, to discuss this in more detail. I thank the noble Baronesses for a good meeting, which assuaged their concerns on this issue.
For the benefit of the House, let me be clear: Article 2 of the Northern Ireland Protocol is vital, and the Government are fully committed to upholding it. I assure noble Lords that the rights for individuals in Northern Ireland captured within the scope of the Article 2 commitment will continue to be protected going forward, and will not be impacted by the workings of this Bill. I have explained this in greater detail in a letter to the noble Baroness, Lady Ritchie. To reassure noble Lords who may have similar concerns, I will place a copy in the Library. I beg to move.
My Lords, it is a great honour to be speaking at this point. My noble friends on the Cross Benches have brought their wide range of experience, wisdom and differing views to crucial amendments to the Bill.
The Bill is of huge constitutional significance: it goes to the heart of our history, to the devolution settlements that have matured as we enter a new era outside Europe. As the UK takes back control and seeks to be more independent than over recent decades, decision-making and mutual respect among the four nations of the United Kingdom will be more important than ever.
We now see that Scotland is withholding legislative consent and Wales is pending, as is Northern Ireland. To lose those nations would compound the threat to the union from a party that is called the Conservative and Unionist Party. In each nation, elected representatives know the intricacy of local problems and ways to achieve solutions to make our nations attractive for innovation and new ways of working. Covid has made the challenges greater, as many in the population have been deeply traumatised by bereavement, isolation and rising unemployment.
This House has examined every word of this Bill with rigour. The amendments it has made have been resoundingly supported around the House and outside. They have laid a foundation for the UK’s reputation to be restored, as we foster new relationships and rebuild older ones around the globe. Through its amendments, the House has shown its commitments to the future well-being of our national relationships and constitution. We have delivered a clear beheading sentence to Henry VIII’s dangerous clauses, and the rumble of Llewellyn the Great and Robert the Bruce turning in their graves was audible at times.
We have ensured that there is a secure negotiating framework on the face of the Bill to achieve that consensus across our four nations, which history has taught us achieves so much more than mere directive dominance. We have removed one clause that would allow the Government to use the allure of taxpayers’ money to work around, not with, the devolved Governments and to undermine their priorities. We have removed another that would explicitly impose new reservations on their competence in respect of state aid. We have protected the devolved institutions’ ability to introduce ecological and environmental improvements and new public health initiatives in their nations, the learning from which will benefit us all.
This Bill has posed a major threat to the union itself. With my noble colleagues on these Benches, particularly the noble and learned Lords, Lord Hope of Craighead and Lord Thomas of Cwmgiedd, we have done all we can to ensure that threat diminishes. It has been an enormous privilege, if daunting at times, to be able to participate in this Bill. So many across the House have brought their expertise—from the Select Committees on which they serve, particularly on common frameworks, as well as past experience as elected representatives of widely differing areas—to a shared goal of improving the Bill.
Now we send the Bill on to the next part of its journey, and I hope the Government will continue to listen hard and will reflect on the importance of the amendments and the eloquent speeches of many, including my noble and learned friend, Lord Judge. I genuinely believe that noble Lords should and will resist the reinsertion of distasteful parts of the Bill and the deletion of key amendments.
Finally, it is my pleasure to thank all those who have contributed to the Bill’s passage: the outstanding Public Bill Office and parliamentary clerks, the Bill team and the many who work to support us behind the scenes, particularly the digital team and broadcasting hub, which enabled so many smoothly unmuted contributions—I beg your pardon that mine failed just now—and efficient votes. We have shown that we can function very effectively as a hybrid House, voting remotely, with numbers that showed how clearly the Lords can express its collective views.
The Ministers, Whips and Peers showed they can still maintain a sense of humour under pressure. I would particularly like to thank the Lord Speaker and my fellow deputies, who chaired us through very complex parliamentary procedures. I thank them all very much indeed. Once again, to all in this House who supported these critically important changes to the Bill, I give a huge thank you.
My Lords, it is a pleasure to follow the noble Baroness, Lady Finlay of Llandaff. At this stage, I thank the Ministers, the noble Lords, Lord True and Lord Callanan, the Opposition Front-Bench team, the noble Baroness, Lady Hayter, the noble Lord, Lord Stevenson of Balmacara, and the noble and learned Lord, Lord Falconer of Thoroton. I thank the noble Lord, Lord Purvis, on the Liberal Democrat Benches, and the noble Baroness, Lady Finlay of Llandaff, and the noble and learned Lord, Lord Judge, from the Cross Benches.
In his speech today, the Minister, the noble Lord, Lord Callanan, referred to the meeting that he had with the noble Baroness, Lady Suttie, and myself yesterday on the non-discrimination principle in relation to Clause 11 of the Bill, which specifically refers to Northern Ireland and the two commissions: the Northern Ireland Human Rights Commission and the Equality Commission for Northern Ireland, which have agreed today with the dedicated mechanism in respect of the Northern Ireland protocol. Our meeting yesterday was very productive, and, in fact, the Minister’s subsequent letter to me, following our exchanges on Report, was also productive and provided good clarification on the point of the market access principles and the non-discrimination principle in relation to the Bill.
Both commissions found it very helpful, because the issue was central to the recent amendment and recent correspondence with the Minister and concerned the operation of those market access principles introduced in the Bill, particularly the non-discrimination requirement. The question was whether these principles applied to legislation introduced to ensure that there will be no diminution of certain rights in Northern Ireland resulting from the exit of the UK from the EU, as required by Article 2 of the protocol. As already referred to, the two commissions have direct responsibility, as they have agreed to act as the dedicated mechanism responsible for monitoring, supervising, advising, reporting on and enforcing the Government’s commitment under Article 2 of the Northern Ireland protocol of the withdrawal agreement from the end of the transition period.
Following that period of uncertainty, shall we say, the Minister’s letter to me of last Friday—which was productive—and our meeting yesterday proved a very useful exchange, providing the necessary clarifications, for which the noble Baroness, Lady Suttie, and I are extremely grateful. I further note that the Minister has agreed to our request to put that letter, plus another one to do with procurements, in the Library of your Lordships’ House.
Robin Walker, Minister at the Northern Ireland Office in the other place, has agreed to write to both commissions: the Northern Ireland Human Rights Commission, for which he has responsibility, and the Equality Commission for Northern Ireland, which is the responsibility of the Northern Ireland Executive. In that letter, he will state what the Minister, the noble Lord, Lord Callanan, has already stated to me.
I thank Ministers for their deliberations with us and productive outcomes, and I hope it all works well. I hope that Part 5 of this Bill, which deals specifically with the Northern Ireland protocol, will not be reinstated in the other place, because I firmly believe in the principle of reconciliation. Breaking international law and the other international agreement, the Good Friday agreement, at any point would not be good for peace or political progress in Northern Ireland.
My Lords, to save time, I ask your Lordships’ House to read into my remarks the kind words of the noble Baroness, Lady Ritchie, about those behind this Bill. I think it is appropriate for me, a disagreeable Conservative Back-Bencher, to congratulate the Ministers, my noble friends Lord Callanan, Lord True and Lady Bloomfield, as well as my other friends on the Front Bench, for their conduct of the Bill, good spirit and sense of humour, as they have watched large parts of the Bill of which they had conduct, crumble during its passage. The Bill has had a bumpy ride; I do not think that is controversial. Today, we will return a somewhat different Bill to the other place compared to the one that it sent to us.
None the less, I urge that we do let it pass and go back to the other place. As I implied on Report, it has, on occasion, been tempting to think that, in relation to the progress and development of the Bill, Downing Street had
“learned nothing and forgotten nothing”.
Of course, Talleyrand was referring to the Bourbons after the abdication of Napoleon: they seemed determined endlessly to repeat the mistakes of their predecessors who had been swept away in the French Revolution. That is clearly not a fate I wish for the Government, although last night’s revolt in the Commons suggests that they need to have a care.
It may be said that all that needs to be said has already been said about the Bill. In the other place, that is often seen as a good reason to say it all over again. I will not say it all over again, but I will point out two themes that have emerged from our consideration of the Bill, which I hope the other place will not ignore when it considers the Bill we return to it.
The first relates to the rule of law. The Bill did not start well. It began with my right honourable friend the Secretary of State for Northern Ireland announcing that the Government would deliberately renege on their international treaty obligations, albeit, as he said, in a very specific and limited way. It was not a slip; it was a deliberate statement. But it was certainly a mistake, and it made the Government look ridiculous.
The Government sought to cure that error by passing the buck to the other place, and then sought to avoid the error by arguing that they were not breaking their rule of law obligations, or that there was a difference between our international law and domestic rule of law duties, or that it did not matter, or that they had to break their obligations because, in some unspecified manner, the EU was going to act in bad faith. I sincerely regret that the Lord Chancellor and the Attorney-General took part in this because, objectively observed, they did not assist. Few Britons who believe in the rule of law and in our respecting treaty obligations were convinced by any of that.
Part 5 of the Bill was unsupportable and it was rightly removed for the reasons set out by the noble and learned Lord, Lord Judge, and many other thoughtful contributors, from all parties and none. I therefore gently ask the Government and the thinking majority in the other place not to put Part 5 back into the Bill.
It is always a joy to have the support of my noble friend.
No British Government, and certainly no British Conservative Government, should be in the business of persuading the United Kingdom Parliament to enact a law that breaks a treaty that is barely a year old, the terms of which were put into domestic law earlier this year by the very same Government and Parliament. They cannot break the law, still less the law of their own making, and expect to engender respect at home or abroad.
My second theme relates to the maintenance of the United Kingdom—something already touched upon by the noble Baroness, Lady Finlay. I am a unionist, and I want to see the United Kingdom of Great Britain and Northern Ireland continue and thrive. Of course, I know that there are some people in Scotland, Wales and Northern Ireland who want to see a different constitutional arrangement, whether that be through greater devolution, a federal system or the separation of Wales and Scotland from the United Kingdom and the unification of Northern Ireland and the Republic. But there are, and there were, provisions in the Bill—no doubt sincere arguments were made in favour of them by the Government—that will encourage those against the continuance of the union to conclude that the United Kingdom Government do not care about their views and that they should therefore try even harder to leave. My noble friend Lord Callanan’s statement at about 2.20 pm exemplified that.
The law too often passed by Parliament is the law of unintended consequence. If we are not more aware of the effect of our words and deeds upon the minds of those who want to bring the union to an end, it is we unionists who will live to regret it. It was, after all, the leader of the Scottish Conservatives, my honourable friend Douglas Ross, who recently said that the case for separation was being won in London, not in Scotland.
I therefore ask the Government, in relation to this second theme—the maintenance of the United Kingdom —not to do anything that will give the separatists any excuse to say that the United Kingdom has had its day and that London knows nothing and cares less for the opinions and self-respect of the devolved Administrations. Of course separatists will find insult where none is intended and make good use of every slight, actual or perceived, so let us not give them any excuse to do so. Let us treat the devolved Administrations with respect and co-operate together as a functioning union, with more to gain from being one country than four separate ones.
I urge the other place to rest content with the Bill as we return it to them. It is in better shape now than it was and it will do less damage to the union and our country’s international reputation.
My Lords, when the Bill entered your Lordships’ House, it presented many problems—not to put too fine a point on it. It is a great honour to follow the noble and learned Lord, Lord Garnier, who, among his many pieces of advice, advised Peers not to rehearse the arguments that we have heard over the course of the Bill. So I will not do that, but I agree that the Bill leaves your Lordships’ House in a better state than when it arrived, though it is of course still far from perfect.
During the scrutiny process, as the noble Baroness, Lady Finlay, alluded to, over 30 amendments have been inserted into the Bill through your Lordships’ overwhelming votes. At the same time, as other Peers have said, large and important parts of the Bill were removed as a result of this process. I hope this gives Her Majesty’s Government cause to reflect further, rather than simply trying to move on.
Additionally, the Government themselves have made more than 30 amendments to the Bill, and that indicates that the Ministers have been listening to and participating in this debate. I thank the noble Baronesses, Lady Bloomfield, Lady Penn and Lady Scott, and the noble Lords, Lord True and Lord Callanan—the full cadre of Ministers—for their stamina and general good humour through this process. I agree that the Ministers listened, and the government amendments are testimony to that. The departmental Bill teams must get much credit for keeping Ministers on the straight and narrow—if indeed they did. The Bill has been drafted and debated on an extremely tight schedule, and I am sure that the Bill team lost many weekends and evenings as it stewarded Ministers through this process—as well as drafting the many letters for my noble friend Lord Purvis that have emerged.
I thank all the Cross-Bench and Labour speakers, the Bishops and their teams for the great collective effort on the Bill. It is invidious to pull out names but I would like to thank the noble Baronesses, Lady Hayter and Lady Finlay, the noble Lord, Lord Stevenson, and the noble and learned Lords, Lord Judge, Lord Hope, Lord Thomas and Lord Falconer, who put in many hours to get us to where we are today. Perhaps the Law Society of Scotland and the Welsh Government should also get a special mention for the hours that they have put into drafting amendments.
I would also like to mention the parliamentary clerks, as well as the Whips’ Office and the usual channels, for helping to get the Bill timetabled and get us through it. It was not an easy task in the circumstances. From our team, I would single out Elizabeth Plummer and Sarah Pughe in the Lib Dem Whips’ Office, who have done a fantastic job. Finally, I thank the cadre of colleagues I have on the Benches today, my noble friends Lady Bowles and Lord Purvis, and the 20 other Lib Dem Peers who have participated in the various stages of the Bill.
It is clear from what I have been saying over the past weeks that this is not the way the Liberal Democrats would have done it, but I feel that the debates have been deep as well as wide, and serious and well considered on all sides. It is important that this is considered as the Bill leaves this House and goes forward.
The Minister mentioned legislative consent. Other speakers have said how important it is that Part 5 remain out of the Bill; that is very true. Many of the other amendments were also targeted at the grab at devolution that the Bill seeks. The principle of legislative consent requires that those amendments be given full consideration in the other place. If they are summarily dispatched, as is often the case with your Lordships’ amendments, the message will be sent clearly to the devolved authorities about what this Government consider to be important in terms of the devolution settlement. That runs far past this Bill, and far past the term of this Parliament. It is a very important issue—and not one that I think the Government, in the end, want to have on their hands.
I am wont to give Ministers advice, and they are wont to ignore it, but there are many other people wiser than me who are also giving Her Majesty’s Government this advice. I hope that, when it all comes out in the wash, that advice will be listened to— because this issue is far more important than just this Bill.
I thank the ministerial team for their time and accessibility while we have been working on the Bill. Bills that span departments—three, in this case—are a nightmare to run. Credit is due to those involved, in BEIS, the Cabinet Office and the Treasury, for their seamless performance. We tried hard to find divisions between them, but we failed. I particularly want to thank the Minister from the Cabinet Office, Chloe Smith MP, at a difficult time for her. I am sure the whole House will want to join me in wishing her well for the next six months, and a speedy recovery.
Our team in the Lords is used to working collaboratively, and we have tried to blend our experiences and interests to good effect in working on the Bill. I thank in particular my noble friend Lady Hayter for her endless supply of wit and wisdom, and my noble and learned friend Lord Falconer, who must have been a terrifying vision when he rose at the Dispatch Box to take on the combined ministerial skills that he was dealing with. We have also worked closely with Commons colleagues, and we now pass to them the responsibility for defending the changes that we have made.
The Bill team has supported the parliamentary processes very well and has managed the large number of Zoom meetings and letters with huge professionalism. We thank them. We should also thank the technical teams who have supported the hybrid House so well. Last, but not least, I thank Dan Harris, our legislative support team member, who has absorbed huge amounts of work and juggled his other commitments so as to keep us on track, drafting all our amendments and dealing with the Public Bill Office to get us to where we are. He celebrates a big birthday this week, and he deserves the break that he is taking.
As the noble Lord, Lord Fox, said, it is customary to say that Bills that have been sent to us for consideration by the other place leave here much improved by the detailed scrutiny that your Lordships’ House brings to legislation. I am not sure that this Bill—with, as the noble and learned Lord, Lord Garnier, observed, its 65 amendments in all, and shorn of about one third of its original material—can qualify for that appellation. It still seems to have some problems and deficiencies. However, we think it has been improved.
My colleagues and I were heartened by the handover meeting we held yesterday with the ministerial team, involving Commons Ministers as well, which seemed to open up possible joint solutions to many of the remaining issues. Of course, external events may well intervene, but we are not far apart on many issues, and we remain willing to work together with the Government to resolve the outstanding issues over the next period.
My Lords, let me first thank all those who have contributed to the debate for their remarks. Again, all noble Lords have approached the subject in a timely and constructive manner, in the finest traditions of this House, as has been demonstrated throughout the passage of the Bill. It is now up to the other place to scrutinise the changes that this House has made to the Bill. It would be wrong of me to prejudge what will happen there, but I can say that should the Bill return for further consideration in this House, I look forward to working with all noble Lords in the spirit of constructive—well, sometimes constructive —co-operation that we have all shown so far.
Bill passed and returned to the Commons with amendments.
State Aid (Revocations and Amendments) (EU Exit) Regulations 2020
Motion to Approve
My Lords, these draft regulations are made under the powers in the European Union (Withdrawal) Act 2018 as amended by the European Union (Withdrawal Agreement) Act 2020, which I will refer to as the withdrawal Act. The purpose of these regulations is to remove redundant EU state aid law from the domestic statute book after the end of the transition period. This is both appropriate and necessary to provide legal certainty for UK businesses and public authorities that EU state aid rules no longer apply in the UK, except where they apply directly under the Northern Ireland protocol.
I begin by explaining the European Union’s approach to subsidy control, which is known as state aid. State aid is support in any form, from any level of government, which gives a business or other entity an advantage that could not be obtained in the normal course of business. If this advantage has the potential to distort competition within the internal market and affect trade between EU member states, then state aid is present and the rules for state aid are triggered. The state aid rules were devised by the European Union to ensure that EU member states operate in a way compatible with the internal market, and the rules are of course very much a European Union concept. They derive from Articles 107 to 109 of the Treaty on the Functioning of the European Union, which, together with the EU regulations and decisions made under that treaty, control how and when member states can grant aid. Responsibility for enforcing the rules sits with the European Commission. However, having left the European Union and the single market, the UK will no longer be bound by EU state aid rules after the end of the transition period.
If changes to domestic law are not made in time for the end of the transition period, EU state aid law would become part of UK law, as retained EU law through the withdrawal Act, but the law would then contain some fundamental deficiencies. These deficiencies would make this retained EU law on state aid inoperable in the United Kingdom. Revoking the EU law on state aid will make it clear to businesses, courts and public authorities that state aid rules will no longer apply in the UK, except, as I said, where they apply directly under the Northern Ireland protocol. Instead, the UK has announced that we will have our own subsidy arrangements to support a competitive, dynamic market economy.
From 1 January, the Government will follow World Trade Organization rules on subsidies and other international commitments agreed in free trade agreements, and we will consult on whether to go further, including whether to legislate on this matter. We will, of course, work closely with businesses and public authorities across all parts of the United Kingdom to consider how best to design an approach to subsidy control that works for the United Kingdom economy.
In terms of the technical detail, this statutory instrument disapplies and revokes retained EU state aid rules that are preserved by Sections 3 and 4 of the withdrawal Act. As I mentioned earlier, Articles 107 to 109 of the Treaty on the Functioning of the European Union, together with the EU regulations and decisions made under that treaty, govern the state aid regime. Article 107(1), for example, defines state aid and sets out the general prohibition on giving aid. That prohibition operates by providing that aid is incompatible with the EU internal market in so far as it affects trade between member states, unless the aid has been approved by the European Commission.
Article 107(2) and (3) sets out when the Commission must give approval and those areas where the Commission has discretion over whether to approve aid or not. Article 108 sets out the Commission’s role in monitoring state aid and obliges member states to notify aid to the Commission in advance. Aid cannot be awarded until approved by the European Commission; this is known as the standstill obligation. While the Commission has exclusive competence to decide whether aid is compatible with the internal market, national courts can enforce the standstill obligation. In effect, national courts can suspend an aid measure until the Commission has considered whether the measure is compatible with the internal market. However, after the transition period, the UK will no longer be bound by EU state aid rules. The rights and obligations I have just described will no longer be relevant. This SI ensures that they are not retained in UK law by the withdrawal Act.
Other EU regulations that enable the EU state aid regime to operate across member states would, after the end of the transition period, become retained EU law through the withdrawal Act. These broadly consist of procedural and exemptions regulations. The procedural regulations, for example, set out how the state aid regime operates and make clear the roles and responsibilities of the Commission and the member states. They set out the procedures to be followed in notifications and investigations and give the Commission information-gathering powers. The exemptions regulations set out the conditions under which an aid measure is exempt from the requirement to notify the Commission in advance. Yet these provisions would not be able to be complied with or enforced in the United Kingdom because the Commission will not have a role in the UK’s domestic subsidy control arrangements. The SI will therefore revoke these now redundant provisions.
Removing retained EU law from the UK statute book that is both deficient and no longer relevant avoids any possible confusion about whether state aid rules must be complied with or not. Importantly, this SI also ensures that domestic legislation can continue to operate appropriately beyond the transition period, when EU state aid rules will no longer form part of domestic law. The SI does this by making consequential amendments to other retained EU law and UK domestic legislation which refers to state aid rules.
It is important at this point for me to make it clear how these regulations will operate in light of the Northern Ireland protocol. While these regulations remove retained EU law from the UK domestic statute book, Article 10 of the Northern Ireland protocol will allow state aid rules to continue to apply after the transition period. The application of state aid rules under the protocol will be limited to measures relating to goods and wholesale electricity affecting trade between Northern Ireland and the EU. The regulations will not affect the application of the Northern Ireland protocol, which is given effect through Section 7A of the withdrawal Act made in 2018: they make amendments only to UK domestic law.
This SI is necessary to make corrections to domestic law, by revoking retained EU law on state aid from the UK statute book and fixing any technical deficiencies in other retained EU law and UK domestic legislation which refers to state aid rules. This instrument will ensure legal certainty for businesses, aid-granting authorities and the courts from 1 January 2021, when EU state aid rules will cease to apply in the United Kingdom. I therefore commend these regulations to the House.
Amendment to the Motion
At end insert “but that this House regrets that the Regulations replace retained European Union State Aid rules with a yet to be defined new subsidy regime, and calls on Her Majesty’s Government to delay implementation of the regulations until (1) they have consulted widely on their proposals, (2) they have sought the agreement of the devolved administrations, and (3) the primary legislation detailing how the United Kingdom’s new subsidy regime will operate after the end of the transition period has received Royal Assent.”
My Lords, I thank the Minister for his introduction of the statutory instrument. My amendment calls on the Government to delay implementation of these regulations until they have consulted widely on their proposals; in particular, until they have consulted and sought the agreement of the devolved Administrations and the primary legislation detailing how the UK’s new subsidy regime will operate after the end of the transition period has received Royal Assent. I will listen very carefully to comments made during the debate, particularly to the response of the Minister, but I give notice that I intend to divide the House on this issue.
This amendment stems from three primary sources. First is the 30th report of the Secondary Legislation Scrutiny Committee, which, inter alia, said:
“The disapplication of EU State aid rules appears to be a reversal of the previous Government’s policy position, which sought a continuity approach in the case of a ‘no deal’ scenario”,
“This approach raises the question whether it would have been more appropriate to take forward such a policy change through primary rather than secondary legislation, enabling Parliament to scrutinise the new approach more fully”.
The second is an amendment in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd, supported by a vote on Report deleting Clause 44 of the internal market Bill, which he said purported
“to make state aid a reserved matter by the device of expanding or extending the competition policy reservation.”—[Official Report, 25/11/20; col. 317.]
The third is the fact that the rollover continuity free trade deal with Japan, discussed in your Lordships’ House last week, replicates the restrictions on subsidies being repealed by this very SI. If we are still honouring international treaties, this will need to be legislated for, so why is this SI being progressed today?
The SLSC commented that when the previous Government laid the 2019 state aid regulations before Parliament, the plan was to transfer the EU’s enforcement functions to the CMA and to enable the continued application of state aid law in the UK in a domestic policy context in the event of no deal. However, these 2019 regulations were withdrawn in February without being made. The SLSC also points out that this new SI is being
“made under the Withdrawal Act which, according to the Explanatory Notes … ‘does not aim to make major changes to policy or establish new legal frameworks in the UK beyond those which are appropriate to ensure the law continues to function properly from exit day’ and commits the Government to ‘introduce separate primary legislation to make such policy changes which will establish new legal frameworks’.”
Why is this happening? Why is there no primary legislation? I hope the Minister will deal fully with the points made by the committee, particularly its general concern about using secondary legislation to introduce policy changes that should be done via primary legislation.
The noble and learned Lord, Lord Thomas, prefaced his introduction to his amendment proposing to delete Clause 44 of the internal market Bill by saying that
“the regime of state aid is plainly necessary, and it is necessary to have one for the whole of the UK”.—[Official Report, 25/11/20; col. 316.]
I agree with him. The Minister has previously made it clear that the UK needs to design a bespoke state aid, or what he calls a “subsidy control”, regime. He has also said he hopes that it
“will operate in a way that works best for all UK businesses, workers and consumers”,
“a consultation on whether we should go further than our World Trade Organization and international commitments, including whether further legislation … is necessary.”
So far, so good. However, with no supporting evidence, he asserts that:
“Reserving subsidy control is the best way in which to guarantee that a single, unified subsidy control regime could be legislated for in future.”—[Official Report, 25/11/20; col. 325-26.]
The noble and learned Lord, Lord Thomas, suggested that this was clear evidence that the Government want to use the internal market Bill to alter the devolution settlement. In the Third Reading debate a few minutes ago, the noble and learned Lord, Lord Garnier, spoke eloquently about the need for all unionists to tread very carefully when progressing legislation that affects the current rights and responsibilities of the devolved Administrations. I agree with him.
Whatever the truth here, this is a worryingly centralising Bill. As we learned in the Autumn Statement only last week, the shared prosperity fund which replaces EU funding for regional and local structural projects will in future be controlled and spent by UK government Ministers from Whitehall. The Minister might wish to clarify whether, under the guise of promoting competition, the Government are set on unravelling the devolution settlement.
There is a bit of a mystery about what the Government are up to here. Why are they currently spurning the sensible and pragmatic way forward suggested by the Welsh and Scottish Governments of using the well-regarded common frameworks process? Reinforcing as it does the need for all four nations to work together for mutually agreed solutions, it seems a complete no-brainer.
On international trade agreements, it is an open secret that level playing field issues are one of the main sticking points in the ongoing EU FTA negotiations. It is said that London has been strongly resisting demands from Brussels for the UK to remain in the EU state aid regime. It has even been suggested that this SI has been brought forward and modified from its original form to bolster the UK’s negotiating position. However, as we debated last week, the state aid provisions included in the UK-Japan free trade agreement are effectively the same as the current EU rules and include what one distinguished commentator called
“hard-edged commitments not to provide open-ended … support”
to UK companies. To give effect to these commitments, there will need to be legislation. I do not need to point out the irony if this SI has to be brought back in primary legislation to give effect to the Japan free trade agreement. Will the Minister comment on this? What are the plans for legislation to implement the Japan free trade agreement?
State aid has received little attention during the UK’s 47 year-long membership of the EU, but its importance has been highlighted repeatedly during the parliamentary stages of the internal market Bill, as well as remaining one of the sticking points in the EU-UK negotiations. We have no sense of where the Government want to take their policy on state aid, other than that it cannot be the same as it has been under the EU. Removing a well-understood policy framework that has been in place for half a century and replacing it with a reliance on WTO rules, which are widely discredited, seems a perverse way of making policy, even if the Government need more time before deciding what to do. There is no doubt that state aid can be beneficial. If deployed as part of a robust industrial strategy, it can help create decent jobs, kick-start businesses, rebalance regional inequalities and power the UK’s internal market. However, it can also be harmful.
The Secondary Legislation Scrutiny Committee said that this change
“is neither a welcome nor indeed acceptable use of secondary legislation”.
Scotland, Wales and Northern Ireland do not understand where they fit into this process, and it is complicated by the Northern Ireland protocol. In the internal market Bill, the Government stand accused of attacking the devolution settlement. Even if that is not the case, they have a lot of ground to make up before their proposals have buy-in from the devolved Administrations and are seen as legitimate and politically uncontroversial in all four nations. The criticism from the SLSC, the gaps in the IM Bill and the need for clarity following international trade treaty commitments suggest in combination that there is a powerful case for delaying this Bill until Ministers have consulted widely and sought the agreement of the devolved Administrations and the necessary changes to existing primary legislation have been agreed. This pause for reflection is what this amendment in my name would achieve. I beg to move.
My Lords, I thank my noble friend for his presentation and explanation of these regulations. I recognise the difficult position the Government are in this year as a result of the pandemic’s impact on preparing the UK’s rules after the end of 2021. However, as I explained during the passage of the internal market Bill, I have significant concerns about the Government’s adherence to issues such as the Northern Ireland protocol and the delicate balance of power within all four devolved Administrations of our United Kingdom.
On the measures we are debating today, I have significant sympathy with all the points made by the noble Lord, Lord Stevenson of Balmacara. I too regret that these measures are being proceeded with. The Welsh Government, for example, have particularly expressed concerns that these regulations will amend UK legislation in devolved areas which hitherto were supposed to require consent under the intergovernmental agreement, especially issues that relate to the water industry and other areas. The Welsh Government have stated their concerns about removing current state aid rules without putting any alternative subsidy regime in place.
Concerns about these measures were reinforced by the House of Lords Secondary Legislation Scrutiny Committee saying that this
“is neither a welcome nor … acceptable use of secondary legislation”
and that it should rather be done with full parliamentary scrutiny in primary legislation. Following the concerns expressed by the Welsh and Scottish Administrations, can my noble friend say how the proposed shared prosperity fund will interact with any new state aid regime? When will the details of the future proposals for this regime be produced? What consultation will happen?
Finally, I repeat my concerns at the Government’s proposal to break the terms of the Northern Ireland protocol. Article 10(1) of the protocol requires the UK to follow EU state aid rules rather than the WTO rules, which are more like a free-for-all. I know that we have dealt with a number of these issues in the United Kingdom Internal Market Bill and that a number of these concerns have been addressed by various amendments made by your Lordships’ House. However, I ask my noble friend, in the light of the ongoing free trade negotiations that have been, and continue to be, under way with other nations, and in the light of the concerns expressed by the devolved Administrations and the House of Lords Secondary Legislation Scrutiny Committee, whether the Government might consider it appropriate to delay the introduction of these measures in order to offer time either to agree a deal or to have the necessary consultations and consents from the other areas of the United Kingdom.
My Lords, I am grateful to the Minister for his explanation of these regulations and their effect in revoking retained EU state aid rules so that they are not part of domestic law for part of the United Kingdom. However, nothing in these regulations affects the continued application of EU state aid provisions, as provided for in Article 10 and Annex 5 of the Northern Ireland protocol, after 31 December 2020. The Minister, when he was introducing the regulations, somewhat skirted over that issue. This has significant and far-reaching implications for businesses and consumers in Northern Ireland. I know that time was short, but it was very much an afterthought and will have significant effects on business in Northern Ireland.
Great Britain will have its own domestic subsidy control regime that follows WTO rules and other international commitments agreed under free trade agreements. It would be good to have some idea of what the Great Britain regime is going to be. We in Northern Ireland need to see the detail. Some flexibilities have been promised, given that we are going to have this hybrid situation in the United Kingdom. I would be grateful if the Minister could indicate when we are going to see the Great Britain rules for the subsidy control regime.
In his reply, will the Minister spell out which areas will be covered in Northern Ireland by the EU state aid regime? He mentioned goods and electricity. Services, as I understand it, will not be covered. However, that can lead to a problem when it comes to which businesses will be subject to which regime in Northern Ireland. We know about manufacturing, but a lot of the value is in services. Will businesses in Northern Ireland be under the EU regime, the Great Britain regime or what? That needs to be clarified as a matter of urgency. We are almost four weeks away from these matters having to be settled and it is important that they are settled and clarified very quickly.
In the Command Paper in May 2020, the Government set out that the state aid provisions in the Northern Ireland protocol would apply only narrowly. Again, I would be grateful if the Minister could reaffirm that and answer the questions that I have raised.
The United Kingdom Internal Market Bill has been mentioned. The Minister and noble Lords will know the concern in Northern Ireland that rules will be applied under the protocol, not least in this area, over which there will be no democratic oversight or input for anyone from Northern Ireland. Stormont, the devolved Government, the Executive and the Assembly will have no say in those rules, and neither will Westminster. There is a massive democratic deficit. That is unacceptable, and yet it has been imposed upon Northern Ireland. Yesterday, we discussed a democratic consent statutory instrument in Grand Committee, and we were told that, in four years’ time, the Northern Ireland Assembly would be able to vote on the matter. The Northern Ireland Assembly and the people of Northern Ireland would like a vote now. It is entirely democratic and reasonable to expect such a thing.
In closing, can the Minister outline how Her Majesty’s Government will ensure that Northern Ireland companies will not be placed at a competitive disadvantage compared to their counterparts in the rest of the United Kingdom? If Northern Ireland companies are following EU state aid rules and their counterparts in the rest of the United Kingdom are following a different subsidy regime, that has the potential to cause problems for Northern Ireland companies. Will he ensure that Northern Ireland businesses can access the United Kingdom schemes as well, or at least offer compensation in some shape or form to make up for that competitive disadvantage, if there is any?
It is important to put on the record that, while these are technical regulations, they seem to be putting in place the state aid rules that will apply after Brexit for the whole of the United Kingdom; but in fact, they will apply only to part of the United Kingdom. For Northern Ireland, these regulations have very serious implications indeed, and that needs to be highlighted and addressed.
My Lords, it will not surprise the House to hear that I strongly support these regulations and do not support the amendment tabled by the noble Lord, Lord Stevenson of Balmacara. I particularly welcome any statutory instrument that removes EU-derived law from our statute book. It may take a long time to remove it all, and it is clearly not a top priority, but when excellent opportunities such as this arise, we should grasp them.
The amendment in the name of the noble Lord, Lord Stevenson, mirrors the concerns expressed by the Secondary Legislation Scrutiny Committee of your Lordships’ House in relation to not using primary legislation to introduce a new state aid regime. We are not being asked to approve a replacement state aid regime. We are being asked to approve this statutory instrument, which should be judged on its own merits and not in relation to the legislative process that may or may not be followed for any replacement state aid regime. The merits of these regulations are clear. They will remove from our statute book the state aid rules that apply to those within the single market. We will no longer be in the single market at the end of this year, except to the extent required by the Northern Ireland protocol. That should be the end of the story.
I have to say to my noble friend Lady Altmann that I do not understand the concerns expressed by the Welsh Government that she relayed. The legislation is redundant and keeping it would be confusing.
The question of what kind of state aid rules we need for the UK’s own internal market is an entirely separate issue and should have no bearing on this order. As noble Lords are aware, the Government have committed to consulting on their plans for a scheme of subsidy control for the UK’s internal market. I am sure that this will include consultation with the devolved Administrations, and so we do not need this amendment to bring that about.
A regime for the UK’s internal market is not an urgent issue, and it is important that the Government take their time to get the details right. As my noble friend the Minister has said, the UK will of course be bound by the WTO’s rules and the terms of any free trade agreements, as it will whether or not we create new rules for our own internal market.
Equally, whether or not the mechanism for creating any new state aid scheme is by way of primary or secondary legislation does not affect these regulations. As noble Lords know, the Government had intended to use the power in the United Kingdom Internal Market Bill before your Lordships’ House took another swipe at the Bill with its wrecking ball last week. Whether the Government decide to use primary or secondary legislation is not a big issue for me, provided that their consultation is thorough. Primary legislation can take a big chunk of the finite time available under our parliamentary processes. I would prefer to use up any spare legislative time for things such as our levelling-up agenda. I would certainly not get excited if secondary legislation were used.
The Secondary Legislation Scrutiny Committee also seemed to misdirect itself when it said, at paragraph 17 of its 30th Report, that part of the reason for drawing the order to the attention of the House was because,
“on this occasion, the policy is one that appears central to the UK’s negotiation position with the EU.”
Your Lordships’ Select Committees never miss an opportunity to drag Brexit into the story, which is, I am afraid, another sign that many noble Lords—perhaps a majority—still have not yet come to terms with the fact that we have left the EU. But our negotiating position with the EU on our future relationship is nothing whatever to do with this statutory instrument. The EU may well be making a fuss about our future internal state aid regime and may want to try to dictate its terms, but that is not relevant to excising irrelevant law from our statute book.
My Lords, it is always a pleasure to follow the noble Baroness, Lady Noakes, who is such a strong and loyal Member of the Benches opposite. I particularly liked her reference to the “wrecking ball” that we took to the internal market Bill, because, obviously, we were in fact helping the Government not to break the law. I think that is part of what we should be doing in your Lordships’ House. I know that when I follow her, all I have to do is go in the opposite direction and I will be absolutely fine.
The Minister was very soothing in his description of what this statutory instrument does, but I had some fears about it being done through secondary, and not primary, legislation, which were reinforced by the comments of the noble Lord, Lord Stevenson. It seems that, rather than the usual EU exit tweaks that most statutory instruments do, this is actually repealing the whole body of EU state aid laws—all the rules—except for Northern Ireland, under the Northern Ireland protocol, leaving us only with WTO rules and anything that is agreed with other countries in our future trade deals. Somehow it seems quite a lot within a very simple mechanism that, I feel, is not perhaps appropriate for it. It does feel like too big a change to be a legitimate use of the statutory instrument powers in the EU withdrawal Act and goes way beyond anything the Government actually said they would use these powers for.
The change should be made by primary legislation. There has been lots of time to do it; there has been time in our schedule but, because the Government have not actually decided their policy, they are just falling back on WTO rules. Also, the fact that this statutory instrument is coming so late in the day rather suggests that this is another hard-line tactic for the EU negotiations, which I think is very sad. What kind of state aid rules are the Government negotiating in their trade deals? Is that something we have access to? What kind of state aid restrictions will the UK subject itself to? Are the Government going to ensure that public authorities are aware of the state aid rules and the changes that will result from this SI?
EU state aid law is well understood by public authorities at the moment, but I would argue that this fast change to WTO rules and trade agreements creates uncertainty—and none of us wants any more uncertainty. I am minded to vote for the amendment to the Motion, because consultation with the devolved authorities does seem like something we really ought to do—if not just through courtesy, at least through gathering more information and understanding exactly what is going on elsewhere. I thank the Minister for his explanation, but I would, if possible, like an answer to my questions.
My Lords, I thank the Minister for introducing these regulations and welcome them. They are necessary to prepare for the introduction of a UK domestic subsidy control regime. As my noble friend has made clear, the EU state aid rules, which would otherwise have been transposed into UK law, would have been inoperable under the withdrawal Act and, in any case, they would have been redundant.
The Government have made it clear that the UK will follow the WTO’s subsidy rules and will also adhere to any relevant obligations entered into under free trade agreements. Among those obligations are those entered into under the CEPA with Japan. Could the Minister explain what the difference is between the Government’s offer to the EU on state aid, which, I understand, is similar to that included in the EU-Canada free trade agreement, and what has been agreed between the UK and Japan? The Financial Times has reported that the UK-Japan agreement replicates the restrictions on subsidies in the EU-Japan deal that went into effect last year. That agreement prohibits the Governments from indefinitely guaranteeing the debts of struggling companies or providing an open-ended bailout without a clear restructuring plan in place.
Of course, as far as state aid is concerned, the EU should put its own house in order. Accusations of dumping cannot easily be made against the UK. As the Prime Minister said in his inspiring Greenwich speech in February:
“France spends twice as much on state aid as the UK, and Germany three times as much … In fact, the EU has enforced state aid rules against the UK only four times in the last 21 years, compared with 29 enforcement actions against France, 45 against Italy—and 67 against Germany.”
But as my noble friend Lady Noakes pointed out with her usual forensic acumen, today’s debate is about our domestic state aid rules. In that regard, I do not support the amendment to the Motion in the name of the noble Lord, Lord Stevenson of Balmacara.
Of course the Government will consult widely on our new domestic subsidy regime, including with the devolved Administrations. I am not quite sure whether creating a statutory requirement to seek the agreement of the devolved Administrations goes further than the requirement to consult, but I am certain that the devolved Administrations will argue that it is tantamount to requiring that their agreement must be given. I would ask the noble Lord if he has not noticed that on every single relevant question the devolved authorities want to do things slightly differently to show their powers. I think the noble Lord’s proposal is, therefore, most unhelpful.
I agree with the noble and learned Lord, Lord Thomas, as quoted by the noble Lord, Lord Stevenson, that it is very important that we have a single set of rules across the United Kingdom. The noble Lord’s wish to extend devolved powers to include all those powers until now held by the European institutions for the purpose of harmonising rules across the EU does not fit well with his view that, at the UK level, the UK Government should not reserve the powers necessary to ensure harmonised state aid rules across the United Kingdom. I think I can see some inconsistency in the noble Lord’s position, and I would ask my noble friend the Minister if he agrees.
The noble Lord, Lord Mann, and the noble Baroness, Lady McIntosh of Pickering, have withdrawn from this debate, so I call the noble Lord, Lord Liddle.
My Lords, I very much want to support the amendment that my noble friend Lord Stevenson is moving. I think that the proposal before us today is symptomatic of the poor quality, dysfunctional Government that we now have. I do not think that I am going to express myself in quite the polite terms that he did, because I think that what is happening is appalling.
As a member of the Secondary Legislation Scrutiny Committee, we thought it very strange indeed that such a major decision was being taken by statutory instrument. It is a major change of policy. It is a change from the policy that the noble Lord, Lord Callanan, himself advocated in this House during the passage of the EU withdrawal Act, when he explained how the European state aid regime would be adopted by the UK but be run in future not by the European authorities but by the British authorities—the CMA. Yet the Government are casting that aside, abolishing the present regime, without frankly having a clue—a clue of the slightest clue—about what they are going to replace it with.
The WTO regime is not a credible state aid regime. I am a strong supporter of trying to build up the WTO—it is very important that our effort goes into that in future and, with the change of President in the US, it might be possible—but, frankly, its regime on state aid is a bit of a joke. There is no need to secure prior notification of any kind, there is no proper enforcement mechanism and there is a tribunal that President Trump has made largely ineffective. The Brexiteers’ greatest friend, President Trump, is the person who has done more to damage the WTO than any other figure.
There is no clarity on the Government’s part about what kind of state aid regime they want. All they know is that they think it is essential that the London Government should be in control of whatever it is. That is the argument we have had on the internal market Bill, where they insist that state aid is a reserved matter when in fact the devolved Administrations have had considerable discretion over how they allocate public funds in support of economic development. The Government’s behaviour on this undermines the devolution settlement as well as being economically incoherent.
The Minister kept repeating that what we are doing here gives business certainty. It gives business no certainty whatever, because who knows what the regime is going to be? The refusal of the British Government to set out a state aid regime is one reason why it is so difficult to conclude the trade agreement with the EU. The EU does not have a clue how the Government intend to sustain any kind of level playing field, which is a perfectly reasonable request in a trade deal.
This is a very bad policy and a very bad move. I believe in state aid; I believe it is necessary to support restructuring. I am not in favour of subsidising lame ducks, but I am in favour of trying to give companies in difficulties a viable future. State aid is important in promoting innovation, particularly in the high-tech industries that are our future. Frankly, though, this does not get us anywhere near having a credible state aid policy. It is a typical Brexit act, taking a leap into the unknown without a clue about what you are actually trying to achieve.
My Lords, state aid has the potential to distort market competition. As a member of the EU, we were governed by its state aid rules. This SI does away with that, but there is a degree of flexibility to those rules. In 2015, for instance, the Government wanted to subsidise the Drax power station to enable it to convert one of its units from coal to biomass fuel. The European Commission investigated and gave its approval. Clearly there were advantages for all in making that contribution to its own carbon emissions, and the EU state aid rules did not get in the way.
I am grateful to the noble Viscount, Lord Trenchard, for explaining to us how the EU state aid rules have been used so fairly, largely to keep France and Germany in line and to allow the UK to do most of what it wanted. They are not overly unfair. We should not characterise EU state aid rules as necessarily preventing the UK doing what is right. As Theresa May said in Florence in 2017, the UK and EU understand and agree about the purpose of state aid rules and
“trying to beat other countries’ industries by unfairly subsidising one’s own is a serious mistake”.
Some of us fear that the Government are about to make that serious mistake.
That is why I take issue with the noble Baroness, Lady Noakes. The Government can now define their own state aid rules but those have implications far beyond the UK. After all, we are a great trading nation, and everything being said about our future outside the EU is about how we are going to trade brilliantly all around the world. State aid rules that are not approved by those we wish to trade with will make that increasingly difficult. That is why we shall not be able to escape completely from state aid rules. The WTO operates its own and, as the noble Lord, Lord Liddle, pointed out, they are far from adequate, but in every trade deal, as we have heard, state aid will be an issue that has to be agreed on.
So what state aid are the Government so keen to be able to dispense that it stood, in part, in the way of a Brexit deal being negotiated? Perhaps the Minister could tell us what the Government want to do. It seems very strange to see a Conservative Government so apparently keen on being able to dispense state aid. In the past, we have seen plenty of instances where government interventions in industry have been disastrous. It gave us the Austin Allegro, for instance, a car that was not only unattractive but prone to breaking down. That failed to rescue the British car industry; being open to overseas investment was what did that.
Backing winners is not something that we have shown particular acumen in doing, but perhaps that is what the Government have in mind to try again. The partial purchase of the bankrupt satellite company, OneWeb, in the summer seemed to be a move in that direction, but hopes for that business have already begun to fade. At the time of the partial purchase, which civil servants definitely were not comfortable with and had to be mandated to do, OneWeb appeared to be caught in the UK’s efforts to find a replacement for the crucial Galileo project and the GPS system that it fuels. Five months on from that purchase, I am no clearer about how we plan to replace Galileo. I would be grateful if the Minister could tell the House whether he envisages pumping more public money into OneWeb and indeed if he could provide reassurance about how Galileo is to be reproduced in just a matter of weeks.
As the noble Lord, Lord Stevenson, pointed out, we still do not know what state aid policies the Government have in mind. It seems wrong to do away with one policy without explaining what will take its place. I can understand why the EU would be concerned about that, and why it could be standing in the way of a deal. Whatever importance the Government put on being able to dispense state aid as they wish, that cannot be as important as securing a deal with our largest trading partner.
In debate after debate, we hear more stories of the chaos that looms with a no-deal Brexit, particularly on top of Covid, so surely the Government could make clear what state aid regime they favour and whether they no longer believe that British companies are capable of competing fairly on the world stage. Four years after the decision to leave the EU, could the Minister tell us how close the Government are to developing their state aid regime?
The noble Lord, Lord Berkeley, has withdrawn from the debate, so I call the noble Lord, Lord Moylan.
My Lords, we have had so much contentious legislation in this Chamber recently, some of it causing noble Lords—including myself—genuine anguish, that my sole purpose originally in putting my name down to speak in this debate was simply to thank my noble friend for bringing forward an instrument around which I thought we would all be able to unite quite joyfully. After all, we as a country voted to leave the ambit of EU law, and noble Lords from all sides of the House have bought into that. Indeed, I recall that the noble Baroness, Lady Jones of Moulsecoomb, whom it is always a pleasure to follow, was a keen advocate of Brexit alongside us at the time. We achieved our objective.
Brexit was an inherently constitutional vote. It did not decide policy, nor what our future laws would be. It decided dramatically to change the locus of where those laws would be made, restoring that to our own democratic institutions and to the electorate on which they depend. Yet, here we are, four years later, still subject to the full panoply of EU law. So we should really be rejoicing at this statutory instrument which, for the first time, is wholly devoted to abolishing a whole range of EU laws—clause after clause. It does almost nothing else. It simply sends regulations bowling like ninepins off the statute book and out of existence.
The noble Lord, Lord Stevenson of Balmacara, seeks to persuade your Lordships to introduce a note of regret into this inherently joyful event. He is not happy for a number of reasons, principally—as far as I can make out—because he is not content to see elements of the existing regime abolished without knowing what will take their place. We might all want to know that; what will replace the Government’s state aid regime is a matter of keen interest. The Chancellor of the Duchy of Lancaster has promised us that it will be robust, and that is all we know. However, as my noble friend Lady Noakes has explained, this is almost entirely ungermane to the current instrument before us. She gave a number of reasons why it was not relevant —but there is another. It would be naive of the Government to put forward their state aid subsidy regime in the context of protracted negotiations with the European Union about our future relationship. The European Union intends to take that regime and, if it approves of it, seek to codify it in an international treaty or make it a precondition of such an international treaty. It wishes to recover its influence over our industrial subsidy strategy before it has even relinquished it—to de-democratise it and take it out of the hands of the electorate.
This seems a very strange path for a Labour Front-Bencher to pursue. The noble Lord, Lord Stevenson of Balmacara, will be well aware that, in recent years, even among the leaders of the Labour Party there has been a wide range of views as to the role of industrial subsidies. There is nothing wrong with that; in a democracy, there is bound to be a wide range of views. His Motion effectively begs a Conservative Government to take their as yet unknown policy and see it embedded in an international treaty. This would remove the opportunity for other political parties which may put themselves forward for election in future to make any meaningful change to it, which is a strange and difficult path to go down.
In the interests of our democracy and of maintaining democratic control over our policy, this amendment to the Motion should be rejected.
My Lords, it gives me great pleasure to follow the noble Lord, Lord Moylan. I can only emulate his wit and clarity. In this instance, I agree with him. I will make some additional points.
I am opposed to the amendment from the noble Lord, Lord Stevenson of Balmacara, just as for many years I was totally opposed to the EU’s state aid rules. It was one reason why I voted to leave in 2016. I was glad to escape them then and I do not want any further delays. I note with some irony that this means I will be supporting the order put forward by the noble Lord, Lord Callanan. During the years before the referendum, even the most ardent Eurosceptics in the Conservative Party were rather lukewarm in highlighting the egregious nature of the EU state aid rules. Indeed, Margaret Thatcher was happy to use those rules to roll back the state at home. The Eurosceptic left might well be a dying breed, although there are a few of us left—but, in contrast, for many years they objected to the EU’s state aid rules. The much-missed RMT leader, Bob Crow, the former Labour leader, the right honourable Jeremy Corbyn, and others on the left, such as me, recognised that those rules were anti-democratic. Whatever the UK electorate might have voted for, if those policies involved certain state subsidies to create new jobs or to help certain industries survive, they could be blocked.
EU rules stipulate that Governments need to notify the European Commission in advance for permission. This is an affront to popular sovereignty and why I support this order. This outrageous mechanism, which allows the Commission to overrule elected finance Ministers and claw back payments, is uniquely prescriptive in the world. It goes far further than other economic blocs, such as the World Trade Organization. The WTO allows subsidies by default. Prior notification and approval are not required. Despite what the noble Lord, Lord Liddle, might say, this makes it more democratic than the EU.
Apart from noting the irony that today’s Labour Party seems keen to retain the EU’s anti-worker, anti-state rules, and that the Conservative Party seems committed to escaping them, it is worth considering why there is so much focus on state aid in the withdrawal agreement negotiations, and in this House. Surely, it cannot be because the EU thinks that the UK will be chomping at the bit to increase state aid, once it is free from Brussels, or that the present Government are likely to launch a campaign for the mass nationalisation of industry. Even when it was in the EU, Britain conducted less approved state aid than most other EU members. In 2018, Britain’s official state aid spending amounted to 0.34% of GDP—about half the EU’s average of 0.76% and far below Germany’s 1.45%. Why do the EU and its avid remainer cheerleaders in the UK constantly take such a robust stance over rules that cover a relatively small part of the UK’s GDP and overall state spending? This seems more politically than economically driven. After all, state aid rules are often used by the European Commission as a mechanism for asserting its overall authority and supremacy over its member states, on pain of punishment and at the expense of their sovereign rights. The rules are used as a punitive and enforcing mechanism.
While the UK has formally left the EU, it seems that it wants to use state aid to curtail the UK as a genuinely autonomous nation. That is why I think it is right that the Government seek to protect against a maximalist interpretation of Article 10 in the Northern Irish protocol, because it could give the European Commission extensive jurisdiction over subsidies granted throughout the UK. It is why it was so important to retain Clause 45 of the Internal Markets Bill, but more of that another time. More broadly, regardless of the economic impact of adhering to any version of the EU state aid rules, the main issue is one of national sovereignty. If the British people want more nationalised industries or state support, it is they—and not the European Commission—who should have the final say.
We have heard much hectoring from some noble Lords about the importance of sticking to international law. Interestingly, despite the rigidity of the EU state aid rules, those same rules were effectively waived during the recent European lockdown-induced recession —just as they were during the financial crisis a decade ago—to allow for emergency bailouts and job protection schemes. This rather calls into question the supposed inviolability of international legal rules in all instances. Is this not a case of one rule for them and another rule for the rest of us? I want to get rid of state aid rules as quickly as possible.
My Lords, this has been an interesting short debate. If the Minister did not already know it from the UK internal market Bill, how state aid—if such a thing is to exist as a definition in future—is to work is a sensitive and significant matter of public policy that merits primary legislation. The changes go beyond what would be permitted under the withdrawal Act. I will concentrate on the mainstream state aid point, although I am sure that the Minister will appreciate that I have seen the amendments to recognise third-country state aid instruments as core tier 1 equity for bank capital. If only there had been such clarity all round.
The problem is that, given the double whammy of, “delete all and maybe start something else—or maybe not”, as we are told in connection with this statutory instrument, and the attempted power grab without consultation in the UK internal market Bill, it all looks like a high level of disregard for stakeholders and devolution, or a high level of disorganisation, or both. The truth of the matter seems to be that policy is at the mercy of trade agreements on the one hand and the avowed distancing from all things EU on the other. It is not even an attempt to cherry pick. There are some cherries to pick, not least the ones that we put into the legislation.
By now, one would have hoped for the emergence of some ideas on alternative shape; if this is how the negotiation is proceeding with the EU, I am not surprised that it got stuck. So instead of an independent policy we have a hole that might or might not get filled. That hole is carved out by secondary legislation, which is a major policy change. Does this mean that, from January, public authorities can start to make subsidies, secure in the knowledge that if they fit within the WTO rules—which means among other things a free-for-all on services—there will be no retrospective prohibition, interruption or comeback? How will that sit in making trade deals if it has already started?
Paragraph 10 of the Explanatory Memorandum says that there have been technical discussions with the devolved Administrations. I find that interesting, given the onslaught against the UKIM Bill. Can the Minister explain more about those technical discussions? Paragraph 11 says that there will be guidance given about the new subsidy control arrangements, but paragraph 12 indicates that, indeed, all that public authorities need to worry about are the WTO rules. Will that guidance include any forward-looking advice beyond compliance?
I do understand that contraction of geographical scope of the state aid rules is sensible, but maybe there could have been a general continuation of the principles until completion of the consultations or some other commitment to co-ordination, not least because of Northern Ireland. Now there will be notional freedoms but concern that it may be temporary or governed solely by Treasury stinginess. The Business Secretary has said—reported, for example, in the Financial Times on 9 September—that the,
“guiding philosophy remains that we do not want a return to the 1970s approach of picking winners and bailing out unsustainable companies”,
and some of that is indeed now in the Japan trade agreement. Is there an intention to enforce that on public authorities and devolved Administrations, or are they being given free rein to see how it works out?
The noble Lord, Lord Stevenson, has proposed in his amendment that the policy be delayed until after the consultation, when devolved Administrations are on board and the legislative context in which state aid rules sit is more certain. These Benches can broadly agree with those sentiments. We think that the Government’s approach to state aid policy, and the wider context of the UKIM Bill, has been deeply unsatisfactory, with important details left undetermined and the devolution settlements neglected. We will, therefore, be supporting the amendment.
I thank all noble Lords for their interesting contributions to this debate. There have been many contributions on a range of subjects, very few of which had anything to do with this instrument. Fascinating though discussions were on the fate of the Austin Allegro, and Galileo, I say to my noble friend Lady Wheatcroft that they were totally irrelevant to today’s debate and nothing to do with the instrument being discussed.
The EU state aid rules were created to meet the needs of the European Union. With the UK’s departure from the European Union, we will no longer be bound by EU state aid rules after the transition period. We have been clear that we will not align with EU rules as part of any free trade agreement. My noble friends Lady Noakes and Lord Moylan were absolutely right to say that what subsidy control regime we have in future is an extremely valid debate. We will, no doubt, have that discussion in this House at great length, but it is nothing to do with the merits, or otherwise, of this statutory instrument. Many noble Lords who contributed seem to be confused about that. The point of this instrument is that businesses must have clarity on the UK statute book to plan for investments and to receive the support that they need to innovate and grow.
The noble Lord, Lord Stevenson, has moved an amendment expressing regret, as he is perfectly entitled to do. However, I hope that noble Lords can see that revoking retained EU state aid law is appropriate and necessary. Furthermore, consequential amendments to other retained EU law, and UK domestic legislation which refers to state aid rules, will ensure that these regulations continue to operate appropriately. I repeat: state aid is support in any form, from any level of government which gives a business or other entity an advantage that could not be obtained in the normal course of business. In the way it is defined in the EU, if this advantage has the potential to distort competition within the internal market and affect trade between EU member states, then state aid is present and the rules for state aid are triggered.
The state aid rules were devised by the European Union to ensure that EU member states operate in a way which is compatible with the internal market. The rules are very much a European Union concept. We will no longer be part of the European Union or the single market and the EU will no longer have any jurisdiction in the United Kingdom, and nor will the European Commission. At present, the UK Government or devolved Administrations proposing any form of state aid need to get the permission of the European Commission. In future, the Commission will have no jurisdiction in the United Kingdom. It makes no sense to leave these rules on our statute book, which is what noble Lords are proposing today.
From 1 January, the Government will follow the World Trade Organization rules on subsidies and other international commitments. Before the end of this year, the Government will publish guidance for UK public authorities to explain these commitments. As I have said before, during debates on the internal market Bill, we will also consult in the coming months on whether to go further, including on whether to legislate.
A number of noble Lords posed questions, very few of which had anything to do with this particular instrument. I will, nevertheless, endeavour to answer them. The noble Lord, Lord Stevenson, asked about legislating for the UK-Japan free trade agreement. In general, where implementation is required, the Government will use the European Union (Withdrawal) Act 2018. The Act ensures that existing laws which implement the EU-Japan free trade agreement continue to have effect.
The noble Baroness, Lady Wheatcroft, in another contribution that had nothing to do with this debate, asked what any new regime would mean for new subsidies. We are clear that we do not intend to return to the 1970s approach of government bailing out unsustainable companies. I shall say a little more about the negotiations later.
I was asked by the noble Lord, Lord Dodds, about the Northern Ireland protocol. It is important to note that after the end of the transition period the EU state aid rules will not apply to Northern Ireland as they do today. State aid provisions apply only to trade that is subject to the protocol, which is limited in scope to goods and wholesale electricity markets. Northern Ireland will enjoy new flexibilities with respect to support for its service industries, but let me be clear that the instrument that we are debating does not affect the application of the state aid principles in the Northern Ireland protocol.
My noble friend Lady Altmann, who I think was referring to our previous debates on the internal market Bill rather than to this statutory instrument, mentioned consultation with the devolved Administrations. Officials have been having technical discussions on this instrument with the devolved Administrations and other Governments’ departments at the official level and no concerns have been expressed about it by their officials. I recognise that on the general issue of a future state aid policy they wish to make a contribution, and we have said that we will consult them, but they have expressed no concerns about this statutory instrument.
The noble Baroness also referred to the shared prosperity fund. Again, that has nothing to do with the instrument that we are debating, but it will be consistent with the UK’s approach to subsidy control following the end of the transition period to ensure that it invests fairly in local economies. The noble Lord, Lord Stevenson, asked about common frameworks. Obviously, we debated these issues at length when considering the internal market Bill, but let me reiterate the points I made then. The devolved Administrations have never previously been able to set their own subsidy control rules, as covered by the then EU state aid framework. They will continue to have responsibility for spending decisions on subsidies within any future subsidy control system.
The noble Lord, Lord Stevenson, and my noble friend Lady Noakes asked why the Government are using secondary legislation to remove the state aid regime and whether this is a policy change. The answer is no. This is not a policy change and it is no more than is appropriate to revoke redundant retained EU law and make amendments to address deficiencies in other retained EU law and UK domestic legislation that refer to EU state aid rules.
The noble Lord, Lord Stevenson, also raised the UK-Japan agreement, on which I have already answered. My noble friend Lord Trenchard and a number of other noble Lords asked about the status of the negotiations. Obviously, they are ongoing literally as we speak and the future of state aid is, of course, an important subject within them. Noble Lords will understand that there are limits on what I can say about it, but perhaps I may refer to comments made by my noble friend Lord Frost when he spoke to your Lordships’ committee about our approach that might be helpful. He said:
“If subsidies are granted, for example, there must be clear statements that they must contribute to and be justified on public policy or market failure grounds. They must be proportionate. There must be openness and transparency about what they are. They must be aimed at bringing about a degree of change in behaviour. They must be the right instrument for the purpose, and you should not in general subsidise if there are negative effects on trade and investment. Those are all commitments that we are willing to make and that we think are important parts of a good subsidy system.”
However, as I said, the negotiations on this matter are very much ongoing.
The noble Lord, Lord Liddle, asked whether we are swapping an effective regime for a dysfunctional one. I have said why we cannot retain the current EU regime: there is no point in giving the European Union jurisdiction over state aid in the UK when we are no longer members of the EU. The ASCM is the appropriate standard for global subsidy control and is a more appropriate basis for regulating subsidies than the EU state aid regime, which of course is designed for the European single market which we will no longer be a part of. Some 164 countries follow WTO rules on subsidy control, showing that they are a well-recognised common standard.
I am running out of time to speak, but I hope that I have explained why the statutory instrument before us is worthy of noble Lords’ support and why it is essential to the clarity and well-being of the UK statute book. Noble Lords raised many concerns about other issues, to which I am sure we will return in the future, but in the meantime, I commend this statutory instrument to the House.
My Lords, I have one request to ask the Minister a short question for elucidation. It is from the noble Baroness, Lady Jones of Moulsecoomb.
The Minister did not answer any of my questions, which I presume is because he felt they were out of order. At the same time, I did ask how we were going to make sure that public authorities understand the impacts of this statutory instrument. He did not answer that.
I answered many questions. It is not a matter of being in order; it is whether questions were relevant to this particular debate. I think I said in my reply that of course we intend to publish guidance for local authorities, the devolved Administrations and others active in this field before the end of the year, but the noble Baroness will understand that this is still very much a live subject in the EU negotiations. When we have a complete picture of how the regime will operate in the UK, any commitments that we may wish to enter into as part of those negotiations will be legislated for in the future relationship Bill, but we will ensure that guidance is issued before the end of the year.
My Lords, I have no further requests to speak after the Minister, so I call the noble Lord, Lord Stevenson of Balmacara.