House of Lords
Thursday 2 February 2023
Prayers—read by the Lord Bishop of Manchester.
Oaths and Affirmations
Lord Watson of Richmond took the oath.
Arrangement of Business
My Lords, before Questions begins, I have sensed some agitation in the House this week over the length of questions, which means that not all noble Lords can ask theirs. Therefore, to ensure that they can, I ask that noble Lords keep their questions brief. I know that Ministers will therefore keep their answers brief.
Transport: South Wales
To ask His Majesty’s Government what steps they are taking to implement the eighth recommendation of the Union Connectivity Review, published on 26 November 2021, to invest in the South Wales main line and ease congestion on the M4.
My Lords, we are engaging with the Welsh Government and other stakeholders to develop transport connectivity improvements across Wales. I am delighted that we are today announcing a £2.7 million investment by the UK Government to develop options for new stations and services on the south Wales main line, which could relieve M4 congestion and support growth in the region.
Despite the Chief Whip’s comments, I beg leave to convey sincere condolences from this side of the Chamber to the First Minister of Wales, the Prif Weinidog, on the sudden and tragic loss of his dear wife, Clare Drakeford. Er cof annwyl—may she rest in peace.
The Minister’s announcement is very welcome because, in terms of figures, we have 5% of the UK population and 11% of track miles but just between 1% and 2% of rail enhancement funding. I hope this funding will actually take place as stated; we were going to have electrification to Swansea but it did not happen. Can she assure me that the Government will show the people that they understand the importance of upgrading the relief lines between the Severn tunnel and Cardiff?
The Government are working closely with the Welsh Government. A newly established Wales rail board, which reports to both the Secretary of State for Transport and the Welsh Minister in charge of climate change, will consider all the different options in Wales and bring forward the most needed.
I of course echo the noble Baroness’s condolences, which are deeply felt on this side of the House too.
My Lords, in supporting the Question of the noble Baroness, Lady Wilcox, I point out that the union connectivity report also specifically recommends improving connectivity on the north Wales coast line
“for faster journey times, more resilience and capacity … to better serve North Wales”.
Since then, the number of through trains has halved and advertised services have been cancelled at short notice. When will the Government get their act together?
Train services are of course a matter for Transport for Wales but, on the infrastructure, recommendation 7 encouraged the Government to look at the north Wales transport corridor. We will take that recommendation on board. Funding is available in the UK connectivity development fund, and, as ever, we look to proposals from Transport for Wales and others.
My Lords, if funds are to be found to ease the congestion on the M4, will similar funds be found to ease the congestion particularly on the M1, where I understand that congestion is at least as severe?
The M1 is one of our key arterial motorways, and it has had a number of upgrades over the years to increase capacity. We continue to look at those bottlenecks, and there will be more on that when announcements are made for RIS3, which is the next road investment strategy period, starting in 2025.
My Lords, why was electrification of the London to Cardiff line not extended to Swansea, as promised by the David Cameron Government?
That was because assessment of that electrification project showed no significant journey-time savings. In 2018, the National Audit Office concluded that it is right to assess investment decisions about upgrades to make sure that they give passenger benefits. We have to put our funding where it can have the largest passenger benefits.
My Lords, in addition to the helpful comments from the Minister on south Wales and investment generally, what about rail connectivity between the south and the north of Wales? That is one of the worst links—it is the longest and I believe it goes through England—so will there be some investment for that?
I do not have any further details about north-south connectivity in Wales. The union connectivity review very much focused on the transport corridors that run across north Wales and along the south coast, but I will write to the noble Lord if I can find out more.
My Lords, in terms of UK connectivity, Northern Ireland unfortunately cannot let the train take the strain: we rely on air and sea connectivity. Given the sad collapse of Flybe, has the Minister had any conversations about sustainable connectivity between Northern Ireland and Great Britain?
The noble Baroness is right: the collapse of Flybe was a sad event, and we work closely with those who have lost their jobs because of it. However, it was a much smaller airline than noble Lords may have seen in the past. Of course we think about air connectivity to Northern Ireland. We have a public service obligation in place for the city of Derry/Londonderry, and there are currently over 200 daily flights from Belfast.
My Lords, when upgrades to our major rail infrastructure are being considered, does it make sense for those upgrades to stop short of central London, or should they reach into central London, where most people would be connecting and travelling to or from?
As the Chancellor has made clear, HS2 will go to central London.
Could the Minister have a quiet word with her noble friend Lord Davies of Gower about the delays on the line from Swansea to London? Twice in the past three weeks, I have been delayed for over an hour. Once there was some mitigation as there were floods, but on the last occasion the replacement bus broke down and we were left with a very long delay. Surely that needs to be looked at as a priority by the new rail board. Is there any prospect of improving that line and of looking again at electrification?
As I said, services are run by Transport for Wales, but the new Wales rail board will consider matters in the round. Sometimes flooding occurs and replacement bus services can indeed break down, but it is important that we improve services across south Wales. The £2.7 million kicks off what could be very significant investment: there would be five new stations, and improvements between west Wales and Bristol Temple Meads will be looked at.
My Lords, we have heard mention of Swansea, the north Wales corridor and various other places of great importance. From time to time, I have to get to Lampeter. It used to have a railway line, which I enjoyed using. If it were restored and continued to Aberystwyth, a significant and time-saving step would be offered to north and south Wales, and it would enable them to get their act together.
If the noble Lord will forgive me, I am not quite aware of where Lampeter is—I am being told that it is “on the left”. For any rail investment, we must look at the benefits and costs. If the Welsh Government want to look at that and bring forward proposals that show that the benefits would far outweigh the costs, we would of course look at them.
Further to my noble friend Lord Griffiths’s question, it is very welcome that we are talking about, we hope, opening lines that were vandalised by Dr Beeching. The Government have had a plan for doing some of that, so can the Minister update us as to how many lines closed by Beeching are now in the process of being reopened?
I do not have the detail on that, but I know that the Okehampton line has been reopened and that there is significant work going on in other places. I will send an update on that programme to the noble Lord.
Broadcasting: Children’s Television
To ask His Majesty’s Government what steps they are taking to address the decline in production of commercial Public Service Broadcasting children’s television content.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare an interest as per the register.
My Lords, the Government recognise the unique social, educational and economic importance of children’s television, and that is why we have put in place a range of measures to support it. The ongoing animation and children’s tax relief schemes have supported the production of over 840 programmes. Working with the noble Baroness, we introduced powers for Ofcom to monitor and set criteria for the provision of children’s television. Children’s television was chosen to pilot contestable funding, which has supported more than 280 hours of new content.
I thank the Minister for his Answer. However, since the early closure of the Young Audiences Content Fund, which offered up to 50% of programme budgets, the amount of newly made UK commercial children’s content continues to decrease. The children’s television production sector faces market failure and a huge challenge. Without funding, television programmes that reflect British children’s lives could disappear from the nation’s screens, and that would be a tragedy. Pact is proposing new tax breaks of 40% to help keep that vitally important sector thriving. So how are the Government living up to their responsibility to ensure that the nation’s children are accessing high-quality British children’s programming? Will the tax breaks proposed by Pact be supported to ensure that we have more UK commercial public service broadcasting of children’s content?
The Young Audiences Content Fund was always designed as a three-year pilot. Now that it is over, it is right that we assess the contestable funding model as a whole to understand how it can be used to help. Any further investment of public funding will need to be considered against that and future broadcasting needs, but we are supporting children’s television to ensure that future generations can benefit from it just as much as past ones have.
My Lords, what steps are the Government taking to ensure that the children’s television production sector is internationally competitive?
With our wider support for the broadcasting system set out in the White Paper, we are ensuring that all our public service broadcasters can compete with the new streaming platforms we see entering the market. The media Bill will deliver on some of the proposals put forward in the White Paper.
My Lords, perhaps the Minister could reflect on the fact that television companies are always bemoaning losing young people from their audience. Would it not be sensible to invest in children’s television at the moment when young people are prepared to engage with their families by sitting on the settee, rather than looking at their devices and losing their sight in later life?
We have indeed been investing: the Young Audiences Content Fund invested a total of £40.5 million directly into brand new children’s television content for exactly the sorts of reasons the noble Lord outlined.
My Lords, the noble Baroness, Lady Benjamin, rightly pointed out the danger now of the huge oversupply of content—including perfectly reasonable content—from elsewhere, mainly America, particularly for young children. Can the Minister address what that is doing to the skill base in this country? There are lots of people who have, and need, very particular skills to create content for young children, and they must be feeling pretty dismal at the moment. Does the Minister agree?
The noble Baroness is right, and the Government are clear that we want to see distinctively British content, so that young people growing up in this country can see it on television and on their tablets, or however they view it. Through our creative industries sector vision, the department is working to address skills gaps right across the creative industries in order to ensure that we can continue to make world-leading content.
My Lords, we of course echo the concerns raised by the noble Baroness, Lady Benjamin. Public service broadcasting faces a number of challenges, including uncertainty over the status of the long-awaited media Bill, which was parked while the Government considered whether to U-turn on privatising Channel 4. Now that decision has been made, can the Minister confirm when noble Lords can expect some breaking news? If not, can he at least say whether the Leader of the House was correct when he stated on 12 January that this crucial legislation will be published only in draft form?
The media Bill will reform decades-old law to boost the growth potential of our world-leading public service broadcasters, replacing the outdated set of 14 overlapping purposes and objectives. We have set out those reforms in our White Paper and the Government will legislate when parliamentary time allows.
My Lords, as my noble friend knows, a number of commercial children’s channels are already available. What concerns does his department have about those, and what criteria are they not meeting that it believes public service broadcasters would meet?
Commercial broadcasters do indeed provide excellent content, but public service broadcasters play a unique role in ensuring that underserved groups are catered for. There is not always the same commercial potential in children’s television programming, which is why it is right that we have particular areas of work to focus on that.
My Lords, as we all know, BBC World News is banned in China. Are there plans to ban Chinese news channels and propaganda channels in the United Kingdom?
Sanctions, of course, are always kept under review, but by their nature, the Government cannot discuss them until they are made.
To ask His Majesty’s Government what plans they have to commission an independent review of the (1) scale, (2) capabilities, (3) ethics, and (4) impact on rights, of CCTV in the United Kingdom.
My Lords, His Majesty’s Government have no plans to commission an independent review of the use of closed circuit television. The Government support the appropriate use of technologies such as CCTV to tackle crime and give the public greater confidence about using our public spaces, provided that its use is lawful, transparent and fair and in accordance with relevant guidelines.
I thank my noble friend the Minister for the reply. The noble Lord, Lord Alton of Liverpool, has already highlighted to the House the dangers posed by Chinese state-owned facial recognition companies Hikvision and Dahua. Is the Minister aware that this technology is now openly available on a far more intrusive smartphone level from other Chinese state-owned companies such as PimEyes? Is he also aware of the very real threats this will pose—and not just to politically exposed persons such as your Lordships? Absolutely anybody can be tracked and traced anywhere at any time. It is not hyperbolic to say that, if left unchecked, these applications will entirely alter our concept of privacy and be open sesame to snoopers, stalkers, blackmailers, cybercriminals and bad actors of every kind.
All organisations in the UK that possess personal data have to comply with the requirements of our data protection legislation. The Information Commissioner’s Office is our independent regulator for data protection and is responsible for providing advice and guidance on compliance with the law. The ICO is currently considering whether PimEyes’ practices may raise data protection concerns. I hope that my noble friend will understand that it is not appropriate for me to comment on an ongoing ICO investigation.
My Lords, does the Minister understand that these mostly Chinese smart cameras have the triple vices of being incredibly intrusive, incredibly unreliable and racially discriminatory? In the light of that, would he perhaps think again about the question from the noble Lord, Lord Strathcarron, and perhaps give a rather more urgent and pertinent response?
It is an urgent matter and it is being looked at currently by the ICO. It would be wrong for me to comment on that ongoing investigation, but it is being dealt with swiftly. We are also taking urgent action across government, and my right honourable friend the Chancellor of the Duchy of Lancaster set out in a Statement on 24 November the action that we are taking with relation to Chinese equipment in public sites.
My Lords, the Surveillance Camera Commissioner recently reported on a survey of police forces in England and Wales. Despite the commissioner’s strong belief that surveillance technology had to be used in a way that maintains the trust and confidence of our communities, the commissioner found that there is no universal approach to due diligence across the police forces of this country. Does the Minister agree that a universal approach is necessary and sensible? If so, how will the Government achieve it?
All police forces are compelled to follow data protection legislation, which is regulated by the Information Commissioner’s Office. They must also comply with human rights and equalities legislation, which is regulated by the Equality and Human Rights Commission. So there is a universal application of those across all forces.
My Lords, I declare my interest as chair of the Greater Manchester Police independent ethics committee. Can the Minister tell us what the Government’s assessment is of the use of CCTV in conjunction with live facial recognition technology by police across the UK, and what legal safeguards are in place to ensure that fundamental rights are upheld?
Polls show that there is public support and, indeed, an expectation on the police to use technology such as this, particularly from victims and their families, to prevent, detect and investigate crime. There is a comprehensive legal framework covering its use. The noble Baroness, Lady Chakrabarti, mentioned the potential for bias against people from ethnic minority backgrounds. When using it, police must comply with the public sector equality duty, and a human operator is also important in this regard.
My Lords, can I first confess that I encouraged the spread of CCTV, because I knew of the demand that comes from potential victims? However, that was before smart CCTV and facial recognition. As the right reverend Prelate said, they introduce a major new dimension of potential intrusion into privacy. I accept that the ICO is reviewing this, but I remind the Minister that ultimately this will be a political decision, taken in the context of the extensive surveillance by the Chinese Government of their own and other people. Will he give it the utmost priority when the ICO has reported?
The noble Lord is right to point to the importance of CCTV in the detection and prosecution of crime. Of course, as technology improves, so does the reliability and its use in criminal investigations—but so do the risks. That is why the Information Commissioner’s Office plays its important role in monitoring it. We will continue to evaluate the continued use of technologies such as live facial recognition and consider the need for further guidance, should that be needed.
Could my noble friend the Minister expound further on that last reply and tell the House how many very serious crimes last year, including murder and GBH, were solved as a result of CCTV?
I do not have those figures to hand, but I imagine that they are substantial, and I shall find out and write to the noble Lord.
My Lords, there is an opportunity here for the Government to get something right. The Product Security and Telecommunications Infrastructure Bill received Royal Assent, as the Minister knows, in early December. Its security provisions are designed to improve the security of smart products—a category that includes CCTV doorbells. Is the Minister able to provide some updates on commencement of Part 1 of the Act, or on the laying of relevant regulations and guidance, given that this will be the subject of some intense debate—and given, too, the potential privacy issues that will arise if security vulnerabilities in personal CCTV products can be exploited, as we now know, by bad actors?
I cannot provide an update on dates by which those things will be commenced, but the noble Lord is right to point to the legislation that we have taken through, which grapples with this important topic, the scrutiny given in Parliament and the change that it will make to the regulation of these sensitive technologies.
My Lords, is it an appropriate use of CCTV facial recognition technology to identify children entitled to free school meals in our schools?
I not aware that that is being done, but that is a matter for the Department for Education. I will refer the noble Lord’s point to the department.
My Lords, just to clarify the answers to some of the questions, I think all of us can understand that using CCTV to catch criminals and help victims is something that has become the norm. But the Minister has been asked whether the new technology changes things. Secondly, is there not a danger of a creep towards the surveillance of innocent people, which would not be something that the Government would endorse or condone?
There is a hugely important role for CCTV in providing assurance for people that our streets are safe, that our public spaces are being monitored and that, if crimes are committed, the people who commit them will be captured and brought to justice. That is a great reassurance to people as they go about their lawful business.
My Lords, I agree with what the noble Lord, Lord Reid, said and what the original questioner said, which is that this is probably not a bad time to think seriously about the application of facial recognition with CCTV. Does the Minister agree that it is not only about crime? It is also an opportunity to find missing people and sometimes, on places such as the Tube and in other places, people who have fallen ill. CCTV has many benefits, but I agree that it needs proper control and accountability.
The noble Lord is right and highlights another important potential use of this technology. It is right that it is monitored. The ICO has published an opinion on the use of live facial recognition by law enforcement agencies, as well as guidance on the processing of biometric data. We will continue to evaluate that and continue to consider whether further guidance is needed.
My Lords, could the Minister just confirm that he saying—I think he is, but it would be helpful if it was clear—that he and the Government accept the huge value for public protection and public safety of the ability of law enforcement to use CCTV and facial recognition techniques? Does he also recognise that the fact that this technology is now out there and is increasingly used by non-law enforcement agencies, by the private sector in all sorts of spaces, is an area that requires at least equivalent, if not stronger, supervision and monitoring?
The noble Lord makes an important point. I think people would find it very disappointing if commercial organisations were able to use the technology in a way that the police and law enforcement agencies could not, to bring people to justice. We do support its use, but only with careful monitoring. The ICO has an important role to play in that.
To ask His Majesty’s Government what plans they have, if any, to prevent internet providers from increasing the price of broadband connections by up to 3.9 per cent above the Consumer Price Index measure of inflation.
My Lords, this is clearly a difficult time for households across the country that are struggling to pay their bills as a result of the global rise in the cost of living. While operators are continuing to invest in gigabit-capable services, the UK benefits from some of the cheapest retail pricing of broadband in Europe, with only around 4% of a typical household’s monthly budget going on telecommunications services. However, we understand the challenges many families are facing at the moment, so we are calling on operators to consider carefully the need for above-inflation price increases and the impact they may have on people across the country.
My Lords, there is absolutely no justification for the inflation-busting 14% price rise for broadband. BT, EE, PlusNet, Shell Energy, TalkTalk and Vodafone are acting in unison; they have trapped millions of people into 18- to 24-month contracts and are forcing them to pay 14% more, mid-term. Those wanting to leave are being forced to pay a £200 exit fee. I ask the Minister, first, to ban mid-term contract price hikes and, secondly, to change the law so that customers can exit free from any broadband contract longer than 12 months.
The Government believe it is important that consumers are fully aware of the clauses in their contracts so that they are empowered to make informed decisions, but we also are mindful of the impact on families at this time. That is why my right honourable friend the Secretary of State earlier this month met chief executives from major broadband and mobile providers and asked them to consider very carefully the need to make above-inflation price increases at this moment. Households struggling to afford telecoms services should speak to their provider. Social tariffs are available, as we heard in a Question earlier this week, but also, since last July, providers have committed to support any customers struggling to pay their bills.
My Lords, is this not an opportunity for the Government, in rolling out their digital programme, to ensure that this area is properly regulated? Could Ofcom not play a crucial role here? All of us are bound by our contracts, as my noble friend the Minister rightly pointed out, which in most cases are locked in for 24 months, and we are going to face an average 11% increase. For vulnerable households, this is just too much.
Ofcom does have an important role to play here as the independent regulator, but, as I say, mindful of the particular challenges that households are facing, my right honourable friend the Secretary of State spoke directly to companies, asking them to consider very carefully the decisions they are making and the impact on their customers.
My Lords, was the Minister struck, as I was, by the observation in Ofcom’s December pricing trends report that there are millions of consumers who are out of contract, and so free to switch, but have not yet done so? Does he agree that these people could make significant savings, often without having to switch at all, as many providers will drop their prices as soon as you ring and threaten to leave? What are the Government doing to make this group aware that they can do this?
Yes, it is very striking. Many people could be saving money and are not aware of it. That is why it is important that contracts are clear, but it also highlights the importance of consumer advice groups and, indeed, debates such as this, to draw the attention of people to the contracts they have signed.
My Lords, of course everybody should read the contracts they sign, but has the Minister read his broadband provider’s contract? These contracts are impossible to understand. They have subcontracts and other regulations—there is no possibility that people will understand the contracts that they have to sign if they want broadband. What my noble friend describes is anti-competitive, inflationary and likely to drive down digital inclusion. This is a matter for the Competition and Markets Authority. The Minister should think about referring this to the Competition and Markets Authority for profiteering and setting up a cartel.
At the risk of sounding like a geek, I have read my contract. I did so because some operators permit their customers to exit their contracts penalty-free when there is a price rise. Mine did; I looked at it, I shopped around and I saved some money. People would be well advised to do the same, but it is important that the industry tells people about the decisions it makes. That is why the Secretary of State brought chief executives in and asked them to consider carefully the impact of the decisions they make and how they communicate them.
Has my noble friend, as well as having the experience of reading a contract, had the experience of trying to communicate with these providers? You sit on the phone for hours and hours and then get passed from pillar to post. Can we do something to make sure that their customer relations are rather more efficient?
On that, my experience was indeed a bit more painful. It is obviously for commercial providers to decide how they provide services to their customers in a way that allows them to keep costs down and keep bills down while satisfying people so that they want to stay with them.
My Lords, there is a pattern here. The Government are keeping down wages for our heroes in the public sector, such as teachers, nurses and firefighters, but at the same time, they are doing nothing to curb the profiteering by energy, broadband and other companies, even though, as my noble friend just said, this is inflationary. Can the Minister explain the double standards that they are operating?
My Lords, the action we are taking is to beat the evil of inflation, which is what lies behind these price rises. At the same time, we have acted quickly to support families, through such things as the energy price guarantee and the energy bills support scheme, as well as further help for the most vulnerable households of up to £200.
My Lords, will the Minister comment on the problems faced by vulnerable older people who might just have started trying to get tech-enabled and just signed up for a broadband contract? They do not understand how these things work, then are suddenly faced with a penalty if they try to change to a better rate and are locked into a contract that was never properly explained to them.
In July last year, the previous Secretary of State also spoke to mobile and broadband suppliers and secured a list of commitments from them, including a commitment to support their customers who may be struggling with the cost of living and to treat them with compassion and understanding. All providers committed to support customers who are struggling with their bills, offering them ways to keep connected, including allowing them to move to cheaper packages without charge or penalty, or agreeing manageable payment plans.
To revert to a question asked previously by a noble Lord, is this not a matter that should be referred to the Competition and Markets Authority?
At the moment we are pleased to have seen the commitments made by the companies following their meetings with the Secretary of State and her predecessor. We will keep it under review.
My Lords, earlier this week your Lordships’ House discussed the Government’s efforts to ensure that eligible households are aware of social tariffs for broadband, which the Minister referred to. I asked the Minister whether the Government would contact benefit claimants directly, given that their data is available to the Government, and in response the Minister cited a more general information campaign of adverts and leaflets. I ask the Minister today whether consideration has been given to contacting claimants directly so that households know that these special tariffs are ones for which they are eligible?
We are advertising the support which is available generally. The social tariffs are available to people who are in receipt of universal credit and other means-tested benefits, but there is help for anyone who may be struggling to pay their bills, thanks to the commitments we secured from the industry last July. That is why we are advertising all of the help generally, through the Help for Households campaign, but of course that is being monitored for its success in getting the message out, and all ideas are welcome.
My Lords, BT businesses are operated under a special government regulation through Ofcom. In view of the fact that throughout rural areas in the UK, BT Openreach is providing broadband connections at highly difficult and challenging costs for many consumers, will the Minister, as a result of today’s questions, talk directly to BT Openreach about reducing its costs and ensuring that infrastructure issues are better dealt with, including wayleave permissions, because many people in rural communities cannot access the broadband they require to undertake their work?
As the noble Baroness notes, Openreach’s prices are fixed by Ofcom as part of its five-year wholesale fixed telecoms market review and have been allowed to increase by CPI to reflect the significant additional costs faced when deploying new infrastructure. Our £5 billion Project Gigabit programme is delivering lightning fast and reliable broadband to hard-to-reach areas right across the UK, as the noble Baroness says. That funding is available to a range of suppliers; where infrastructure is built using public subsidy, suppliers must make their networks available for use by other operators so that everybody can benefit.
Hillsborough Families Report: National Police Response
Commons Urgent Question
The following Answer to an Urgent Question was given in the House of Commons on Wednesday 1 February.
“The Hillsborough disaster was an awful, devastating tragedy. Its impact continues to be felt to this day, especially by the families and friends of the victims. I am sure the thoughts of the whole House are with them. It is imperative that lessons are learned from the experiences the Hillsborough families have gone through, so I am very grateful to Bishop James Jones for the report he produced, which highlighted a number of points of learning for the Government, the police and other agencies.
As my right honourable friend the Home Secretary said during yesterday’s debate, the Government are fully committed to engaging with the Hillsborough families prior to the publication of the Government’s formal response. Since arriving in the Home Office two or three months ago, I have asked for this work to be sped up, and we are expecting it to come out in the course of this spring. The National Police Chiefs’ Council and the College of Policing published their response earlier this week. I welcome their commitment to avoid repeating the mistakes that were made, and I welcome the apology that they gave. They made it clear that strong ethical values and the need for humanity and humility in the police response to public tragedies are critical. One of the commitments they rightly made earlier this week was to substantially strengthen and update their own code of ethics in relation to these issues.
Some important steps have been made by the Government in the past few years, which have addressed a number, but not all, of the points that Bishop James Jones published. For example, in 2020 a suite of police integrity reforms was introduced, on a statutory basis, via the professional standards for policing, which included, crucially, a duty to co-operate with inquiries. Other initiatives have already been taken forward to support bereaved families, including the removal of means testing for exceptional case funding to cover legal support for families at an inquest, which broadens the scope and access for families; and the refreshing of our Guide to Coroner Services for Bereaved People so that it is more tailored to their needs and provides improved guidance for others involved in the inquest process. The Inquiries Act 2005 also provides a statutory process for funding legal representation requests. Last year, the Home Office also established an independent pathology review, and additional consultation with the families is now taking place. A consultation has also taken place on retaining police documents, which was the subject of a recommendation made by the bishop, and the Ministry of Justice has also consulted on establishing an independent public advocate.
Those steps are important. They go a long way to improving the situation, but they do not cover everything that the bishop recommended, which is why we will be responding in full. We intend to do so in the spring, but after, of course, full and deep engagement with the families concerned.
The Government are committed to making sure that these lessons are learned following this awful tragedy and I, as the newly appointed Police Minister, will do everything that I can to work with Members across the House, particularly those representing the affected communities, to make sure that this does now happen quickly.”
My Lords, 97 people lost their lives as a result of what happened at Hillsborough on that terrible, awful day 34 years ago. We must never forget what followed: a shameful cover-up of the truth by the police and others, and decades of families, their supporters and the community having to fight and campaign to uncover what actually happened. We again salute their courage. Five years after Bishop Jones’s report, The Patronising Disposition of Unaccountable Power: A Report to Ensure the Pain and Suffering of the Hillsborough Families is not Repeated, why is there still no government response? Can the Minister give us a categoric statement today? When will we get that government response and end the shameful and unacceptable wait for a response to the bishop’s recommendations?
My Lords, I agree with the noble Lord that Hillsborough was an awful and devastating tragedy, and its impact is still felt today, especially by the families and the bereaved. My thoughts are with them.
As regards the report, the noble Lord is right: it was published a number of years ago. For the first four years there were criminal proceedings ongoing, and it was felt that it would be inappropriate to publish a response while those proceedings were ongoing. My right honourable friend in the other place, the Policing Minister, yesterday committed that the Government’s response will be published in full in the spring—he has not yet been more specific than that. He has also committed to speed up the work being done on this, and there are still ongoing consultations with the bereaved families.
My Lords, Hillsborough almost matches my time in this Chamber; it has been there as a constant for nearly 34 years. The fact that the police apologised publicly yesterday was a major step forward, but when it comes to a response in the spring, is there anybody in this Chamber who does not know that spring usually means autumn, at best? Can we not do a little better than that and give a firm date for this to occur, or at least a maximum deadline so that we can actually have some closure on this, which all those involved deserve?
My Lords, I am sorry, but I am unable to go further than the Policing Minister in the other place.
My Lords, it is more than 18 months since the Daniel Morgan panel, which I chaired, published its report. We recommended a statutory duty of candour to be owed by all law enforcement agencies to those whom they serve, subject to the protection of national security and relevant data protection legislation. The Government owe a response not only to the Hillsborough families who have waited so long but to the family of Daniel Morgan, who have waited a very long time. Is our recommendation for a statutory duty of candour, which would be binding on police and law enforcement agencies, part of the Government’s plan?
As part of the February 2020 integrity reforms, the Government introduced a statutory duty of co-operation for police officers, which provided clarity on the responsibility to participate openly and professionally as a witness in various circumstances, including in the misconduct of others. The noble Baroness is quite right to bring up the Daniel Morgan Independent Panel report, which obviously considers this matter fully, and the Government will take its recommendations into account.
My Lords, I echo tributes to my friend, the former Bishop of Liverpool. As a young priest 34 years ago, I was summoned to Hillsborough to support bereaved families in the immediate aftermath. That the Hillsborough families were not fully consulted in October last year when the Home Office announced an independent review is, I fear, deeply regrettable. Will the Minister now commit to ensuring that the Hillsborough families remain consulted, engaged and at the heart of the Government’s response from this point on?
I think the right reverend Prelate is referring to the pathology review. It was announced in October 2022; the terms of reference were published then, in response to a point of learning from the former Bishop of Liverpool’s findings on the experiences at Hillsborough. The review is led by Mr Glenn Taylor, an independent forensic scientist and an expert with extensive experience in death certification. It has been paused while the families are consulted; they felt—and it was felt—that they deserved more input into this.
My Lords, it has been 34 years since this happened and many other institutions are now involved, such as the Independent Office for Police Conduct and the IPSO. Can my noble friend the Minister outline whose responsibility it is now to ensure that this does not happen again, and to walk back through the whole process to check that the institutions we now have in place would have prevented this happening in the first place and could prevent a tragedy of this scale happening today?
My Lords, I think we should also refer to the fact that safety in stadiums has improved dramatically, so one would hope that the circumstances in which this tragedy occurred would not be able to happen in quite the same way—which is not to say it might not happen. The culture of policing has come under considerable scrutiny in the last few weeks. I welcome the police’s apology for the actions they have taken, and I am assured—and convinced—that they are making the right responses and taking this as seriously as it deserves.
My Lords, Members will be aware that I represented the constituency that covered the ground, and I reinforce what my noble friend Lord Coaker said. I ask the Government to help bring closure for the families and communities most affected after 34 years. I would like the Minister to draw to his ministerial friends’ attention the fact that my noble friend Lord Wills brought forward a Private Member’s Bill in this House that did not progress, but that might be returned to and help in this process.
I thank the noble Lord for that, and I agree: the families and the bereaved definitely deserve closure. Whether they will ever truly achieve it, I do not know. I will certainly reflect on that and take it back to my ministerial colleagues.
My Lords, we owe it to our former colleague the former Bishop of Liverpool to give a formal, firm government response very soon. I completely understand why my noble friend was not able to go beyond what was said in the other place yesterday, when he was answering the noble Lord, Lord Addington. But the noble Lord had a very real point. Will the Minister please go back to his department and say, “Can we please have a date? Be it 1 May or 1 June, can we have a date very soon?”.
I agree with my noble friend and, of course, the noble Lord, Lord Addington. It would be preferable if I were able to state a date. I am not, but I will certainly take the noble Lord’s concerns back and ask the department to firm up on this. I stress, though, that the Policing Minister in the other place has committed to speeding this process up.
My Lords, to go back to the question asked by the noble Baroness, Lady O’Loan, with trust and confidence in the police at historically low levels, why did the Government oppose placing a clear, simple and easily understood statutory duty of candour on the police in primary legislation, as exists for the NHS? A statutory duty of co-operation in secondary legislation is not the same thing.
My Lords, I appreciate that point, but the former Bishop of Liverpool’s report is being considered. We will publish our full response in due course, and I am quite sure that the duty of candour will form part of that response.
My Lords, the bishop’s report made it very clear that when it came to the first round of inquests, the families could not secure legal aid, whereas all the public bodies were publicly funded in their legal applications. When can we expect equality of legal arms when it comes to these sorts of inquests?
My noble friend asks a very good question, and I am happy to say that some of the initiatives that have been taken support the sorts of things he is talking about—for example, the removal of means testing for exceptional case funding to cover legal support for families at an inquest. That broadens the scope and access for families. We have also refreshed the Guide to Coroner Services for Bereaved People. I hope that goes some way to answering my noble friend’s question.
My Lords, it goes some way but, sadly, not far enough. It should not be a matter of exceptional case funding, should it? If public authorities are funding themselves and the police are funded, why should the bereaved families, in any situation and in any inquest, not be funded at a matched level?
I agree with the noble Baroness, and I will take that suggestion back.
Urgent and Emergency Care Recovery Plan
The following Statement was made in the House of Commons on Monday 30 January.
“Today we have published our new delivery plan for recovering urgent and emergency care services, which has been deposited in the Libraries of both Houses. Given the scale of the pandemic pressures that healthcare systems around the world and across the UK are collectively facing, we are building the NHS back to where we want it to be. That requires the widespread adoption of innovation, building on best practice already applied in specific trusts, together with significant investment in new ways of working, including a £14.1 billion funding boost for health and social care, as set out in the Autumn Statement.
Today’s announcement is the second of three plans to cut waiting times in the NHS. Our elective recovery plan is already in action, virtually eliminating the backlog of two-year waits in England. Our primary care recovery plan will be published in the next few weeks, to support the vital front door to the NHS through primary care. Today, together with NHS England, we are setting out our plans to reduce waiting times in urgent and emergency care through an increased focus on demand management before patients get to hospital, and greater support to enable patients to leave hospital more quickly through care at home or in the community, supported by a clinical safety net. In addition, the plan sets out how we will adopt best practice in hospitals by learning from the trusts that have displayed the greatest resilience in meeting the heightened pressures this winter.
Today’s announcement on urgent and emergency care does not sit in isolation, but is part of a longer-term improvements plan that builds on the legislative change enacted last year to better integrate health and social care through the 42 integrated care boards, which became operational in July. That was prioritised for additional funding through the £14.1 billion announced for health and social care in the Autumn Statement. Following the quick spike in flu cases over Christmas, with in-patient flu admissions 100 times those of the previous year and increasing sevenfold in December, we announced £250 million of immediate funding on 9 January for the pressures this winter, giving extra capacity to emergency departments to tackle the issue of patients who are fit to leave hospital but are delayed in doing so.
Today’s plan, developed in partnership with NHS England and social care partners, builds on the actions and investment that I set out to the House earlier this month as we put in place the more substantive changes required to enable the NHS to have greater resilience this time next year. To do that, this plan involves embracing technology and new ways of working to transform how patients access care before and after being in hospital. That in turn will help to break the cycle of emergency departments in particular coming under significant strain in winter.
Our plan has a number of commitments that are both ambitious and credible. First, we are committing to year-on-year improvement in A&E waiting times. By next March, we want 76% of patients to be seen within four hours. In the year after that, we will bring waiting times towards pre-pandemic levels. Our second ambition is to improve ambulance response times, with a specific commitment to bring category 2 response times—those emergency calls for heart attacks and strokes—to an average of 30 minutes by next March. Again, in the following year we will work to bring ambulance response times towards pre-pandemic levels. I am pleased that the College of Paramedics has welcomed the plan, saying that it is
‘pleased to see a strong focus in the recovery of those people in the Category 2 cohort’.
Of course, this will not be the limit of our ambition, but it is vital that we get these first steps right and that we are credible as well as ambitious. To put these targets in context, achieving both would represent one of the fastest and largest sustained improvements in the history of the NHS.
Underpinning these promises is one more essential commitment: a commitment to better data and greater transparency. On data, the best-performing hospitals have benefited from the introduction of patient flow control centres to quickly identify blockages in a patient’s journey, and e-bed management systems to speed up the availability of beds when they become free. Through this plan, we will prioritise investment in improving system-wide data, both within the integrated care boards and on an individual trust and hospital site basis. This will allow quicker escalation when issues arise and a better system-wide response when individual sites face specific challenges.
On greater transparency, for some time voices across the NHS have called for the number of 12-hour waits from the time of arrival in A&E to be published. This is something I know the Royal College of Emergency Medicine has long campaigned for—I can see the honourable Member for St Albans nodding her head—and there has been criticism of the Government, including from Opposition Members, for refusing to provide this transparency. Instead, the data published to date has been a measure of 12 hours from the point of admission rather than from arrival in A&E. For the commitment to transparency to be meaningful, we must be prepared to publish data, even when that transparency will bring challenges, so today I can inform the House that from April we will publish the number of 12-hour waits from the time of arrival. Dr Adrian Boyle, the president of the Royal College of Emergency Medicine, has previously said:
‘The full publication of this data will be an immensely positive step that could be the catalyst for transformation of the urgent and emergency care pathway that should help to improve the quality of care for patients.’
I hope this transparency will be welcomed across the House.
Our plan focuses on five areas, setting out steps to increase capacity in urgent and emergency care; grow the workforce; speed up discharge; expand and better join up new services in the community; and make it easier for people to access the right care. Action in each area is based on evidence and experience, learning lessons from the pandemic and building on what we know can work. More than that, we are backing our plan with the funds we need, and the Government are committing to additional targeted funding to boost capacity in acute services and the wider system. That is why this package includes £1 billion of dedicated funding to support hospital capacity, building on the £500 million we have provided over this winter to support local areas to increase their overall health and social care capacity.
Taken together, this plan will cut urgent and emergency care waiting times by, first, increasing capacity with 800 new ambulances on the road, of which 100 are new specialised mental health ambulances. This comes together with funding to support 5,000 new hospital beds, as part of the permanent bed base for next winter.
Secondly, we are growing and supporting the workforce. We are on track to deliver on our manifesto commitment to recruit more than 50,000 nurses, with more than 30,000 recruited since 2019. The NHS will publish its long-term workforce plan this year. We are also boosting capacity and staff in social care, supported by investment of up to £2.8 billion next year and £4.7 billion in the year after.
Thirdly, we are speeding up the discharge of patients who are ready to leave hospital, including by freeing up more beds with the full rollout of integrated care transfer hubs, such as the successful approach I saw this morning at the University Hospital of North Tees.
Fourthly, we are expanding and better connecting new services in the community, such as joined-up care for the frail elderly. This includes a new falls service, so that more elderly people can be treated without needing admission to hospital.
Virtual wards are also showing the way forward for hospital care at home, with a growing evidence base showing that virtual wards are a safe and efficient alternative to being in hospital. We aim to have up to 50,000 people a month being supported away from hospital, in high-tech virtual wards of the sort that Watford General Hospital has been pioneering, as I saw last month.
Finally, we are improving patient experience by making it easier to access the right care, including a better experience with NHS 111 and better advice at the front door of A&E, so that patients are triaged to the right point in the hospital without always needing to go through the emergency department—this new approach can currently be seen at Maidstone Hospital, as I saw earlier this month.
These are just some of the practical improvements already being delivered in a small number of trusts that, through this plan, we will adopt more widely across the NHS and, in doing so, deliver greater resilience ahead of next winter.
I am pleased that NHS Providers has welcomed today’s plan, and that the Royal College of Emergency Medicine has called it
‘a welcome and significant step on the road to recovery’.
Taken together with all the other vital work happening across health and care, including our plan to cut elective and primary care waiting times, today’s plan will enable better care in the community and at home, for that care to be more integrated with hospital services and for existing practice to be more widely adopted. I commend this Statement to the House.”
My Lords, this plan, interesting in parts though it is, misses the point. We find ourselves in yet another debate over another short-term cash injection to deal with a continuing acute crisis in the health service. It would certainly be helpful if, in replying, the Minister could indicate to your Lordships’ House whether this is in fact new money and, if not, where it is coming from. Furthermore, can the Minister say in his response whether he feels, from his experience, that the better way forward would in fact have been to have a sustainable and long-term plan for the NHS and social care with a laser-like focus on having the necessary workforce in place? The absolutely core point here is this: do we have the staff with which to provide the right level of service? At present, we do not.
We know that more than 7 million people are waiting for NHS treatment; that the four-hour A&E waiting time target has not been met since 2015; and that heart attack and stroke victims and others are waiting inordinate amounts of time for an ambulance. Similarly, we know that those waiting for more than five hours in A&E are more likely to lose their lives, as are heart attack and stroke victims waiting more than 18 minutes for an ambulance.
I am concerned that this plan waters down standards for patients rather than trying to recover the baseline services that are needed to meet them. For example, while the target is for 95% of patients to be seen within four hours at A&E, the Secretary of State has said that the best that can be managed is 76%. Yet outcomes are poorer if patients wait longer than five hours, so can the Minister say what plan there is to return to this all-important target? More generally, can the Minister indicate when patients will see a return to safe waiting times throughout all services?
It is important to see this in the round because too many people find it impossible to get a GP appointment so they end up in A&E, putting more pressure on the service. At the same time, the right care is not available in the community; patients find themselves kept in hospitals, sometimes for months, when they should not be there. As I have said, the gaping hole in this Statement and the Government’s plans is the lack of any sustainable solution to having the right workforce in place, both now and in future. After all, good care in the community, in people’s homes or in hospital cannot be provided without the staff to care for people. As we have lost two in five district nurses since 2010, can the Minister say how more “hospital at home” services will be delivered for patients if there are not the staff to visit them?
As I raised this in a recent question to the Minister, I wonder whether he is now in a position to comment on why the Universities Minister wrote to medical schools telling them not to train any more doctors. It would be helpful to have some light shed on this action.
With regard to virtual wards, NHS providers have rightly pointed out that progress will be dependent on NHS staff continuing to go above and beyond. Does the Minister share my view that this is not what exhausted health and care staff need to hear? Rather, they will want to know when they can expect to have a more sustainable job to go to and when there will be further support from the extended workforce.
In the other place, the former Health Secretary, Sajid Javid, pointed out that successive Governments have not focused enough on prevention, which would take much of the pressure off more expensive emergency care. This intervention came in the context of the Government’s latest announcement that they will not be publishing individual cancer, dementia and mental health plans, which has troubled many patients and stakeholder groups. Can the Minister assure your Lordships’ House that the Government’s new major conditions strategy will give prevention the focus it deserves? When can we expect this strategy? Also, the plan does involve more mental health ambulances, but can the Minister say how we can look forward to a plan that will prevent those with mental ill-health needing an ambulance in the first place?
Lastly, on children, the Royal College of Paediatrics and Child Health has heard how footfall in paediatric emergency departments has doubled across the country, with some children waiting more than 10 hours to be seen by a doctor and surgeries cancelled to free up beds on paediatric wards. As children can deteriorate very quickly, a timely assessment and response is absolutely essential to providing safe and effective care. Will the Minister commit to ensuring that a proportion of the dedicated fund will be used for paediatric services? Will he also commit to writing to every local area to remind them of the solutions that are included in this plan in order to improve urgent and emergency paediatric care?
I look forward to hearing the Minister’s response, in particular with regard to the need for a workforce plan. Perhaps he might also be able to tell us today when we can look forward to the strategy being put before your Lordships’ House.
My Lords, as is usual for this kind of Statement, it is peppered with promises of more of everything. I hope the Minister will help us to dig into the numbers we have been given to see how much lies behind them. First, on the new hospital beds, this seems to come from a process of making winter surge beds permanent. For a real long-term increase in capacity, we need the promised 40 new hospitals. How many of these will be on stream by next winter?
The Statement also tells us that there will be 800 new ambulances, which I think most people would interpret as fully staffed, blue-light vehicles. Can the Minister offer a more detailed breakdown of the different types and capabilities of what is being offered here? The Statement itself said that, for example, 100 of these will be mental health emergency vehicles rather than classic blue-light ambulances.
Of course, staffing these beds and ambulances and the other measures in the Statement will depend on good workforce planning. Here, I echo the comments made by the noble Baroness, Lady Merron, and by these Benches over many months. The Statement tells us that the plan will come this year; can the Minister offer any more precision on when this year we might expect it?
The Statement also talks about data and transparency. We are told that integrated care boards will now have to focus much more on data about patient flow. Can the Minister commit to making more of those statistics public, as well as the ambulance wait time statistics?
Finally, the promised new care hubs can add value only if care services are actually there. This brings us back to workforce limitations. I end with three questions for the Minister: where is the staffing for the beds, where is the staffing for the ambulances, and where is the staffing for the care services?
First, I thank the noble Lords for their questions. To put the UEC recovery plan in the context of the three plans we will be announcing, there was last month’s elective recovery plan, which we spoke about, followed by this UEC recovery plan, and then, within the next month or so, we will also talk through the primary care recovery plan. That plan will seek to address exactly some of the points the noble Baroness, Lady Merron, rightly made about getting care in the right places, such as primary care.
I hope noble Lords agree that what we see today is a sensible and pragmatic plan. It has been welcomed by NHS Providers and described by the Royal College of Emergency Medicine as a
“significant step on the road to recovery”,
seeking to increase capacity in urgent and emergency care. The 5,000 beds that the noble Lord, Lord Allan, mentioned are a recognition that more capacity is needed in that space.
As has been mentioned many times, and as was raised by the noble Lords today, growing the workforce is crucial. This includes student places and getting to the bottom of whether there is a cap on those numbers, on which a written reply will be given soon. Again, the workforce plan is in draft and will be shown shortly—as I say, in weeks. I cannot give a date, but it will be soon. It is designed to tackle the whole question of how we are going to staff all of this and the points that have quite rightly been made. We need the staff: the nurses, the ambulance staff and all the others. There are 30,000 more nurses than three years ago, so we are on target to hit the 50,000 increase. There are 5,000 more doctors than a year ago, but that is not to say that we do not need more. That is what the workforce capacity plan should be all about.
This plan is looking to show those milestones and what we are trying to do to increase capacity, with the 5,000 new beds, growing the workforce, speeding up discharge, expanding and having better joined-up community services and making it easier to access the right care in the right places, such as primary care. I would say this, probably, because I am biased, but I feel that this is a useful and pragmatic plan because it is trying to build on the evidence of the things that we have seen work, which noble Lords have heard me talk about over the last few weeks. They include the Maidstone “mission control”, which really is making a difference there and we are now looking to roll out to all trusts and ICBs; the Watford virtual wards, which we are looking to roll out to 50,000 places; and, in all instances, using data-driven analysis to make sure we are making the right decisions.
The plan is backed up by funds and is part of a long-term plan. We are using the £1 billion of support for this year and the £500 million for social care capacity, but this is in the context of an increase of £14 billion over the next two years. It is part of a sizeable plan, but it is realistic action. I would love to be able to stand here today and give targets, but we are trying to be realistic about where we are coming from—for example, in setting the 30-minute category 2 ambulance wait time. Likewise, the target of 76% of patients being seen within four hours is not the limit of our ambition. That is the minimum, and from there we would look to increase it beyond that target. I would much rather come to your Lordships’ House with targets we think are realistic, with achievable plans behind them, as a statement of intent from which we can grow, rather than setting unrealistic expectations.
Of course, I say all of this in the context of what the House knows is an unprecedented challenge. It is not just England facing these challenges; I have spoken to colleagues across Europe, the US and Canada, and within the UK, in Wales and Scotland. Every health system is facing these problems off the back of Covid, and there are also the demands coming from flu coinciding with that this winter in particular.
I believe that this is a realistic plan. It is centred on the workforce; I agree on that. Prevention is also a key element of this. The five-year life expectancy improvement target is still key. We are looking at what we realistically need to do to make a difference on that—so, what are the causes of death, and what are the things we need to tackle? Again, the House has heard me speak many times about Chris Whitty’s concern about cardiovascular disease, and that it could be the next cohort of potential excess deaths among 50 to 65 year-olds, because they missed out on their blood pressure monitoring over the last couple of years. We all agree that rectifying those sorts of prevention actions is key.
When this plan is seen in the context of the primary care plan, which will also come out shortly, I hope it is understood that this is about treating people in the right place, which is not A&E. We all know that far too many people go to A&E who do not need to be there, and that is because we need more primary care spaces. We are on target to achieve the 50 million more primary care spaces, but, again, we need to do more. We really need to look to expand capacity in pharmacies, as I have mentioned before. We need to look at what some of our colleagues in Scotland are doing and the ability of pharmacists, for instance, to prescribe a lot more. Longer term, the new hospitals are a key part of this. Just this morning, I was going through the plans and some very good virtual reality examples, which we are going to bring to Westminster Hall for one day in the next few weeks. I look forward to showing colleagues exactly what is happening and how that will be the future.
I hope that noble Lords will see this plan in the context in which it is meant. I will, as ever, write in detail on the points I have not managed to cover in this quick reply. I hope noble Lords will see this as a down payment for the future, within the context of the elective care recovery plan and the primary care plan that we will see later, building on solid things that we know work and making sure that we are expanding those rapidly, so that we have learned the lessons from this winter and have them in place in time for next winter.
My Lords, my noble friend will be aware that this problem is not unique to this country. I am ashamed to say that Denmark, my mother’s original country, is building new hospitals all over the place but people cannot be treated because there are not enough doctors to treat them. Is my noble friend aware of the report from the Health and Social Care Committee in the other place, which noted that there are almost 500 fewer full-time equivalent GPs in a three-year period and that the committee realised that that accounts for the fact that there is an increased challenge in accessing GPs and also a lack of continuing healthcare? Will my noble friend take this opportunity to explain to the House what proposals the Government have to retain GPs so that recently qualified GPs are not working as locums in preference to being salaried or partners in a practice? I declare my interest as an adviser to the Dispensing Doctors’ Association.
I thank my noble friend and agree that the GP service is the backbone. As per the earlier comments, a lot of the issues and challenges we have with A&E are because people are not getting their appointments in the GP space, and fundamental to that is having enough doctors. I did not quite recognise the figures. I am aware of an increase of over 2,000 GPs since 2019. That is not to say that that is enough, and so, again, the workforce plan will be key to making sure that we are building for that long-term future. However, we are also looking to retain them. We had a very good debate in the House about pensions and what we need to do in that space, and we will make sure that everything we do—including, I hope, the primary care plan—will show that primary care is key to the solution.
My Lords, I am sure the Minister has taken note of the House of Lords Public Services Committee report on emergency access to healthcare, which came out two weeks ago. Many of its recommendations have been taken up by the Government. I thank the Minister in particular for the one on the 12-hour waiting list. We found out to our shock that that was not honest, as the witness said to us when they came to talk about it. I am pleased that the Government have done something about it. Our previous report was on workforce, and I urge him to read that too. Any report or plan is worth the paper it is written on only if it will and can be delivered. We were promised the outline of the workforce plan last September—we have had nothing yet.
Can the Minister help me on what I see as a major problem this week? As he has said today, a major part of the plan is increasing capacity. As others have said, you need the staff to do that. However, the Government, having said on Monday this week that increased capacity was really important as part of the emergency plan, wrote on Wednesday to Lincolnshire ICT to say, “You have a deficit. In order to deal with that deficit, you must cut beds”. What are people there to think when on one day the Government say, “We will sort emergency access by increasing capacity and beds” for one thing, and then two days later say, “Oh, you have a deficit—cut the beds”?
I thank the noble Baroness for her question and her recognition of the 12 hours. In all these spaces, data is always the way that you give a backdrop to better services, and 12 hours is part of that. As regards capacity, I totally agree that we need more of it. I was surprised by what she said—I will find out some more about it. However, the absolute direction is a recognition that, with Covid and flu, what might have been the right number of beds a couple of years ago is not today. That is why we are committed to the 5,000 extra beds and, just as importantly—potentially more so—the 50,000 in virtual wards, because that is using technology to look at how we can expand supply, and absolutely critical to that is having the workforce.
My Lords, my noble friend quite rightly pointed out that there are more doctors than ever in the NHS, but many of them are in training. As my noble friend Lady McIntosh pointed out, we are losing very senior and experienced doctors because of the rules that apply on pensions. My noble friend said that this was being addressed. I remember raising this several years ago—it is a continuing problem. What is worse is that doctors leave the NHS because of the tax implications for their pensions and then come back and cost it even more money. My noble friend says that this is being addressed, but in the autumn I heard the Chancellor say that he was going to freeze the level of the maximum amount that counts towards the pension before you pay tax for the next three years—so how is that addressing the problem? Is it not an urgent problem? We may be putting more people into the service who are in training, but we are losing people out the bottom at a greater rate.
I thank my noble friend. As I mentioned just now, retaining doctors is critical, and pensions are a key issue. We had an excellent debate on this a couple of weeks ago. Again, we are working on all of that with the Treasury. However, as I said then, the simplest thing is that, while I understand the Treasury’s concern about making special rules for special groups and the potential knock-on from that, we can very quickly make sure that, if people are hitting that pension ceiling, they can get the equivalent pay in their pay package very quickly. As a health department we have the ability to do that, to make sure that no one is financially losing out from that. If it does not make sense for them to get it through their pension, they can get it through their salary instead. I am not saying that that is perfect, and more work needs to be done across the Treasury, but we can do that quickly.
My Lords, the Minister has attempted to give a full response on this. However, there is clearly an absolute urgency about the workforce plan, and noble Lords would have been very pleased to have heard something rather more specific about the date on which it would come before us. If it is in draft, perhaps he could go back and say, “Can we speed up the final drafting of it?” The Minister also used the word “realistic” on a couple of occasions. Can he say whether he understands that the workforce plan will not be realistic unless we can pay staff in an appropriate way to make sure that we can hold on to their services, without which any attempts to remedy the difficulties we are facing are, frankly, a forlorn hope? Finally, on virtual wards, can we make sure that there are not people in the digital divide having difficulty engaging with the virtual ward if they have broadband problems and other problems?
I thank the noble Baroness. Taking those questions in reverse order, yes, it is understood that virtual wards do not work for everyone. At the same time, I am constantly surprised by the data: for instance, the average age of an NHS app user is in the mid-60s—so it is not a particularly young demographic who use this. Obviously, the examples I have seen, particularly on COPD at Watford, show that an older population is using that. However, we absolutely need to make sure that there is not a digital divide from that.
On the noble Baroness’s points on the workforce, she is quite right. We live in a competitive market, and one of the benefits of full employment is that, again, most people who want to work have a job, but one of the downsides is that there is competition for jobs. We have to face up to those realities and be realistic in terms of workforce, in that if you are going to attract and retain the good people, which you need to have as the bedrock of your services, you need to make sure you have an attractive and rewarding place to work. Clearly, that has to be a feature.
My Lords, the Minister mentioned new hospitals. Is he aware that the biggest obstacle to major health improvements in west Norfolk is the chronic state of King’s Lynn’s Queen Elizabeth Hospital, which I gather is the most internally propped-up hospital in the UK? He will be aware of an all-party campaign to secure the building of a new hospital. Can he tell the House where are we with that process?
I am very familiar with the problems with the so-called RACC—reinforced, autoclaved aerated concrete—hospitals. King’s Lynn is one of those, and there are a handful of others. There is a recognition that everything we do in the new hospital programme has to ensure that those hospitals are rebuilt in time, because they have a useful life that is fast reaching its end. Our priority number one is making sure that they are replaced.
My Lords, what are the government plans for long-term rehabilitation? We need more physiotherapists and occupational therapists. There is an idea of getting people out of hospital quickly, but some of them need confidence and ongoing care.
That is absolutely right. The figure that struck me on one of my many hospital visits was that apparently people lose 10% of their muscle mass each week they are in hospital, making it harder for them to look after themselves. The noble Baroness, Lady Merron, mentioned that we need to make sure the resources and investment are in the right places. All too often, hospitals become the place of last resort, when we all know that it is much better to put resources into the primary care at the front end or the social care and domestic help for physios who can visit homes at the back end. Central to the plans of my colleague, Minister Whately, is recognition that we will solve this in the long term, as all noble Lords want, only if we invest those resources in the right places.
My Lords, I welcome the plan and hope that the Government can keep to the targets they have set. I had experience of being in a major London hospital recently, spending five hours in A&E. It was the first time I had been in A&E for a long time. I was surprised at the number of young people there. When eventually I was seen by a nurse, I asked why so many young people were there. She said, “We’re surprised; there was a good football match on tonight, and we thought there wouldn’t be so many”.
It is odd when people are in A&E. Should they be with a GP? We wait with interest to see the report on GPs. I suspect that we have far more people now getting involved in health, for a whole variety of reasons, than need be in the system. This takes us back to prevention. I still do not believe we are addressing prevention as we should—trying to reduce the number of people in ill health. The programmes we have on obesity and in a whole range of areas where we are trying to get people to change their lifestyle are not having any impact. Until we seriously address those and put money and personnel into them to get ourselves reasonably healthy by comparison with the rest of Europe, we will just see the health service getting into even more difficulty, no matter who is in power.
I am sorry for going on at length. I hope the Minister will say something about a proper plan on prevention.
I agree with the noble Lord. We have a manifesto pledge about five years of healthier living. I am keen to do exactly that, to say, “Okay, let’s unpack this—how can we make that realistic?”. We have all talked about being realistic. What are the causes of death or ill health that we need to get on top of? I mentioned cardiovascular disease earlier. We need to quickly address that because there is a cohort of people of my age who have missed out. Obesity is a clear thing. It is not just the treatments but everything we talk about in terms of supermarkets. I know that there is some discussion in the House on whether we have gone far enough on some of those things, but the action we have taken is hitting the big numbers. It is hitting about 95% of the planned reduction in calorific intake; we are seeing that have an impact already. There is also anti-smoking; I am keen to make that into a coherent plan. We all know that we can spend more and more money on hospitals and the health service, but we will have healthier lifestyles only if we can get up stream on the problem and talk about protection.
My Lords, I declare my interest as a non-executive director of a care company and lead Peer for the Local Government Association.
It is great that politicians are trying to sort out problems with the health service, because those problems have largely been created by politicians—national politicians from both sides of the other Chamber. Clearly, the last Labour Government’s disastrous changes to GP contracts exacerbated the situation we are living in now. The even worse contracts for construction companies to build new hospitals at exorbitant prices were bizarre and are currently impacting the health service.
The coalition Government and this Government are responsible for the chronic underfunding of social care services. We have all contributed to people not being able to see the right GP or whatever at the start of the process, and we are now contributing to people not being able to get out of hospital.
That is not really what I wanted to say, even though I have just said it. I live in Lincolnshire. If a member of staff somewhere in the Lincolnshire health network has suggested, contrary to the Government’s position of increasing hospital beds, that they have to reduce their hospital beds, one way they could save some money is by deleting the post of the person who suggested that. That is probably a good place to start, because a lot of people want to use acute services but cannot because some of the budget is being diverted away to people dressed like me rather than to somebody dressed in those suits they wear in hospitals.
I am quite simple and do not understand why I saw a picture on the news the other day of 40 ambulances queueing up outside a hospital with 80 members of staff and only 40 patients inside the ambulances. Why can we not put up a big inflatable building of some description, offload the 40 people from the ambulances with 40 of the staff, and let the other 40 staff drive 20 ambulances back out again? Nobody seems to be controlling the resources that are being used, even though we all admit that they are scarce.
I will take it in reverse order. We do have the ability to stand up that capacity quickly so that the ambulances can discharge. I have already ordered a number of those, and some are ready to go, to provide exactly that capacity. Others are coming on stream in the coming weeks, so we are rapidly responding to the exact point that my noble friend raises.
Just as important—I am glad to have the opportunity to talk a bit more about this—is that a lot of the time ambulances do not need to bring the person to A&E. The mental health ambulances we are introducing, or the falls service ambulances that every ICB now has to introduce and have running every day, are critical. They can go there, right the person who has fallen and set them back up again. That needs only one person, not a big ambulance. That sort of care in the community—solving those problems and the right access—is critical in this situation.
On Lincolnshire, I will find out. The key thing here is making sure that we are expanding capacity in terms of beds.
My Lords, I sat with the noble Baroness, Lady Armstrong, on the Public Services Committee for that report. Two things were left with me; they follow up on the point from the noble Lord, Lord Porter, about ambulances attending the scene. We heard numerous cases, the worst I heard being that of a 95 year-old man who lay on the floor for 24 hours with a broken collarbone and hip. His family put a tent around him and no one in the health service—I do not mean just the ambulance service—went to help.
I just cannot understand that. There are over a million people in the health service; the Minister just mentioned that he is trying to get action around this, but why did the bosses not get out and drive an ambulance? Why did a GP not attend? Why did someone in society not think that that guy should not be lying there for 24 hours on the floor with a tent around?
Those examples really shame us. I do not say “the Government” or anybody else; they shame us. A piece of evidence which stuck with me was that one of the paramedics pointed out that one of the good things that has changed in strategy to improve outcomes for patients is that they spend longer on the scene, so they improve the initial treatment and improve the outcome. Of course, I asked what the overall impact of that was; he reckoned that they were able to attend about half the incidents that they did before, so were halving the effectiveness of the number of ambulances that we have. It does not look like the number of ambulances and staff will shift as a result of that change, or that there will be a different model of delivery—perhaps that one person might go or whatever. But those good outcomes for the heart-attack patient, perhaps, were not replicated for everybody: if they never got the ambulance, that did not help them. It just struck me that the change of delivery had not changed as much as the change of the model—spending longer at the scene—had improved the outcomes where ambulances attended.
Yes, what the noble Lord talks about is critical. To my mind, this is where the data—I know data and analysis sound dry—is needed to arm the local decision-makers. This is the whole idea behind the ICSs: that they can invest in the right services in the right places. We have often got too much into thinking that the one-size-fits-all model of the ambulance with the two paramedics is the solution, whereas we know that the full service can do things far more effectively and keep the person in the home. To my mind, that is the whole sense of direction of the ICBs, which need to understand and own their areas. I saw a fantastic example in Spain: Ribera Salud, with which many people here are familiar, I think. It ran the local hospitals and local primary care. There was investment in primary care, and A&E entrances plummeted. That is what I want ICBs to look at, and what I want the workforce plan to do: to make sure that we give the right care in the right places, and have flexible delivery of different types of ambulances and types of staff, who will go and problem-solve. Sometimes that is problem-solving as per the example that we gave, but mainly it is trying to give the local ICBs the analytical tools, powers—for want of a better word—and resources, so that they can properly shape things. Some of them will do very well, and others will probably take longer. But that is the critical thing about letting people run their own areas: making sure that they adopt best practice, but that they have flexibility in that approach so that they can solve the problems on the doorstep.
Central Bank Digital Currencies (Economic Affairs Committee Report)
Motion to Take Note
That this House takes note of the Report from the Economic Affairs Committee Central bank digital currencies: a solution in search of a problem? (3rd Report, Session 2021-22, HL Paper 131).
My Lords, I am delighted to open this debate on central bank digital currencies, and in so doing I declare my interest as an adviser to, and shareholder in, Banco Santander. The words “central bank digital currencies”, or the acronym CBDC, can be met with either a blank look or a reply of, “Oh yeah, crypto and all that”. There is undeniably and understandably a lot of confusion about what a CBDC is and is not. So before I go any further, for those watching or listening who may need some clarity on this point, what we are talking about here is the creation of a digital pound or bank note that the Bank of England would issue. It is not a new currency, nor a cryptocurrency, which is privately issued and not banked by a central party.
For those who may remember it, whereas Harold Wilson talked of the “pound in your pocket”, a central bank digital currency would mean we might have digital pounds in our digital wallets, which does not quite have the same ring to it, but there we are. A number of central banks are looking at introducing a CBDC, and the Bank of England is among them. So a year ago, the Economic Affairs Committee published a report which, at its core, asked a simple question: is a central bank digital currency a solution in search of a problem?
A year on, I think that that question still needs answering. The fact that this is so shows the wisdom of the then-chairman of the committee, my noble friend Lord Forsyth, in instigating this inquiry. I thank him for and congratulate him on his chairmanship of our committee. In so doing, I also pay tribute to the Bank of England for the thorough work that it—in particular Sir Jon Cunliffe and his team—is doing on a central bank digital currency, and the transparent way in which it is doing so. I thoroughly recommend that anyone who is interested looks at their website, for as their work progresses it highlights the issues that the creation of a CBDC raises and that our report highlighted.
Let me turn to that main exam question that our report poses: what problem is a central bank digital currency attempting to solve?
“I start by saying—it can come across the wrong way—that we have to be very clear about what problem we are trying to solve before we get carried away with the technology and the idea. I am not convinced about some of the problems that we might be trying to solve.”
Those are not my words; they are the words of the Governor of the Bank of England himself, Mr Andrew Bailey, just a few weeks ago. He is quite right; I would actually go further. There is still no clear, simple answer to this fundamental question, nor in my mind a clear answer to the follow-up question: if there is a problem that needs solving, could it not be solved in other ways?
The Bank of England website states that it is
“considering a central bank digital currency (CBDC) because the way people are choosing to pay for things is changing.”
The argument is that a digital pound would effectively be a new payment system. Our report found that a CBDC could indeed spur competition and innovation in payments, possibly lowering costs for merchants. But we heard few significant advantages for UK consumers if there were a digital pound in their digital wallets, and the Governor himself told us that issuing a CBDC was
“a disproportionate response to that issue”
of competitiveness in the payments system.
Then there is the argument that we need a CBDC to address the decline in cash, and that we need a digital pound as an anchor of confidence. But it is not obvious that the properties of CBDCs would satisfy any residual demand for cash, which is often valued for its physical properties and the privacy that it can provide. Our committee also noted that the Bank itself has said that it would continue to issue cash. Next, and linked, is the argument that a CBDC would increase financial inclusion. Possibly, but it is not clear that a digital pound will break down the barriers currently preventing or deterring people from accessing the financial system. It is likely that there are more straightforward and targeted ways to support access to financial services than launching a CBDC.
The next argument is that CBDCs are needed to avoid the risks that new forms of private money creation, such as stablecoins, pose to financial stability. We heard that greater regulatory control over stablecoins might be sufficient to manage such risks, although there are technical and jurisdictional issues to overcome. That begs the question whether such regulation undermines the need for a digital pound or, to flip this point on its head, whether if there were to be a sterling stablecoin—that is, a stablecoin backed by sterling—that would undermine the need for a digital pound.
Finally, there is an argument that a CBDC is needed to make cross-border payments cheaper and easier. Well, CBDC payments could, in theory, bypass some of the existing frictions in the internal payments systems, with lower costs. Nevertheless, the CBDC system would still have to comply with oversight frameworks, national laws, and international technical standards, which are a long way from being agreed. Furthermore, cross-border payments are already improving as a result of innovation and competition in the fintech sector.
My first question to my noble friend the Minister is: can she summarise in a couple of sentences what problem a CBDC would solve, and why that problem cannot be solved in other ways? Given her ability and expertise, I assume that she will be able to knock that ball straight out of the park and we will get a very clear answer, so I will proceed on the basis that it is clear that we need a CBDC.
The next issue, which our report went into, is how we avoid a CBDC undermining financial stability. If a CBDC is introduced, it is inevitable that some people will transfer money out of their bank accounts and into their CBDC wallets—their digital wallets. It is unclear how much such so-called disintermediation might take place; that will ultimately depend on how the CBDC is designed. But the impact could infect the entire economy, as higher levels of disintermediation would lead to more expensive credit and tighter lending criteria. Without safeguards, CBDCs could exacerbate financial instability during periods of economic stress, as people would likely seek to replace bank deposits with CBDCs.
There are two main options for reducing the negative effects of this disintermediation. The first is to limit the amount of CBDCs that can be held or spent by an individual. The second is to disincentivise use by paying uncompetitive rates on a CBDC above a certain level of holdings. Either of these options, or a combination of both, would be likely to reduce the attractiveness of a CBDC to users, depending on their stringency. This could therefore undermine other possible objectives, such as the ones that I have mentioned: financial inclusion or crowding out privately issued stablecoins.
So, the next question for my noble friend is: what studies has the Treasury or the Bank done on this crucial issue of disintermediation over the last year? In answering that, as we unpeel this onion, I fear we get to other big issues. The first is monetary policy. I assume that the Government do not envisage CBDC wallets to be interest-bearing, and that the CBDC would not be used to implement monetary policy, but, to ask a simple question, can my noble friend rule that out?
Then there is the issue of privacy. In this entire debate, privacy is the dog that has yelped but not yet barked. We heard that any CBDC system could not support anonymous transactions in the same way that cash can be spent anonymously. For that to happen, payments data on CBDC users will exist. The question of who performs the necessary checks on when and where that data is held is a major privacy issue. The Governor of the Bank of England said that a digital ID would be needed but that it was yet to be determined what form that ID would take. So the next question for the Minister is: how has thinking on know your customer rules progressed? How can a CBDC ensure strong privacy safeguards while also meeting financial compliance rules? Which organisations will be able to access sensitive CBDC payments data, and for what purpose will that data be used? Crucially—this is the main question—what kind of digital ID would be needed?
A retail CBDC raises many other issues which our report touches on; for example, its impact on national security and sanctions. There is also the key question of priorities: whether the Treasury and the Bank should focus more on a wholesale CBDC, which would arguably be less disruptive than a retail CBDC and have fewer economic and political risks.
However, I will end by focusing on two less technical points. Our report touched on the first one, but it needs further scrutiny: how much will the creation of a CBDC cost? Secondly, who will foot the bill? Can the Minister give us some indication on that? Thirdly and finally, there is the important issue of the role of Parliament. Given the importance of the creation of a CBDC and the issues that I have raised, can my noble friend confirm without equivocation that if the decision is taken to proceed with creating a CBDC, Parliament will be given the opportunity to scrutinise, debate and vote on primary legislation to do so, and that Parliament—not the Treasury or the Bank of England—will have the final decision on whether we press ahead and create a digital pound?
I apologise for giving my noble friend so many questions to answer. To do so is not to question the need to explore the potential that a CBDC might offer—I repeat that the Bank of England is right to do so—but before we proceed, we need clear answers to these core questions, especially the first: what is the problem that only a CBDC can solve? I beg to move.
My Lords, I speak as a member of the Economic Affairs Committee which produced the report that we are debating. I thank the noble Lord, Lord Bridges, for his excellent introduction to the debate. I declare an interest as a consultant to Citigroup.
Central banking is not the most exciting of topics. Indeed, at the Bank, my ambition was to make it boring. But add “digital” to any title and you find a wave of enthusiasm overwhelming all those involved, with people feeling that this is the future and that we must be at the forefront of any development. The Government have said that they want the UK to be at the forefront of innovation of crypto assets and fintech, but we need to be selective and not driven by a misplaced enthusiasm for all things crypto. It is probably true that when the lemmings went over the cliff, some of the leaders said to one another, “Perhaps it wasn’t the best idea to be at the front of this particular wave.”
The first thing to say about a central bank digital currency—CBDC—is to repeat what the noble Lord, Lord Bridges, said: it is not a currency. If the Bank of England or the Federal Reserve were to issue a CBDC, it would be in sterling or dollars, respectively. CBDCs are about ways of making payments; they are not a new currency. Whether a country needs a CBDC is really about the state of its current payments system, hence the title of our report, Central Bank Digital Currencies: A Solution in Search of a Problem?
What are the problems in our payments system to which a CBDC might be the answer? The main conclusion of our report is that there are no problems to which a CBDC is the only, or even the most obvious, answer. Our payments system is more efficient than those in most other countries, certainly the United States. Most transactions are already digital, whether by tapping a card on a machine at the point of sale or making a digital payment on a computer for remote transactions. All of these are operated already by commercial banks and an increasing number of new payment vehicles.
Competition has moved us from a system that used to be based on paper cheques, which often took five days to clear, to one driven largely by digital payments, with virtually instantaneous clearing. It would be somewhat odd to try to increase competition in this area by creating a state monopoly of the payment system, as opposed to the role of a central bank in determining the value of a currency. That is a quite different function.
The Bank has played an important role in regulating and promoting the current payments system operated by private sector banks and other payment providers. There is no doubt that further improvements are possible—indeed, desirable—but none requires a CBDC. I invite noble Lords to think of the two different ways in which a digital currency might work: first, for retail customers, and, secondly, for wholesale payment providers. The Bank certainly does not want to offer bank accounts to any individual who wishes to open an account with it. The Bank has always limited the number of customers to the hundreds—not 50 million. I do not think Andrew Bailey or anyone else at the Bank wants to be on the receiving end of phone calls from Mrs Jones in Wrexham or Mr Smith in Guildford complaining that they cannot log into the website to transfer money to their grandchildren. This is not what the Bank of England is set up to do.
In countries without an effective banking system—there are some—the central bank might have to step in but that is self-evidently not true in the United Kingdom, hence the suggestion by some that a CBDC would take the form of tokens issued by commercial banks and guaranteed by the central bank. However, that is exactly the position we are in today: commercial banks issue bank deposits and they are guaranteed one way or another by government. So there is no obvious benefit to creating a duplicate arrangement that happens to have the sexy name of a “digital currency”.
The enormous risk is that, in a financial crisis, households would abruptly shift their deposits from banks to accounts with the Bank of England, forcing the latter immediately to transfer the deposits back to the banks to avoid a collapse of the system. In 2008, when the Bank, with approval from the Government, lent a large amount of money to RBS and HBOS to prevent their collapse, the operations were covert and revealed only some months later to prevent a system-wide loss of confidence. That would be impossible if households could switch without limit instantaneously from all commercial banks to the Bank of England. So a retail CBDC has risks but no obvious benefits.
As for a wholesale CBDC, we already have one in the form of reserve accounts with the Bank of England held by payment providers such as commercial banks. It has been used actively in recent years in the operation of, first, quantitative easing and, now, quantitative tightening. In evidence to our committee, the Bank of England made it clear that it saw no need for a wholesale CBDC.
Of course, there can always be improvements in our payment systems, but a CBDC is neither a necessary nor a sufficient condition for that. The major problem today concerns the cost and speed of cross-border payments but much of this results from regulation to prevent money laundering. There is certainly scope for central banks to link their payment systems together—many central banks are working on this—but that does not require, nor is it facilitated by, central banks setting up their own CBDCs.
The UK should certainly aim to be at the forefront of fintech but we need to be careful in determining the respective roles of the state on the one hand and competitive private sector players on the other. My motto for a central bank is: only do what only you can do. Central banks are important regulators of payment systems. The case for them to be direct providers of digital retail payments is yet to be made. That is why I conclude by going back to the title of our report, Central Bank Digital Currencies: A Solution in Search of a Problem?
My Lords, I thank the noble Lord, Lord Bridges, for the committee’s excellent report. Around the time it was issued, I wrote for the website of OMFIF, a think tank that I am involved with, totally rejecting and criticising this scheme. It is not so much that it does not solve a problem but that it will create one.
The most significant problem it will create is that it will deprive ordinary people of easy access to cash. We have to be honest: it may be that cash is declining in terms of total payments but larger payments are made by richer people and smaller payments are made by poorer people. As somebody in Parliament, I feel that it is my duty to care for the smaller people rather than the big people. I do not care what commercial or central banks do with each other about sending money via digital or non-digital means. What concerns me is people who are budgeting their expenditure from day to day. They value cash, access to cash and the ability to approach their bank in person to explain the problem they are in.
When I lived in Camberwell and I went to my local bank branch—that is a rarity nowadays; there are no local bank branches left, which is bad enough—I could see how people were in serious trouble and could not solve their problem unless they were face-to-face with their bank so that they could explain why they needed money and how they could have it. They needed cash. It is also true that we have numeracy problems at all age levels in this country. It is bad enough having to count cash. CBDCs will alarm people in their day-to-day behaviours. It is not a question of what problem CBDCs would solve; I am worried about the problems that they would create, which would be much more serious than the problems they would solve.
The original sin in this respect, if I may say so, is bitcoin. Because it was called a coin, people thought it was money. It is not; it is a token. I call it a “Zen token” because it has Japanese origins. It has no useful value whatever and it has a very uncertain exchange value. Only a gambler would hold bitcoin. Because bitcoin was called a coin instead of a token, lots of copies of those assets have been introduced. As we saw from the FTX debacle, a lot of money can be swindled out of ordinary people.
The sooner we get away from this digital nonsense, the better off we will be—definitely in terms of people’s welfare. We have enough problems with the unequal distribution of money and so on. We certainly do not want to add to those by chasing the latest technology just because it is the latest technology and harming our own citizens. Rather than asking what the Bank of England wants to do, can the Government please say categorically that they have no intention of introducing CBDCs, which would deprive ordinary people of access to cash as they have always known it? Anything else would be deeply harmful to the body politic.
My Lords, I also had the privilege of sitting on the Economic Affairs Committee for the development of this report under the excellent chairmanship of the noble Lord, Lord Forsyth, who is no longer in his place, and with the expertise brought by the noble Lords, Lord King and Lord Bridges. I tend to be of their mind but I really do not think that we can have four speeches in a row that represent only the more sceptical side of the argument. I am a debater so I will try to present some of the other views because they are significant.
First, there is the issue of cross-border transactions. I say to the noble Lord, Lord King, that there may be ways in which the cost of cross-border transactions can be reduced but, boy, are they not evident at this moment in time. I constantly need to bring money from the United States because I worked over there for many years. I am really tired of paying Barclays something like 15% of every transfer; it gets you one way or another, either through manipulated currency exchange rates or fees. Yes, there are alternatives—I also use some of the fintechs—but, frankly, one is grateful to be taken for just 5% to 7% rather than 10% to 15%. It is absolutely ridiculous. It is not just the KPIs and the regulations. The institutions have seen that this is an opportunity where they can take superprofits—and they jolly well do. I would grasp at almost any mechanism that would give us an efficient and fair cross-border transfer system. As I said, I am speaking on this personally.
If we expand this out to business, we are a trading country and we say that our future is trade, so this has to be tackled and dealt with. At this point in time, to turn down looking at any solution might be rather unwise. However, a different argument, and one that I found interesting, was brought before the committee. Noble Lords will be aware that something like 114 countries are currently looking at a potential CBDC. Three Caribbean countries and one African country have already launched a CBDC in some form or another—some in quite constrained forms, but they have launched it. Various countries are running pilots and, most significantly, in China the digital yuan is being trialled now in 15 cities, with transactions surpassing 100 billion yuan, or $14 billion, to last August. You can see the attraction of the yuan. At the moment, China says it will merely be used domestically, but its potential to export this across the developing world as a reliable mechanism for payment where people are suspicious of their local banks and their Government is extremely powerful. If China does that, I think we can all guarantee that along with the digital yuan will go a great deal of political control. Quite frankly, this is something that we have to look at from that perspective as well.
The European Union is taking a look at this issue and is expected to conclude its investigations in the autumn. The US is at a very early stage, and is probably much closer in its position to that expressed by the noble Lords, Lord King and Lord Bridges, but it has a great deal to lose if it is outmanoeuvred. Currently, the US dominates the international payment system through SWIFT, which is a major contributor to international financial stability. If China or Russia come to control a significant portion of the international payment system through CBDCs, western security, including its sanctions regimes, could be incredibly difficult to enforce and is potentially quite seriously compromised.
I have to say to the noble Lord, Lord Desai, that, back in the UK, quite a number of social justice groups that work with people who are financially excluded can see real possibilities in a CBDC. We know that all the banks, working together, have for years talked about dealing with financial exclusion and bringing people in from the cold. They have made some progress, but we still have something like 1.2 million people without a bank account because they do not trust the banks. There is a possibility that they might trust the Bank of England where they will not trust the banks that they see involved in various mis-selling scams and abusing their position of power, and where they are generally always going to be suspicious of the motives of the private banking sector. We have got to think some of that through. It interests me that so many of those groups are looking at CBDCs as a route to be able to deal with that excluded population.
The other issue that was brought to our attention, which has not been discussed, is the learning factor that comes from being so deeply engaged in digital currency, as a regulator such as the Bank of England would be if it delivered a CBDC. That becomes necessary as you start to look at the world of stablecoin and, more broadly, crypto assets. The Government issued their consultation on crypto assets yesterday. I printed it out and thought that I would read the summary section. It is absolutely impossible—you have to read the whole 42 pages; it really is a nightmare. It will be entertaining for me this weekend, because I am a geek. The reality is that there is extraordinary complexity in understanding this field and the plumbing that sits behind it; it is not just blockchain but the far more complex mechanisms for tracking, enforcement, reporting and monitoring—it is a very complex environment. It is also about dealing with the players that appear on the horizon that most of us look at and think are a Ponzi scheme by any other name.
The UK continues with its declaration. Last April, John Glen, then Economic Secretary, stated our goal to be a global hub for crypto assets. I can understand why; we are bleeding a lot of the traditional business here in UK. It was inevitable after Brexit, and it is happening slowly but steadily. We are trying to grasp the new area of green finance because it offers possibility and potential, and I hope very much we will become a leader in it. However, every time we think that crypto is bound to die now, after the latest scandal, it rises again from the dead, and we discover that billions of pounds of assets are flowing in its direction. If we want to be engaged in that world and decide that, like it or not, that is where the public are going and therefore that is where we have to be, the question is this: does it make a difference to our ability to understand, monitor and control if we have a regulator deeply embedded in the process by engaging itself in a digital currency?
I understand all the issues that have been raised—questions around why we would do this when there are other ways to do it; that all it does is upset the system; that we can have lesser innovation to make things work more effectively—but, if the public make the call that this is where they are going, that is where we also have to go. I hope very much that the Government will take all of that into account as they try to make these complex decisions in the future.
I thank the noble Lord, Lord Bridges, for his introduction to this debate. He presented an elegant precis of the document. The noble Lord, Lord King, touched upon the magic word “digital”, and I think that is absolutely valid. The word is sprinkled around our society as somehow modern—digital has been around for a long time but it is hopefully modern. Both noble Lords and my noble friend Lord Desai had cynical concerns that this might take off in an uncontrolled way. My noble friend Lord Desai also brought up the issue of the smaller and poorer people. In this whole debate about money, currency and so on, they are not very well represented, so it is important that people such as my noble friend, and to some extent me, always remind us that all these schemes have a levered effect, particularly on poor people who depend on cash.
The noble Baroness, Lady Kramer, made an excellent speech, as usual, with the idea of introducing balance in something of a headwind. I take from what she said that, whether or not one thinks CBDC is a good idea, government has a duty to apply appropriate resources to understanding this area. The benefits of a central bank digital currency, CBDC, which the committee alluded to, such as providing the Bank of England with powerful new monetary policy tools, should certainly be explored, but its conclusion—that it has yet to hear a convincing case for why the UK needs a retail CBDC—seems to stand up. The report speaks to the financial stability risk. On this Government’s watch, millions of British consumers’ savings have already been put at risk by the collapse of cryptocurrencies, and crypto-related scams have hit record levels. We have an amendment to the Financial Services and Markets Bill which would compel the Government to update their decade-old national fraud strategy, and clearly digital currencies and related issues have to be considered.
Despite the real and tangible risks of private unregulated digital currencies, it seems the Government are committed to spending significant resources promoting crypto gimmicks, to great fanfare. I fear their exploration of CBDCs maybe a continuation of this pattern, wanting to innovate to distract from political turmoil over tax affairs and crumbling public services. Instead, I wish the Treasury would keep a red-hot focus on the cost of living crisis and avoid wasting precious resources on NFTs, for example, or on more consultations. What we need is action on consumer protection now.
Can the Minister enlighten us on how many Treasury and Bank of England officials are working on this during this most serious cost of living crisis? Are CBDCs appropriately prioritised? If the Government want to do something in this space, how about getting serious about building a robust regulatory regime that would attract fintech companies to the UK—a regime that would allow new companies to safely harness new technologies?
My Lords, I apologise for the delay; I was just organising my responses to the many questions raised by a short but expert list of speakers on this debate. I thank all noble Lords who have spoken today and thank the Economic Affairs Committee for its work in producing this really valuable report. A considerable amount of ground has been covered today and I will try to address specific points raised by noble Lords in my response.
Before I do, I might speak a little about the ambitions that lie at the root of this policy. We are living through a pivotal time for the future of money and payments. Rapid innovation is bringing fresh opportunities and considerations for individuals, industry and policymakers alike. As noble Lords are aware, like many countries around the world—as pointed out by the noble Baroness, Lady Kramer—the UK is actively exploring the potential role of central bank digital currencies. The Treasury and the Bank of England are working closely together to consider our next steps.
This work is a key part of a broader government agenda to ensure that the UK remains competitive and at the forefront of payments innovation. I have to disagree with the noble Lord, Lord Tunnicliffe, in his assessment of this issue. He pointed to creating a regulatory landscape for fintech. That is what we have done and continue to do through, for example, the Financial Services and Markets Bill that most of us are also debating on Mondays and Wednesdays. This is a key part of that landscape too and we need to be future facing when it comes to this issue.
The noble Baroness, Lady Kramer, pointed to the potential benefit of a CBDC in providing a better basis for cross-border payments, and I have talked about its importance in remaining competitive and looking at payments innovation. To try and answer the first question put to me by my noble friend Lord Bridges, at its heart, the question of a CBDC is about maintaining access to central bank money. This is available through cash, but that landscape is changing.
I also acknowledge at this point the concerns raised by the noble Lord, Lord Desai, about the implications of this work for access to cash. Key to our considerations will be ensuring that financial inclusion is at the heart of any technical design decisions on CBDC and we will also be considering the role a CBDC could play in increasing access to digital payments. Again, the noble Baroness, Lady Kramer, highlighted some ways in which that could be the case.
We acknowledge the importance of cash to many households across the country at this time, in particular more vulnerable households or those who may be more financially excluded. That is why we have taken action to legislate to protect access to cash. Again, that is going through in the Financial Services and Markets Bill that this House is currently considering.
With all that said, we have not yet decided whether to introduce a CBDC—a digital pound—in the UK, and we will engage widely with stakeholders on the benefits, risks and practicalities of doing so. The design of any UK CBDC is subject to further work, and a forthcoming Treasury and Bank of England consultation, due in the coming weeks, will set out some of our more detailed thinking. Crucially, any future decision will be based on a rigorous assessment of the benefits and what it means for public policy objectives.
Delivering a UK CBDC will require a carefully sequenced plan of work, which will span several years. The consultation will set out the Treasury and Bank of England’s assessment of the case for a digital pound. It will also set out further detail on the “platform model” proposed in the Bank’s 2020 discussion paper. This would mean that a CBDC would exist as a complement to cash and bank deposits, leaving a substantial amount of retail-facing business to the private sector.
If there is a decision to proceed, a development phase would follow the consultation. This would include the publication by the Bank of England of a technical specification. It would involve in-depth testing of the optimal design for, and feasibility of, a UK CBDC. Following this, a decision would be taken on whether to move into a subsequent build and testing phase, with the earliest date for any launch in the second half of the decade. We believe that this is an ambitious, yet feasible, timeline towards delivery and, as I have said, extensive stakeholder engagement and consultation will be crucial in making the decision to move to each stage of the timeline towards new issuance.
To address another question from my noble friend Lord Bridges around the role of Parliament in that process, we expect Parliament to be fully engaged through any possible legislation in an open and transparent manner to ensure that there is full and proper scrutiny of any proposals in coming years. My noble friend also asked about the work the Treasury and Bank of England have done on disintermediation and whether I could rule out the digital pound being interest bearing. Those are two of several risks and questions that need consideration in the design choices. The macroeconomic effects of a CBDC will be contingent on some of those design choices. For example, an interest-bearing CBDC could allow for more effective monetary policy transmission, while a non-interest-bearing CBDC could make the zero lower bound more binding, therefore reducing the strength of monetary policy. That is something that the Government and the Bank of England have not reached a decision on yet.
As also pointed out, one of the main potential macro risks could be that of bank disintermediation. In an illustrative scenario, the Bank estimated that the cost of credit could rise as a result of consumers reallocating from commercial bank retail deposits into a CBDC. This scenario was theoretical, and the Bank maintained that it was difficult to forecast with any certainty the extent to which a CBDC could cause bank disintermediation. The design choices of a CBDC could be used to reduce some of these macroeconomic risks. Specifically, holding limits and decisions on whether a CBDC would be interest bearing are features most likely to have an impact on this. So the potential effects of a CBDC on the macro economy are broad, and we fully acknowledge that. The Bank and His Majesty’s Treasury are working closely together to gain a clearer understanding of the potential impacts.
On privacy and security, maintaining user safety and privacy is of the utmost priority as the Government and the Bank appraise the case for a CBDC. Indeed, the UK, through its G7 work, has been clear that rigorous standards of privacy, accountability and transparency on how information will be used are essential for any CBDC to command trust and confidence. Fundamentally, the Government recognise that financial innovation must be safe and secure in order to benefit and win the trust of consumers, businesses and the wider economy alike.
My noble friend Lord Bridges and the noble Lord, Lord King, mentioned the benefits of a retail CBDC versus a wholesale CBDC. The Bank and the Treasury have chosen to explore a retail CBDC in light of the potential benefits I touched on before, including providing digital access to central bank money in a digital payments environment and greater efficiency and resilience in payments. With regard to a wholesale CBDC, as the noble Lord, Lord King has pointed out, banks already have access to electronic central bank money in the form of reserves, and that has been available for decades.
We are open to exploring innovative ways in which wholesale firms can use central bank money, and HMT and the Bank are working together to continue exploring the case for new and improved ways of facilitating wholesale settlement. There are three ongoing initiatives that we consider are likely to provide similar benefits to any wholesale CBDC. First, the Bank is already renewing its wholesale payments system, the real-time gross settlement system, which will improve the efficiency and resilience of domestic wholesale payments being made as well as offering increased interoperability.
Secondly, last year the Bank of England created a new omnibus account to enable private sector innovation in wholesale payments. These new accounts were announced by the former Chancellor in Fintech Week in April 2021 and will allow firms to create innovative wholesale settlement solutions of their own, docking into the Bank’s balance sheet to provide them. Thirdly, the Treasury has proposed a new sandbox for the use of distributed ledger technology in financial market infrastructures, a measure that we are taking through the Financial Services and Markets Bill. That will support firms wanting to use new technology to provide FMI services such as the settlement of securities.
My noble friend Lord Bridges asked about the cost of a CBDC and who will pay, and the noble Lord, Lord Tunnicliffe, asked how many people are working on the current project and what it will cost. The Economic Secretary has been clear that a UK CBDC is a major national infrastructure project, so the Government acknowledge that it is a significant undertaking. It will cost money to develop, although I am not in a position today to say how much as we are still in the early R&D phase of our work. Many government innovations to modernise come with a cost, and the upcoming consultation aims to ensure that genuine public discussion has taken place on both the potential benefits and the cost. While I cannot provide the noble Lord, Lord Tunnicliffe, with specific figures—if I can, I will write to him with them—that is the point on which I would close this debate. One of the UK’s strengths is remaining at the forefront of innovation.
The Minister assured us that there would be parliamentary involvement in the introduction of any CBDC. Does that mean she is assuring us that it will involve primary legislation?
I believe we need to understand better the design and shape of a CBDC, but I am trying to give the strongest possible assurance on that point while not knowing the answer to some of the questions that will be in the forthcoming consultation.
As I was saying, one of the UK’s great strengths is remaining at the forefront of innovation. The landscape is changing quickly in this area and we are open-minded as to the right way to proceed. Many of the points raised in the Select Committee’s excellent report are exactly those we want to continue to consider in a very public and open way through the forthcoming consultation, and through collaborative work between the Treasury, the Bank of England and many other public organisations, so that we can get the answers right to many of the important considerations that need to be made. I do think this work has value, and it is important to ensure that we remain at the forefront of some of these areas. I commend that position to the House.
My Lords, I thank all the speakers who have contributed to this short debate. What we have lacked in quantity we have certainly made up for in quality.
As my noble friend rose, I was wondering why the House was suddenly filling up with other noble Lords. Was there a sudden massive outbreak of interest in CBDCs? Then I remembered that of course, we are about to debate Brexit. As a captive audience is here, I ask all noble Lords to start to focus a bit more on this subject, which I think demands more parliamentary scrutiny, given the profound issues we have been hearing about from the noble Lords, Lord King, Lord Desai and Lord Tunnicliffe, the noble Baroness, Lady Kramer, and obviously the Minister. What we are talking about here could have a profound impact not just on our currency and how we pay for things, but on our wider economy.
I have three brief points to make. First, the noble Baroness, Lady Kramer, is quite right that we need to keep our critique of CBDCs balanced. We certainly need to explore this subject, and she is right that 114 countries are looking at it. Obviously, we should avoid falling into groupthink, which is I think where the noble Lord, Lord King, is coming from. But at the same time, the fact that China and particularly the EU are progressing incredibly fast in the development of central bank digital currencies could have deep geopolitical and global macroeconomic implications. So the noble Baroness is right that we need to look at the subject, and in so doing it may have spin-offs in terms of benefits and innovation.
My second point is equally important, and this is where the noble Lords, Lord King and Lord Desai, came in. As I said in my opening speech, the challenges that the creation of a central bank raises are significant. As the noble Lord, Lord Desai, put it—and he is right—the question is not just, “What problem is the CBDC trying to solve?” but, “What problems might it also create?” We need to bear that in mind. I noted down the motto that the noble Lord, Lord King, wants to have for every central bank, and which he certainly abides by: only do what you can do alone. How very true, and that should certainly be a guiding thought.
Whether one is sceptical about the rationale for introducing a CBDC or more persuaded of its merits, we must continue to scrutinise and debate these issues. For sceptics, too little scrutiny means that we might stumble into introducing a CBDC, which could have profound unintended consequences. For those who are more forward-leaning, a failure to progress might mean not just missing out on opportunities but getting left behind, which could have geopolitical and macroeconomic consequences.
I say for those who were not present that I bombarded my noble friend with lots of questions—I apologise—but the central question was: what problem is the CBDC trying to solve and, crucially, why can it not be solved by other means? I think my noble friend said that the reason for it is to address the decline in cash. That is obviously a reason, but I make two points. First, the Bank of England itself recognised that the CBDC would be an imperfect substitute for cash, saying two years ago:
“For those in society who value the physical nature of cash, the introduction of CBDC is unlikely to affect their payment behaviour, and so we consider that CBDC would likely act as a complement to cash rather than a substitute.”
Secondly, are there not other means to address that?
Finally, and I am grateful to the noble Lord, Lord Tunnicliffe, for raising this, we still need a much clearer and unequivocal answer to the question: will it be Parliament that votes on whether to introduce a CBDC? It could have a major impact on this country, and it is only right that Parliament takes that decision. It cannot be taken by the Bank of England and the Treasury alone. We will return to this point, but I thank my noble friend.
EU: Trade in Goods (European Affairs Committee Report)
Motion to Take Note
That this House takes note of the Report from the European Affairs Committee One year on—Trade in goods between Great Britain and the European Union (4th Report, Session 2021-22, HL Paper 124).
My Lords, before I address the substance of the Motion, there are some important things to say. First, on behalf of the whole committee, I thank and congratulate our staff, Nick Boorer, Dom Walsh, Tim Mitchell, Louise Shewey and Sam Lomas. Their hard work, professionalism and good humour stood us in good stead and were evident throughout.
Secondly, I formally record our warm memories of Baroness Couttie, who was a strong and highly respected colleague, Member and contributor to our report. Finally, I would like to say how much I am looking forward to the valedictory speech from the noble Baroness, Lady Chalker, marking her stepping back from such an exceptional career in service.
In September 2021 we launched our inquiry into trade in goods between the EU and Great Britain, recognising that trade matters relating to Northern Ireland are for our sister committee, that on the Ireland/Northern Ireland protocol. We published our report on 16 December 2021, just under a year after the conclusion of the trade and co-operation agreement. The Government responded on 16 February 2022. It is now just over two years since the TCA was concluded and came into force.
The report sets out the then economic context using official trade statistics. At the time, there was evidence that there had been a sharp drop in UK-EU trade immediately after the end of the transition period, with a partial recovery thereafter. The committee concluded that, at a macroeconomic level, it was difficult to disentangle the impact of Brexit on trade in goods from that of Covid. However, we observed that this should not obscure the new administrative burdens that business faced; for example, the requirement to fill in customs paperwork when exporting goods to the EU—something that was clearly not a consequence of the pandemic.
In the year since the publication of our report, the gradual trade recovery that we observed seems to have continued. In 2022 the value of both goods imports from and exports to the EU recovered to their highest level since 2019, even after taking inflation into account. However, overall UK trade volumes have performed below those of most advanced economies, with the UK currently experiencing the lowest trade growth in the G20. It is not clear whether this underperformance can be attributed to Brexit. For my first question, I ask the Minister to comment on the current state of UK trade with the EU and its impact on the UK’s wider trade performance in the light of the recent statistics.
The start of the committee’s inquiry followed just after the Government’s decision in September 2021 to delay the introduction of certain import controls on EU goods. It was the third time that the Government had announced such a delay. The report therefore assessed the causes and consequences of that delay, including the impact of asymmetry in the import controls applied by the EU and the UK, it being the case that GB exporters faced more stringent checks than their EU counterparts. We noted concerns among some businesses that this could create a competitive disadvantage.
At that time, full customs declarations were due to be implemented in January 2022, with sanitary and phytosanitary, or SPS, controls and safety and security declarations due to follow in July 2022. The customs controls were indeed implemented as planned, in January 2022. In their response to the committee’s report in February 2022, the Government said that they would introduce the remaining controls on time. However, the remaining controls were delayed yet again in April 2022 and are now not due to be implemented until the end of 2023 at the earliest. Our committee engaged in correspondence with the then Minister for Brexit Opportunities, Jacob Rees-Mogg MP, in the wake of that delay. He confirmed that the latest decision reflected a more fundamental change in approach, with the nature of the border regime as well as the timetable under review. He was also dismissive of concerns about the impact of asymmetry at the GB-EU border, saying that the Government rejected
“the premise that increasing burdens for importers and increasing costs for British consumers will help our exporters”.
However, there is still uncertainty about the future border regime. We were told that the Government would publish a target operating model in autumn 2022 that would set out in detail how and when the new border regime would be implemented. We still await that document. According to the Department for Environment, Food and Rural Affairs, it is now due to be published in early 2023. Can the Minister provide an update on the UK’s future border control regime and the publication of the target operating model?
Questions have also been asked about the UK’s biosecurity, given the absence of the remaining SPS controls on imported plants and animals from the EU. Last summer the Food Standards Agency said that
“the continued absence of a fully implemented UK import control regime for EU food and feed reduces our ability to prevent foods that do not meet the UK’s high standards being placed on our market.”
What steps are the Government taking to safeguard the UK’s biosecurity in the absence of the remaining SPS controls?
On the overall impact of the end of the transition period, the committee’s report concluded:
“Although the worst-case scenario of widespread disruption did not come to pass, GB-EU trade in goods is now more complicated and expensive than it was before January 2021.”
We noted that SMEs and the agri-food sector were particularly hard hit. In their response, the Government said that the new relationship
“will contain many benefits for individual businesses; but … this involves some change”.
Our committee wrote back to the Government asking them to explain what these many benefits were. In his reply, the then Minister for Europe, Graham Stuart MP, highlighted the TCA’s provisions for zero tariffs. I found his answer somewhat perplexing and disappointing.
The committee’s report identified some more specific problems that traders have faced and proposed several solutions. However, the Government’s engagement with those recommendations, both in their response and in the subsequent correspondence, was mixed. On SPS requirements, the committee highlighted that these had been a major challenge for exporters and called on the Government to seek an SPS agreement with the EU. The government response did not engage with that recommendation. In a subsequent letter, the Minister clarified that the Government were “open to discussions” on SPS, but not on the basis of “alignment with EU rules”.
On customs, the committee called for increased EU-UK co-operation, including exploring a so-called single customs office model. The Government dismissed this recommendation, arguing that the TCA did not provide the legal basis for co-operation of this kind.
On VAT, a major concern for small businesses, the committee welcomed the Government’s efforts to persuade the EU to list the UK for VAT purposes, which would eliminate the need for businesses to engage an expensive fiscal representative when exporting to the EU. The Government have since said that they will continue actively to pursue facilitation in this area.
These and other matters could all be addressed within the plethora of trade specialised committees set up under the trade and co-operation agreement—committees that are operational but not really operating due to the Northern Ireland protocol impasse.
There may be further challenges on the horizon. Businesses that the committee spoke to in the inquiry were not opposed to regulatory divergence, provided that it was carefully considered. However, the Retained EU Law (Revocation and Reform) Bill could produce further divergence between the UK and the EU in an unplanned way and in ways that might interact with the trade and co-operation agreement. What assessment have the Government made of the compatibility of the retained EU law Bill with the UK’s commitments under the trade and co-operation agreement, in particular regarding the level playing field provisions on employment and environmental standards?
There was a lot in our report and, I feel, many clues as to how to improve matters. Trade is always mutually beneficial; I fervently hope that the many trade-specialised committees can be unleashed soon to unlock that benefit. In the meantime, I very much look forward to the debate ahead. I beg to move.
My Lords, it is a very strange feeling to be making this speech in this House after so many happy years. Some will recall that I made my maiden speech in the Palace of Westminster in early 1974; 18 years later, my maiden speech in this House was on the Maastricht Bill. I hope I shall not disappoint the noble Earl, Lord Kinnoull, who spoke so kindly in anticipation of this speech, but I think he can deal with all the detail. I should just say my grateful thanks.
There is a very large list of thanks to the many people who have helped me in my formal political years. There are private secretaries and their deputies in four government departments—as we then worked in—our advisers and Permanent Secretaries. I add my sincere thanks to colleagues in this House, friends in all parties, all the staff in the clerk’s department, the Library, Hansard, the refreshment department and the staff who keep us warm and safe, but especially to the doorkeepers of this House. Above all, I must thank the Foreign, Commonwealth and Development Office teams who guided me from 1986 to 1997. They were always faithful, helpful and thoughtful.
My thanks go too to my family and friends, my drivers and personal secretaries. Each has played a significant part in my ability to deliver my role. They often altered their plans to accommodate my timetable, missed many meals and had family time shortened or cancelled with little complaint.
The close of my days as an active Peer really began about two years ago during the second Covid lockdown. I found it a very stressful personal time. Once a person no longer feels able to research and produce good work on time, it is time to decide how to plan ahead and possibly not to continue in a previously much-loved role, but to move on to other tasks and a less strenuous working style.
So I am retiring before my colleagues feel that I am past the role that I have so valued since 1992: that of an active life Peer. By this action, I may allow a space in this House for younger, able future Peers. Perhaps there could be more spaces created, for there are many able persons outside who could play valuable roles in this House, but we are a very full complement at present.
With more time to utilise my enjoyments, I shall take up new voluntary tasks, not only in the UK but also in South Africa. I will begin by voluntarily teaching eight year-old township children to read and speak English. I am starting to paint and draw again, and I am now able to be more involved in animal and Fijnbosch conservation in the Gondwana game reserve in the southern Cape. I will protect my family time in all countries to the hilt.
The many trials and travails of political life are evident in the public discomfort of too many Members in both Houses. My first political hero was the late Iain Macleod, followed by a number of noble Lords in this House. Iain encouraged me to listen well, even to those with whom I disagreed. In EU politics, this has been more than a tall order, for the instances of facts being twisted by some politicians and the press are too numerous to list. However, as my colleagues on the various EU Select Committees have identified, we need to remain fully involved with the EU to get the best that remains after our losses from our exit from the union. I have already asked Ministers to take greater action to improve the passage of goods and people at border crossings, for instance. This Select Committee’s work is critically important to ensure that all aspects of the changes are fully understood and well implemented.
Whatever the future of this House, coming generations face a major challenge in contributing as much to reform in British society as has been achieved by those in the Lords today, in their wide range of careers; I have learned so much from them. Politics of any shade need doers who contribute sound examples of improvement, especially for local societies and national charitable work and particularly in the health and social care field, as in all aspects of our public life. My sincere wish is that we can stimulate much more involvement in local communities, which will improve our society. Without that, we are not a really active nation in the way we should be.
I wish all colleagues and staff good health, sound debate and sufficient time away from debates to regain a happy balance between work in your Lordships’ House and recreation time, especially in their later years. I thank all noble Lords for these fascinating years and a really enjoyable career, although sometimes it was a bit tiring.
My Lords, I got a great shock when I arrived at the House today because I had not realised that my noble friend was going to make her valedictory speech. It is a moment of great sadness for me to be standing here, following her wonderful speech. She and I were personal friends for many years before we both joined the House of Commons. Outside this House, we have also worked together in the private sector.
She has had an outstanding and very noteworthy political career, serving in four departments, as she said. She is particularly well known for her work in the Department of Health and Social Security and, perhaps most of all, her work for overseas development. She served with such energy and distinction that some of us at the time were deeply puzzled why Mrs Thatcher did not make her a member of the Cabinet. Although she often attended Cabinet, she was never given a Cabinet post. Most of us thought she richly deserved one because of her work.
No one could possibly doubt my noble friend’s commitment to development and to improving the lot of the poor of the world. She is a very familiar figure in Africa because she has spent so much time there in recent years; she is known, I think, in almost every country of the continent. She will be very much missed there, as she will be in this House. Her speech of enormous warmth, humility and modesty showed the very great qualities which will be deeply missed by us all. I thank her for all her service.
I speak today as a member of the Select Committee, and I pay tribute to our chairman, the noble Earl, Lord Kinnoull, who, with his calm, precise and diplomatic chairmanship, managed to get us to reach a report which is—more or less, give or take a few commas—unanimous. It was quite difficult because there were different views within the Select Committee. I join him in thanking our staff.
I was one of the few supporters of Brexit on the Select Committee, and I think that in today’s debate I am its only supporter. I supported Brexit on the grounds of sovereignty, independence and identity, rather than on economics—although I would not have supported it if I had thought that the long-term economic effects would be detrimental. This debate coincides with the third anniversary of Brexit. I am not quite sure what the significance is of the third anniversary, but it gives people a chance to pull the plant up by its roots, examine it, and put forward various theories.
Our report, through no fault of anyone other than the system, is massively out of date; as the noble Earl, Lord Kinnoull, said, it was addressing particular points at that particular time. The report was merely a snapshot of the problems that companies were facing immediately after the end of the transition period, so a lot of those problems—but not all—were teething problems with new systems coming into existence. Our report refers only fleetingly to the infrastructure problems that were forecast to occur at the ports. As noble Lords may remember, we were told at the time that there would be vast queues in Kent, resulting in the whole county being turned into a car park, and that Dover would be impossible to move in. We had Operation Yellowhammer and all those other very alarmist ideas. The most reverend Primate the Archbishop of Canterbury initiated a debate on the situation. However, none of it came to pass, and our report possibly rather underplays that.
Many of the recommendations in the report are about clarifying the administrative arrangements at the time, including changes in deadlines that were uncomfortable for business, and the effects on SMEs. One of the interesting points in our report is what it says about the absence of import controls; it is something of a curiosity. We came to the conclusion that the failure of the Government to meet their target date for imposing import controls was causing uncertainty. Perhaps it was, but one of the oddities was that, despite the absence of import controls when there were controls on the other side of the channel on British exports, British exports were doing much better than continental exports from the EU into this country. I think that that underlines the point that not all the problems that occurred were entirely due to Brexit or the Brexit regulations.
Three years on, our economy is undoubtedly facing very considerable problems. Sometimes I feel that almost everything is being blamed on Brexit. The day before yesterday, Mr Verhofstadt said that Ukraine would not have been invaded had it not been for Brexit—that seemed to be a rather extreme statement. Then there was the statement by a distinguished former Governor of the Bank of England, who claimed that in 2016 the UK’s GDP was
“90 per cent the size of Germany’s. Now it is less than 70 per cent.”
That is, as a leading economist in one of the remainer think tanks said, something of a “zombie” statistic. In fact, since 2016, the GDPs of Germany and the UK have grown by almost exactly the same amount. The report emphasises, as the noble Earl, Lord Kinnoull, did, that it is almost impossible to separate the effects of Covid and Brexit—and it was published before the invasion of Ukraine, which has added another complicating factor, making it very difficult to separate that as well.
For example, to take the shortages of labour, which are common to a number of countries, including the United States, but a very severe problem here, if during Covid a restaurant is closed and an Italian waiter decides to return to his own country, Italy, is that because of Covid or because the restaurant was teetering under the hammer from Brexit? Was it Covid or Brexit? It is very difficult to say.
Some people are determined to torture the statistics until they confess up the right answer. One example of that is the so-called doppelganger analysis used by certain think tanks. This is the system that takes a number of countries, which in the past were growing at the same rate in a particular period, and extrapolates that forward to today. It then comes up with the conclusion that, if we had grown at the same rate as these countries, our economy would be 5% greater. This has been recycled repeatedly in a lot of the media. But of course it depends, first, on the period that you choose and, secondly, on the countries that you are comparing yourself with. In the analyses that have been used, the countries that Britain has been compared with in some of the think tanks’ findings have been countries such as Australia, New Zealand and Norway—hardly a very persuasive comparison.
Rather than looking in the crystal ball, one should read it in the book. As the noble Earl, Lord Kinnoull, pointed out, the ONS figures now published give a more encouraging picture for exports. As he said, exports in 2022 in currency terms are at a record level and, adjusted for inflation, at a level not seen since 2019. If you look at the graph, it looks as though exports are broadly back on trend. Of course, we have had recently a much-publicised and gloomy report from the IMF forecasting that the UK economy will shrink this year; it does not actually mention Brexit. Today the Bank of England has said that it expects the economy to shrink this year, but by less than it had previously thought. Sometimes these reports in the recent past have been over-pessimistic for the British economy. But as I said earlier, since 2016 the British economy has grown at much the same rate as that of Germany.
One subject on which there was a lot of debate in our committee was divergence—to what extent regulation should be allowed to diverge from the previous model in the European Union. Some members of the committee were particularly apprehensive about that, clinging to the idea that we should remain aligned in regulation. My view is that we certainly should not make a fetish of divergence—we should not diverge for the sake of divergence—but it is important to have the parliamentary power and freedom to diverge. But those decisions should be driven by industry and commerce. Divergence is very important for new technology. As the noble Earl, Lord Kinnoull, said, we had the arguments around SPS and agricultural products, and our report urges that there should be an agreement with the EU on SPS. Yes, there should be an agreement—but that should not necessarily mean alignment.
The report refers to the review of the TCA due in 2024-25, and rightly urges that the UK Government use the 32 specialised committees, the partnership council and the joint committee to build on the trade arrangement that we have and build on the TCA to get arrangements that are more flexible and comprehensive, to develop a relationship that is mutually beneficial. I remain a supporter of Brexit but that is the past. It is important now to improve our relationship. We can be a third country to Europe, but a good friend, a strong ally and a partner. We should put the past behind us and, as the noble Lord, Lord Hague, said to our committee, we should adjust to the future, rather than attempt to adjust Brexit. I commend the report to the House.
My Lords, from this side of the House, I join in the tributes to the noble Baroness, Lady Chalker. She was one of the Conservative Ministers in the Thatcher and Major Governments whom I most admired, particularly for her work on overseas development. We are going to miss her a great deal and I thank her for what she had to say.
I also join in the tributes to our committee. I am a member of the committee; I regard it as one of the privileges of being a Member of this House to be able to be a member of its European committee, and I certainly think the chairman has done extremely well since I became a member. He chairs the committee with consistent charm and grace; he can occasionally be tough but is always intelligent and wise in his judgments and I think we would lose a lot from his absence. I also pay tribute to the staff who have managed the adjustment from the grand European Union Committee that we once had to the lesser European Affairs Committee that we are now members of. They have been very helpful, worked very hard and put an enormous amount of effort in: we owe a great deal to them.
I feared that this debate might be something of an unproductive battle of statistics, and I do not intend to go there: I am not going to get involved in doppelgangers, the noble Lord, Lord Lamont, will be pleased to know. I think there are two facts that come out of the analysis of our trade position since Brexit. One is that, although UK trade has recovered in the last year, it has not recovered as fast as other countries’ trade has from 2019. Trade intensity, a measure of trade in GDP, has declined somewhat. We are suffering a bit on trade, but one fact that the noble Lord did not mention, which is one of the most worrying things about the trade position, is that small companies have been particularly hard hit. I regard small companies as the entrepreneurial future of Britain. From those small companies should grow big companies, but one-third of small companies, I think, have dropped out of trading with the European Union. That is an extremely serious problem. I do not quite know, and I would like to ask the Minister, whether the Government recognise that to be a major issue and what they are trying to do to help small companies compete more effectively in the EU. In that regard, I think the fact that European companies can come here without any control, while small companies in Britain face all these controls at the borders, is bound to put them at a competitive disadvantage.
Also, the SPS issue is very important for small companies. We have heard of all the problems with Scottish seafood, plant growers and all that stuff: some of the eminent Members of this House own companies in the plant-growing area. They have faced very considerable problems, yet the Government are taking what I regard as a dogmatic position on SPS. Again, it would be good to hear whether there is any shift from the view taken by the noble Lord, Lord Frost, in the negotiations, which was that, in any circumstances, dynamic alignment with the EU was completely unacceptable. I am not suggesting dynamic alignment in all areas, but it seems to me that to say it could never be acceptable, you have to look at the price you are paying, and I think quite a lot of small businesses are paying a very high price for a bit of Tory dogmatism, to be quite honest. Are the Government going to reconsider that position in the future?
The debate on Brexit is moving on. I was passionately opposed to it, but I regard my position now as asking how we make the best of where we are. I do not see any prospect of an early return to the European Union; for that to happen there would have to be a settled political consensus in the UK—in other words, a very significant shift of opinion in the Conservative Party about its attitude to the European Union. I do not think that our partners would be in the slightest bit interested in a British reapplication while the political debate in Britain is so heated and divided. We had better accept that and try to make the best of it we can. I have detected a sense in which the debate is moving on. For instance, we have moved away from the position where a lot of people who were in favour of Brexit claimed that we would not suffer any problems in trade as a result of leaving. There are undoubtedly bureaucratic barriers that have been erected, and the TCA is the result, and that is now more admitted than it was two years ago.
It is six years since the referendum; it is three years since we left. The Government have been presumably working very hard on trying to define a policy of divergence which would demonstrably improve our competitive position. In my view, they have not as yet produced much of a positive result; this is a very significant failure on the part of those who were the strongest supporters of Brexit. I am unimpressed by the trade deals that we have managed to deliver, in terms of their economic benefits. I am convinced that there are areas where regulatory freedom would be beneficial, particularly, as the noble Lord, Lord Lamont, said, in the new high-tech industries, digital trade and all that. However, we do not see much coming out of the Government, and what I fear about the Bill we are going to debate next week is that there is again a sort of ideological presumption that if we abolish all EU law, somehow this is going to result in a great revival of the British economy. If you are serious about this, you have to do detailed sectoral analysis of where divergence might be beneficial. I see very little evidence of that on the Government’s part, with the possible exception of financial services, and most experts on financial services think that the Government are exaggerating the extent of the divergence that they are recommending. We have to make the best of it, and I hope the Government recognise that this is what they are trying to do.
I would be interested to hear what the Government feel their policy will be for the future of regulation; what their policy will be for the revision of the TCA in two years’ time—we have to start thinking about that—and where they see the possibility of what I would call sovereign alignment. If it is in our interests to align with EU rules, that is a sovereign decision of ours, not the EU imposing anything on us. It is up to us, so we should allow for that possibility. At present, it is just ruled out. I think that is a very big problem.
There we are: we must do our best to improve things. I will always remain a passionate pro-European. I believe that events since 2016, particularly in Ukraine, have underlined the importance of close engagement and friendship with our European friends and partners. While we cannot be members of the European Union in the foreseeable future, I will certainly never give up campaigning for a united Europe.
My Lords, I also start by paying tribute to the noble Baroness, Lady Chalker, and thank her for her wonderful valedictory speech. I know that my father admired her greatly; he came in as a new MP in 1979, when she was beginning her ministerial career, and I continue in that admiration as well. I am fascinated by her reason for departing at this particular moment. My noble kinsman Lady Stocks, Mary Stocks, said of this House in her autobiography—they did not have valedictory speeches in those days—“I do not want this place to become my eventide home”, and I suspect that the noble Baroness, Lady Chalker, would have some sympathy with that. My father and I both came from a showbusiness background, so I think the other way we would put it is to leave the stage while people are still applauding. If there is one thing that the noble Baroness, Lady Chalker, should hear from across this House today, it is that we continue to applaud her for her contribution.
The report from the noble Earl, Lord Kinnoull, and his committee is a significant contribution, providing evidence of the difficulties we have faced in trade in goods since we left the EU three years ago this week. It is a particular pleasure to follow the noble Lord, Lord Liddle, whose attitude that we must make the best of where we are is echoed by myself and my colleagues—but with a fervent hope that we will rejoin one day. I realise that there are those for whom that would not be the desire, but I also believe that there is now evidence showing that some of the concerns we had prior to the referendum are unfortunately there. The question is whether this country will be able to deal with them, and I am perhaps less convinced than the noble Lord, Lord Lamont, that that is true. It was interesting that he quoted Guy Verhofstadt, but the actual quote is slightly longer and helps to understand why he said it. He said of the Ukraine war:
“It’s really an attempt by Putin to restore the old Soviet Union … I think without Brexit maybe there was no invasion. I don’t know, I guess that he would see a far stronger and united Europe on the other side”.
That is the issue for us: the role of Britain, and the UK. I echo his comments and those of the noble Lord, Lord Liddle, that the UK’s involvement across Europe in the context of Putin’s invasion of Ukraine has started to build those ties and relationships again. That is important after Brexit.
There are three statistics that stand out to me about the UK-EU trade figures and statistics over the last couple of years. First, the UK’s exports to the EU fell by 13% in 2021. Secondly, EU-UK trade is currently 20% lower than if Brexit had not happened. Thirdly, the value of customs duties for UK businesses went up by 64% in 2021. For my brief contribution, I want to look at one area: chemicals. As at September 2022, the UK exported 2.8 billion goods from the chemical sector into the EU, and imported 4 billion—so we are already seeing a continued difference between exports and imports.
I want to focus not on customs duties and other delays and barriers, as others noble Lords have already done, but on the so-called freedoms that this Government have referred to—our ability to create our own rules and regulations and not, to quote many Ministers, blindly follow the EU. The consequences of this policy in relation to chemicals are evident, particularly in how the UK manages the retained EU law and the proposed sunset of all EU laws by the end of this year.
On 21 November, in Grand Committee, we considered the Biocidal Products (Health and Safety) (Amendment) Regulations 2022 and the changes to the certification process following our departure from the EU. It is the first time I have seen, up close, the practical problems that businesses, government and government agencies have faced with having to manage things. The Secondary Legislation Scrutiny Committee noted in advance:
“These Regulations propose to extend the transitional period by five years because HSE has been unable to process the large number of applications for re-authorisation, in particular because much of the data … is stored on databases to which Great Britain no longer has access.”
The committee was concerned about the progress that was being made by the HSE more recently.
I raised this issue with the very helpful Minister at that time, the noble Baroness, Lady Stedman-Scott, in Grand Committee, and I asked her two questions. The first was how the department and the agencies that report to her—specifically, in this case, the Health and Safety Executive—could be protected from the proposed cuts to the Civil Service and other public bodies in order to deliver the extended timescale for an agency that is clearly struggling to manage the new arrangements, where there has to be dual certification, once for the UK under our own system and again for any company exporting to the EU. I also asked her about how much this extra certification was going to cost the Health and Safety Executive, and eventually businesses, because everything is done on a cost recovery system.
The Minister’s responded, on the first issue, that there were some commitments
“to ensuring that health and safety legislation continues to be fit for purpose”,
but she could not give me any more details about the cost more generally. However, on resources specifically for the chemicals division, she told me—and I have to say I was astonished:
“The total budget for the HSE’s chemical regulation division has grown by 39%, from £22.4 million to £31.2 million between 2018-19 and 2022-23, reflecting the HSE’s need for increased resources for its post-EU exit responsibilities.”—[Official Report, 21/11/22; col. GC 239.]
That is an extreme increase in a budget, at a time when the Chancellor of the Exchequer is saying we must cut all public services.
I have three questions for the Minister. He will be relieved, I think, to know that I am not going to ask him about biocidal regulation. First, are government conducting a formal review of capacity relating to all bodies—whether government bodies or arm’s-length bodies—in charge of any retained law being changed that has already diverged, such as this particular biocidal product? We should now have some idea of what extra costs there are likely to be. Secondly, is an assessment being made for all future retained law that is going to diverge in the future and how much it will cost? Thirdly, what prospect remains for cuts to the Civil Service and the arm’s-length bodies in light of this information? It seems to me that the one message we can take from this excellent committee report is that, if this Government want to make the new arrangements work, it is clear that current arrangements are not working in the Health and Safety Executive in an absolutely vital safety area both for biocidal products in the UK and for any we may export to the EU.
I appreciate that some of that might be quite technical, and if the Minister cannot reply today, I hope he will be able to write to me. However, it raises a more general issue about whether this country is prepared to understand the realistic cost of Brexit and how doing things our own way will not be just a wonderful theory. In practice, it will cost money, which means costing our businesses money.
My Lords, like other speakers, I begin by paying tribute to the noble Baroness, Lady Chalker, whose valedictory speech we took such pleasure in hearing, although with such regret on the occasion of it. I worked for her in a number of capacities, first when I was Permanent Representative to the European Community. She had put her name to an Act that set up the single market: the Single European Act, of which I believe she can be proud. It was not only her name but Britain’s too. It is one of the answers to those who say, “Did we contribute anything positive to the European Community when we were a member?” That is one of the conclusive answers.
I also worked for the noble Baroness when she was Minister for Overseas Aid and I was ambassador to the United Nations. Although our contribution in GNP terms was a figure I will not embarrass her or anyone else by giving now—it was lower than what we have now—she put in a great deal of effort to get it on an upward trend. For both those reasons and in both those capacities, she has made a notable contribution to the public life of this country.
It has become a feature of debates in this House on Select Committee reports to criticise the extreme—indeed, sometimes pretty well farcical—delays in bringing them forward for debate. I am afraid this is one of the farcical ones. Trade statistics are always lagging, so if you take as long as this to debate a report, the statistical basis for which was necessarily quite some time before the report itself was written, you ensure that all the figures are out of date.
Since the report was written, those figures have tended to move further and more consistently in a negative direction. I point out that the figures the Government and other speakers have used are of a devalued currency; that also casts some light on their validity. If noble Lords doubt that things have moved, and are still moving, in an adverse direction, just read reports by the OBR, the Centre for European Reform, on whose advisory board I sit—I am sorry that it was responsible for the doppelganger approach, which I think was of somewhat greater validity than the noble Lord, Lord Lamont, would allow—or the King’s College group, UK in a Changing Europe.
My first question to the Minister is: does he stand by the Government’s extraordinarily complacent assertion in its ministerial correspondence with the committee, on which I also serve, that our trade with the rest of Europe is “generally proceeding well”? If he does, I recommend he say that to any of the trade associations or groups that assert the contrary. He would be likely to get what the great PG Wodehouse called “the bird”.
None of this deprives our debate of its validity and topicality. Many of its main themes have been extremely cogently set out by our chair, my noble friend Lord Kinnoull, who has brought such skill to the management of our committee. I will concentrate on two of them: sanitary and phytosanitary rules, and the predicament of small and medium-sized enterprises, both of which have been referred to by previous speakers and make up important components of our trade with the EU. SPS sounds a pretty arcane subject but those rules, applied to us as a third country, contribute much of the friction which has been imposed on our exports of agri-food products since we left the EU. Trade in those products had grown steadily throughout our period of EU membership.
My first question is: should we not seek to conclude an SPS agreement with the EU, as some other third countries have done—Switzerland and New Zealand, for example? In this way, we would alleviate the burden placed on our agri-food exporters. The case is all the more compelling when you realise that such an agreement would remove some 80% of the problems which bedevil the Northern Ireland protocol. Your Lordship’s committee proposed that course of action several times, and every time the Government rejected it out of hand, as the noble Lord, Lord Liddle, has said. Why? Well, they did not really deign to explain that in any detail. So, my second question is this: can the Minister explain why that common-sense solution should not be adopted? In doing so, it might be relevant to recall that, when our committee took evidence last week for our current inquiry in Wales and Scotland, we were told that negotiating an SPS agreement was a top priority for both those nations. That was the view of all parties—all parties—in Wales and Scotland.
Then there is the case of small and medium-sized enterprises. Their trade association said publicly last week that 20% of the companies that used to trade with the rest of Europe had now ceased to do so altogether, and that many others were struggling with increased bureaucracy and costs. Again, your Lordships’ committee recommended that the Government extend the duration of the scheme they introduced when we left the EU to assist small and medium-sized enterprises, in order to help them overcome these problems. Again, this was rejected, without any serious arguments to justify that. So my third question is: does the Minister not think that decision should be reversed before any more damage is done?
It is not impossible that more bad news could be coming down the track so far as our trade with the rest of Europe is concerned—and we must remember, of course, that that is nearly half our trade. Most obviously, if the Government’s efforts to find a negotiated solution to the problems with implementing the Northern Ireland protocol were to fail, some kind of increase in trade barriers could ensue. That is a pretty obvious one. Also, if the EU’s developing policies of introducing cross-border adjustment mechanisms to take account of carbon content and climate change considerations were to result in more friction in our mutual trade, that would be damaging to us too. The application of the EU’s rules of origin could do the same, and they are due to move into a sharper focus and higher gear in the coming year.
I invite noble Lords to reflect that this is all taking place during a period when the sterling exchange rate’s loss of value, as I referred to before, should have been giving our exports a major boost—it clearly has not done so—and when our place as one of the main recipients of foreign direct investment both from outside Europe and within it has been slipping away. I would argue that there is no ground for complacency here—quite the contrary. Perhaps the Minister will tell us that the Government have shifted from their stated view that things are generally proceeding well. I really hope he will do that when he replies to the debate.
My Lords, like my noble friend Lord Lamont, I was shocked to learn that our noble friend Lady Chalker is to leave us. I had not realised that that was going to happen, and I am extremely glad that I should be here on the occasion of her valedictory speech. I remember her well as a radical and disruptive influence in the Young Conservatives back in the late 1960s and 70s. Since then, she has had a most distinguished career; she has combined idealism with energy and vision with practicality. This House, and particularly the Conservative Benches, will be sadly diminished by her departure.
For me, too, this is something of a valedictory speech because, to my great regret, I have been rotated off the European Affairs Committee; indeed, I think I ceased to be a member two days ago. I wish to say how much I have enjoyed serving on the committee; how very much I have appreciated the wisdom, fairness and deliberations of our chair, the noble Earl, Lord Kinnoull; and how much I have enjoyed the company of the other committee members. Although we have not all agreed on everything at all times, it has been a model of noble Lords of different parties working constructively together. I hope that my successors on the committee will find it as enjoyable as I have and will continue to produce reports of the quality that the noble Earl has made possible. I also wish to say how very well served we have been by the committee staff. They have had a considerable amount of work to cope with and have done so in a very efficient fashion.
Very often, the time that elapses between the publication of a report and its debate in this House is a disadvantage but, on this occasion, it is an advantage. As other noble Lords have said, when the report was published, it was still unclear what the effects of both Brexit and Covid were and it was difficult to disentangle them. However, now, after the effluxion of time, we can see how perceptive the committee was in disentangling those factors and identifying the problems that have been created by the terms under which we left the EU.
The Government’s response is a very singular document. It is basically a list of their efforts to overcome obstacles to Britain’s trade with its principal trading partner that the Government themselves are responsible for creating. It is a very unusual situation. In saying that, I am not trying to reopen the Brexit debate; as the noble Lord, Lord Liddle, said, that issue is settled. What I am doing is drawing attention to the consequences of the terms on which Mr Johnson and my noble friend Lord Frost negotiated our departure from the EU. It did not have to be this way. The country took the decision to leave the EU, which I personally regretted very much, but the manner in which we did so has created a range of problems that could well have been avoided had we adopted different negotiating tactics and objectives.
As we know, all countries have been hit by the effects of Covid and the consequences of the war in Ukraine. In explaining the problems facing the British economy, Ministers harp to a great degree on these matters but, in those respects, the United Kingdom is in the same position as everybody else. The reason why we are facing additional problems is, as I have just said, the terms under which Mr Johnson negotiated our departure.
Their manifestations are clear for all to see: the fact that the UK is the only major economy still at pre-pandemic levels; the hit to our exports, to which other noble Lords have referred; the fact that business investment has been growing by so much less than the G7 average; the shortage of workers, which all European countries are suffering from but our problems have been made worse than they need have been; and the IMF forecasts that suggest that we will be alone among the major economies in going into recession.
As my noble friend Lord Lamont pointed out, forecasts are not always right and the UK has defied pessimistic forecasts in the past. However, this accumulation of factors is significant. I agree with those who say that Brexit is not the only factor behind them but the terms on which it was negotiated are a very important factor. All these problems were foreshadowed in the committee’s detailed questioning of witnesses and the responses that they received. From the evidence we collected, it was clear that the totality of the individual issues that we identified would cause major problems to the economy.
My party devotes a great deal of time to debating growth and how best to achieve it. Growth is a difficult thing to achieve but one way in which we could certainly contribute to growth would be, as the noble Lord, Lord Liddle, has pointed out, making Brexit work. As this report and the government response shows, one of the best things we can do is set about resetting the relationship between this country and the European Union. It is not a question of returning to the EU. That is not something we should be thinking about at all at the present time. We should be thinking about how this country can deal with the EU on a constructive, equal and mutually beneficial basis. I very much hope that an agreement on the Northern Ireland protocol might prove to be the first step on that road.
My Lords, I begin by paying tribute to the noble Baroness, Lady Chalker. We have never met but I have followed her career over many decades—admittedly not as far back as the 1960s nor in the Young Conservatives, but I have followed it nevertheless. I know what a distinguished career she has had in both this House and another place, especially as Minister of State for Overseas Development and Minister for that department’s successor, DfID. I once visited one of her successors in that post, the Member for Leeds Central, and saw the noble Baroness’s photograph on the wall of former Ministers. I can report that she was regarded with great affection by members of staff in that department, all those years later. That is not always true of every Minister. I wish her very well in the years ahead in everything that she has outlined.
In my experience and as has been pointed out, it takes all too long for a report, once published, to be debated in this House. Often, that delay is a disadvantage; I think that the noble Lord, Lord Hannay, takes that view. Sometimes the heat may have gone out of a subject—I am not sure that is the case here—or events may have overtaken it but, on this occasion, I agree with the noble Lord, Lord Tugendhat, that it is advantageous that we are debating this today because of the amount of time that has passed since December 2021. I hope that, when people read today’s debate, it turns out to be a somewhat more honest assessment of the position on GB-EU trade.
I congratulate the noble Earl, Lord Kinnoull, and his committee, on having produced this report. I am not a member of the committee and am in a minority of speakers in this debate for that reason, but I think that it is advantageous to consider this now. One advantage, to anticipate the speech of the Minister, is that, as a result, we are likely to hear somewhat less about the effects of Covid as a reason why trade with the EU is difficult and has suffered. We know, of course, that Covid made a big difference. As the noble Earl said, the committee itself stated that it was hard to disentangle the effects of Covid and Brexit at the time when the report was written. However, now it is a little clearer, which is why the Minister will probably not need to refer to the effects of Covid in quite the same way. After all, if it was simply Covid that affected our trade with the EU, we might as well pack up the debate and go home now. Where are we three years after we left and what do we know? I want to run through a few points as quickly as I can as a contribution to this debate.
First, leaving the EU single market and customs union has undoubtably been bad for the economy and bad for trade. British businesses exporting to the EU now have to contend with costs, paperwork and red tape that they did not face before. In addition, as the committee states,
“the inconsistent application of the new rules by different EU Member States”
has only made things worse.
Secondly, SMEs have been particularly affected. According to HMRC, the number of UK businesses exporting goods to the EU has fallen, unfortunately, by an astonishing third between 2020 and 2021, and in the main, it is thought that most of those are small businesses that simply gave up in the face of the Brexit red tape that exists.
Thirdly, proof of this is partly shown by the insolvencies that have been higher than average during the pre-Covid pandemic period. I will spare the House a range of statistics that I got on this basis about insolvencies, which have been greater in number than at any time since the end of the financial crisis in 2009 or thereabouts.
Fourthly, at a macro scale, we now know more than we did about independent projections for the UK economy. The House will know that the UK is now forecast by the IMF to be the only G7 country likely to move into recession this year, and we are certainly the only G7 country that has a smaller economy than we did before Covid. The noble Lord, Lord Lamont, said that the Bank of England said today that we are going to move into recession but it will not be as bad as it might otherwise have been. I accept that, but it is still not good. The Office for Budget Responsibility estimates that both exports and imports will be around 15% lower in the long run than if the UK had remained in the EU, and Brexit will reduce long-run productivity by about 4%. The OBR says that the UK has
“missed out on much of the recovery in global trade.”
Bloomberg Economics has said that Brexit is costing the UK economy £100 billion a year.
Fifthly, while all these costs have been imposed on British businesses trying to export to the EU, the Government have, as has been mentioned, so far delayed implementing the full checks on goods coming into the UK. The committee’s report explicitly referred to “disquiet” among GB businesses—what a wonderful word; it is an understated term—about the ongoing
“asymmetry in the border regimes, with GB exporters … facing a far more rigorous import regime than … EU business sending goods to GB.”
I will not go into the biosecurity issue, but it may come up later. Why do we not have these import controls? The answer is fairly clear: we do not have the capacity to undertake the checks, in terms of both the staffing and the infrastructure, as the committee noted, and probably because the Government are afraid of the consequences in the form of further shortages and delays if they are introduced. When I talk about capacity, I mean that in some obvious cases, people are understandably worried that there simply is not the physical room to implement proper checks on incoming EU goods.
The noble Lord, Lord Lamont, said, “When you look back, people predicted huge queues but they never happened.” I am tempted to say that he should have been with me in July last year on the first day of the holidays, when it took me seven and a half hours to get to the Folkestone Eurotunnel instead of one and half hours. The delay was considerable—it was all over the news.
Moreover, if we look ahead, as noble Lords may know, the EU is now planning not just to introduce a visa system for entering the EU but to fingerprint us. When that is introduced, and everyone has to get out of their car and be fingerprinted, the queues are going to be astronomical. That is not a prediction that I want to make, but nevertheless I fear that that is ahead of us. If the Minister wants to tell us that that is not the case, I ask him to do so when he winds up.
Sixthly, what about the trade deals? It is fair to say that almost all of them have replicated what we already had, while the two new ones, with Australia and New Zealand, are really quite small. I note that the former Environment Secretary, George Eustice, is on record as saying that the Australia agreement was
“not actually a very good deal”
because the UK
“gave away far too much for far too little in return.”
As for the promised trade deal with the United States, it is nowhere in sight and I should think it is quite a long way away, if it ever arises.
Seventhly, there is the issue of employment and skills shortages. The House knows that employers say how hard it is to find workers, especially in areas such as catering, hospitality, food and farming.
Eighthly, there are other effects too. I suppose these come under the heading of cultural trade, but they are none the less real. I shall mention two, and I hope the House will forgive me; this certainly was not in the committee report. Musicians and performers have found that the costs and visa red tape make touring in the EU not just more difficult but almost impossible. I am talking not just about professional orchestras, for whom it is bad enough, but about youth orchestras and young people, who used to go and tour around Europe in the summer—and the same was true in reverse—and got enormous cultural benefit as well as providing music across Europe. That has stopped completely, and I deeply regret that.
The next example is one that I came only across this week. The Minister has many responsibilities in his portfolio and it certainly does not cover this, but I read that there is a British zoo that is desperately worried that it can no longer move a rhinoceros, which is needed for breeding purposes to keep the species alive, because of the enormous amount of red tape involved. These things happen, and it is a terrible shame that they do.
Ninthly, we should not forget that in this debate there are things that the Government have tried to do which they claim will be a Brexit benefit but are actually counterproductive, if not practically impossible. As far as I know, they have twice delayed the introduction of a UK CA mark to replace the familiar CE mark, because businesses are asking what the point of it is.
Another, more serious example is the EU REACH programme. Noble Lords may not be familiar with this, but the REACH regulations governing the safety of chemicals are the bedrock for the way in which we deal with risk and hazard in a very important area. REACH was in fact the largest piece of legislation ever considered by the European Parliament when the regulations were passed some years ago. As I understand it, the Government have said they want to introduce a British version of the REACH regulations but that has now been delayed until 2025, while the UK chemicals industry says it would entail enormous costs for no benefit whatever. When the Minister winds up, I would be grateful if he could say a word about the Government’s plans for the UK REACH programme.
Tenthly, we have to face up to the huge and complex EU retained law Bill, which plans to put a sunset clause on all EU-derived legislation unless it is saved. We had a taste of that at Questions this week, when the Minister was asked for a guarantee that the Government intended to retain the TUPE regulations but failed to give it. What will be the effect of that Bill? I think it will produce a lot of confusion on the part of business and the public as to what the law and regulations are and will be, and I am not sure that that is very good for investment.
Of course, the UK’s relationship with the EU has been damaged by the Northern Ireland protocol Bill. I say only that we hope that the negotiations succeed and that some of the collateral damage, including our non-participation in Horizon Europe, can be solved in the end.
Eleventhly, in the face of all this evidence, it strikes me as interesting that people who particularly argued for Brexit are now rather more unsure, as they struggle to understand what has gone wrong. I found the speech of the noble Lord, Lord Lamont, quite interesting in that respect, and I shall read it in Hansard. I hope there will be some common ground that we can find in the years ahead, some working degree of consensus that the UK needs, for its own future—a better working relationship with Europe. Perhaps when the time comes to review the TCA, we can find areas that need fixing and fix them, as has been mentioned in the debate today.
What do the public make of it? Opinion is still divided—and for a lot of people Brexit was about sovereignty, not the economy—but this very week John Curtice, the distinguished professor of politics at Strathclyde University, reported that the latest polls show that 58% of people think that Brexit was a mistake. We must now start talking about a new and different relationship with the EU, and the European political community is a good way to start. Accepting this committee’s report and everything in it would be a good basis for approaching the task ahead.
My Lords, it is a sad day to be contributing, during a debate that has included valedictory remarks from the noble Baroness, Lady Chalker. Her long and distinguished reign as the premier friend of Africa is the stuff of legend. She understands what makes Africa tick. She will be missed, and I wish her well.
The noble Earl, Lord Kinnoull, was spot on in his remarks, and in part drew attention to many observations that I wished to make—but I shall press on. I shall not comment on the whys and wherefores of the effects on the economy resulting from EU withdrawal and the current complexities of intra-European trade, other than to note that we have not risen to the challenge of Brexit. We are where we are, with the only relevant question being, “What are we going to do about it, moving forward?”
Nevertheless, notwithstanding the remarks from the noble Earl, Lord Kinnoull, and the noble Lord, Lord Lamont, I should put on record that, at the meeting I attended in Birmingham this week as the guest of Midlands Engine and Midlands Connect, it was underlined that the Midlands region now exports 40% fewer products than at the start of 2019, with the biggest impact being on SMEs. One in five of all England’s exports comes from the 800,000 Midlands SMEs that employ 4.4 million people. It was also stressed that the region’s total exports are £7 billion below those levels. Losing those exporters could break the pipeline for future export growth and significantly harm the UK’s frail productivity.
The Future of UK Freight and Logistics APPG has embarked on a year-long 2023 assessment to lay strategic preparedness to serve for 50 years hence, which, when combined with the parallel APPG for Trade and Investment conducting a review of the United Kingdom’s export promotions strategy, has been long overdue. The last endeavour in that regard was the 2012 review by the noble Lord, Lord Heseltine, entitled No Stone Unturned. I serve as co-chair of both APPGs and look forward in that capacity to sitting next to the Minister for Exports in order to understand the Government’s thinking on export promotion, in respect of which the essential galvanising of trade with countries on the continent must surely be one for mandatory consideration.
I am in no doubt that there is a desire in this United Kingdom of ours to work together in public and private sector partnership, but to be less reliant on central government interventions and spearheaded by focal points such as Midlands Engine in order to drive economic growth and achieve our shared goal of greater prosperity, unlocking the opportunities for investment and trade and maintaining our status as an economic player on a rapidly changing global stage. An underlying principle is that there should be a spirit of reciprocity with trading partners for trade to thrive. Trade with, rather than into, should be the mantra.
Additionally, a solution to trade is assisting our exporters, providing them with clear guidance and training on new regulations. They must be supported so that they do not feel that it is all too much hassle to bother. Those on the front line must be supported. I visited the Port of Dover, the UK’s busiest international roll-on roll-off ferry port, handling £144 billion of freight and one-third of the UK’s trade, whose biggest single trading partner is the EU. The key elements for success are ensuring that border fluidity is adequate in a post-Brexit world, along with road investment and a decarbonised supply chain, thus ensuring delivery of the resilience, time and cost benefits that supply chains rely on into the future.
A key message I wish to offer the Government, therefore, is for border procedures and management, allowing for the consequential training required, to be planned quicker and more in depth than currently is the case. A takeaway is that the Government should be doing more to inform those that are an engine room of trade: namely, those engaged on border management procedures on both sides of the channel. They need to be better informed. I can further vouch for that, having hosted a meeting of Nigerian Government agencies that were unaware of the UK import regulations that resulted in 60% of a particular product range being rejected by the UK authorities. So more needs to be done in that regard to explain what our regulations are, so that people around the world can comply, not least our own organisations.
While not wishing in any way to prejudge the review to which I have referred, the original guide on how the border with the EU works, entitled the Border Operating Model, originally published in July 2020, was subject to two complete revisions as most of the dates set in the original BOM for implementing new arrangements were not met and had to be delayed. The most recent change was made to reflect the Government’s decision to delay the implementation of sanitary and phytosanitary checks on agricultural goods and foodstuffs imported from the EU, which should have been introduced on 1 July 2022. This should have been published in autumn 2022, but still has not been so, leaving importers of such goods from the EU unable to plan for their introduction or train staff accordingly.
Additionally, in December 2022 the TCA published instructions setting out the rules of origin—touched on by the noble Lord, Lord Hannay—that goods had to meet to be considered as qualifying for the purposes of claiming preferential rates of duty. These have proven difficult for companies to follow, as has the process for issuing documentary evidence of the origin.
EU exporters making a statement of origin on their commercial invoices to allow the UK importer to claim the preferential rate of duty must have a registered exporter number if the goods are valued at more than €6,000. A large number of EU exporters still seem unaware of this requirement. A UK exporter has to provide only its economic operator registration and identification number to make an origin statement, which creates confusion. Many smaller traders, particularly those who had only ever traded with the EU and therefore had no customs experience prior to Brexit, have struggled with this legislation and do not feel supported in their efforts to understand it.
The policy paper for the 2025 UK border strategy, published in December 2020, referred to as the target operating model, described the border we are intending to create. Does HMRC intend to use trusted trader programmes when implementing both the single trade window and the 2025 UK border strategy? Will the simplifications offered to traders under the new strategy be available only to trusted traders, for example?
The UK already participates in the World Customs Organization’s authorised economic operator programme, with many companies undertaking a lengthy and onerous application process to prove their levels of compliancy and security to HMRC in order to achieve accreditation. In the lead up to Brexit, many companies thought that AEO would be beneficial post Brexit as it would offer accredited companies a green lane for their EU goods to enter the UK. This did not prove to be the case and many companies are now questioning the value of the scheme. The accreditation is meant to be subject to a reassessment by HMRC after three years, but many traders are now saying that they would rather let the accreditation lapse as it does not offer any benefits. This is disappointing. HMRC should be encouraging traders to apply for AEO as it focuses on compliance and ensures that traders have systems in place to self-audit their customs declarations, thus allowing HMRC not to do so and freeing up limited resource to focus on non-compliant businesses.
HMRC is possibly missing a way of improving customs clearance standards and potentially raising more revenue by ensuring that the correct duties and taxes are paid on import declarations. Why do customs clearance providers not have to be licensed or qualified, or to be members of a professional body in the UK? The customs declaration service, the replacement for CHIEF—the customs handling of import and export freight—was finally implemented for imports in October 2022. The CDS for exports was meant to be implemented in April this year. However, this has already been delayed by eight months, to December 2023. Why is that?
In summary, and to help in this process, it would be helpful for those tasked with border management if the Government replied to nine detailed technical questions. The Minister may be relieved to hear that I do not anticipate full responses due to ministerial time constraints, but I request that they be given full consideration. I will be placing them today as Parliamentary Questions for Written Answer, but for the record of the House, these are they. When will the target operating model be published? Can goods imported into the UK be repackaged, sold to the EU and referred to as being of UK origin? When will the 2025 UK border strategy be released? When will details of “ecosystems of trust” and how trusted traders will be identified be published? Is it intended that HMRC will continue promoting authorised economic operator status to businesses and will it commit to ensuring that successful applicants will receive the published benefits? Is it intended that HMRC will make authorised economic operator status mandatory for customs declarants? Will the customs declaration service for exports be implemented on time? Will the single trade window really start to deliver in 2023? Finally, have the Government sufficiently resourced HMRC to manage an anticipated 270 million additional customs declarations each year from UK companies for the import of EU goods, with a similar number expected on the EU side of the border?
My Lords, I too am particularly pleased to be able to participate in this debate because it gives me an opportunity to say a few words about the noble Baroness, Lady Chalker. Unlike my noble friend Lord Stansgate, I have met the noble Baroness, Lady Chalker, on many occasions. Indeed, we crossed swords in the other place when I was one of the shadows in overseas development, so I know a great deal about her. Some of the statistics are remarkable. She is one of only five people who managed to survive the whole 18 years of the Conservative Government as a Minister. That was really remarkable. She was also a Minister for Overseas Development for about eight years—another remarkable stint. In spite of what the noble Lord, Lord Hannay, said about how much was spent on overseas development at the time, it would have been a great deal less if it had not been for the work of the noble Baroness, Lady Chalker. So I know a lot about her, and I have crossed swords with her on a number of occasions. That is why I bow to no one in this House to pay tribute to her for her wonderful work. We are all very proud of her.
I am a recently retired member—like the noble Lord, Lord Tugendhat, a somewhat reluctantly, but willingly in the end, rotated member—of this committee. I too welcome the report and most of its findings. As other members of the committee have done, I pay tribute to the chair, the noble Earl, Lord Kinnoull. Anyone who can get unanimous reports out of a committee that includes the noble Lord, Lord Lamont, and my noble friend Lord Liddle must be a real diplomat—not to mention having me on the committee as well. He has done a great job.
I endorse the analysis in the report that openly acknowledges Brexit’s negative effect on small businesses in particular. However, I remain slightly disappointed that many of our observations are still caveated with this warning about the supposed impossibility, again perpetrated by the noble Lord, Lord Lamont, of disentangling the economic effects of the pandemic from Brexit. It is easily done. This is deliberate obfuscation by the Brexiteers, and particularly by the current Government, who are unable to admit that Brexit was and is a disaster.
The report can also seem contradictory at times. For example, it states:
“It will take time before a proper comparison can be made.”
However, in the preceding line, we make an incredibly compelling comparison between our trade with Europe versus the rest of the world, noting that United Kingdom-EU trade has fallen far more precipitously. I urge the reconstituted committee, and the noble Earl, Lord Kinnoull, in particular, perhaps to recognise that the time for fence-sitting has passed. Notwithstanding the presence of the noble Lord, Lord Lamont, it should perhaps look at the current reality and take a stronger view.
Earlier this week, the IMF released figures that reveal that the United Kingdom is the only G7 country that has failed to rebuild its economy to pre-pandemic levels. Its report also predicted that, as my noble friend Lord Stansgate said, we will be the only G7 country that does not experience growth this year; instead, our economy is expected to shrink. Unfortunately, a hesitancy to fully accept the reality continues to permeate the Government’s attitude to Brexit. However, despite what the Chancellor says to the contrary, our economy is currently clearly in decline. We should expect no less: if we impose major barriers to trade and migration with our largest trading partner, the consequences must be decreasing trade volume and investment. That is obvious—it defies common sense to think otherwise. Even the Government’s own forecasting organisations—the OBR and the Bank of England—recognise that there will be a “long-running net loss” as a result of Brexit.
Rather than burying our heads in the sand, it is vital that we act swiftly to reverse this damage. As the committee report rightly states, small businesses in particular bear an undue burden under the new system of trade—this is inevitable because they lack the capacity and resources of larger businesses—and our labour market has taken a significant hit as a result.
I turn to the older workforce. Incidentally, I must say that the noble Baroness, Lady Chalker, is retiring at a relatively early age; she is younger than about half of the participants in this debate, if my statistics are correct. I should have wished her well in her retirement—the things she is about to do sound very exciting. I apologise; I am deviating. The older workforce will not be enticed back into work under this Administration when the Government seem unable to resolve simple wage demands from multiple key sectors. If you were mischievous, you might almost get the impression that they are trying to stoke up industrial dissent for political purposes.
Once again, blaming the pandemic for instigating a mass retirement is not a sufficient excuse. We are also the only G7 country where employment has failed to recover to pre-pandemic norms. The CBI pleaded with our Prime Minister to align with the European Union on this issue and create a temporary work visa scheme for European Union citizens. However, he refuses to budge on this issue, and his stubborn outlook is fuelling stagnation.
Incidentally, the issue raised by my noble friend Lord Stansgate about musicians travelling around Europe is one that the committee is dealing with and concerned about, and no doubt we may have an opportunity to discuss it again on another occasion.
Opinion poll after opinion poll indicates that the British public are regretting the decision on Brexit. Even a small majority of viewers of that bastion of Brexiteers, GB News, said that they would now be in favour of a Swiss-style deal. In our committee, we discussed the options of a Swiss-style, Canadian-style and Norwegian-style deal and seemed, before I was rotated off, to be moving to the conclusion that we should have a special kind of deal developed which was more appropriate for the United Kingdom. I shall come to that in a moment, but the Swiss-style deal is certainly a very good deal indeed for Switzerland.
With public sentiment edging on our side and a number of important deadlines, such as that for the GDPR agreement, rapidly approaching, it is time we began to forge a closer partnership with the European Union, as my noble friends Lord Liddle and Lord Stansgate rightly said. This begins by recognising the numerous benefits that membership brought, as it did, most of which we are missing at the moment. Although I reluctantly accept that rejoining in the immediate future is not in prospect, alignment on all important issues relating to trade and labour is vital if we want to grow our economy and ensure that Britain remains a global trading partner.
I am not pleading with the Minister today, I am not asking him 10 or 20 questions, I am pleading with the chair of the committee, its members who are continuing and the new members who have joined. I hope that the committee will produce a blueprint for achieving a closer alignment with the European Union which ensures that we work collaboratively on every possible area, and come up with some kind of deal that is tailor-made for the United Kingdom to have a closer relationship with Europe. Its countries are our closest partners, our biggest traders and our natural allies. It would be madness not to have a really great deal with them in future.
My Lords, I always enjoy listening to the noble Lord, Lord Foulkes, and I must say that I too would love to see that closer link. Unlike him, I did not have the pleasure of experiencing the flash of steel of the noble Baroness, Lady Chalker, or even of having a cup of tea with her, but as someone who was outside the Palace of Westminster—indeed, completely outside politics—I was in constant admiration of her work on international development, which was clearly second to none. It must sadden her slightly that the money going into international development has had to be cut. She knows only too well how difficult it is to keep that amount up and running.
I should possibly declare my interest as a professional musician, which will give your Lordships some idea of where I am about to go. I shall concentrate on only one area. The noble Viscount, Lord Stansgate, mentioned it, but I want to go into it in a little more detail.
The report is wonderful; it has great clarity and does not pull its punches, and I commend my noble friend Lord Kinnoull and his Select Committee on it. When I started reading it, I saw, as we have just heard, that the Select Committee is dealing with performing musicians on another occasion and at another stage, so I thought, “Perhaps, this is not the moment for me to open my mouth”. But when I read further and saw the item about cabotage, I thought, “I cannot avoid this”, because, as the noble Viscount, Lord Stansgate, mentioned, it is absolutely disastrous for the musicians of this country, for music touring and for the creative arts. I say to the noble Lord, Lord Lamont, whom I have always found extremely persuasive in his arguments—and I say the same to my noble friend Lord Hannay—that I suspect that he would agree with me that this is one issue that is not out of date, and that we can separate it from Covid. It has nothing to do with Covid; rather, it is to do with the free movement of musicians and the exchange of ideas.
The report says:
“UK lorries are limited to two laden journeys between different Member States (crosstrade) and one laden journey within a single Member State (cabotage).”
For the creative industries, musicians and dance companies, we should substitute “cabotage” with “sabotage”, because it is ruinous—it cannot be done. Furthermore, Logistics UK told the committee
“that these rules on market access ‘work reasonably well for general haulage companies’. However, they added that because of the limitations on cross-trade and cabotage, the TCA ‘[does not] offer any sustainable solution to UK touring companies carrying equipment on pan-European cultural tours’, such as performing musicians, where ‘the same load”—
this is crucial—
“needs to be moved to different successive locations across Europe.’ This, they said, ‘constitutes a gap in the TCA and requires a jointly agreed solution with the EU.’”
I will briefly explain why that is so. If you are touring a pop group, you have to take amplifiers and, probably, video equipment and you need roadies; you cannot do that without a huge truck. If you are touring the London Symphony Orchestra, you will have eight to 12 double basses, timpani, percussion and music stands, all of which must be moved. Dance companies will need a certain amount of staging to operate at all. No tour can be set up in Europe that does not go to multiple venues—I have checked this with the people who do it—as it would simply not be financially feasible. That is a fact of life.
The report continues:
“The Committee has previously highlighted the issue of haulage restrictions for touring as part of its separate work on the movement of creative professionals. In a letter to Lord Frost, dated 19 October 2021, the Committee warned that continued UK participation in the music haulage market is rendered ‘practically impossible’ by the restrictions in the TCA”—
both sides agree on that—
“and highlighted the UK’s previous dominance of the European music haulage market, meaning that this is ‘not a sector in which the shortfall could be picked up by EU operators’”
using other EU lorries, getting everything off one lorry and on to another lorry. The report goes on:
“Committee correspondence with the Government on this matter is ongoing.”
Although I found in meetings with the noble Lord, Lord Frost, that he was pretty unmovable on going back to the TCA, he had the good grace to say that the Government got it wrong on EU touring. That gives me a mandate to demand from the Minister—so expert on foreign affairs, but now having to deal with this—that he must put this right.
The Select Committee said:
“Although the TCA’s provisions on road transport work well for most hauliers, they are wholly inadequate for those whose business model relies on the temporary movement of goods to multiple locations in the EU, particularly to large sections of the performing arts sector. We retain a close interest in this matter and intend to continue pursuing this in correspondence with the Government.”
I am glad to hear that.
Let us think about the ramifications of this. Following Covid, many musicians and people in the performing arts suffered terribly financially. I have always acknowledged Rishi Sunak’s help for the sector, and I do so once again, but there were many freelancers who fell through the net. They have been doubly hit by the fact that, in getting back into work now, they simply cannot tour. Then we come to the issue of society as a whole; this slightly echoes what Sir Paul Nurse has said about science. Art, science and music all rely on the exchange of ideas to make society more aware of what is happening around the world. If we do not have that exchange, things ossify and die.
It was good news for the Treasury when we toured. The creative industries brought in billions to the Treasury. At a time when it needs every penny, why are we stopping our artists going abroad, giving the reputation of this country a boost and bringing money into the Treasury? It makes no sense whatever. I am sure the Minister will say, as the response to the report says, that the Government acknowledge that touring is a vital part of musicians’ and performers’ careers; the response even talks about the things I have just said and why they are important. Then it goes on to say:
“This is a complex issue for which there are no simple solutions.”
I say that where there is a will, there is a way. I hope that the Minister may be able to reassure us—as people have done in private—that this is a subject the Government take extremely seriously and wish to change.
My Lords, I feel that the noble Baroness, Lady Chalker, may well not remember when we first met—it was a long time ago—but my wife and I certainly do. It was in Belfast in the late 1960s when we were keen young unionists and she and others were keen young Conservatives—not disruptive young Conservatives, I think. I would never have thought that we would be together here on these Benches so many years later. Lorna and I have been following the noble Baroness’s career with great interest; I am delighted to be here tonight to join with others, as she ends an extremely exemplary parliamentary career, in wishing her a fair wind. She will not be forgotten.
I thank the noble Earl, Lord Kinnoull, for securing this important and timely debate. I also pay tribute to him and his esteemed colleagues on the European Affairs Committee for doing such sterling work in producing the report we are discussing today. Of course, I have an obvious problem with the report in that it is titled, and focuses on, Trade In Goods Between Great Britain and the European Union. That is neither a criticism of the committee nor of the report—quite the opposite. Instead, my frustration stems from the fact that it underlines that, post Brexit, Great Britain is indeed being treated very differently from Northern Ireland. Put simply, in relation to trade and checks on goods with the EU, we are no longer one United Kingdom. As a unionist, that pains me greatly.
Wearing my other hat, as a businessman, I find it somewhat bemusing—tinged with an element of national embarrassment—that His Majesty’s Government have been forced to announce several delays to the introduction of import controls on goods entering Great Britain from the EU. In contrast, the EU was able to introduce full import controls from 1 January 2021, leading to an immediate imbalance between GB exports to the EU and GB imports from the EU. One might be forgiven for thinking that His Majesty’s Government were not fully prepared for the practical consequences of Brexit.
That brings me back to Northern Ireland. Your Lordships will have read media reports over recent days that a deal between the UK and the EU on the Northern Ireland protocol may be close. These reports seem to have been both confirmed and denied in equal measure by elements on both sides of the negotiations. As a veteran of successful and unsuccessful talks processes in Northern Ireland, this is a pattern with which I am all too familiar. Our debate today is about goods entering GB from the European Union but there should be no question of additional checks, beyond those that were already taking place before Brexit, on goods entering one part of the United Kingdom from another part of the United Kingdom—unless, of course, the goods are clearly destined for the EU. Without these internal checks being removed, we will continue to have a sea border separating one part of the United Kingdom from the rest; that will never be acceptable to unionists of all shades in Ulster.
Neither are the additional checks and controls on goods entering Northern Ireland from Great Britain acceptable to many businesses, which are facing increased costs, nor to large numbers of consumers, who face higher prices and a diminishing choice of goods because fewer suppliers are choosing to deliver to the Province. The noble Lord, Lord Lamont, mentioned that he felt there were few Brexiteers in this Chamber. As I have said many times, I was in favour of Brexit—I still am—but, in common with so many others in 2016, I heard the promises from leading figures in the Vote Leave campaign that Northern Ireland would not be treated differently to the rest of the United Kingdom should the country decide to leave the European Union. Fast forward to December 2019 when Vote Leave’s chief advocate, Prime Minister Boris Johnson, told Sky News:
“There’s no question of there being checks on goods going from Northern Ireland to Great Britain or Great Britain to Northern Ireland.”
Twelve months later, Mr Johnson himself signed the deal to introduce checks on goods going from Great Britain to Northern Ireland.
I wish the negotiators well. I hope that a deal is done, and I trust that that deal will remove the disastrous Irish Sea border, enabling our kingdom to be truly united again. I again congratulate the noble Earl, Lord Kinnoull, and his committee colleagues on their report.
My Lords, I begin by adding my congratulations to the noble Baroness, Lady Chalker, not just on what was a wonderfully warm and heartening valedictory speech but on an extraordinary career in business and, of course, in politics. We all owe her a lot, particularly the women who have come along in her shadow. I wish her well. I think it typical of the lady that her retirement will see her teaching in the townships of South Africa; it does not sound like the sort of retirement that many people have in mind.
I thank the committee for producing such a detailed report and the noble Earl, Lord Kinnoull, for introducing it so thoroughly. It would be interesting—but not particularly heartening, I believe—to see a follow-up report. It is hard to believe that one could argue things have got better. One in four small businesses have stopped exporting altogether because of Brexit but this is not just a story about trade figures; this is about people who have really suffered and seen their businesses wrecked because of Brexit.
In his most eloquent speech, the noble Lord, Lord Berkeley, gave us a hint of just how bad things have been for people working in the music industries. It has hit freelancers, photographers and many others. Take John Hearn, whose business is wine importing and exporting. He rather surprised Jacob Rees-Mogg on “Question Time” in December last year when he said that his business and every business he knew in the wine sector was being suffocated by bureaucracy and paperwork.
Things got even worse for Simon Spurrell, who had set up the Cheshire Cheese Company and built a really successful business. In November last year he had to sell out because he faced a drop of £600,000 a year in his sales. He could not afford to keep the business he loved for himself. He is still working there, thank goodness, but under new ownership.
Last year the APPG on Fisheries produced a report that went into great detail about how that sector, which was promised so much from Brexit, was suffering. It contains heart-rending stories from the individuals interviewed, talking about how their businesses had been decimated.
The noble Lord, Lord Lamont, was a touch Pollyannaish when he wondered what the third anniversary could be. I can tell him: it is leather. To me this looks like old, unpliable leather, not the sort of Italian, soft nappa leather we might have wished for.
I declare an interest as chairman of the Association of Leading Visitor Attractions. We depend on tourism, which is this country’s fourth-largest earner. Tourism has been hit by Brexit. It will be hit harder when border controls come in that make life difficult for people coming into this country, but Brexit is already causing problems for my members and others in the tourism sector because of the lack of workers. They cannot get people in their kitchens. I heard yesterday of a hotel chain that has shut entire floors in some of its buildings because it cannot get cleaners. This is not benefiting our tourism industry.
Something that would benefit our tourism industry would be to bring back tax-free shopping, which, for reasons best known to themselves, the Government have done away with. This was the one good thing that the brief Truss Administration pledged to do. Instead, the Government have once again stuck to the idea of no tax-free shopping and just sending potential tourists elsewhere. Why would they come to the UK if they can do better in Europe? Yet again, I plead with the Government to revisit that and see whether it is a simple thing they could do to benefit the tourism industry and the whole UK economy.
Businesses crave certainty. At the moment they face more uncertainty over travel regulations and people being held up at ports. The noble Earl, Lord Kinnoull, went into detail about how the requirements are in theory coming in, first in November for ETIAS and then at that vague time “the end of the year” for fingerprinting. What will actually happen? Who will be ready to cope with it? We all know that the Port of Dover does not have the wherewithal to deal with backlogs of traffic. Five people in a car all needing to be photographed and fingerprinted will not make life easy for those who wish to use our ports.
Then let us add to the uncertainty and give business a bonfire of regulations. We will debate that next week. It is a crazy thing to do. When the Minister, the noble Lord, Lord Callanan, spoke about the Bill earlier this week, he said that there was certainty because the sunset clause would come in at the end of the year, but that does not give businesses any certainty at all. They need to know what the position will be at the end of the year and they need to know it now, because, as Tony Danker, the CBI’s director-general has said, the danger is that we are already shrinking our markets because our customers overseas do not know what we will produce and to what standards. We need certainty for our businesses if they are to survive and thrive.
At the moment the uncertainties are driving away inward investment. Only today, the Financial Times reported that Wolfspeed, a chip maker, has committed €3 billion to open a new plant in Germany. We could have done with having that plant here. Last year Intel committed €17 billion to open a chip-making plant in Germany, but we had Britishvolt, which was to be the battery maker that was essential to the UK’s motor industry. We know what has happened since: Britishvolt has collapsed. One former Minister commented that
“it’s a sad reflection probably on Brexit … So that’s part of the damage that’s been done by leaving the EU.”
That was not a rabid remainer; it was William Hague, the noble Lord, Lord Hague. He is absolutely right: we have done so much damage to this country.
I agree with others that we are not going to go straight back into the EU. There is not an appetite for it here, and neither is there yet one for it there. We must begin to rebuild relations with our nearest and largest trading partner. We need to get back into the Horizon programme immediately for the sake of our science and scientists. We then need to begin building single markets in sectors—not having one single market, but coming to arrangements with the EU, sector by sector, that will make trade easier for both sides. What could be more sensible than that?
I finish by asking a single question; I do not have a long list. I apologise to the Minister in advance, but can he tell me, in a single figure, what the direct trade benefit of Brexit has been?
My Lords, I am grateful to speak in the gap. It is a pleasure to follow the noble Baroness, Lady Wheatcroft; I agreed with everything she said, including on tax-free shopping. I hope the Minister answers that point. I also congratulate the noble Baroness, Lady Chalker, and support all the tributes that have been made to her. As an artist myself, I am very glad to hear that she is going to spend some time painting and drawing.
I want to make a couple of remarks further to those of my noble friend Lord Berkeley of Knighton and the noble Viscount, Lord Stansgate. We think of the creative industries as part of the service industries. They have been and will be treated in detail in other reports, but trade in goods is a significant aspect of those industries. I have two examples of goods produced by the creative industries, one in one direction and one in the other, to show how complicated things have become. There are serious ongoing problems in the creative industries, as my noble friend has outlined. One example is that of merchandise, which is now hugely important to bands. They carry merchandise abroad, but the problems of costs, red tape and logistics in moving such goods have already been a contributory factor in the cancellation of tours.
My second example is the recent cancellation of two art fairs for 2023 in London: Masterpiece London and the summer edition of the Art & Antiques Fair Olympia, which should be celebrating its 50th anniversary. Brexit is doubtless a major factor in these cancellations, with a 58% decline in international participants since 2018 in the case of Masterpiece—so that trend occurred long before Covid. There is now a huge problem in moving artworks between the EU and the UK because of VAT costs, increased shipment costs since Brexit, and red tape. The effect of all this is to lower our standing in the world in terms of the arts—as well as having an effect on London itself, both culturally and economically.
As the excellent report shows, what was once simple and easy has now become complicated. As for solutions for the creative industries, this complexity means that we urgently need co-operation between the Department for Transport, DCMS, BEIS, the Home Office and the Foreign Office. This remains an urgent cross-departmental concern. I have one other point: it is important to note that obstacles to trade are not just a serious problem themselves but have a significant knock-on effect in many other areas.
My Lords, as one of the flurry of former members of the committee who has contributed to this debate today, I also add my thanks and appreciation to the clerking staff and for the policy support that the committee has received. I also commend the canny diplomacy—as I think the noble Lord, Lord Lamont, put it—of our chair, the noble Earl, Lord Kinnoull: it is quite a task to bring across unanimity on issues such as trade and Brexit. I also commend him for the parent committee on the Northern Ireland protocol and unanimous reports on that. So I think that I might take him with me on my next visit to the Middle East—and leave the noble Lord, Lord Foulkes, at home, if that is all right.
The debate ended with three contributions showing the human element to this. I am not foreign to using statistics—in fact, I will be relaying some later on in my contribution—but reminding us of the human impact within goods and on non-financial services is very important. The debate also had a very human element at the start with the valedictory speech of the noble Baroness, Lady Chalker. One of the signs, I think, of good politicians that I have admired is that people who they do not recall having met have a very fond opinion of them. When I was David Steel’s bag carrier when he was an MP and a shadow of the former Minister, she was always very pleasant to me, a humble researcher. Then when I worked briefly in this place as a member of staff for my then noble friend Lord Steel of Aikwood, she was also very generous and kind towards me. I hope she forgives me for saying so, but she was elected a month after I was born—so I cannot compete with those who met her earlier on in her career.
I took the opportunity, having noticed, as others had, that she was going to be making her valedictory contribution today, of reading her maiden speech in the House of Commons on 15 March 1974. She was highly regarded and very well noted for development, with, as the noble Lord, Lord Foulkes, indicated, nearly nine years in that post, whereas her successors as Ministers for Africa have lasted an average of nine months. That shows the contribution that she made. I will never forget the emotional plea that she made in 2015 on the 0.7% Bill, when she appealed to her successors as Ministers to have predictability in overseas development assistance. Alas, her successors have not heeded that, at the cost to the poorest in the world and our standing in the world.
In her maiden speech, she called for something which so many of us now take for granted—I look at my noble friend Lady Brinton, who perhaps still has to struggle on this issue. But I will quote just one line from what she said in her maiden speech, if the House will forgive me. She said:
“I suggest that the Secretary of State for Industry should instruct his planners and those carrying out the work to ensure that, when they dig up roads, kerbstones and cornerstones, they replace them with sloping stones to enable wheelchairs and, indeed, mothers with prams, to get along more easily. Far too often we go back to doing the old thing the old way, because we have not thought about it anew. If the right hon. Gentleman could plan in that way, it would be better than creating a castle in the sky in the shape of a national enterprise board.”—[Official Report, Commons, 15/3/1974; cols. 571-72.]
Well, the contributions that she has made and what she called for then, which we take for granted now, have made a real difference to people’s lives, and that is also a testimony to her career.
Now to castles in the sky—except that this one has Brexit-shaped ramparts. I admire the defence of the lone noble Lord, Lord Lamont, on those ramparts in this debate, but nevertheless we are one year on, as the committee said. We are one year on from the committee report, and three from Brexit. The Financial Times editorial board yesterday put it like this:
“In the 1970s, the UK was known as the ‘sick man of Europe’. Today it seems to be the sick man of the developed world.”
Citing the forecast by the IMF, which has been raised in this debate, but also the actual ONS outturn data on GDP, we have heard that, uniquely among developed economies, we have not regained pre-pandemic GDP levels.
Our businesses are suffering the whiplash of three Conservative Prime Ministers since the 2019 election, each saying they are a new Government, each condemning the economic policies of their predecessors, while all the time keeping new burdens and barriers on business, leading to, as the FT put it,
“incoherence in economic policy and exacerbated business reluctance to invest.”
That is not just within pure trading barriers, as we have heard so well in this debate.
I respectfully disagree with the noble Lord, Lord Lamont. We did not just analyse the teething problems of Brexit; as we have heard, many of these issues that we thought were teething are now permanent, and they are hardwired into the relationship we now have, whether it is SPS or cabotage, to name just two of many. These barriers to trading have a cost, and the cost is enormous.
This is not often debated, but the Government have a current framework called the business impact target. That is the target for the economic impact of their regulatory activity on business. It is called the BIT. The Regulatory Policy Committee, independent but nevertheless official, is the independent verification body. In its report, it said:
“For the 2017-2019 Parliament, the relevant government set a BIT target of a £9 billion reduction in direct costs over the length of the Parliament, however the final position was an increase in costs of £7.8 billion. Similarly, the government has set a holding target of £0 for the current Parliament”—
that is the one we are in—
“but in the first year of the Parliament, there was an increase of £5.7 billion (excluding the very significant impacts of temporary COVID-related measures).”
So, I want to ask the Minister what the current position is. What is the Government’s own current estimate of the actual cost on business of the additional burdens they have put in place? The numbers on the side of the Brexit bus need to be updated, of course, because, while the savings were always fanciful—I think many of us knew that—the costs are already outweighing them multifold, and the barriers erected by this Government on trading with our biggest market are a weight on our many SMEs and exporters.
Of course, as the noble Baroness, Lady Wheatcroft, indicated, with the REUL Bill we will be debating, there is going to be uncertainty added on to these costs. But all of us know that uncertainty becomes costs, and that is going to be an added burden. It is well worth noting that the same Regulatory Policy Committee for the impact assessment of that Bill has rated it “red”—not fit for purpose. The Government simply are not learning lessons. No Government in the history of this nation—only perhaps the Conservative-led National Government who introduced protective tariffs, which led to the Liberals leaving—have set on businesses a heavier weight of bureaucracy and burden. It simply must be reduced or removed.
The Government think that giving preferential market access to modest trading friends on the other side of the world without anything in return will offset the massive barriers they are putting up on trading with the huge market on the other side of the channel. Trade agreements seemingly negotiated by Prince Potemkin are not offering the growth to fill this void. The trade in the Far East or Asia that, it was argued, would offset this is simply not coming to pass. We know we have already missed the manifesto target for 80% of all our trade through FTAs by 2022, so I want to ask the Minister: will we be meeting it in this Parliament? I do not see a trajectory that suggests that that is going to be the case. Now that we are seeing trade barriers erected with our biggest market, we have seen decline.
I was very struck by the point the noble Lord, Lord Lamont, raised with regards to comparing GDP growth with Germany over the last couple of years. Before the debate, I wanted to make sure I was very accurate with the OECD data—not forecast data but real data on what has happened. The noble Lord was right about the last couple of years.
My figures were from 2016.
I will retract what I was going to say. The noble Lord is wrong about 2016, but he would be right if he was talking about the last couple of years. He did not highlight the most relevant factor, which I found when I accessed the OECD database this morning and looked at 2016 to the current position: in 2020, the UK’s economy collapsed far deeper than that of any other OECD country. Regaining average levels over the period since Covid has not offset the massive fall that happened in 2020.
Taking the average over 2016 to 2022, we are behind Germany. In quarter 2 of 2020, UK GDP fell 22.6% and Germany’s fell 10%. The following quarter, we fell 10.3% and Germany fell 2.5%. In the quarter after that, we fell 9.2% and Germany fell 2.1%. The 2020 collapse of the British economy because of Covid was far deeper, so any regrowth is coming from a deeper hole, and therefore the average over this period shows that we are considerably behind Germany. I do not think that simply stating that we show comparable growth figures over the last couple of years tells that full story.
We are also not going to have a level playing field, which was one of the highlighted freedoms of having the ability to innovate. The power to innovate is all very well if we assume that no one else is innovating—but of course they are. We may have said, “Stop the EU, we want to get off”, but the EU did not stop moving, and therefore we have to look at this on a comparable basis. That is why I will close by looking at the really important border issues.
The Government have stated that, in just over 18 months’ time, in 2025, we will have the best border in the world—that is the target. However, as the noble Earl, Lord Kinnoull, indicated, we are still operating on temporary measures; we still do not have the facilities in place. The National Audit Office stated that the border operating model uses “temporary” or interim measures,
“delaying the introduction of full import controls.”
That is simply not sustainable. It is compounded by the recent decision to pull money away from the levelling-up fund to give £45 million to Dover to fix problems created by this Government. They are even taking money away from the very communities that were promised benefits from Brexit.
We have a Potemkin trade policy, and, like many charades, it gradually wears thin, the paint flakes and we all see it for what it really is. The FT editorial yesterday finished with an appeal to the Chancellor for his March Budget. It said:
“If he cannot go beyond mere buzzwords, the latest bout of ‘British disease’ will become ever more chronic.”
We want to see practical policies from this Government that will realistically help our trade and economy.
My Lords, I first put on record my thanks to the noble Earl, Lord Kinnoull, and to the other members of the European Affairs Committee for producing this excellent report. We have had an excellent debate so far. I join the noble Earl and others in their comments about our much-missed colleague, the late Lady Couttie.
I congratulate the noble Baroness, Lady Chalker, on her wonderful valedictory speech. The noble Baroness has a truly wonderful record of public service, having served in this House and the other place for just under 49 years. I found out that she jointly holds the 20th-century record for continuous service in government, having been appointed a Minister following the election of the Conservative Government in 1979 and serving every single day until the Government left office in 1997. I first saw her on television, when she was the Minister for Overseas Development, visiting many countries on behalf of the UK. She has a proud record of achievement in the field of international development, both in and out of government. I wish her a long and happy retirement, which is well deserved.
I am pleased that several members of the committee which produced the report have taken part in the debate. The most disappointing thing that the committee found—sadly, I was not surprised—is that since the implementation of the trade and co-operation agreement with the European Union, trading with the EU has become more complex and burdensome for business. That means more red tape and more cost. That is not some abstract concept; it is affecting everybody.
I have my own example to give the House. It was my parents’ 60th wedding anniversary in November 2021. They lived in the UK for 50 years and then went back to Ireland, where they came from. I sent them some flowers and I wanted to send them some chocolates, so I logged on to the Hotel Chocolat website—I had used the site many times. When I put in where they lived, I got a message saying, “Sorry, we cannot send to anywhere outside the UK at the moment and nowhere in the European Union.” I thought, “This can’t be right. This is ridiculous.” I kept checking, but I could not send chocolates to them. So I found a very good chocolatier in Ireland, sent them the chocolates and it was great. But look at the loss of revenue because this great company could not send to anywhere in Europe. I checked today. It says that they can now do Ireland but they still cannot do the European Union. It is nonsense that we are in this situation. Money is lost to a great British company—lost profit, lost jobs and lost opportunity. It is an absolutely ridiculous situation to be in. That is one small example. If we multiply that by all the other people who want to do it, and other sectors and other businesses, it is a huge hit to our economy.
Generally, what I find most frustrating from the Government is their position that, with all the problems that businesses have with exporting, compliance, rules of origin, SPS rules, customs requirements and other regulations, it is always somebody else’s fault and always somebody else’s problem. It would be refreshing to hear the noble Lord, or any Minister, say to us, “Yes, it hasn’t gone as well as we thought it would. It is not as good—we accept that entirely.” We all accept that there have been issues with how the EU has sought to address problems, but we as the UK must take our share of the blame as well and acknowledge that we have not always acted as we should have done.
We should stop the nonsense and move ahead, engaging positively and in good faith, with no more threats about ripping up agreements that we entered into—agreements that we negotiated and then want to rip up a few months later. That is just not the way to operate. It would be lovely to hear from the noble Lord or any Minister that we will act in good faith. For me, that is the British way of operating: we act in good faith and our word is our bond. That is what we should be doing.
I am a pro-European, but as my noble friend Lord Liddle and other noble Lords have said, there is no possibility of us going back into the European Union any time soon—it is off the agenda; I accept that entirely. I also fully accept that the impact of the Covid pandemic has to be taken into account. However, the challenges identified in the report are little to do with the pandemic and are a result of the position we found ourselves in at the end of the transition period.
The SPS requirements have continued to be a major barrier to exports of agri-food products since the trade and co-operation agreement. As the report says,
“GB exports of agri-food to the EU have become slower, less competitive, and more costly”.
If this issue, among others, could be addressed, we could make more progress on the Northern Ireland protocol issues that the noble Lord, Lord Rogan, mentioned. I want to see the Assembly set up again and politicians in Northern Ireland making the decisions that they want in Northern Ireland—that is really important for everybody.
My noble friend Lord Liddle made an important point about small companies and trade. I lived for many years in the east Midlands, although I am a Londoner, and I found out recently that only 5% of companies in the east Midlands export any more—they just stopped exporting to the European Union. How is that good for anyone?
Like my noble friend Lord Liddle, I want to make the best of where we are and move forward, and we have to do that in good faith with our European partners and friends. The trade deals that have been negotiated so far have been very poor—look at the comments of George Eustice in the other place on that matter.
The noble Baroness, Lady Brinton, spoke specifically about the health and safety sector. She set out some of the worrying points and had some very pertinent questions for the Minister. I know that he cannot answer them today and that he will write to the noble Baroness and other Members of the House, but I thought that the noble Baroness’s questions on health and safety were very important.
The noble Lord, Lord Tugendhat, again identified issues where, if we had taken a different attitude, we could be in such a different place here today. It is all about attitude and acting in good faith.
The noble Lord, Lord Hannay of Chiswick, set out the context of the report. Although the figures are out of date—we all accept that—it has got worse, not better. Plain common sense, not ideology, is what we need here for British business and the British people to prosper. Sadly, over Brexit, ideology, not common sense, has been the driving force.
My noble friend Lord Stansgate set out a number of concerning points and statistics. I want to mention three points. The first is the problem that has been caused for artists and musicians; the noble Lord, Lord Berkeley of Knighton, and the noble Earl, Lord Clancarty, also mentioned that. We have a fantastic, wonderful, vibrant cultural sector in this country—it is one of our jewels—and all we have done is damage that. I have been quite shocked and surprised that question after question has come to the Government but nothing has happened; the way they have behaved over the last few years has been shocking. I do not understand how anyone would leave the sector as it is now; it is absolutely appalling.
Secondly, last September, on my way to the Labour Party conference, I went with my noble friend Lady Kennedy of Cradley to Chester Zoo, having been invited to visit it. It is a wonderful place; I had never been there but it is a fabulous zoo. We met a guy there called Gareth Siddorn, who showed us round the zoo, and what he told us about was the very point that my noble friend mentioned, about all the breeding programmes and the fact that you have to move all the animals around different countries so that you have proper breeding. There was a real threat that the zoo could not get animals moved around—it is a huge problem. I had never thought of that until it was mentioned to me when I was at the zoo, but it was worrying for the staff there, as their breeding programmes and conservation could be affected because of the red tape and the problems that Brexit had brought. I thought that was absolutely awful.
Thirdly, I also agreed with my noble friend’s comments about the Horizon programme and science. I was surprised this week when I sat here and listened to the answers from the noble Lord, Lord Callanan, who is not in his place today. I thought his comments on where we are with Horizon were most unsatisfactory. It is always somebody else’s problem—it is the EU’s problem. It is just not good enough. As I said before, I agree very much with the points the noble Lord, Lord Berkeley of Knighton, made on that, and the loss of revenue to the Treasury from the cultural stuff is absolutely immense.
I thank my noble friend Lord Foulkes of Cumnock for rotating off the European committee. I know that the rotations this time were quite difficult—I have had many delegations to my office about rotations over the last few weeks and months—but we got there in the end and I think we have all learned some lessons from that.
My noble friend also mentioned the barriers of red tape between the EU and the UK in their trading relationship. I do not understand why anyone who believes in free trade and understands that trade brings prosperity would want a situation where more red tape and barriers are put in place. My noble friend also mentioned the comments of Tony Danker from the CBI, who called for more temporary work visas for European citizens to come and work here. Again, that call appears to be falling on deaf ears, and I do not understand why that is the case.
The noble Baroness, Lady Wheatcroft, highlighted the huge problems that tourism is facing. It brings huge sums of money into the UK economy. Again, people come to this country because of our cultural offer; they want to go to our theatres, visit our museums and galleries and look at our wonderful arts scene.
I have mentioned before how, when I was a young councillor in Southwark in the 1980s, I got involved in the campaign to build Shakespeare’s Globe on Bankside. My first vote as a Labour councillor was to end that ridiculous dispute with the council and get it built. I am very proud of that having been my first vote. I go to that theatre regularly, and it is packed with people, with tourists looking at these wonderful plays, right next door to Tate Modern. The whole area has been transformed by tourism and the arts. I knew the place as a child, when there was nothing there except a road sweepers’ depot. It is so frustrating that while our cultural offerings are so good, we make it so hard for our artists and musicians to flourish.
The noble Lord, Lord Purvis, mentioned the border strategy and the Government’s claim of having “the most effective” border in the world. I looked at the report and thought, “I just want a border that works.” I am quite irritated by the Government. We have all these comments—always “transformational”, always “world-beating”, always “the most effective”—but getting the job done properly would be quite nice. Stop all the rhetoric and the rubbish and just get the job done. It is very distressing. Often these things that we get from the Government do not amount to a row of beans at the end of the day. I wish they would stop. We need a little less talk, a little less pen and a bit more shovel.
The noble Lord also reminded us of the Brexit bus figure of £350 million a week for the NHS. I have not worked it out yet, but it has been three years, so that is a lot of money. We all know the situation that our NHS is in at the moment, do we not?
I thank the noble Earl, Lord Kinnoull, and the committee, for the report. I hope that the Government look at it carefully, listen to this debate, and take some action. I know that the Minister will listen very carefully. I like him very much and I am sorry that he has to be here for the Government. Perhaps another Member should have been here, but I am sure that we will get some response. I hope he takes away that there are huge issues here that we are all passionate about, and that the Government need to act.
My Lords, I thank all noble Lords for their contributions to this important debate. I say to the noble Lord, Lord Kennedy, that it is always good to finish on a high, if nothing else than just in giving superficial flattery to the Minister who is responding. I am truly grateful.
I assure all noble Lords that I have listened very carefully to the debate. It reflects, as I often say from this Dispatch Box, the wise insights and detailed knowledge within your Lordships’ House. We may not always agree, and this is perhaps one of those occasions where there is a difference between the Government’s perspective and many of the contributions from noble Lords. I was therefore heartened to hear the contribution of my noble friend Lord Lamont. Nevertheless, this has been an insightful, detailed debate which reflects where the Government and our country are in facing up to the challenges. I hope that many noble Lords recognise that we believe passionately in important, constructive relationships with our partners—and, I add, friends—within the European Union.
I join the noble Earl, Lord Kinnoull, the noble Lord, Lord Kennedy, and others, in reflecting on the valuable contributions of my noble friend Lady Couttie. She challenged me regularly on the wide brief that I have but, equally, she is missed.
I begin, as other noble Lords have, by paying tribute to my noble friend Lady Chalker. It is an honour for me to be here on this occasion to respond to her final speech. She has been an inspiring individual to me as a Minister and has demonstrated that as changes occur at the top, it is good to have consistency and continuity in a ministerial role. I regard her as one of my inspirational heroes in this respect. Seeing her in her very distinguished career as a Minister, and subsequently, as a Minister myself, there have been occasions when she has been in different parts of Africa and I have received a call saying, “Tariq, tell me what I can do, what you need? I am here to help.” That has been reflective of her contribution. I align myself totally with the tribute of my noble friend Lord Lamont. Her wise insights and in-depth experience we will all sorely miss.
However, I feel it is not the last we have heard of my noble friend Lady Chalker. Indeed, my noble friend reminded me of a conversation shared with me by Kofi Annan’s daughter. She said to me, “Lord Ahmad, Nelson Mandela, when hearing of Kofi Annan’s retirement, smiled and laughed as only Nelson Mandela would, in his usual style, and said, “Kofi, you are retiring. When will you retire from retirement?” I think that applies very much to my noble friend, for she has listed what she is seeking to do. As she departs and draws the curtain on this particular stage in the House of Lords, I know she will continue to assist with great insight, experience, passion and affection the cause of international development and the many people across the world who perhaps are not as fortunate as many in our country, and, as we have heard today, the cause of children. I look forward to hearing from her about that, and I am sure that as I continue in my role, she will also remind me of my responsibilities. My noble friend, I know I speak for the whole House when I say we wish you well, and you depart this House with our best wishes and prayers.
I am grateful to all those who have participated in this debate, and I assure the noble Lord, Lord Kennedy, that I speak for many, and that although I had only one noble friend here, others have joined me on the Front Bench. We always speak with good faith, and that has to be our intention. I also assure him that it is with exactly that principle in mind that we are engaging positively with our partners in the European Union.
I am also grateful to the noble Earl, Lord Kinnoull. He has always discharged his duties with great aplomb, and we see that in this report. Many noble lords spoke about his diplomatic capability. This report follows one on a similar issue, from the noble Lord, Lord Jay, and it shows the wisdom of your Lordships in being able to align fully across the spectrum and present a report which is constructive. I assure him that the Government have engaged constructively. I thank the committee for the way in which it reviewed our responses to the 55 conclusions and recommendations in the report and our subsequent correspondence. Of course, I will reflect on this debate in detail and write where I have not been able to answer questions in the time available. I shall write to the noble Viscount, Lord Waverley, on his nine questions, rather than detain the House.
Important issues have been raised in this debate. As my noble friend Lord Lamont said, it should be forward-looking. I want to say at this juncture that notwithstanding our departure from the European Union, our relationship with the EU remains strong. It has been demonstrated at its finest through our unity of response to Russia’s illegal war in Ukraine, and that continues to be the case. I have experienced many meetings and engagements with European colleagues where we are fully aligned on the important issues and challenges that we face.
The noble Lord, Lord Hannay, reminded me not to be overly bullish in presenting a picture of the economy, and indeed our country, in terms of trade. I have reflected on his comments, and I totally accept that, as my noble friend Lord Tugendhat pointed out, collectively the EU is our largest trading partner and it is important that we have a very strong relationship. Indeed, it should not be forgotten that we are the EU’s second-largest trading partner, and a strong commercial relationship based on free trade is firmly in the interest of both sides. The noble Lords, Lord Liddle, Lord Hannay and Lord Purvis, the noble Earl, Lord Kinnoull, my noble friend Lord Lamont and others talked about various issues, from different perspectives at times, and what has been achieved since our departure from the European Union.
While trade in goods with the EU was worth £381.9 billion at current prices in 2016, according to the most recent ONS statistics it was worth £480.7 billion in the 12 months to September 2022. This represents an overall increase of 26%, and an increase of 9% when compared to pre-Covid levels, but I accept that there is more to be done. During this debate we have heard about the barriers and challenges that continue to be faced, which I will come on to, and it is important that we as a Government address those issues.
As my noble friend Lord Lamont reminded us, not everything that needs to be done is about Brexit. However, if I may offer a personal anecdote, I was reminded that during the 2019 election campaign, I asked my then five year-old, “What does Daddy do?” After naming various professions, he said, “Make a point and get Brexit done.” There are some personal reflections of a five year-old in the Ahmad household, which shows that general election slogans and campaign slogans work.
Our trade with the EU remains important, as I have said. Our low-tax, high-skilled economy has helped to ensure that the UK remains an attractive place to invest and grow a business. The UK has moved up the foreign direct investment global ranking since 2020 to become the highest recipient of foreign investment in Europe and the second highest in the world, second only to the US.
The Government recognise that, as the report indicated, the UK’s trading relationship with the EU has changed since our departure from the single market and the customs union. Of course, some businesses and their supply chains have been directly impacted and affected by this new operating environment, but the trade and co-operation agreement, which several noble Lords have mentioned, has played a critical role in securing UK-EU trade and encouraging inward investment. By the standards of free trade agreements, the TCA is very much cutting-edge. It is the world’s biggest zero-tariff, zero-quota free trade agreement and the first of its kind signed by the EU. For example, it includes provisions and sectors of UK comparative advantage such as services and digital trade. It also safeguards the regulatory freedoms that are now enabling the UK to benefit from Brexit.
On the issue of implementation, which the noble Lord, Lord Liddle, and others pointed to, the overall agreement is functioning well. All specialised committees responsible for monitoring implementation have met at least twice. The agreement’s wider network of oversight functions, including the UK-EU Parliamentary Partnership Assembly and the Civil Society Forum, have been established.
However, I accept that there remain a number of important issues that need to be fully worked through, particularly the current discussions between the EU and the UK about EU programmes such as Horizon Europe. I take on board the importance of reaching a satisfactory conclusion through these discussions, for both sides. I assure noble Lords that through direct engagement via the FCDO—as noble Lords will know, my right honourable friend the Foreign Secretary is leading on engagement concerning the Northern Ireland protocol—Ministers are routinely raising other issues of UK interest. Again, I will take back the many detailed and specific issues that have been raised by noble Lords today.
I shall share some of the other formal structures that have operated within the implementation of the TCA. We have seen exchange updates on major legislative developments, such as the discussion at the goods and trade specialised committee on the EU’s Chips Act and the carbon border adjustment mechanism. We have seen accelerated delivery of the TCA provisions, such as our exchanges with the Commission at the specialised committee on energy regarding electricity trading arrangements and co-operation in the North Sea on renewables. There are additional points but if I may, in the interests of time, I will respond in more detail to the noble Earl, Lord Kinnoull, in writing and put a copy in the Library.
We are exploiting the huge renewable potential of the region, which we also believe will boost European energy production and enhance our energy security, and of course that of Europe. Recent events have demonstrated the importance of that.
I will now address some of the points made in the report, and by noble Lords in this debate, about the implementation of the trade and co-operation agreement. First, on the impact of red tape on UK traders, particularly SMEs, which several noble Lords talked about, I share the view expressed by the noble Viscount about the importance of SMEs in being part and parcel—the real backbone—of the British economy. Various other noble Lords raised this issue, including the noble Lords, Lord Liddle and Lord Hannay.
I will list what the Government are doing specifically to support SMEs. The Government have provided £20 million via the SME Brexit support fund to help SMEs adjust to new customs, rules of origin and VAT rules when trading with the EU. HMRC has also produced a useful step-by-step guide to help customers understand the process for importing goods into the UK; this can be found on the Government’s website. HMRC’s customs grant scheme paid out more than £69 million to support businesses with recruitment, employee training and IT to help with customs declarations. All the other work that we have done around business readiness is also available to SMEs.
The refreshed export strategy will focus on the range of barriers to exporting reported by SMEs directly, from costs and lack of knowledge to constraints in capacity and lack of contacts. It will target interventions across the exporter journey, as part of a new single integrated ecosystem of export support, built around the new export support service that was launched in October.
The SME Brexit support fund, which was mentioned, was intended to be closed and has now closed as scheduled. The fund was offered by the Government and granted up to £2,000 per organisation between March and June 2021 to support SMEs to adjust to new customs, rules of origin and VAT rules when trading with the EU. To date, approximately £8.4 million has been offered to businesses, enabling more than 4,100 businesses to pay for practical support, including professional advice. This is important, and I assure noble Lords that I welcome insights, experience and practical examples, as were provided in this debate, about where noble Lords feel the Government should continue to focus.
SPS was raised by many noble Lords, including the noble Lords, Lord Liddle, Lord Kennedy, Lord Hannay and Lord Purvis. There are of course legitimate concerns around the EU’s application of SPS rules, and the Government very much share them. It is clear that the UK continues to maintain among the highest standards of biosecurity and food safety in the world. I assure noble Lords, including the noble Earl—I note the report and the issues he highlighted—that we will continue to work through the SPS specialised committee to challenge the disproportionate restrictions on high-quality UK exports, such as seed potatoes and certain shellfish.
Noble Lords also raised the steps that the Government are taking to safeguard the UK’s biosecurity in the absence of the remaining SPS controls. Goods from the EU are of course currently subject to full customs requirements. However, due to the staged introduction of controls, which several noble Lords pointed to, some controls are yet to be brought in for EU products. These are safety and security declarations for standard goods, as well as certification and check requirements for non-high risk SPS products. High-risk SPS goods are subject to certification, pre-notification and checks. As the target operating model is prepared for publication, so too will be the dates for bringing in the remaining controls on EU goods.
The noble Lords, Lord Liddle and Lord Hannay, talked about dynamic alignment. As we proposed during the TCA negotiations, we remain open to an SPS agreement with the EU based on regulatory equivalence, given both sides’ records and commitment to high SPS standards. As highlighted in the committee’s report, the EU has agreements of this kind with other third countries, such as New Zealand. But we are clear that we cannot accept an SPS agreement based on dynamic alignment to EU rules, like the EU-Swiss model, which several noble Lords pointed to.
Does that clear position apply to all parts of the United Kingdom, including Northern Ireland?
My Lords, we are in ongoing discussions with EU partners on Northern Ireland issues. I will not answer specifically but, as I have said repeatedly, the important thing is that our discussions on the Northern Ireland protocol ensure the workings and efficiencies of both single markets, considering the impact not just on the European Union single market but on the UK single market, which clearly is not working under the current agreements.
Another issue outstanding is the continuing absence of a number of envisaged technical working groups. The trade and co-operation agreement provides for regulatory co-operation in a number of sectors that the EU has not yet established, including organics, motor vehicles and medicines.
I have already covered the update on the UK’s future border control regime and the targeted operating model in my answers to previous comments. As I said, I will provide a more detailed assessment of the questions raised by the noble Earl in a letter.
Turning to the Northern Ireland protocol, on which the noble Lord, Lord Purvis, just interjected, I can assure the noble Lords, Lord Rogan and Lord Hannay, that talks are ongoing with the European Commission to solve the real problems arising from the implementation of the protocol. Having been part of some of the conversations, I can assure noble Lords that conversations currently taking place with the European Union and the Commission, and specifically the talks between my right honourable friend and Commissioner Šefčovič, are taking place in a very constructive and collaborative spirit, and it remains our hope and preference that the talks conclude with tangible progress that ultimately addresses the concerns of all communities within Northern Ireland.
On the issue of retained law—I will come on to the creative industries and tourism in a moment—the noble Baroness, Lady Brinton, was of course correct. I will write to her specifically. There are wonderful briefs available, and one seeks to have a working knowledge when responding to debates, but on some of her specific questions I will write to her. However, His Majesty’s Government have processes in place to monitor the economic and business impacts of regulatory divergence between the UK and the EU and whether that divergence is UK or EU-led. Analytical frameworks and guidance have been issued to departments when making assessments of regulatory changes to help us understand any potential impacts. The Government have also published a comprehensive list of retained EU law, which will be available at the retained EU law dashboard. I know this will be the subject of various discussions but, as I said to the noble Baroness, I will write specifically on the questions she raised.
A point was raised about tourism by the noble Baroness, Lady Wheatcroft. I accept that challenges are posed on free movement, et cetera, but it is interesting to look at some of the specific figures. In 2015 tourism numbers into the UK were 35.1 million. In 2022 it was 29.7 million. However, the forecast from VisitBritain for 2023 looks at a return to around the 35 million mark. Of course, there could be improvements—I totally accept the point that the noble Baroness raised—and there are issues that need to be addressed because of the changes that many companies within the tourism industry now face, including on issues of workers and ensuring that sufficient services can be provided, but I certainly take encouragement from VisitBritain’s figures, which present a positive picture.
In conclusion, I once again thank all noble Lords for their detailed insights; some specific questions have been raised. Turning very quickly to the creative industries, as I promised—they have not been forgotten—I was asked quite specifically about what has been done. I heard the valuable contributions made by the noble Viscount, Lord Stansgate, the noble Lord, Lord Berkeley, and the noble Earl, Lord Clancarty. We of course recognise that it has changed for workers in the creative sector in the EU, who have had to adapt to new requirements. I have heard very clearly the specific challenges raised by noble Lords in this respect.
Since the end of the transition period, the Government have worked closely with industry to help UK artists adapt to this new regulatory environment, including by engaging with EU member states on their entry requirements for touring artists. I am informed that the vast majority of member states have confirmed that UK musicians and performers do not need visas or work permits for some short-term touring. I know that the Government looked specifically at providing support; some work was done over the summer looking at hauliers and what could be achieved for their processes. I will look at the specific issues that noble Lords have highlighted and talk to my colleagues across government to see what other specific issues and areas we can address directly. I assure noble Lords that the Government are seized of and recognise the challenges that noble Lords have highlighted in that sector. I also take on board the issues of transition in zoo visits and how it has led to educational insights for both shadow Ministers and Ministers on some of the challenges that specific industries and companies are facing.
In welcoming the report and our continued co-operation with the committee, we look forward to seeing how we can continue to engage constructively with it by taking on its recommendations and reporting, as has been demonstrated today. I end where I started: stressing the importance of our co-operation, partnership and friendship with the European Union. Sometimes it is immensely challenging to demonstrate the importance of that but the war in Ukraine has done just that. The European Union is, and will remain, a major geostrategic ally, partner and friend of the United Kingdom. The UK’s departure from the European Union was always going to present challenges that would take time to work through. However, it is important that we address those challenges collectively, collaboratively and pragmatically. I assure noble Lords that His Majesty’s Government are committed to addressing those issues through dialogue, wherever possible, and are committed to a respectful and mature partnership and friendship with the EU that benefits all the people of both Europe and the United Kingdom.
I shall be very brief. First, I congratulate the noble Baroness, Lady Chalker, on her valedictory speech. It showed that, after 49 years, she has lost none of her touch. I found it to be a heady mixture of wit, wisdom and style. It was a great privilege to be here for it; I thank her very much.
I also thank all noble Lords who have spoken in the debate; it is has been very long and very interesting. I particularly thank the members of my committee, who presented noble Lords with a window on to the vibrancy, expertise and strong views that sit around our table, which make it so interesting, enjoyable and satisfying when we manage to produce a report such as this one. I thank the Minister; he is a multirole Minister because, while the report is about trade, he is from the Foreign Office. As ever, he responded very carefully; I thank him in advance for the letters that will arrive to answer some of the difficult questions posed to him.
Some common themes arose today. A cloud is developing around the REUL Bill. Many of us will be back in this Chamber on Monday to discuss that developing cloud; it must be watched very carefully. There were also remarks on travelling creatives. I assure my noble friends Lord Berkeley and Lord Clancarty and the noble Viscount, Lord Stansgate, that the committee remains committed to following up on the work that we are doing on that difficult and distressing area for which we need to find solutions.
Two themes were most important, one of which was about SMEs. An important point was made early in the debate by the noble Lord, Lord Lamont, that, strangely, the damage to SMEs is bigger in the European Union than it is in the UK when expressed as an aggregate number of pounds. So it is in the interests of both sides to solve the issue with SMEs. It is in the British interest because we want growth and this is a quick way for growth to solve the issue. The mechanism for solving the issue is the series of specialised trade committees within the TCA; we must get those going.
The second incredibly important theme concerns the SPS requirements. It seems to me that finding a solution to that is in the realms of the possible. I am always disappointed to hear that someone remains open to something because it suggests that they are not going out to search for the solution. I hope that the language of the Government changes here from “remains open” to “going out to try to search for a solution”, because that, too, will unleash growth—and growth is something we really need.
As a committee, we will return to all these themes in due course.
Common Frameworks (Common Frameworks Scrutiny Committee Report)
Motion to Take Note