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General Committees

Debated on Wednesday 16 January 2019

Delegated Legislation Committee

Draft Motor Vehicles (Wearing of Seat Belts) (Amendment) (EU Exit) Regulations 2018

The Committee consisted of the following Members:

Chair: David Hanson

† Blackman, Bob (Harrow East) (Con)

† Bruce, Fiona (Congleton) (Con)

† Cruddas, Jon (Dagenham and Rainham) (Lab)

† Donelan, Michelle (Chippenham) (Con)

† Farrelly, Paul (Newcastle-under-Lyme) (Lab)

† Fellows, Marion (Motherwell and Wishaw) (SNP)

† George, Ruth (High Peak) (Lab)

† Heappey, James (Wells) (Con)

† Huq, Dr Rupa (Ealing Central and Acton) (Lab)

† Jones, Darren (Bristol North West) (Lab)

† Kawczynski, Daniel (Shrewsbury and Atcham) (Con)

† Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)

† Norman, Jesse (Minister of State, Department for Transport)

† Peacock, Stephanie (Barnsley East) (Lab)

† Thomas, Derek (St Ives) (Con)

† Turner, Karl (Kingston upon Hull East) (Lab)

† Vickers, Martin (Cleethorpes) (Con)

Yohanna Sallberg, Zoe Grünewald, Committee Clerks

† attended the Committee

Eleventh Delegated Legislation Committee

Wednesday 16 January 2019

[David Hanson in the Chair]

Draft Motor Vehicles (Wearing of Seat Belts) (Amendment) (EU Exit) Regulations 2018

I beg to move,

That the Committee has considered the draft Motor Vehicles (Wearing of Seat Belts) (Amendment) (EU Exit) Regulations 2018.

It is a pleasure to serve under your chairmanship, Mr Hanson. As the Committee will appreciate, the draft regulations are a very minor and technical change to the law on seatbelts. I am keenly aware of hon. Members’ interest in proceedings in the Chamber, so I do not propose to detain them for longer than is necessary.

The draft regulations are made under powers contained in the European Union (Withdrawal) Act 2018. Their principal purpose is to make technical changes to ensure that domestic seatbelt legislation continues to work after the UK’s withdrawal from the EU. It is important to say that they will not make any substantive changes to domestic seatbelt wearing policy; if approved, they will maintain the status quo.

This legislation is a devolved matter in Northern Ireland, but in the absence of a Northern Ireland Executive and in the interest of legal certainty, the UK Government will take through the necessary secondary legislation for Northern Ireland. Accordingly, the draft regulations will make changes to legislation applicable both in Great Britain and in Northern Ireland.

There is no doubt that the introduction, over a number of years, of the compulsory use of front seatbelts, rear seatbelts and child restraints has had a highly beneficial effect on road safety. It should be borne in mind that failure to adhere to the rules on the use of seatbelts and child restraints carries a fixed penalty fine of £100— £60 in Northern Ireland—or a maximum fine of £500 in the magistrates courts. It is therefore important that the law governing those obligations remains clear.

The Government consider that it is only by making the technical changes in the draft regulations that clarity can be achieved for drivers, passengers and those responsible for enforcing the law. In our view, maintaining the status quo, both on seatbelt and child restraint use obligations and on recognition of medical exemption certificates, is the most appropriate way to achieve that clarity.

In essence, the draft regulations will make two key changes. First, they will remove powers and duties in the Road Traffic Act 1988 and the Road Traffic (Northern Ireland) Order 1995 to make subordinate legislation for the purpose of implementing an EU directive. Secondly, they will amend EU references in subordinate legislation by replacing “another member State” with “a member State”, thereby reflecting the fundamental change in the UK’s relationship with the EU.

The removal of existing powers and duties to make subordinate legislation for the purpose of implementing an EU directive is required because such powers will no longer be needed after the UK’s withdrawal from the EU. The draft regulations will achieve the removal of the powers to implement the EU directive by means of a straightforward deletion of the relevant powers from Great Britain and Northern Ireland legislation. The duties to implement the EU directive will also be deleted and replaced with a power that allows the UK to achieve the same outcome—the power to decide whether there should be an exemption from wearing a seatbelt for any person holding a medical certificate issued in an EU member state.

Replacing “another member State” with “a member State” is necessary to ensure that the law remains clear and continues to have effect when the UK is no longer a member state of the European Union. Without those changes, it is possible that the relevant provisions would be rendered legally ineffective or questionable.

These amendments to subordinate legislation will ensure three things in particular. First, medical certificates issued to drivers and passengers in EU member states who cannot wear seatbelts on account of a medical condition will continue to be recognised in the UK. This will prevent a situation whereby, for example, a driver resident in an EU member state who holds such a certificate issued by that state would either need to apply to a UK health practitioner for an exemption or be committing an offence if they did not use a seatbelt.

The second objective is to ensure that passengers are obliged to wear an adult seatbelt even when the only belt available was approved by an EU member state and is not otherwise compliant for use in the UK. That is important because there is an exemption from the requirement to wear an adult seatbelt when no compliant seatbelt is available. If such seatbelts ceased to be compliant by virtue of our not making this technical amendment, their non-use would no longer constitute an offence.

What that means in practical terms is that a failure to make the regulations could have adverse consequences for road safety. After exit day, any lack of clarity over what constitutes a compliant seatbelt could lead to drivers and passengers with seatbelts approved by “another member State” choosing not to wear those belts—clearly not a safe or sensible policy from the Government’s perspective. Making the regulations maintains the current position that seatbelts must be worn.

The third objective is to ensure that driving in the UK with a child restraint system that would meet the requirements of the law of an EU member state, but that would not otherwise meet the requirements of domestic seatbelt-wearing legislation, does not become an offence. We want to avoid confusion for any family travelling to the UK over whether that child restraint is legal.

The Government see considerable benefit in maintaining the status quo, enabling people from both the UK and the EU to carry on using the same child restraints on UK roads after exit day as they do now. In essence, we wish domestic legislation to continue to work effectively, in order to retain good travel, tourism and business access from EU member states following this country’s exit. I commend the regulations to the Committee.

It is always a pleasure to see you in the chair, Mr Hanson, and to serve under your chairmanship. I will be very brief in my remarks.

As the Minister has mentioned, the regulations are part of the many aspects of EU law falling into UK law under the Government’s European Union (Withdrawal) Act, and ensure that child restraints and seatbelts approved under the law of EU member states, and medical exemption certificates issued in existing EU member states, continue to be recognised in UK law. They are absolutely necessary and the Opposition support them.

It is a pleasure to serve under your chairmanship, Mr Hanson. I simply echo what has just been said. The Scottish National party is very content with this measure, as it is a sensible change in the present circumstances.

Question put and agreed to.

Committee rose.

Draft Justification Decision Power (Amendment) (EU Exit) Regulations 2018

The Committee consisted of the following Members:

Chair: Sir Henry Bellingham

† Bacon, Mr Richard (South Norfolk) (Con)

† Caulfield, Maria (Lewes) (Con)

† Clarke, Mr Simon (Middlesbrough South and East Cleveland) (Con)

Cryer, John (Leyton and Wanstead) (Lab)

† Day, Martyn (Linlithgow and East Falkirk) (SNP)

† Glindon, Mary (North Tyneside) (Lab)

† Harrington, Richard (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

† Harris, Rebecca (Lord Commissioner of Her Majesty's Treasury)

† Henderson, Gordon (Sittingbourne and Sheppey) (Con)

† Jayawardena, Mr Ranil (North East Hampshire) (Con)

† Jones, Susan Elan (Clwyd South) (Lab)

McMorrin, Anna (Cardiff North) (Lab)

† Metcalfe, Stephen (South Basildon and East Thurrock) (Con)

† O’Brien, Neil (Harborough) (Con)

† Smith, Nick (Blaenau Gwent) (Lab)

† West, Catherine (Hornsey and Wood Green) (Lab)

† Whitehead, Dr Alan (Southampton, Test) (Lab)

Mike Everett, Committee Clerk

† attended the Committee

Sixth Delegated Legislation Committee

Wednesday 16 January 2019

[Sir Henry Bellingham in the Chair]

Draft Justification Decision Power (Amendment) (EU Exit) Regulations 2018

I beg to move,

That the Committee has considered the draft Justification Decision Power (Amendment) (EU Exit) Regulations 2018.

It is a great pleasure to be here under your chairmanship, Sir Henry—in my case for the first time, but given the number of regulations due to be considered over the next few weeks, possibly not the last time. The Justification of Practices Involving Ionising Radiation Regulations 2004, which I will call the “justification regulations” to simplify matters, provide a framework within which justification decisions regarding ionising radiation are made. It may not surprise you, Sir Henry, to learn that those decisions are an important part of our regulatory regime that surrounds ionising regulations, as they determine whether a practice involving ionising radiation is justified in advance of its first being adopted or approved. In addition, it may be determined as a result of a review that a class or type of practice is no longer justified, so it works both ways.

The power to make those decisions is currently provided by section 2(2) of the European Communities Act 1972. It is possible that only yourself, Sir Henry, the shadow Minister, the hon. Member for Southampton, Test, and I were around to witness the passage of that Act; it did pass me by at the time, but I have concentrated on the matter for the purpose of today’s statutory instrument. Given the United Kingdom’s exit from the European Union and Euratom, and the repeal of the 1972 Act, the justifying authority will not retain the power to make justification decisions regarding practices involving ionising regulation. This instrument corrects that inoperability by providing the authority with a replacement power to make justification decisions involving ionising regulation. The powers to make this secondary legislation are found in the European Union (Withdrawal) Act 2018, which received Royal Assent in June 2018.

I will briefly explain the background to our position in relation to the 2004 regulations. The Committee should be aware that we are committed to maintaining an up-to-date and internationally concurrent justification regime, because we are a world leader in radiological safety and that needs to continue. We also have an international reputation as a trusted partner, with other countries trading nuclear skills, services and materials with us. These regulations are the first step towards regulatory approval for a new class or type of practice involving ionising radiation—for example, medical treatments and new designs of nuclear reactors that may be proposed. The regulations provide that framework.

The bit of the framework that the regulations provide is how Government determine whether the practice is justified in this context, rather than the general word “justified”. In this more narrow sense, “justified” means that the individual or societal benefit of a practice involving ionised radiation outweighs its potential detriment to health. It is a balance, which any Government need to have a system to be able to recognise. Those decisions are taken by the justifying authority, which could be the Secretary of State of the relevant Department or the devolved Administrations, in the form of regulations.

I will quickly mention the devolved Administrations, because they have been involved a lot in this process, and have been content for us to establish and make changes to the justification regime using UK-wide regulations. The instrument allows us to make UK-wide justification decisions in reserved areas, but also allows the devolved Administrations to make their own justification decisions using regulations covering their own geographical areas for activities that fall within the devolved subject matters. I can confirm that we have received letters of consent from each of the devolved Administrations agreeing that they are happy for us to proceed.

Let me briefly expand on the draft regulations. Further to the invocation of article 50, the 2018 Act will repeal the 1972 Act when we exit the EU. However, to ensure continuity for the UK, the 2018 Act will preserve EU-derived domestic legislation so that it continues to have effect in domestic law. That will leave our statute book with several EU-related inoperabilities, including the power to make justification decisions; there are others, but they are not the subject of this debate.

The draft regulations will provide the justifying authority with a replacement power, created under section 8 of the 2018 Act, to make justification decisions under the 2004 regulations once the existing power ceases to be available as a result of the repeal of the 1972 Act. It is important to note that the draft regulations will not allow the Secretary of State or the devolved Administrations to make decisions in any other way, nor will it give them any extra powers or competencies that they did not have under the 2004 regulations. The replacement power is narrower than the power under the 1972 Act: it is limited to the making of justification decisions for the purposes of the justification regulations.

Looking forward, the Department is aware of several potential justification applications that may require a decision by the Secretary of State in the normal way. A functioning justification regime is necessary to ensure that those applications are subject to the appropriate scrutiny procedures. To give just one example, the HPR1000 reactor, intended for use at Bradwell, is a new nuclear reactor design that will require a justification decision before it can be deployed.

I hope Committee members will confine their remarks to specific technical points related to the draft regulations and agree that the regulations are necessary to ensure a functioning statute book on exit day, regardless of the outcome of the negotiations. I commend the draft regulations to the Committee.

It is a pleasure to serve under your chairmanship, Sir Henry. It will be a pretty brief pleasure today, because my understanding is that the draft regulations are simply a device to place into UK law what was previously determined by European provisions. As the Minister outlined, that is necessary because forthcoming justificatory decisions—most notably the decision on the new reactor design for Bradwell—will need to be made within UK rules. If those rules are not in place, the justification process obviously cannot get under way.

As the Minister says, the draft regulations have a pretty obscure title, but they are about taking a cost-benefit approach that ensures not only that new reactor designs are safe, but that the overall environmental effect of ionising radiation from the operating activities of reactors and other devices is justified. Those activities are important, and it is important that we regulate them properly so that in the event of an abrupt Brexit, or even a Brexit that includes a considerable period of adjustment, we have a regime that is fit for purpose. This statutory instrument is part of that; it is not exactly in the same mode as our recent discussions about the future of Euratom, but it is nevertheless in the general area of requiring proper provisions within UK powers after Brexit.

As far as I understand it—I would be grateful if the Minister formally confirmed this—in this instance the justificatory powers themselves are essentially contained in the justificatory powers secondary legislation of 2004, and no malfeasance has been done to those regulations; this process just shifts the operation of those regulations into a UK position. That is my understanding, and I trust that it is the Minister’s as well.

It is a pleasure to be here, and I am grateful to the Minister and the Opposition spokesperson for their comments. I, too, do not see the measure as particularly controversial: it simply replaces EU-derived law so that the regulation of ionising radiation can continue, which I would welcome.

I have said before in other meetings that it is a shame we are wasting so much time doing such things, but I recognise why we have to. It is quite nice, in all the chaos going on around us today, to find ourselves in what is probably the most consensual part of Parliament.

I am pleased to confirm, Sir Henry, that you have presided over peace and tranquillity this afternoon. I thank the shadow Minister and the Scottish National party spokesman. [Interruption.] I thought the Whip was bringing out more sweets.

In response to the shadow Minister’s question, I happily confirm that the regulations are absolutely a replica of the previous ones. He used the word “malfeasance”. I confirm for the record that there has not been any, and there will not be.

Question put and agreed to.

Committee rose.

Draft Occupational and Personal Pension Schemes (Amendment Etc.) (EU Exit) Regulations 2018 Draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) (EU Exit) Regulations 2018

The Committee consisted of the following Members:

Chair: Mr Laurence Robertson

Antoniazzi, Tonia (Gower) (Lab)

† Bradley, Ben (Mansfield) (Con)

† Charalambous, Bambos (Enfield, Southgate) (Lab)

† Clark, Colin (Gordon) (Con)

Cooper, Rosie (West Lancashire) (Lab)

† Dromey, Jack (Birmingham, Erdington) (Lab)

† Dunne, Mr Philip (Ludlow) (Con)

† Fabricant, Michael (Lichfield) (Con)

† Grant, Mrs Helen (Maidstone and The Weald) (Con)

† Grogan, John (Keighley) (Lab)

† Opperman, Guy (Parliamentary Under-Secretary of State for Work and Pensions)

† Pursglove, Tom (Corby) (Con)

† Rimmer, Ms Marie (St Helens South and Whiston) (Lab)

† Scully, Paul (Sutton and Cheam) (Con)

† Stephens, Chris (Glasgow South West) (SNP)

† Stevens, Jo (Cardiff Central) (Lab)

† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

Rob Cope, Kevin Candy, Committee Clerks

† attended the Committee

Seventh Delegated Legislation Committee

Wednesday 16 January 2019

[Mr Laurence Robertson in the Chair]

Draft Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2018

I beg to move,

That the Committee has considered the draft Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2018.

With this it will be convenient to consider the draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) (EU Exit) Regulations 2018.

It is a pleasure to serve under your chairmanship, Mr Robertson. These regulations make changes to domestic legislation that would otherwise no longer operate effectively once the UK withdraws from the European Union. Given that Parliament has voted against the withdrawal agreement, these regulations will help to ensure that we have a functioning statute book in the event that the UK exits the European Union without a deal. It is important to prepare for every eventuality, but I want to stress to the Committee that if we were to get a deal, these regulations would be scrapped, providing that all matters were agreed.

The UK is not reliant on any European institutions or agencies for essential functions in respect to private pensions, such as approvals, licences, decisions or rates. The Pensions Regulator’s powers are derived from UK law. This means that the UK does not need to create any legislation to replicate domestically any EU-level activities relating to occupational and personal pensions after the UK’s exit from the European Union. However, we must ensure that domestic legislation relating to occupational and personal pensions does not rely on any definitions, obligations or reciprocal arrangements that will no longer apply once the UK is no longer an EU or EEA member state.

UK domestic legislation contains various instances of reference to EU law and to the UK as a member state of the EU, which would no longer be the case once the UK exits the European Union. This includes where distinctions have been made between EU or EEA member states and overseas entities that will no longer apply, where the UK is referred to as an EU or EEA member state, or where the UK is obliged to share data with EU agencies or member states under reciprocal agreements that will no longer apply.

Northern Ireland’s occupational and personal pensions legislation broadly mirrors legislation in Great Britain. We are therefore making regulations that make analogous amendments to the corresponding Northern Ireland legislation. The Department of Communities in Northern Ireland has helped to develop and agree the text of the regulations, which I commend to the Committee.

It is a pleasure to serve under your chairmanship, Mr Robertson. The statutory instrument, which is not objectionable, makes technical changes to pensions legislation to ensure that retained EU law continues to operate as it has previously, but with us outside the EU.

However, we have to raise certain concerns relating to the prospect of no deal in respect of investing, including whether passporting rights will continue regardless. The biggest impact could be felt at the next stages by those in defined contribution schemes, whose pension is dependent on market value. For some the impact could be very serious indeed.

Aside from the likely chaos and economic damage, the technical implications of no deal for pension fund investing could impact asset values. First, as a member state of the EU, we can operate within the single market, which gives UK investors access to other members states’ financial services via what is known as the passport arrangement. Secondly, that is because services, particularly financial services, are covered by the general agreement on trade in services, which is the first and only set of multilateral rules governing international trade in services, and which is inferior to single market operations. Thirdly, under the GATS, the UK’s financial services sector would lose a number of benefits it currently enjoys under EU law, especially passporting rights, resulting from the financial services single market.

That is why discussions about future trade relationships with the European Union have centred on an equivalence regime, which means terms of trade equivalent to those we enjoy in the single market. Fund managers and banks can get around no deal by establishing and operating an arm in the EU, and many already have. It is likely that the EU will allow investing between the UK and the single market to continue to ensure that there is no significant disruption to the banking and investing sectors of the economy.

Significant issues then arise for asset managers, who manage 98% of our pension assets, in the Brexit negotiations. Those issues include the continued ability to delegate management of European funds to UK managers so that the UK can continue to manage assets for clients and funds from across the EU; a clear timetable for UK withdrawal so that asset managers can plan effectively; and whether the UK Government will maintain broad regulatory equivalence with its EU counterparts in future so that, whatever the ultimate shape of Brexit, investors on both sides can maintain confidence in the asset management regime in the UK.

No deal presents significant risks for all pension fund investors and, more significantly, for defined contribution scheme members who, by the very nature of those arrangements, bear all the risks of investing. Falls in asset value reduce the value of the individual’s investment pot. Those who are in retirement and who are drawing down money from their pots could see them reduced to insufficient levels.

Because financial services are covered by World Trade Organisation rules, technically, continued trading and management of pension assets would cease between the UK and the EU member states, because the UK would become a third country with no passporting rights. A no deal would have a significant impact on relationships with the EU and would raise significant questions about the nature of any future trading relationship for financial services. In those circumstances, we would be relying on the EU to maintain equivalence all through the period post no deal only on the basis of grace and favour, due to the severe impact on the EU member states’ financial services sectors and the fact that their own pension funds use UK asset managers, who manage £2.5 trillion of clients’ money from outside the UK.

UK financial institutions could establish subsidiaries and apply for national licensing in the EU27. The host countries’ authorities would then supervise their EU27 branches in matters of reorganisation and winding up. National licensing schemes are, however, more limited, complex and costly because of the differences between them. Alternatively, the UK could ask the Commission for equivalence treatment. However, the equivalence regime is very limited in its scope and can be withdrawn at any time.

In conclusion, the regulations before us are not in themselves objectionable, but there are some very significant issues raised for pensions more generally, and for defined contribution schemes in particular.

I associate myself very much with the remarks made by the shadow Minister. I have one question for the Minister: as he will know, I am a member of the Work and Pensions Committee. Will he assure us that the Select Committee will be kept in touch with any changes required in relation to cross-border activity, and that those discussions will be ongoing?

I will answer hon. Gentleman’s question about the Work and Pensions Committee first: by all means, I will do so. I will undertake to write to explain not only the content of these particular regulations, but any other matters that arise. My understanding is that we are not taking forward any other specific pension-related EU Brexit no-deal situations, but I will get that confirmed in writing and send it to the Chair and the members of the Committee.

In relation to the point by the hon. Member for Birmingham, Erdington, the regulations ensure that pension schemes can continue to invest in regulated markets not only in the United Kingdom, but in the European economic area and overseas, on an ongoing basis. These regulations apply where an employer is using an EU base for its pension scheme, or has done so already. It is about the location of the scheme. We genuinely believe that fewer than 1,000 people will be affected by such a situation because, as he will be aware, the vast majority of schemes have a UK base. He raised specific points on passporting. I am sure my Treasury colleagues, who are taking responsibility for that, will be delighted to write to him and give a due assessment of the wider investment issues relating to passporting but, in the circumstances, I commend the regulations to the Committee.

Question put and agreed to.

Draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) Regulations 2018


That the Committee has considered the draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) (EU Exit) Regulations 2018.—(Guy Opperman.)

Committee rose.

Draft Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Mr Adrian Bailey

† Austin, Ian (Dudley North) (Lab)

† Champion, Sarah (Rotherham) (Lab)

† Efford, Clive (Eltham) (Lab)

† Fitzpatrick, Jim (Poplar and Limehouse) (Lab)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Frazer, Lucy (Parliamentary Under-Secretary of State for Justice)

† Gaffney, Hugh (Coatbridge, Chryston and Bellshill) (Lab)

† Garnier, Mark (Wyre Forest) (Con)

† Hands, Greg (Chelsea and Fulham) (Con)

† Heaton-Jones, Peter (North Devon) (Con)

† Jones, Mr David (Clwyd West) (Con)

† Lopez, Julia (Hornchurch and Upminster) (Con)

† Milling, Amanda (Cannock Chase) (Con)

† Qureshi, Yasmin (Bolton South East) (Lab)

Rashid, Faisal (Warrington South) (Lab)

† Rowley, Lee (North East Derbyshire) (Con)

† Whittingdale, Mr John (Maldon) (Con)

Claire Cozens, Committee Clerk

† attended the Committee

Ninth Delegated Legislation Committee

Wednesday 16 January 2019

[Mr Adrian Bailey in the Chair]

Draft Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Bailey. The draft statutory instrument forms part of the Government’s preparations should we leave the EU without a deal. The Committee should be aware that the Government have been hoping for a deal, but preparing at the same time for no deal, and, as part of those preparations, publishing a number of technical notices to outline the implications of a no-deal exit for citizens and businesses.

On 12 October the Government published a technical notice titled “Providing services including those of a qualified professional if there’s no Brexit deal”. That notice set out the implications of a no-deal exit for professionals in scope of the two EU directives on lawyers’ services and lawyers’ establishment. The draft instrument makes changes to the arrangements in England, Wales and Northern Ireland relating to those directives, and it remedies deficiencies in the relevant retained EU law arising from our withdrawal from the EU. Scotland will introduce its own legislation on the matter.

It is important to set out the current application of the EU directives. The lawyers’ services directive allows specified lawyers to provide regulated services in a member state other than the one in which they qualified—termed a host state—without the need to register with a host state regulator. Lawyers provide services under their existing professional title, which is otherwise termed their home state professional title. The directive clarifies the regulatory rules that are applicable and the conditions for providing those services in a host state.

The lawyers’ establishment directive allows specified lawyers in one member state to practise reserved legal activities on a permanent basis in another member state under their home state professional title, and the conditions for doing so. It also allows lawyers who are practising in another member state to be admitted to the profession in that member state after three years of practice in the law of that member state, without having to go through the usual qualification routes. European lawyers practising in the UK under the establishment directive must be registered with a UK regulator as registered European lawyers. As registered European lawyers, they have the right to own legal businesses without a UK-qualified lawyer.

The question that therefore arises is: what will change if we leave the EU without a deal? The answer is that the lawyers’ services directive and the lawyers’ establishment directive will no longer apply to the UK, and there will be no system of reciprocal arrangements under which EU and European Free Trade Association lawyers, including UK nationals holding EU and EFTA qualifications, can provide regulated legal services and establish on a permanent basis in the UK, and likewise for UK lawyers in the EU. It is the deficiency in the retained EU law caused by that lack of reciprocity that we are seeking to remedy.

First, I should say that EU and EFTA-qualified lawyers who have already successfully transferred into the English, Welsh or Northern Irish qualification will be able to retain their qualification and practice rights, but arrangements will be different in the future. In the event that the UK leaves the EU without a deal, our services trading relationship with the EU will be governed by World Trade Organisation rules. The general agreement on trade in services prohibits signatory states from giving preferential market access to any other signatory state in the absence of a comprehensive free trade or recognition agreement between them.

We therefore need to fix the deficiencies in the relevant retained EU law caused by the lack of reciprocal arrangements with the EU, while meeting our international obligations. As such, we will revoke the legislation that currently implements the EU framework, and EU and EFTA lawyers will be treated in the same way as other third-country lawyers.

The draft statutory instrument will helpfully provide a transition period to allow registered European lawyers time to comply with the new regulatory position. The transition period will run from exit day until 31 December 2020. It will allow registered European lawyers and those in the process of achieving registered European lawyer status by exit day to practise in the same way as they do now, but with time to adjust. The arrangement will also allow EU and EFTA lawyers with ownership interests in regulated legal businesses in England, Wales or Northern Ireland to adjust their regulatory status.

In conclusion, if we leave the EU without a deal, there will be a deficiency in retained EU law implementing the two lawyers’ directives, because of a lack of reciprocity. This statutory instrument fixes that deficiency. We take the upholding of international obligations very seriously, and it is our international duty to comply with such rules. In the event of no deal, aligning the rights of EU and EFTA lawyers with those of third-country lawyers will allow them to continue to access our world-leading services market, while ensuring that the UK complies with its international obligations.

It is a pleasure to serve under your chairmanship, Mr Bailey. I have indicated to the Minister, the Government Whip and the Chair that we will not be pressing this statutory instrument to a vote. I thank the Minister for her courtesy in ringing me to talk about it last week.

The Opposition have some observations about the statutory instrument and its effects. The legal services sector is in a unique position in the European Union. It is widely established that a series of European directives have created a single market in legal services, unlike in other service sectors. Lawyers and law firms benefit from a simple, predictable and uniform system that allows them a temporary or permanent presence in other EU member states, with little scope to introduce national variations. This allows United Kingdom lawyers to service the cross-border needs of businesses and individuals, both from satellite offices in the European Union and through fly-in, fly-out services from their London offices. That is a daily business practice for many firms.

Since this liberalisation, the UK legal sector has become a major exporter to the European Union, with 36 of the top 50 UK law firms having at least one office in another country in the European Union or European economic area, or Switzerland. UK law firms have a presence in 26 of those 31 countries. That has meant that the legal sector has contributed significantly to our economy. In 2017 alone it was worth more than £26 billion to the UK economy—equivalent to 1.5% of UK GDP—and it employed in excess of 380,000 people. The latest statistics show that the legal services sector was responsible for a net export of £4 billion. There is no precise figure for how much of that trade is to the EU, but we are aware that 55% of the UK’s business services exports go to the European Union, and legal services make up a significant amount of UK business services.

A no-deal Brexit would have a significant impact on the ability of UK lawyers to operate in the European Union, and it would lead to World Trade Organisation rules being applied. Progress in developing rules on services at the World Trade Organisation has been very slow. Although it is outside the scope of the statutory instrument, I remind Members that there is a concern that a no-deal situation will have the following consequences for UK law firms and lawyers. Without a future partnership agreement, world-leading law firms in the UK could face significant restrictive regulations on the provision of temporary and permanent services in the European Union 27 countries. Lawyers would face more than 30 different regimes, depending on each European Union and EFTA member state, many of which impose restrictions and limit practice rights for third-country lawyers and law firms.

For example, there are restrictions on practice areas. In most European member states, it is not possible to practise local state law as a third-country lawyer without holding local qualifications. The WTO schedules of commitments under legal services include only home country and public international law. Crucially, European Union law is not treated as a type of public international law, and so is excluded from the scope of the schedules. UK lawyers will therefore not be able to advise on areas such as competition, internal markets and trade. In most member states, it would not be possible, save for a few exceptions, for a third-country lawyer to represent their client in the domestic courts.

Another big consequence is a restriction of modes of practice. Most European Union member states do not permit fly-in, fly-out services by third-country lawyers. If those services are lost, the profession’s ability to continue to advise European clients, represent those with cases involving more than one European Union member state and continue to play a leading role in global investigations will be jeopardised. Fly in, fly out is excluded from the WTO commitments, and each member state imposes its own rules and regulations. For example, France, Germany and Luxembourg require compulsory membership of professional bodies in relation to commercial presence. There are strict rules prohibiting local lawyers from partnering with non-EU lawyers in, for example, Spain and Sweden. There are restrictions on company structure or commercial presence, such as restrictions on foreign investment in law firms or an imposition of a certain legal form on third-country law firms, in, for example, France, Spain, Portugal and Poland.

One of the main issues is that most member states do not allow third-country nationals even to re-qualify in their national legal profession, as that is available only to EU, EEA or Swiss nationals. Again, that will have a big impact on UK lawyers and legal services, and our economy. Our world-leading services, which are rightly recognised across the world, will be seriously impacted.

Those are just some of the consequences. There have been at least two Westminster Hall debates on those and other issues relating to legal matters arising from Brexit. One was on 29 March last year and the other was on 21 November, and I had the pleasure of responding to both from the Opposition Front Bench. The issues I mentioned today were spoken about in detail or alluded to in those debates, and we asked the Government a number of questions. What are the Ministry of Justice and the Government doing to deal with the problems that we will have if we leave the European Union? So far, it seems that no protocols, no agreements, no treaties and no memorandums—no nothing—have been negotiated by the Ministry of Justice or the Government for legal services. There is a grace period until 2020, but nobody knows what will happen after that. Our legal services will be impacted.

This is not new. I am sure these issues have been raised by other hon. Members prior to 2018—I have been dealing with them since last year. I and other hon. Members who were present in the Westminster Hall debates that I have mentioned raised these points then. The Ministry of Justice has had to introduce a statutory instrument to deal with the revocation of all the previous legislation and the things that allowed essentially seamless movement of legal services across borders.

Although lawyers who have already qualified will keep their rights, that is not a great concession because if someone is already qualified in a particular country, it will be difficult to take that back. I know—as does the Minister, who was a practising lawyer as well—that at some point we are going to require another country’s legal jurisdiction. Different countries have different rules. Europe has what we call the continental system, which is a statutory-based codification, and that is a different ball game from trying to practise in common-law jurisdictions, which are very different. It can be an absolute nightmare, and a difficult and lengthy process, to re-qualify in other jurisdictions—and that leaves aside the fact that in some jurisdictions, someone who is not an EU, EEA or Swiss national cannot practise at all. Once we are out of the European Union, we will not be a member of any of those, so we will not be able to practise in many European countries. I do not know why the Department has not grasped the impact of that particular provision on our legal services.

I hope that the Minister and others in the Department are listening. I wish they would get together and sort something out, so that our lawyers can practise across the European Union, the EEA and Switzerland.

I thank the hon. Lady for the comments that she made at the beginning of her speech. It is always a pleasure to liaise with her, on these matters as on so many others. She was right to identify the importance of the legal services sector to our country, in terms of not only the amount that the sector brings to the economy, but the number of jobs that it provides. It is one of our country’s most successful industries, providing jobs up and down the country, and we in the Government and the Ministry of Justice absolutely recognise that.

We absolutely agree with the hon. Lady that it would be beneficial to have a future partnership with the EU, with continued reciprocal rights. That is why my Department and the Government more broadly have spent a considerable amount of time negotiating those matters in a future partnership with the EU over the previous months; that is why the Government put the deal that would have enabled a future relationship with reciprocal rights before the House last night; and that is why I voted for it. I hope that hon. Members will see that in the absence of a deal we need this statutory instrument to allow us to comply with our international obligations, including aligning and adhering to rules on reciprocal arrangements, while preserving the ability to promote the attractiveness of our leading legal services market.

I wonder what the Minister thinks about the situation in the House at the moment. Does she believe that there is a majority among Members of Parliament to leave the European Union with no deal? Rather than passing all this legislation, does she not think it would be more beneficial for the country if the Government were just to rule out using the option to leave with no deal? That would put the minds of a lot of businesses and industries at rest—

Order. The hon. Gentleman is straying rather a long way from the detail of these particular regulations. I applaud him for his initiative and ingenuity, but I call the Minister.

I, too, applaud the hon. Gentleman. I will end by saying that I commend the draft regulations to the Committee.

Question put and agreed to.

Committee rose.