Motion to Approve
That the draft Order laid before the House on 28 February be approved.
My Lords, this order amends the 2009 order of the same name, and this revision confers on British nationals working for the organisation the limited privileges and immunities to which they are entitled under an international agreement between the organisation and the United Kingdom.
The European Organisation for Astronomical Research in the Southern Hemisphere is important to the United Kingdom. We contribute £17.5 million annually to its budget for a 16.4% share and 40 British nationals currently work there. The space sector offers significant research and economic opportunities. UK academics and businesses operating in the sector are internationally renowned and are in a strong position to take advantage of those opportunities.
I now turn to the details of the order. The European Organisation for Astronomical Research in the Southern Hemisphere was established by a convention in 1962. In 1974 its member states agreed by protocol to confer, in their respective jurisdictions, legal personality and certain privileges and immunities on the organisation and its staff. The United Kingdom acceded to the convention and joined the organisation in 2002. In 2012 we acceded to the protocol. The protocol was given effect in domestic law by the European Organisation for Astronomical Research in the Southern Hemisphere (Immunities and Privileges) Order 2009. However, the 2009 order failed to confer on British nationals working for the organisation the limited privileges and immunities to which they were entitled under the protocol. That error came to light in June 2014, and for the United Kingdom to continue its fruitful relationship with the organisation we must make this amendment order to give full effect to its international obligations.
The amendments concern three issues. First, on the taxation of employees, the protocol requires the UK to exempt from taxation the emoluments of officers who are British nationals or permanent residents. Of around 40 UK nationals or permanent residents working for the ESO, we know that at least 38 are based overseas in Germany or Chile; the remaining two have previously or occasionally work in the UK and are directly affected. Secondly, the protocol requires the United Kingdom to confer on officers of the organisation who are British nationals or permanent residents immunity from legal process in respect of their official acts, excluding motor vehicle offences and damage, which are not included in this immunity. Thirdly, the protocol requires the United Kingdom to grant social security exemptions to officers of the organisation who are British nationals or permanent residents.
The 1968 Act of Parliament under which the 2009 order was issued permits social security exemptions to be granted only to “high officers”, namely the director-general and his or her deputy. This amendment order therefore confers exemption from national insurance contributions on the director-general and his or her deputy. In respect of social security exemptions for all other officers, the UK has entered a reservation to the protocol. The UK filed this reservation with the French Ministry of Foreign Affairs, which acts as a repository for all papers relating to the convention and the protocol on 14 February of this year. I make clear that the other states party to the protocol have 12 months to object to the UK’s reservation. In the unlikely event that another state party objects, the reservation will not be valid between the UK and the objecting state. However, the UK’s membership of the organisation should be unaffected.
Article 2(3) of this order amends Article 15 of the principal order to ensure that, if the director-general or person appointed to act instead of the director-general has a form of British nationality or permanent residence, that person shall benefit from: immunity from suit and legal process in respect of official acts, excluding motor vehicle offences or damage; exemption from income tax on emoluments received as an officer of the organisation; and exemptions relating to social security.
Article 2(4) amends Article 16 of the 2009 order to provide that any officer of the organisation who has a form of British nationality or permanent residence, other than the director-general of the organisation or his or her deputy, shall benefit from immunity from suit and legal process in respect of official acts, not including motor vehicle offences or damage, and they will benefit from exemption from income tax in respect of emoluments received as an officer of the organisation.
Both the 2009 order and this order apply to the whole of the UK, but some provisions do not extend to, or apply in, Scotland. The opportunity has been taken to clarify which of the provisions in the 2009 order apply or extend to Scotland. Article 2(2) therefore inserts new Article 1A into the 2009 order to clarify the existing position. A separate Scottish Order in Council has been prepared in respect of those amendments within the legislative competence of the Scottish Parliament, and has been laid in parallel before that Parliament.
I reassure your Lordships that the privileges and immunities afforded to officers of the organisation, including those with a form of British nationality, are limited to those that the organisation needs to conduct its official activities. They are in line with those offered to officers of other international organisations of which the UK is a member.
Leaving the European Union will have no direct impact on the UK’s membership of the European Organisation for Astronomical Research in the Southern Hemisphere. The ability for UK staff to work effectively for the organisation before and after the UK’s departure from the European Union is controlled by our adherence to legislation that accurately reflects the convention and its protocol, and the privileges and immunities they afford to staff. In the light of that explanation, I beg to move.
I see that there are not too many volunteers for this one. This order appears to have had a difficult gestation period. It has gone through all kinds of hurdles and has failed at each one. That gives rise to a number of questions.
When I first saw that this order was on our forthcoming business, my noble friend Lord Foulkes suddenly thought that it was a great opportunity to raise the question of why a telescope on St Helena is not being funded by this organisation, as that might also ensure that we can improve travel and transport links there. However, on detailed reading I advised him that there was not really an opportunity to do that here, although I said that I would mention it. I hope that the noble Baroness could make some reference to that.
As the noble Baroness said in her introduction, we joined the convention in 2002, which of course was signed in 1962. According to the briefing from the Foreign Office—I express my appreciation to officials there, who helped me with the background and briefing on this—we signed the protocol in 2012, although it was given effect by this order in 2009, which of course is the beginning of the journey for this matter. I do not quite understand why the protocol was acceded to in 2012 when it was given effect by that order in 2009.
The error that the Minister referred to, namely that the 2009 order was defective as it did not give clear immunities in accordance with the protocol that we signed up to, was not discovered until June 2014. This error must have some implications; the individuals involved must have raised the issue, because they would have been working with people who were employed in accordance with the overall protocol. Therefore, when this error was discovered, how many people were affected by it, and is there any liability on the United Kingdom Government for this error? I assume that there may well be, if two people have been working in the United Kingdom. However, it may be more extensive; it may be that some people, this error being no fault of theirs, may be seeking some sort of recompense. I would like to be clear about that for the future.
I was also slightly concerned that the noble Baroness referred to the numbers that could potentially be affected. Of around 40, we know that at least 38 are based overseas in Germany and Chile. These are not huge numbers—I would have thought that we would be able to be a little more specific about the numbers involved and how we will put right this error.
On the general principle—the Minister referred to this—the briefing says:
“Providing privileges and immunities to International Organisations is standard practice where the Organisations need these privileges and immunities to operate and function effectively”.
That is accepted and I understand that, particularly if that is a requirement of the original protocol. It continues:
“The UK only agrees to confer privileges and immunities on International Organisations to the extent necessary for the proper functioning of the Organisation”.
What does that mean? How do we measure that? Why have we determined that certain individuals will benefit from the requirements of the protocol? This would be a classic episode of “Yes Minister”, I suspect, in terms of understanding the language and the errors and the fact that this 2009 order has been brought before the House three times and still failed. It would help in terms of general policy to understand exactly how these things operate. I hope the Minister will forgive me for this direct approach and will be able to answer.
As the noble Lord, Lord Collins, predicted, there is hardly a rush of enthusiastic interrogatories to deal with on this issue. I thank him for his insightful and helpful contribution to the debate. The amendment order simply corrects a number of errors in the order it replaces and aligns domestic law with the obligations we have made to the European partners, with which we share an endeavour to increase our knowledge of space.
The UK’s commitment to the European Organisation for Astronomical Research in the Southern Hemisphere remains unchanged. We remain committed to strengthening our position as a world leader in astronomy and space exploration. Belonging to this organisation brings with it opportunities from which British companies and our scientists, academics, astronomers and astronauts of the future are well placed to benefit.
I will try to deal with some of the points which the noble Lord, Lord Collins, raised. He mentioned the nature of the journey to this point. I will be quite candid. The journey has involved a road with a number of potholes, and a certain degree of stumbling into and over the potholes has taken place. Why has it taken three years since the order was laid? While the order was laid in 2009, the UK did not complete payment of all the joining fees until 2010 and thereafter we went through necessary internal processes to ensure that we acceded to the protocol. This process took two years as it was given low priority because it was likely to impact on very few UK nationals.
As an aside, the noble Lord mentioned his noble friend Lord Foulkes and the matter of St Helena. I have no information on that but I undertake to look into his question and to write to him. I should make clear that the current telescopic facilities are based in Chile.
The noble Lord also raised the important issue of why the staff of the ESO need privileges and immunities. It is a legitimate question and important we endeavour to answer it. The UK is obliged to confer privileges and immunities by virtue of its accession to the convention establishing the European Organisation for Astronomical Research in the Southern Hemisphere and the protocol on the privileges and immunities of that organisation. Privileges and immunities are important for the organisation to conduct its official activities in the UK, irrespective of whether it has a physical presence in the UK. In particular, tax immunities ensure that partner contributions are directed to the construction and operation of the project and not into tax revenue.
The other issue that the noble Lord raised in that connection—and again it is an important one—was its impact and the personnel affected. As I said, my understanding is that of the 40 identified personnel, 38 work in Chile and two have worked or sometimes work within the UK.
I make it clear that UK nationals or permanent residents working for the ESO overseas are not liable to pay income tax in the UK on emoluments received as an officer of the organisation. However, if UK nationals or permanent residents working for the ESO overseas have income from a second employment, business, or financial investments in the UK, they will be liable for UK tax on such income on the same basis as anyone else working abroad.
The noble Lord, Lord Collins, raised a pertinent point about the potential impact for persons now covered by the order. I make clear that Her Majesty’s Government are not legally financially liable because the amendment order does not include a retrospective effect. In other words, it does not say that the Government will refund income tax payments. However, we will be sympathetic to the concerns of the organisation or the individuals affected if we are approached.
The noble Lord poses a question that he knows I cannot possibly answer. I have not even given a commitment. I have merely, I hope, indicated a note of empathy in respect of the concern which he has raised.
The noble Lord was also concerned about whether this amendment order was the complete solution given the rather troubled history of where we have been and how we got there. Certainly, it is an important step forward in implementing the protocol in respect of officers with British nationality or UK permanent residence to the extent permitted by the Act of Parliament under which it is made. The Act does not permit us to confer by order the social security exemptions on any British nationals or UK permanent residents, other than the director-general. That is why I anticipated what the noble Lord might be interested in and obtained the specific information from the officials, which I was able to include in my speech. I hope that has reassured him.
I hope I have managed to answer the points raised by the noble Lord, Lord Collins. In conclusion, this Government remain committed to the European Organisation for Astronomical Research in the Southern Hemisphere and its ambitious programme to make scientific discoveries and look deeper into space than we have ever managed to do before. This will clearly be for the benefit not just of this generation but for many generations to come. I hope my comments have allayed any apprehensions that the noble Lord had.