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Post Brexit: Small Service Businesses

Volume 812: debated on Monday 24 May 2021


Asked by

To ask Her Majesty’s Government what assessment they have made of the impact of the United Kingdom’s departure from the European Union on small service businesses dependent on mobility between the United Kingdom and the European Union; and what support they have offered to such businesses to preserve their incomes and jobs.

My Lords, the Government are committed to supporting SME owners from all parts of the UK. My colleague, Minister Scully, recently formed an SME action group, which meets regularly to discuss key issues. The EU-UK Trade and Cooperation Agreement supports small services businesses, ensuring that many business visitors can stay in the EU for 90 days of any six-month period without requiring a work permit. BEIS is currently expanding GOV.UK guidance on member states’ immigration systems.

My Lords, numerous small UK providers of cross-border services, based in the EU, EFTA and the UK, have found their businesses under existential threat following Brexit, including IT consultants, translators, exhibition organisers, tradespeople, sailing-holiday providers, ski instructors, journalists, artists and, of course, musicians, to name just a few. They find it hard to get clarity on the rules now governing their activities or on where to get help to resolve issues. What guidance can the Minister offer to such service providers to help them find ways of saving their businesses and their livelihoods, and will the Government consider setting up something similar to the EU’s Your Europe Advice and SOLVIT services to support them?

The noble Lord makes a good point. This is a complicated area. We are upgrading existing GOV.UK guidance on the immigration systems of EU and EFTA member states to help businesses adjust to the new requirements. The first tranche of these guides is available now, and from 1 January 2021, for short stays of up to 90 days in any 180-day period, UK nationals will not need a visa when travelling to and within the Schengen area to undertake a limited range of activities.

Now that a free trade agreement with the EU is in place that enables the selling of equipment into Europe, what discussions have been held that would aid the removal of the 90-day restriction that is an impediment to UK experts being able to service the equipment or machinery that has been sold?

I understand the noble Lord’s concerns but we have reached a balanced deal with the EU similar to the EU’s agreements with Canada and Japan, and the TCA is the basis of our agreement, so I am sorry to tell him that this will not be renegotiated.

I declare an interest as I practised European law in Brussels. Can the Minister explain the situation regarding the freedom to provide services, in particular family law, under the EU-UK Trade and Cooperation Agreement? I understand that this is not covered. What would the situation be if a solicitor or an advocate in this country wanted to represent a member of the family living in the European Union? How would the agreement apply to that? Also, can the Minister and his department urgently address the availability of insurance for small firms and solicitors post Brexit and post Covid?

As my noble friend is aware, legal services are subject to separate international agreements. The details of how that will apply across member states are complicated, so it is best for me to write to her.

My Lords, does the Minister understand how grave the mobility problem is for the musical community, many of whom have earned nothing for the last year and are now struggling with piles of forms and visa fee demands? Did I understand him to say that they could work and be paid in that 90-day period? Illness often means that, in both directions, players and singers must be able to move at short notice.

As the noble Lord is aware, having raised this a number of times, we are working closely with the music industry to help musicians adjust to the new trading relationship. Bilateral conversations have established that some touring activities are possible and, under certain conditions, without visas or work permits being required. We have created landing pages on GOV.UK to provide guidance to musicians on these areas.

Further to the question from the noble Lord, the TCA contains no overarching agreement with the EU on short-term work relating to our creative industries and, despite what the Minister says, no bilateral or reciprocal agreements are being signed at the moment. What assessment have the Government made of the impact that this will have on our services trade, which in 2019 was worth over £534 billion?

As I said, we are working closely with the sector and across government to consider how we can help resolve these issues. I understand the noble Lord’s point. This has been very damaging to the creative industries. It is hard to quantify the impact at the moment. Given the pandemic, not many people are travelling anywhere, but we will monitor the situation closely.

My Lords, the noble Lord, Lord Frost, admitted last week to our European Affairs Committee that the Government rejected the EU’s offer of a visa waiver system whereby arts and culture workers, such as musicians, could tour on the continent without a mass of red tape. The Government now seem to be trying to reach bilateral deals with individual EU countries, but this may well be blocked by Brussels. What effective strategy do the Government have to give mobility to a sector worth billions to our economy?

The proposals from the EU were complicated and would not have resolved many of these issues, so the noble Baroness should be wary of believing some of the propaganda she reads. We tried to reach a comprehensive agreement, but our proposals were rejected by the EU. I know that she will find this hard to believe but that is what happened in practice.

My Lords, the nuances of the TCA mean country-by-country understandings for business travel. The CBI, of which I am president, welcomes the recently published guidance from the Government. However, do the Government agree that, as travel restrictions ease, government support should be provided to help businesses, particularly SMEs, navigate these complex new requirements? Do the Government also agree that the UK and the EU should work together to make these processes as efficient as possible?

I agree with the noble Lord, and we are doing exactly that to support SMEs. The Government have announced a £20 million SME Brexit support fund. We have also established a network of 38 growth hubs to support businesses, one in each local enterprise partnership area in England, and will continue to offer whatever support we can to business.

My Lords, already hit by Brexit and Covid, small businesses have suffered a decline in their post-Brexit exports because of increased paperwork and shipment delays. The Federation of Small Businesses found that by the end of March, almost a quarter had suspended sales to Europe. Some companies have given up on trade with the EU or Northern Ireland altogether. Can the Government urgently use the provisions of the trade and co-operation agreement to ease post-Brexit burdens on small businesses?

Of course; we are more than interested and keen to ease burdens as much as possible. It requires a willing partner on the EU side to engage in constructive discussions, but we will continue attempting that.

My Lords, the increased costs and complexity of post-Brexit touring, about which we have heard, are particularly acute for the many micro-businesses in the cultural sector which do not have access to the resources or specialist skills needed to navigate multiple regimes in EU states. Can the Minister say what further discussion there has been about the establishment of a new creative export office to provide expert advice and support since Ministers first mooted the idea in February? Can he say what the remit of this office would be?

The noble Baroness makes some very good points, and I know that she has raised this point about the provision of services before. Regarding the creation of the creative export office, I will speak to my colleagues in DCMS who have responsibility for this and write to her with the details.

My Lords, I told my colleagues that I would try to sweep up any questions the Minister did not answer, but I have so many to choose from that it is difficult. However, in at least two of his answers, he has been very critical of the EU. In answer to the noble Baroness, Lady Ludford, he implied that the EU was not being sincere or constructive in practice and, in his answer to the question from my noble friend Lord Hain, he said that the EU is not a willing partner in discussion. We cannot carry on like this. We have left the EU. That is it: we have left. The consistent inability to do deals, to talk to the EU and to accept that it might be a willing partner and that the problem might be with us is very difficult. Will the Minister try to answer those two questions again please?

As I said to the noble Baroness, Lady Ludford, the UK’s proposals on input from the sector were repeatedly rejected by the EU and the EU’s proposals would not have addressed many of the sector’s concerns. They were non-binding and did not include touring.

My Lords, some members of the local business association in my town of Richmond are reporting that Brexit has driven up running costs by 10% to 15% since January. Can the Minister tell me how they are supposed to stay competitive in the global marketplace and where the much-promised level playing field is?

The level playing field in the context of the TCA refers to horizontal regulations governing business. In areas of competition, labour and environmental and climate law, our regulatory environment will no longer be determined by EU rules. We are free to set our own policies and, with the will of this House and the other place, we can make ourselves as competitive as we possibly can by adjusting those regulations.