Comprehensive and Progressive Trans-Pacific Partnership (IAC Report)

Lord Anderson of Swansea Excerpts

Tuesday 19th March 2024 Lords Chamber

[Lord Anderson of Swansea (Lab)]

My Lords, I congratulate my noble friend Lady Hayter on her helpful introduction to the debate on the report. I differ from the noble Lord, Lord Lansley, only in that he was a member of the committee, heard the evidence and is now contributing to the debate; I was not a member of the committee at the time and did not hear the evidence and therefore have to rely largely on the helpful report which the committee has produced. I will therefore be somewhat brief.

I accept that the accession is welcome and, more importantly, has potential for growth in directions that are relevant to our own interests, both in relation to the internal developments within the agreement—as insiders, we can now make contributions in a way that we could not if we were not members—and because of the possibility of new members coming to join. China and Taiwan have been mentioned, but both, for different reasons, are unlikely to join. It is uncertain how many other countries will join. Indeed, if there were a large number of members, the agreement would be approximate to the now failing WTO. Although both previous speakers said that the WTO is important, there is clearly a deadlock, not least because of the Trump policy on appeals and so on. As insiders, this is important, but we join having to accept the existing rules—rules over which we have had no part in drafting. It would therefore be unwise for us to throw our weight around at the beginning, although we are the second-most important economy in the group.

The context is clear. The accession is possible because we are now outside the European Union. Obviously, within the European Union, our weight in trade negotiations would have been substantially enhanced. Yet such bilateral or plurilateral agreements should be put in perspective: the best trade agreement that we had was inside the European Union. Any other deals, such as with Australia or this current deal, are, in essence, damage limitation: doing the best that we can outside the European Union. The European Union remains the UK’s primary trading partner and the largest single export market for our services. The European Union provides a basis for an improved service sector among member states and within the single market. I was present at a recent Brand Finance conference, where John Major, as a principal speaker, said how much he favoured joining the single market.

It is a temptation for the Government—as the Minister said yesterday at Question Time—to hype the importance of such deals, and although we welcome the accession, the report is careful to avoid such exaggeration. The report summary says:

“Despite projections that CPTPP will bring limited economic benefits to the UK in the medium to long-term, the accession of the UK could be of strategic importance, especially in shaping the future development of CPTPP and geopolitical influence in the region. However, the effective implementation of CPTPP is key to maximising any potential benefits and building capacity for the future”.


I emphasise the words “could” and “potential”. We already have free trade agreements with nine existing members, although I accept that it is important that Brunei and Malaysia are now within the fold. Therefore, it means that the opportunity for growth is somewhat constrained, and two witnesses described the benefits as “marginal”. The Society of Motor Manufacturers and Traders, for example, stated that the

“potential benefits … should not be overstated”,

and we should generally be alert to the fact that the agreement is only a small part of UK trade. Yesterday I mentioned the Government’s estimate of 0.08% of GDP over the relevant period and the 0.04% estimate of another relevant group.

My second point is that there needs to be a new focus on services in our trade policy, particularly as, from 2021, services have overtaken goods as a share of UK exports. In 2023 services accounted for 54.3% of the total UK exports of £859.2 billion. These figures do not include services provided through our commercial presence in third countries. Our strength is in the service sector and yet the current agreement offers little, if any, liberalisation of services and no effective enforcement mechanism. We can only hope that, as insiders, we can help over time to move the agreement to have a more robust policy on the service sector. In the Government’s judgment, what prospects are there of helping to move the agreement more to the service sector? Have there already been any soundings in that direction?

My final point, already made in part by my noble friend, relates to the devolved Administrations. The Government have acknowledged the failure of consultation in this respect. The committee calls for information to be shared in a timely and transparent manner in and outside the relevant areas of devolved competence. I note that in the Australia deal, which the noble Lord, Lord Lansley, mentioned, Welsh farmers suffered substantially over Welsh lamb. I hope that the lesson of listening more to the concerns of the devolved Administrations has been learned. We should not sacrifice their interests on the altar of greater deals. The information-sharing protocol, which was made early last year, indicates that the Government have learned some of the lessons. But we should watch this space to see whether there are any real improvements. We must understand that the devolution settlement is now only 25 years old. There needs to be a total culture change in Whitehall to consult on and listen to the interests of the devolved Administrations. The Government have acknowledged that this was not the case in respect of this agreement. Let us hope that the lessons have now been fully learned.

UK Tradeshow Programme Closure

Lord Anderson of Swansea Excerpts

Monday 18th March 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I am not entirely sure whether that is a question for me, but the noble Earl touches on defence, and I would say that we have been doing a huge amount on defence and security exports to promote our industries. New arrangements, such as AUKUS, are also incredibly powerful in driving our exports in that area. I also draw this House’s attention to the Saudi Great Futures event, which will launch on 14 May. Over the past few days we have sent out literally thousands of invitations to businesses, and we will fly a huge quantity over to Riyadh in the middle of May to celebrate the enormous opportunities that we see in that country, working on projects such as NEOM. Across the board there is an enormous amount that we are doing. I shall have to refer the question about banking to one of my colleagues.

[Lord Anderson of Swansea (Lab)]

My Lords, the Minister has just said that there will be “significant benefits” to this country from the trans-Pacific partnership. How significant is “significant”? Does he recognise that the Government estimate that the benefit to our GDP will be 0.08% and the OBR believes it will be 0.04%? Should the Government not be careful not to overegg their pudding?

[Lord Johnson of Lainston (Con)]

Since many of our exports are going to be food and drink, I think overegging the pudding is precisely what we should be doing when it comes to encouraging our exports. The opportunities that CPTPP presents are, first, a new trade deal with Malaysia, which we do not have; far better arrangements around rules of origin, which noble Lords opposite who have been involved in motor manufacture will see the benefits from; and very important new opportunities to export our agricultural goods. CPTPP is not a single trade deal but a living agreement. We hope new members will join which are aligned to our ambitions. That will allow us to have access to even greater markets. I am very proud of this Government’s record of negotiating trade deals, but there is more to do, so I am excited about the future too.

Brexit: Benefits to Economy and Society

Lord Anderson of Swansea Excerpts

Wednesday 6th March 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank my noble friend. This could get quite spicy. I will keep to trade. We have just joined the CPTPP—we need a new name for this trans-Pacific partnership. The last time I looked at the map, Britain was not anywhere near the Pacific Ocean. We managed to get America’s place in this group of 12 countries which have 15% of global GDP and 40% of the world’s middle-class consumers, who all want to buy goods that are made in Britain. We could not have done that deal while we were inside the EU. We are 95% of the way through negotiating with India. We could not have done that deal inside the EU. Trade is tilting towards the East and we need to be where the trade is.

[Lord Anderson of Swansea (Lab)]

My Lords, has any of that made up for the loss of trade to the European Union? Would it not be helpful—

[Baroness Williams of Trafford (Con)]

My Lords, we will hear from the Cross Benches, then the Labour Benches.

[Lord Offord of Garvel (Con)]

I thank the noble Earl. We heard in the Budget today the Chancellor identify the creative industries as one of the five key new industries coming through which will power our economy forward. We have in the UK probably the best tax regime for the creative industries. On individual country-by-country touring issues, we are resolving them one by one, to the benefit of our young artists.

[Lord Anderson of Swansea (Lab)]

My Lords, have any of these trade deals cumulatively made up for the loss of trade to the European Union? Would it not be helpful to publish two columns—one with the extravagant claims made by Mr Johnson and his friends during the referendum and one with what has actually happened?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. I can give some detail on that. If you take out inflation and things such as precious metals, our exports today are in real terms 1% ahead of 2018. After a very difficult five years of world contraction, our exports are, in effect, £870 billion. Interestingly, our economy is 80% services and 20% goods, but our exports are 50/50 because our goods are good and go around the world. The direction of travel is that our exports will be two-thirds services and one-third goods. Our services have gone up by 15% and our manufactured goods have gone down by 12%. Therefore, our services are more than making up for goods. The killer stat is that if you look at our exports, our manufactured goods to the EU are down 13% and to non-EU down 12%, so there is no difference. Brexit is a red herring.

Tata Steel: Port Talbot

Lord Anderson of Swansea Excerpts

Tuesday 19th September 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for allowing us to debate this Statement. The noble Baroness from His Majesty’s loyal Opposition made some important points, and I associate myself with her remarks. I have some additional questions.

The agreement to fund the installation of new arc furnaces for steel making will have a positive effect on emissions, and that is good news. However, as the noble Baroness said, the package could mean as many as 3,000 job losses in the UK, and in one area of the UK. That is a terrible outcome.

Tata is reported as warning that there would be a

“transition period including potential deep restructuring”

at the plant. I am not sure that I understand what that means. Can the Minister please translate it for your Lordships’ House in real terms and real lives? Those jobs are being shed. What plans do the Government have to support those people and that local economy when the jobs go? What are the plans for retraining, for example? What are the realistic expectations for a concentration of new and different jobs in that area?

As we also heard, the electric arc furnaces deliver different grades and qualities of steel compared to what we get from a blast furnace site. What is the Government’s assessment as to how the new capacity in this country as a result of that will affect the profile of steel we need to import? To add to the point that the noble Baroness made, what is the assessment on resilience in this country as a result of this change?

The new coal mine in Whitehaven that was last year partially waved through by Michael Gove is also a factor here. West Cumbria Mining said that the coking coal that it would produce would be used for steel making in the UK and Europe. As the Minister knows, electric arcs do not use coke. Yesterday’s announcement removes at a stroke a large proportion of the domestic market for that mine, meaning that the mine will be almost solely for export only, which even further removes the legitimacy of that venture.

The Statement mentions that the British industry supercharger, aimed at assisting electricity prices and helping to make them competitive for energy-intensive industries, will be applied here. His Majesty’s Government responded to the consultation on this only on 5 September, so I suspect that this is its first outing. I really do not understand what it is, but it is cited in reports. Can the Minister please write to us outlining what it is and what it means? I saw the consultation on the British industry supercharger and the response to it, and it is cited as being applied here. How is it applied? What are the terms of that application and what does it mean in energy terms for this business? What other businesses are now in line to benefit from it—not least Scunthorpe, where the Chinese owners cited energy costs as the reason for their shutting down of its coking ovens?

I have a couple of other points. Tata expects to release land at Port Talbot for transfer or sale following the closure of the blast furnaces. This land presumably hosted high industrial activity for decades, so who will be responsible for the not inconsiderable costs of decontaminating and remediating this land before it becomes useful and valuable for anything else? Who will be stumping up these costs?

In conclusion, we have seen a number of government interventions, including the also Tata-owned Jaguar Land Rover, Nissan, BMW and perhaps, going forward, British Steel. It has been said by some that these are foreign investors who are masters at extracting subsidies. We understand that there is an international subsidy competition going on here, but how does the Minister respond to that charge? The Chancellor has said that he was not prepared to go toe to toe with the US and EU in the subsidy bidding war, but this looks like the Government reacting to things when they settle in their in-tray. A patchwork of deals is a poor substitute for a coherent industrial strategy. Where is His Majesty’s Government’s plan? What are the Government seeking to cause to happen, or should we expect further examples of sticking plaster activity?

[Lord Anderson of Swansea (Lab)]

My Lords—

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

Apologies, my Lord. I think I have the opportunity now to respond to the two opening speeches and then I will answer questions one at a time, if I have the order correct.

I greatly appreciate the debate we have had so far over what I believe is a pretty sensational recovery of an extremely difficult situation. Noble Lords will be aware that these conversations around Port Talbot have been going on for many years—some say even more than a decade. Certainly, from my own experience in the private sector, I regarded the situation with a great degree of pessimism, to be frank, and I am surprised that the tone of the debate is not more positive. That does not negate the realities of saving the situation and the transformation that will result in the locality.

I will go through the points raised by the noble Baroness, Lady Chapman. I am happy to answer them one by one because we have a strong and coherent policy response to each of the very important points raised. This is a very serious issue. We are not playing politics here; we are dealing with people’s lives and the important commitment of, I believe, all of us in this House to maintain steel production in Port Talbot and to guarantee a future for those communities. What we have ended up with is a powerful opportunity for this country to reshape its industrial base in terms of producing steel and reducing emissions. Noble Lords will be aware of the astonishing level of emissions that Port Talbot alone produces; I think it is 1% of our entire national output. If we are serious—and I think, collectively, we are—about reducing carbon emissions, to reduce one site that produces 1% of the emissions by 80%, which is what this outcome will produce, is significant for the collective challenge we are presented with.

I also find, if I may say so to noble Lords in this House and to the noble Baroness, Lady Chapman, and the noble Lord, Lord Fox, that there is an opportunity to shift. This is a business case—so it is subjective and perfectly reasonable to raise it—for virgin steel, whereby we import the ore, at great cost to emissions and national resilience, and recycle the nine or 10 million-plus tonnes of scrap. This presents an opportunity to us, to Port Talbot, to the people of Wales and to the whole country to realign our steelmaking industry—to rightly make the most of this scrap steel, which otherwise is being exported to Turkey or the US to be recycled. We were losing out on an enormous opportunity to be part of the circular economy.

Let us look at the prima facie business case for what the Government have done, to work in partnership with Tata. I put on record my personal thanks to the leadership of Tata for the extraordinarily good tone of the negotiations that I know it engaged in. From my first meeting with the chairman of Tata a year ago—although I was not involved in these specific negotiations —there was a very clear signal that Tata felt it was important that it reflected its family ownership in terms of commitment to the community of Port Talbot and the United Kingdom. I hope all noble Lords will join me in expressing thanks for the intense amount of good will demonstrated.

The Government have been extremely brave and forward-footed in bringing forward a proposal that will enable us to transform this site, reduce our emissions and, through the transformation to the Celtic freeport projects and the work we shall do—the noble Lord, Lord Fox, rightly raised this—in releasing land that is currently either potentially contaminated or has risk around it, create up to 16,000 new jobs. The noble Baroness, Lady Chapman, is right to call back some of the policy decisions taken in the 1980s, when there probably was not enough sensitivity paid to the transformation process, which affects people but ultimately makes us safer. That is why the Government have been extremely aware of and sensitive to this crucial point that affects people’s lives. Working with Tata—again, a private enterprise—we have created, or are in the process of establishing, a £100 million fund specifically to look after the communities and the people affected. I am aware that specific task forces are being set up to ensure that the process can be properly handled.

There is a reasonable case to be made by noble Lords, although I do necessarily agree with it, about the process by which this announcement was made, but I am sure all noble Lords who have been involved in sensitive and complex commercial negotiations will be aware that the specific terms cannot be entirely public. It was quite right that we got to a good decision, rather than one jeopardised by too much general community discussion. However, as the noble Baroness, Lady Chapman, will know well, as will her colleagues on the Front Bench, these discussions have been going on for a very long time. Indeed, the announcement of electric arc furnaces at Port Talbot really should have brought great relief to many people, because the worry in the air was that a far more jeopardous decision would be made.

This gives us an enormous opportunity to restructure our industry and reduce our emissions, which is a core commitment of all sides of this House and this Government. It gives us an opportunity to reinvent a huge site with great potential, creating tens of thousands of jobs. I have tried to take a much more positive view of what is a wonderful partnership between the Government, private enterprise and the community that will safeguard thousands of jobs, when the risk of losing those jobs was so significant.

I am aware that both the noble Baroness, Lady Chapman, and the noble Lord, Lord Fox, asked me specific questions, which I am sure other noble Lords would like answers to. If the noble Baroness will allow me, I will just cover those points I did not cover in my main speech. There is an issue over virgin steel. The noble Lord, Lord Fox, suggested that we guarantee always to have a capacity for virgin steel.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I am very grateful to the noble Lord for his points. I think it would be very unfair to suggest that at any point the Government or myself—I would say this personally—are somehow triumphant about people not having their employment. I think that is very unfair of any noble Lord in this House to suggest that there is triumphalism over an important transformation.

However, it is right to celebrate the saving of many thousands of jobs, and the opportunity to repoint our steel industry, which the noble Lord cares about with his heritage and history. We are surely working as one here in solving an extremely complex problem for the better. I could not think of any other outcome that could be as optimised as this. That does not mean that every outcome does not have an element of compromise. In the short term, there have been very difficult decisions to make, but I have made it very clear that the Government take this incredibly seriously. A huge number of lessons have been learned over the last 40 years in terms of industrial transformation. That is why we are committing £100 million specifically to the transformation fund, to ensure that people are insulated to some extent from the effects, and so that we can service communities and assist individuals who may find themselves without employment in that specific job in the future. We also hope that we will create tens of thousands of jobs for the communities of Port Talbot through this act.

There is a question that has come up often and with which I have sympathy, and I hope the noble Lord will give me credit for that. I understand there is frustration about the consultation process that led to the announcement last week. I am sure that many people would have liked to be consulted, but it is very difficult to engage with a broad group on specific commercial transactions such as this. Having said that, as far as I am aware, there has been a huge number of engagements and consultations with all the unions involved—the three unions at Port Talbot—and with the Welsh Government. It is very important that we have some clarity now that this deal has been announced. The people of Port Talbot and the staff of the plant can now know what the future is, when last week they did not. From my point of view, that is one of the most important flags for the future. It gives us the opportunity to have the structure around which to have proper consultation, which the company is obliged to take part in and would want to do so in any case. So some of these questions will be answered in the near future and I am grateful to the noble Lord for his question.

[Lord Anderson of Swansea (Lab)]

My Lords, as the only person present who lives in the area and knows the decades-long dependence of Swansea Bay city on the steel industry, I say that it is sad that it is the local community that is now likely to pay the price of green steelmaking. How many jobs will be lost? Is it accepted that it will be 3,000? Can we be assured that there will be an attempt to synchronise those job losses and any incoming jobs at a time when there are few large investments in prospect and increased competition? Finally, is there a danger that the transformation will lead to increased imports from countries not subject to the decarbonisation process?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for his questions. On the last point particularly, we are very aware of the need to ensure that our carbon border pricing mechanisms are properly implemented. In this House, we are all aware of the situation of competitive imports that we face in this country, which the noble Lord alluded to. We have been particularly forward-footed in ensuring that our World Trade Organization tariff processes are well deployed in order to protect our economy.

On the question asked by the noble Lord on the synchronicity of the Celtic port investments and the transformation of Port Talbot, we are doing everything we can to ensure that that would be the case. Clearly, it is very difficult, but this is a long-term process. The noble Lord was absolutely right to raise it. It is our intention, through this extraordinarily forward- footed and bold investment partnership with Tata, and working with the freeport and the ports companies operating there, to truly transform this area that the noble Lord has such affinity with into the most astonishingly vibrant, advanced manufacturing and industrial hub.

Industrial Strategy

Lord Anderson of Swansea Excerpts

Tuesday 20th June 2023 Lords Chamber

[The Earl of Minto (Con)]

I entirely agree with my noble friend. I assure him and the whole House that the Department for Business and Trade is specifically making it easier for small and medium-sized enterprises to consider and go through the process that they fear is difficult—and in fact is not so difficult—to start exporting, to the benefit of all.

[Lord Anderson of Swansea (Lab)]

Do the Government agree that a continuation of steel production in the UK is vital to our industrial future? Therefore, does an industrial strategy include the investment at Port Talbot steelworks which Tata Steel is now wishing to make, without which there will be an enormous hole in employment in south Wales?

[The Earl of Minto (Con)]

The Government fully recognise the role that steel plays within the UK economy, and they are working with the industry on its decarbonisation options. It is a foundation industry, it is high-wage, and it is extremely important to this country for all sorts of reasons. On the specific issues with Port Talbot and Tata, there are ongoing negotiations, which I am sure the House will realise I cannot divulge. But we are closely involved with Tata, British Steel and Liberty.