State Aid (Revocations and Amendments) (EU Exit) Regulations 2020

Lord Faulkner of Worcester Excerpts

Wednesday 2nd December 2020 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I thank the Minister for introducing these regulations and welcome them. They are necessary to prepare for the introduction of a UK domestic subsidy control regime. As my noble friend has made clear, the EU state aid rules, which would otherwise have been transposed into UK law, would have been inoperable under the withdrawal Act and, in any case, they would have been redundant.

The Government have made it clear that the UK will follow the WTO’s subsidy rules and will also adhere to any relevant obligations entered into under free trade agreements. Among those obligations are those entered into under the CEPA with Japan. Could the Minister explain what the difference is between the Government’s offer to the EU on state aid, which, I understand, is similar to that included in the EU-Canada free trade agreement, and what has been agreed between the UK and Japan? The Financial Times has reported that the UK-Japan agreement replicates the restrictions on subsidies in the EU-Japan deal that went into effect last year. That agreement prohibits the Governments from indefinitely guaranteeing the debts of struggling companies or providing an open-ended bailout without a clear restructuring plan in place.

Of course, as far as state aid is concerned, the EU should put its own house in order. Accusations of dumping cannot easily be made against the UK. As the Prime Minister said in his inspiring Greenwich speech in February:

“France spends twice as much on state aid as the UK, and Germany three times as much … In fact, the EU has enforced state aid rules against the UK only four times in the last 21 years, compared with 29 enforcement actions against France, 45 against Italy—and 67 against Germany.”


But as my noble friend Lady Noakes pointed out with her usual forensic acumen, today’s debate is about our domestic state aid rules. In that regard, I do not support the amendment to the Motion in the name of the noble Lord, Lord Stevenson of Balmacara.

Of course the Government will consult widely on our new domestic subsidy regime, including with the devolved Administrations. I am not quite sure whether creating a statutory requirement to seek the agreement of the devolved Administrations goes further than the requirement to consult, but I am certain that the devolved Administrations will argue that it is tantamount to requiring that their agreement must be given. I would ask the noble Lord if he has not noticed that on every single relevant question the devolved authorities want to do things slightly differently to show their powers. I think the noble Lord’s proposal is, therefore, most unhelpful.

I agree with the noble and learned Lord, Lord Thomas, as quoted by the noble Lord, Lord Stevenson, that it is very important that we have a single set of rules across the United Kingdom. The noble Lord’s wish to extend devolved powers to include all those powers until now held by the European institutions for the purpose of harmonising rules across the EU does not fit well with his view that, at the UK level, the UK Government should not reserve the powers necessary to ensure harmonised state aid rules across the United Kingdom. I think I can see some inconsistency in the noble Lord’s position, and I would ask my noble friend the Minister if he agrees.

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

The noble Lord, Lord Mann, and the noble Baroness, Lady McIntosh of Pickering, have withdrawn from this debate, so I call the noble Lord, Lord Liddle.

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[Baroness Wheatcroft (Non-Afl) [V]]

In debate after debate, we hear more stories of the chaos that looms with a no-deal Brexit, particularly on top of Covid, so surely the Government could make clear what state aid regime they favour and whether they no longer believe that British companies are capable of competing fairly on the world stage. Four years after the decision to leave the EU, could the Minister tell us how close the Government are to developing their state aid regime?

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

The noble Lord, Lord Berkeley, has withdrawn from the debate, so I call the noble Lord, Lord Moylan.

COP 26

Lord Faulkner of Worcester Excerpts

Wednesday 18th November 2020 Lords Chamber

[Lord Callanan (Con)]

My noble friend is tempting me on to dangerous ground with this question. I agree with him that it would be great if more people took their holidays using some of the excellent facilities that are provided for in this country. Of course, however, people should also be free to go on foreign holidays if they wish to do so. One of the purposes of the plan is to see how we can spend more on areas such as decarbonising jet fuel so that aeroplanes in the future will not be so polluting. Hopefully, when we get to our ambitious targets, people will be able to take advantage of excellent holidays either in the UK or, if they wish to do so, abroad.

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

My Lords, all supplementary questions have now been asked and we shall now move on to the next Question.

United Kingdom Internal Market Bill

Lord Faulkner of Worcester Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 28th October 2020 Lords Chamber

I am also taken with the formulation used by the noble and learned Lord, Lord Hope. He has already explained well the basis of where he got the subject matter, but I was interested that he referenced regulation, which is rather more precise than an objective. It seems that that might tie it in to the extent of devolved powers as expressed through regulation and make it simpler to adjudicate. That is a point worth examining further to see whether it has any useful significance in a wider way.

[Lord Faulkner of Worcester (Lab) [V]]

My Lords, I wish to draw the Committee’s attention to the risk to future public health policy as a result of the inconsistent nature of this Bill and focus on the impact of artificially splitting the public health exclusion so that it applies unevenly across the market access principles.

I will concentrate on Amendments 39A, 47A and 52A —tabled by the noble Lord, Lord Young of Cookham—to which I have added my name and which are also supported by the noble Baroness, Lady Northover. As the noble Lord, Lord Young of Cookham, said, the exclusions to the market access commitment differ between mutual recognition and non-discrimination. I struggle to understand the rationale of legislation that recognises the importance of allowing policy that is necessary to protect some aspects of human health but provides no equivalent avenue for others. This is not a continuation of how our internal market is currently regulated, but a significant departure from it.

The example of minimum unit pricing for alcohol, which was mentioned by the noble Lord, Lord Young, illuminates the risk of arbitrary distinctions. Much of the discussion in the House of Commons on this Bill’s health impacts revolved around its potential effects on minimum unit pricing, which arguably was covered by the mutual recognition principle. If it were covered by mutual recognition, this could have rendered any future similar policy—possibly even modifications of the existing minimum pricing regime—largely untenable due to the lack of a public health exclusion from mutual recognition.

In responding to this, rather than applying a public health exclusion to mutual recognition, the Government instead moved minimum unit pricing and similar manner-of-sale policies from mutual recognition. When introducing these amendments, the Minister in the other place said:

“We are taking the opportunity to put it beyond any possible doubt that alcohol minimum unit pricing-type regulation and any other sales requirements are not in the scope of the mutual recognition principle, unless they amount in practice to a total ban on a good being sold.”—[Official Report, Commons 29/9/2020; col. 189.]


While your Lordships may consider that this represents an improvement at face value, on closer inspection, it is a cause for considerable concern.

First, the Government’s decision to do this indicates that a thoroughly evidenced-based policy such as minimum unit pricing, which has steadily defeated challenge in the courts, might not have been possible if it were included within mutual recognition. That illustrates just how narrow the exclusions are to this principle.

Secondly, it demonstrates the risk that this Bill poses to future public health legislation. We know about minimum unit pricing, so we can modify the Bill to attempt to protect it, but it is not hard to imagine that we might in future see innovative and effective policy based on health labelling bans or content reformulation of alcohol, tobacco or food products. All these aspects would likely be subject to the rigid mutual recognition principle.

Lastly, regarding the amendments on the powers of the Secretary of State to amend the Bill through secondary legislation, the Delegated Powers and Regulatory Reform Committee concluded that the Government’s adoption in the Bill of wide-ranging Henry VIII powers, whereby:

“Any power to make regulations under this Act is exercisable by statutory instrument”


and includes the power

“to amend, repeal or otherwise modify legislation”

is completely inappropriate. In effect, it allows the removal or weakening by ministerial diktat of the limited public health protections currently included in the Bill.

At Second Reading, I discussed the importance of allowing the Governments of the four nations of the United Kingdom to protect the health of their populations and how that can lead to innovative policy solutions. The UK has been a leader in the past on tackling smoking, alcohol and sugary drinks. This legislation risks us being unable to embrace, let alone lead, key public health policies in years to come. Our amendments will protect the future of public health legislation, and I commend them to the Committee.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Faulkner of Worcester, who, along with many other noble Lords in this group, focused on public health. Covid-19 has reminded us how unhealthy our society is and how inadequate current arrangements are.

Given that my noble friend Lady Jones of Moulsecoomb has spoken with great power and eloquence in this group, I will be brief and address only Amendment 51 in the name of the noble Lord, Lord Stevenson of Balmacara, to which I attached my name. That amendment would provide public interest defences on trade restrictions; environmental standards and protection; animal welfare; consumer standards; employment rights; the health and life of humans, animals or plants; cultural expression; regional sociocultural characteristics; and equality entitlements, rights and protections. These describe what should be the goals of a decent Government aiming to deliver a healthy life for all their citizens and the sustainable development goals that they are signed up to.

The term “public interest” makes me think of public money for public goods. I am aware that “public goods” has a technical definition but the parallels with “public interest” in this amendment are obvious. I cannot, therefore, see how the Government can oppose it, given that they want to spend significant sums of public money for some of the same goals through the mechanisms of the Agriculture Bill and the Environment Bill, whereas here we are simply applying standards to deliver public goods. I am aware that some Members of your Lordships’ House believe that trade, and the greater volume of it, is a good in itself and should be our primary or sole aim, but we come back to the question: do we work for the economic system, or does it work for us?

Many of these discussions have a distinctly Groundhog Day feeling and the Government may respond by saying, “Our intentions are good and we are trying to deliver all these things”. I come back to the word “dictatorship”, my use of which the noble Lord, Lord True, objected to. I reserve my own right to judgment on that. In fact, I do not have to go that far for the purpose of arguing for this or other amendments. We know that Prime Ministers and Governments have not had a long shelf life in recent times, and who knows how long this one will last? We are creating a legal framework and the possibility for action by any future Government, whatever they might look like. Giving the right to all devolved Governments to act on behalf of their citizens to defend them against chlorinated chicken or fruits laced with dangerous pesticides can be the only basis for continuing in a democratic manner.

United Kingdom Internal Market Bill

Lord Faulkner of Worcester Excerpts

2nd reading & 2nd reading (Hansard): House of Lords
Monday 19th October 2020 Lords Chamber

[Lord Faulkner of Worcester (Lab) [V]]

My Lords, this has been a fascinating debate, with many important issues raised with skill and eloquence in all parts of the Chamber, and enhanced by two excellent maiden speeches.

I am a member of the EU Select Committee. The views I express in this debate are of course my own, though I should make it clear that I agree with every conclusion contained in the report which we published last week on Part 5 of the internal market Bill. The report was agreed unanimously, and I pay tribute to the noble Earl, Lord Kinnoull, who chaired our proceedings with skill, distinction and humour.

I also congratulate my noble friend Lady Taylor of Bolton and her colleagues on the Constitution Committee on their report which focuses on devolution arrangements in the UK and the rule of law. Other speakers have dealt with the devastating nature of those issues: the consequences for Britain’s reputation abroad if we appear prepared to ignore the rule of law, the threats to the 1998 Belfast/Good Friday agreement, and the aggravation of the risk that Scotland will leave the United Kingdom.

One concern which has not received much attention in this debate, except, I think, from the noble Baroness, Lady Finlay of Llandaff, is the threat posed to public health. Public health is a devolved responsibility, and the individual nations of the UK have different populations and different priorities. Scotland, for example, pioneered minimum unit pricing for alcohol and England led the way on prohibiting tobacco displays in shops. However, the narrow drafting of this Bill substantially undermines the ability of all parts of the UK to innovate and improve public health policy. This is because of the very limited exceptions for public health. Furthermore, the current exclusions, including the list of legitimate aims that override non-discrimination, can be removed or weakened by statutory regulation. In my view, the Bill must be amended to allow the Governments of the four UK nations to protect the health of their populations. Protecting human health must be included as a legitimate aim for overriding all market access rules. I shall be supporting amendments to this effect in Committee.

In my last few moments, I want to make a couple of other points. First, I want to emphasise that this is not a rerun of earlier Brexit debates. If anyone is in any doubt about that, one need listen only to the powerful speech by the noble Lord, Lord Howard of Lympne, earlier today. And this is despite the intemperate attack by some Conservative MPs on the most reverend Primate and his fellow archbishops for daring to have a letter published in the Financial Times today.

The second point concerns the role of your Lordships’ House. The work of our committees—the Constitution Committee, the European Union Select Committee and the Delegated Powers Committee—has been outstanding and has hugely informed today’s debate. If your Lordships believe that Part 5 should not be included in the Bill, we should not be afraid to say so when we vote on the amendment of the noble and learned Lord, Lord Judge, tomorrow, and when we consider the Bill line by line in Committee. However, if Part 5 survives, I hope your Lordships will look closely at new Clause 56. It provides for the House of Commons to have to approve a resolution before Ministers can use the powers in Part 5 but it is silent about any role in your Lordships’ House. That is something I hope we can address as well.

Trade Bill

Lord Faulkner of Worcester Excerpts

Committee stage
Thursday 15th October 2020 Lords Chamber

I hope I have reassured noble Lords about the TRA and the trade remedies system, which are designed to have transparency at their core and to provide independent, expert advice to the Secretary of State, and that on that basis they will therefore agree not to press their amendments.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

My Lords, I have received no requests from noble Lords wishing to speak after the Minister, so I call the noble Lord, Lord Stevenson of Balmacara.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I thank all noble Lords for their contribution to this debate. I especially thank those who supported the amendments in either my name or that of my noble friend Lord Bassam, particularly my noble friends Lord Rooker and Lord Judd.

My noble friend Lord Rooker made a very good point about the additional legitimacy which stems from public hearings, and he was picked up on this by the noble Lord, Lord Lansley, and the noble Baroness, Lady Kramer. Their points were strong enough to be convincing, although I am sorry that the Minister did not give a very explicit reason why he was not prepared to accept the amendment as it stood.

I am reminded that when we discussed this issue last time around, we had a slight advantage: we knew that the then Minister, the noble Baroness, Lady Fairhead, had actually been through that process of hearings as she had been the prospective chair of the BBC. Unfortunately, she was not terribly enthusiastic about the process itself, but I think she agreed with the points made today about the additional support it gives to those who have been through the process, and the general sense in which these appointments are, on one level at least, open for wider consideration and discussion.

In thinking through some of the issues raised later in the debate on the particularities of how organisations appoint, recruit and sustain their organisational structures, we need to have regard to the long-running debate—which I precipitated with some of the amendments that we tabled—about whether these people are to be seen as representatives or whether their background, having been gained in particular areas, would be of value to the organisation concerned. Perhaps I am not as naive as the noble Baronesses, Lady Bowles and Lady Noakes, alleged in suggesting that we needed to have a firm representative structure in place for the TRA; that would be ridiculous.

Taking a step back to look at some of the outcomes of processes to try to have a representative group on boards to help with better decision-making, legitimacy, transparency and all the other issues we are concerned about, it is quite interesting that we do not always get in place the sort of backgrounds reflected by the amendments in front of the Committee. I simply point that out. If the Minister is saying that the advisory committee may be the route here, that the words mentioned in this debate will be reflected on by the TRA, and that he will make sure that this is the case, I think we can feel we have made that point and do not need to continue discussing it.

I have two final points. First, to reassure the noble Viscount, Lord Trenchard, I did not mention any names when talking about appointments to the Board of Trade. Indeed, my amendment was specifically about the absurdity, or the Gilbertian situation we seem to be in, that there is one member and loads of advisers. This is more like a court than an advisory group; I wonder why we go through this charade.

If it is limited to privy counsellors that is one way of doing it, I suppose; it is probably better than some other routes we can think about. However, there are hundreds of privy counsellors. There are probably 100 engaged in this process at the moment—not including myself, of course, but others have been honoured by that. I would not have thought there would be difficulty in finding a privy counsellor if we wanted to make it two instead of one member of the Board of Trade. It really raises the question of why we have a Board of Trade with only one member if it needs advisers to advise it, but does not seem to produce anything one way or the other, yet we have thousands of other people sitting in trade advisory groups and other groups yet to be appointed. I leave that on the table.

My last point is that the Minister was intriguing when he said that the department hoped to deepen its engagement with the trade unions. I am pleased to hear that. I think I can speak for the trade unions to say that they are ready and willing to do what is required. I can only suggest that he gets ahead with his invitation, whatever it is he is going to do.

This is not an attempt to try to hijack things, but the feeling I am left with at the end of this debate, which has been a good, rich and important one, is that there is a bit of ground to make up. All that the Minister can do in using his experience of the processes needed to get fair appointments, the systems that need to be in place in the bodies once they are established, and the engagement with civic society and the wider group of people who are interested and want to support them, is important and will be the sustaining point as we go further down the track. With that, I beg leave to withdraw the amendment.

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[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

We now come to the group beginning with Amendment 84. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this, or anything else in this group, to a Division should make that clear in debate.

Clause 7: Collection of exporter information by HMRC

Amendment 84

Moved by

--- Later in debate ---

I hope that the clarifications I have given will provide noble Lords with the reassurances that are being sought, and it is on that basis that I would ask that the amendment should be withdrawn.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

My Lords, I have received no requests from noble Lords to speak after the Minister, so I call the noble Baroness, Lady Noakes.

[Baroness Noakes (Con)]

My Lords, first, I thank all noble Lords who have taken part in this short debate. I am grateful to my noble friend for confirming positively that the regulation-making power in Clause 7(4) cannot be used to compel the provision of information and that HMRC would not be able to impose penalties—that is exactly the assurance I was seeking.

However, I have to say that I am not entirely sure that I followed everything my noble friend said in relation to Clause 8. I did not follow what he said about why, if the words “among other things” were to be deleted from subsection (2), that would impede the use of information for trade purposes. I will read carefully in Hansard what he said, but I put him on notice now that it did not quite ring true when I heard him say it for the first time.

I have to say that I remain concerned about HMRC being regarded as a “safeguard” for information. If my noble friend the Minister listened to what some other noble Lords said in this short debate, he will have heard that people are concerned about what HMRC sometimes does. So to say that HMRC is one of the safeguards in this does not quite meet the point. That is why I asked my noble friend specifically to say what safeguards there are and what oversight there is of the use by HMRC of this kind of power, because it is very significant to authorise the disclosure of information other than for trade purposes. I hope that my noble friend will reflect on that and possibly come back to explain how we will oversee how HMRC uses its power here, effectively to override the provision of information only for trade purposes, and how that will be effective. But for today, obviously, I am happy to withdraw the amendment.

Amendment 85 not moved.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

My Lords, we now come to the group beginning with Amendment 85A. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in the group to a Division should make that clear in the debate.

Amendment 85A

Moved by

Trade and Agriculture Commission and Trade Remedies Authority

Lord Faulkner of Worcester Excerpts

Thursday 15th October 2020 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

I am sure that that will be discussed in the usual channels and considered by the Leader of the House at the appropriate time. If I find more information, I will write to the noble Lord.

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

My Lords, the time allowed for this Question has now elapsed.

Saudi Arabia: Arms Sales

Lord Faulkner of Worcester Excerpts

Friday 10th July 2020 Lords Chamber

[Lord Grimstone of Boscobel]

First, I acknowledge the noble Lord’s obvious deeply felt concern about this matter. The UK and Saudi have a long-standing bilateral relationship based on a number of pillars, including trade, defence, security, energy and shared concern about regional issues. Matters are changing in Saudi Arabia. We have seen progress on social reforms under Saudi Vision 2030. For example, the Saudi economy was the most improved for women’s economic opportunities, according to the recent World Bank report, Women, Business and the Law—so things are happening there and I think it is right for us to encourage that process of change in Saudi Arabia.

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

My Lords, I am afraid that the time for this Question has now elapsed. I apologise to the noble Baronesses, Lady Coussins and Lady Warsi, for not being able to call them.

Covid-19: Financial Markets

Lord Faulkner of Worcester Excerpts

Wednesday 25th March 2020 Lords Chamber

[Lord Callanan]

Perhaps it would be helpful to the House if I set out what powers the FCA has in this area. Under the short selling regulation, the Financial Conduct Authority has a range of powers which require the holders of net short positions in the issued share capital of a company to make notifications once the thresholds have been breached. It also provides the FCA with the power to suspend short selling or limit transactions where there are significant falls in prices. As I have said, this is being monitored constantly and as yet there is no evidence that it has contributed to the fall in market prices. It forms a relatively small proportion of trading activity at the moment and when studies were made after the financial crisis, again there was no evidence that short selling had contributed to the overall fall in the markets. Nevertheless, it is a situation that we are keeping under constant review and I know that the FCA is watching market activity very closely.

[Lord Faulkner of Worcester (Lab)]

The Government obviously have no responsibility for what is happening in the American markets, but are they watching closely the reports of the short-selling activities in the financial sector, which are having an even more devastating effect than in this country? Are there any lessons that we should learn from the experience in America?

[Lord Callanan]

The noble Lord makes a good point. I am sure that the FCA and the regulators are closely watching what is happening in all markets. As I mentioned, when short selling, certainly in European markets, is banned in certain exchanges, we also limit trading in those countries. So, yes, it is something that we monitor closely.