Trade Bill

Debate between Lord Fox and Earl of Clancarty

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Tuesday 15th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, the amendment is in my name and I thank other Peers who have put their names to it. It would insert a new clause that places an obligation on the Secretary of State

“to take all necessary steps to secure a mobility framework with the European Union”.

For some time, there was an assumption that any free trade agreement with the EU would include a chapter on mobility and mutual recognition of qualifications. It is clear that even if there is an FTA, no such provision would emerge by 31 December. Therefore, the amendment is a way in which to address the need for the Government to think again and focus on this issue, whether it is through the FTA or in some other way.

At Second Reading, the Minister—the noble Lord, Lord Grimstone—said that his aim was to maximise economic benefit. As I said in Committee, it is surprising, given the Secretary of State’s acknowledgement of the importance of services to trade, that Her Majesty’s Government are so blind to what they are doing by cutting off or making much more difficult the essential movement of people. In truth, the need for mobility has already been recognised in other deals. Indeed, other trade deals have mobility frameworks such as those agreed with Japan, which was presumably put there by the Japanese to facilitate the support of their manufacturing industry and financial sector, and with Switzerland, to allow the free movement of certain financial industry functions. However, in this context, movement between the UK and the EU is much more important in terms of meeting the Minister’s aims of maximising the economy.

As the noble Viscount, the Minister, knows, the UK services industry accounted for over 40% of the UK’s exports to the EU in 2018. As well as the acknowledged financial and banking industries, those exports include legal, accounting, advertising, research and development, architectural and other professional and technical services. Then there are all the creative, musical and artistic areas that involve people who have been moving seamlessly through Europe, adding not just to the cultural richness of our relationship with Europe but to the financial performance of the UK. From January, these sorts of movements will either not be possible or be extremely difficult.

In her speech in Committee to a similar amendment, the noble Baroness, Lady Bull, set out clearly the five modes of services traded across borders. I recommend that the Minister rereads her speech if he can. One of the modes that she raised was fly-in, fly-out. Every month, according to industry, around 10,000 people move between UK and EU manufacturing, more than the Government’s estimate of 53,000 per year. As the Minister will appreciate, they include engineers, technicians and the like, who are providing the services that keep manufacturing going. In return, EU people come the other way.

Let me give an example. I am using the Germany-to-the-UK version and I declare my interest as a vice- president of the German-British Forum. Let us say a German company sells machinery to British industry—as many of them have, to a great extent. That could include the transport, power supply or car industries. In many cases, both the installation of and ongoing technical support for that machinery comes from technicians who come from Germany. They are not necessarily German, but they come from Germany, sometimes at very short notice. If something goes wrong, as of today, a technical team of people who are specialists in particular pieces of equipment, which are often wide-ranging, will fly in. The number of people sent and the individuals in question depend on their availability and the other contracts that the company has.

As it stands, the current immigration policy for tier 5 temporary workers does not appear to cater for this sort of situation, which requires a reliable approach as individuals generally cannot be named in advance and the length and frequency of the stint that they perform when they are in this country are unknown. This is a real issue that has not been borne in mind. I understand that we are talking about the Trade Bill but trade involves the free movement of people to make things happen and make things flow.

Cross-border work is further hampered by the absence of mutual recognition of qualifications. In Committee in September, during the debate on a similar amendment, the Minister—the noble Viscount, Lord Younger of Leckie—said that negotiations with the EU were opening on this matter. That seemed late then, 90 days before the end of the transition period. It would be helpful if the Minister could update us on how those negotiations are going, what sort of mutual recognition regime we can expect on 1 January and, if there is no agreement, what the contingency plan is, so that we can make sure that the valuable skills of the people from the European Union working in this country are recognised and the valuable livelihoods of British people are still alive and kicking.

We are about to plunge into high unemployment; the figures show that unemployment is a very serious developing issue. However, the people being cut off are the sort of people who can to help to grow the UK out of this unprecedented situation. This sort of immigration policy and the lack of a mobility framework sends a message to would-be entrepreneurs from across Europe—people who tended to flock to the United Kingdom because they saw it as a great place, where they were welcome and could work to the advantage of everybody in the country. It is not just about them; it is also about the movement of the people who are not necessarily well paid but form their teams.

This amendment proposes a new clause that places an obligation on the Secretary of State to take all necessary steps to secure a mobility framework with the European Union. Trade is increasingly about people and this Trade Bill ignores this. This amendment requires the UK to negotiate that mobility framework. To fail to do this is to invite the law firms, architectural practices and many other service industries to set up offices that were in this country in the rest of Europe. To fail to do this is surrendering jobs and the considerable tax take they bring to other countries. It is cutting off cultural interchange and opting to make manufacturing in this country harder and less attractive. In short, the process we are entering is disrupting the human supply chain which keeps this country running and growing. I beg to move.

[The Earl of Clancarty (CB)]

My Lords, I am grateful to the noble Lord, Lord Fox, to be able to support this amendment. We do not yet know whether we will get a deal with the EU or what exactly the deal will look like if we do. What we can say is that a no-deal on services will be a no-deal for the country, irrespective of whether we get a deal. The Government and the media have consistently underestimated the importance of service industries, both to this country and as part of our trade with Europe. Service industries are 80% of our GDP, a statistic we have repeated many times in this House. Our services trade with Europe makes up 51% of our services exports. As it stands, Europe is a hugely important market for services—the most important. Due to the significance of geography to service industries, it is one that is frankly irreplaceable.

Services have not been ignored in all quarters. In an interview with the Observer on 1 November before stepping down as director-general of the CBI, Carolyn Fairbairn said that her “really big disappointment”—her exact words—was the lack of help for services in the potential deal. The recent report by the EU Services Sub-Committee, The Future UK-EU Relationship on Professional and Business Services, raises similar concerns —not least those shown by the creative industries. The amendment moved by the noble Lord, Lord Fox, does not specify what the precise nature of the mobility framework should look like. The so-called mobility arrangement that Liz Truss has just signed with Switzerland agrees 90 days’ visa-free work a year. If this a sign of what is to come for EU countries, it will still not be enough on its own for much of the sector—which demands longer stays and ease of movement between European countries. This will be—

Trade Bill

Debate between Lord Fox and Earl of Clancarty

Committee stage
Tuesday 13th October 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, Amendment 46 is in my name and those of my noble friend Lord Purvis of Tweed, the noble Earl, Lord Clancarty, and the noble Baroness, Lady Bull. This amendment seeks to ensure that the Secretary of State takes all necessary steps to secure a mobility framework with the European Union. It is strikingly similar to one that your Lordships voted to include in the last version of this Bill. I am a little disappointed with the Government, and a little sad that they did not see fit to incorporate that amendment into the body of the third version of the Trade Bill, because the House had spoken very clearly on its preferences.

I am surprised also because the Secretary of State has been voluble about the role of services in the UK’s trading future. She claims that we are the world’s second largest services exporter—I certainly do not dispute that—and Europe’s pre-eminent destination for tech investment. We rely on people to develop those services; we rely on people to take those services out and sell them around the world; and we rely on the reciprocal movement of people around the world in order for services and our services industry to thrive. This is true in a huge number of sectors, not least in areas such as the performing arts and culture, which I know will be addressed by other speakers. And yet, the message sent through the narrow criteria of the immigration Bill is really the opposite.

We live in difficult times for employment, and the statistics today from the ONS around unemployment are extremely worrying. However, I will focus on the central skills environment. Other data reported by the ONS—last Thursday, I think—finds that between 2017 and 2019 there were 32.3 million people employed in the UK workforce, of which 11% were non-British nationals, among which about two-thirds were from the EU and one-third were non-EU nationals. Within that, 12% of key workers in the health and social care sector were non-British nationals. I should remind your Lordships that this sector is desperately seeking to recruit more people; there are literally hundreds of thousands of vacancies.

As your Lordships know, the immigration Bill ushers in a new skills-based work migration system, which comes into force after the transition period. This points-based system will require applicants to reach 70 points to be able to work in the United Kingdom. Points will be awarded based on qualifications, salary on offer, ability to speak English and whether the relevant sector is suffering from staff shortages. The salary threshold has been lowered to £25,600. I would point out that this is still well above the sum earned by many non-EU key workers, particularly in and around the care sector. One thing the Covid crisis has demonstrated is that salary is not the best indicator of people’s value to our communities.

The Migration Advisory Committee is already seeking to widen the lens of migration into this country. Its latest report says:

“Senior care workers and nursing assistants are among the occupations that should be added to the”


shortage occupation list

“to relieve pressure when freedom of movements ends … Other occupations which should be added to the UK-wide list include butchers, bricklayers and welders … The MAC has also recommended additions to separate lists for all of the devolved nations … This includes extra fishmongers, bakers and horticultural workers for Northern Ireland, childminders and nursery nurses for Scotland and health professionals for Wales.”

This is a valiant effort by the MAC but, looking across the Floor to the government Benches, it is hard to believe that, when noble Lords signed up to become members of the Conservative Party, and when they handed over their membership fees, they did so in order to elect a Government to micromanage the number of fishmongers in Belfast. Is this really an approach that a Conservative Government should be even thinking of? Would not a mobility framework be better at this than trying to track and trim every sub-level of trade and profession in every region and to try to manage their supply.

I am sure that the Minister will say this Bill is only about continuity agreements. That is not strictly true, as we know, because the Government have added amendments that address the wider trade agenda. If we look at the continuity agreement with Switzerland, for example, we find that a new element has been inserted—not quite the continuity agreement. The Swiss citizens’ rights agreement is a mobility framework that provides Swiss nationals and their family members living in the UK at the end of the implementation period with the right to continue to stay in the UK. It seems that the Government are amenable to the concept of mobility frameworks in continuity agreements—at least when it comes to Swiss bankers and gold traders.

I will turn to other deals. What about the deal with Japan? I know that details are still being filtered out around this, but the EU-Japanese deal—which our deal replaces—has a mobility framework. According to the European Commission, the agreement includes the most advanced provisions on movement of people for business purposes that the EU has negotiated so far. It covers categories such as intercorporate transfers, business visitors, contractual service suppliers, and the EU and Japan have agreed to include spouses and children to accompany service suppliers or those who work for a service supplier. So we know that the European Union is amenable to negotiating such deals. Can the Minister confirm whether the UK-Japanese deal also includes a mobility framework?

I do not think that either Minister, in their heart, wants the sort of migration environment proposed by the Government. In fact, I think that they understand the stifling nature of this. But it is probably too much to expect the Minister to admit this. However, I ask him to please tell your Lordships whether the UK-Japanese trade deal contains a mobility framework such as the one in the EU deal that it agrees to replace. We know that the UK does mobility because the Swiss-UK deal has added mobility to its scope—and we know that the EU does mobility through its Japanese settlement. Why not put these two together? Why not introduce a bit of consistency? By accepting this amendment, the Minister would acknowledge that mobility frameworks are to our mutual advantage, and he would be opening Her Majesty’s Government to the possibility of an EU mobility framework. I beg to move Amendment 46.

[The Earl of Clancarty (CB)]

My Lords, in speaking in strong support of the amendment moved by the noble Lord, Lord Fox, I will concentrate on the work aspect of this amendment, in particular in services and the British industry side of any reciprocal agreement that might be made. I acknowledge also the importance of study.

One would not think that, as individual groups, lorry drivers and lawyers necessarily have a great deal in common. But they do. They are both part of our huge services industry—our largest sector, providing 80% of the UK’s GDP and, according to the ONS, £95.2 billion-worth of exports to the EU, from the UK, in 2018. Looking back at the debates early last year on the almost identical amendment in the previous incarnation of the Trade Bill, it is clear that little has really changed in terms of the arguments that need to be made, or indeed with the extent to which the Government have addressed, or rather not addressed, the concerns of the sector. What has changed are the circumstances of Brexit, so that, if anything, the need for a mobility framework as 2021 rapidly approaches has become even more urgent.

Services depend inherently on a mobility framework. As our closest customer geographically, Europe is hugely important as a market and always will be. Yes, we can try to develop our services trade elsewhere, but putting impediments on our trade with Europe will inevitably result in a significant net loss when that trade starts to fall off, as indeed it has already as a result of a future mobility framework not already being in place—and this effect was observable before Covid. It should not be a case of either European or global trade, although that is sometimes the impression given. If anything, there is an argument that causing such impediments with Europe will detrimentally affect such trade with the rest of the world, such are the connections between countries and blocs of countries globally.

The loss of free movement on 1 January 2021 will directly impact on the effectiveness of this sector and consequently on the livelihoods of its many and various services providers, including IT, engineering, aviation, translation, and creative services. Many of these workers are self-employed and resident in both the UK and the EU. A survey by British in Europe found that 58% of respondents felt that their livelihoods would be affected by their loss of mobility rights. This finding was backed up for creative services by the Arts Council survey quoted last week on Report of the immigration Bill by the noble Baroness, Lady Bull, which stated that the continuation of short-term mobility was a top priority—even more important than the loss of EU funding.

The UK-EU cross-border services working group, for whose briefing I am indebted, has identified four key areas of concern for services. The first is GDPR, including the need for an adequacy agreement. The second key area is recognition of professional qualifications. Thirdly, and at the top of the list, are mobility rights and associated concerns, including the right to render services, the right of establishment and the right to travel at a moment’s notice between the UK, EEA countries and Switzerland—including, crucially, movement between Schengen territories. Fourthly, and importantly, there is the confusion and anxiety caused by the lack of an adequately defined single framework, which is increasingly deterring European clients. British workers urgently need these matters resolved and need guidance from the Government, which they are currently not receiving.

It is curious that the professed desire of the Government is to develop our tech industries, but these concerns have not been addressed and the industry overall has not been consulted. It must be emphasised that, in normal circumstances, on-site presence is an integral aspect of the services sector. In an earlier debate, I quoted an IT worker saying, “We freelancers export ourselves.” Creative services, particularly the performing arts, necessitate a mobility framework, because touring above all is such an integral aspect of that work. Among the raft of concerns, industries such as the performing arts and media and events, share the concern about the need to move equipment across borders, again at a moment’s notice. In other industries, we should also not forget the servitisation component of manufacturing.

As Committee has made clear, trade is not just about trade; it is about the policies that define it and the effects it may have, such as on people’s health and the environment. It is also—and this is particularly true about services—about other things in a more integral way, such as cultural exchange and soft power. The ambassadorial aspect of these industries is something that we are in great danger of sacrificing. Such aspects of services, apart from the financial worth, are both essential and invaluable, and will depend on an effective and appropriate framework.