European Union (Withdrawal) Bill

Lord Keen of Elie Excerpts

Monday 19th March 2018 Lords Chamber

[Lord Goldsmith (Lab)]

My Lords, my noble friend Lord Haskel has raised some important issues, which we should carefully consider—I hope that the Government will do so. He is plainly right that one of the consequences of our departure from the European Union will be the loss of the benefit of EU governance institutions and the standards that they set and enforce. It is worth underlining the word “enforce”, as the noble Baroness, Lady Ludford, did. This is not just about having the standards; it is also about having institutions that are capable of enforcing them.

Of course, the Government will say that we can and we should take over ourselves the setting and enforcement of appropriate standards. But there are challenges in doing that, to some of which the noble Lord, Lord Cormack, has referred. If we are going to have standards in which people have confidence, they need to be delivered by institutions in which there is demonstrable independence. That then gives rise to credibility: the standards and the institutions that set them must be seen to have a distance from Ministers and not be subject to expedient ministerial policy-making. We have so far become used to—indeed, perhaps taken for granted—the fact that there are standards that are set by the current EU institutions which have rigorously debated and taken into account national standards. However, as my noble friend said, we need to be assured that standards—he mentioned in particular general data protection rules, but other standards as well—are not lowered.

That raises an important point. In this Bill, the Government have taken the view, in my view quite rightly, that the fundamental rights that are protected by the European Convention on Human Rights, now by our own Human Rights Act, cannot be changed without parliamentary scrutiny—indeed, only by primary legislation. That is not the position that is proposed in relation to other rights or standards that are, in many people’s eyes, as important. We need clarity on these issues. It is not enough for the Government to say that they recognise the need to maintain high standards of protection; they need to explain how those high standards of protection are in fact to be achieved, and to do that in a way that gives rise to confidence.

My noble friend Lord Liddle raised a further important point—and, if I may say so, he played an important part in this himself in previous years—about the conversations and co-ordinations that have taken place between European countries in setting policy and the standards that go with policy. It would be good to hear from the noble and learned Lord the Minister whether those will be continued and in what way.

There is much to support in this amendment and in the principle that my noble friend has put forward. It is supported by the noble Baroness, Lady Jones of Moulsecoomb, and I do not think for one moment that the fact that she has added her name to it means that the amendment will be looked at less—quite the opposite, I suggest. We look forward to hearing what the noble and learned Lord has to say in response to this amendment.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I thank the noble Lord, Lord Haskel, for tabling this amendment. I believe the intention behind it is to ensure that United Kingdom law will continue to function effectively after our departure from the European Union. This is, of course, the aim of the Bill, and so I welcome his engagement on its content. However, despite these intentions, the Government cannot accept the amendment.

The Bill will take a snapshot of European Union law—including the rights, freedoms, protections and standards it brings—so far as it applies within the United Kingdom immediately before exit day, and seek to retain it in UK law, so far as is practical. It will then be our priority to ensure it will be able to operate consistently and without deficiency within our domestic law through the use of powers given in the Bill. This includes ensuring that there is suitable provision for the transfer of existing functions and roles carried out by the EU or its institutions while we are a member. It is of course right that the Bill is able to do this.

The United Kingdom has a long-standing tradition, one that predates 1972, of ensuring that our rights and standards are protected domestically, and of fulfilling our international obligations with regard to these matters. The decision to leave the European Union does not change this. Any regulation to correct a deficiency in retained EU law, within which such rights, freedoms, standards and protections will sit, will of course be subject to the overview of this Parliament: it will be subject to the established procedures of parliamentary scrutiny and, in addition, to the work of the sifting committee that the Leader has indicated will be constructed in this House.

The noble Lord, Lord Haskel, said that standards would be subject to Ministers. But standards, I suggest, will be subject to parliamentary scrutiny. I say the same in response to the noble Baroness, Lady Ludford. We will retain the law and it will not be empty of meaning because again, in so far as we implement it in domestic law, it will be the subject of parliamentary scrutiny. The noble Baroness, Lady Jones, suggested that retained EU law would be worthless if there were no body to oversee it, but that body will be Parliament. No body is better equipped for that task than Parliament.

On policy co-ordination, referred to by the noble Lord, Lord Liddell, of course, that is bound to be a matter of negotiation and not one for this particular Bill. We want to negotiate questions of the extent and depth to which we co-operate with members of the EU after we leave. As regards standards themselves, is it suggested that because we are in Europe—as the noble Lord, Lord Cormack, observed, we still are and still will be—but not in the European Union, somehow our standards are bound to fall? Is it supposed that Switzerland or indeed Norway do not maintain rigorous standards in regard to consumers, the environment and so on?

[Baroness Ludford]

Norway is in the single market. That is why it has to uphold the same standards, and Switzerland is de facto in the single market.

[Lord Keen of Elie]

Switzerland is not de facto in the single market. Switzerland has a multiplicity of agreements with the EU that have been negotiated on a bilateral basis, which is the form of negotiation that we intend to carry out in due course. Membership of the EU is not, as I say, the touchstone of rigorous standards either in Europe or beyond.

With regard to the points raised by the noble and learned Lord, Lord Goldsmith—

[Baroness McIntosh of Pickering (Con)]

Is my noble and learned friend saying that we are now seeking an EU/Swiss-style agreement?

[Lord Keen of Elie]

I am not suggesting that for a moment. I was saying that these matters will be the subject of negotiation going forward; they are not ones for this Bill. What one cannot suggest is that, because we are taking the step of leaving the EU, we are determined somehow to see any diminution in the standards and obligations that we maintain at the present time. As this House will be well aware, the Bill is not designed to legislate for the major elements of any future agreement between the United Kingdom and the EU. Indeed, we cannot unilaterally legislate for our future relationship with the EU without the withdrawal agreement, or seek pre-emptively to provide for the possibility of maintaining particular functions or powers within the UK after we leave the EU.

This Bill instead aims to provide a stable and certain domestic statute book on exit day—a platform—irrespective of the result of the negotiations in any final agreement with the EU. The proposed amendments, therefore, do not assist in that process, but would potentially disrupt any negotiating process that is to be carried on. At the end of the day, I respectfully suggest that the amendment would not benefit the task we have in hand and I therefore urge the noble Lord to withdraw it.

[Lord Goldsmith]

Before my noble friend responds, will the Minister give an assurance as to this? He has talked about the legal difficulties involved and the legal freedom that the Government want, but is he able to give an assurance that whatever protections and standards we leave the European Union with will not thereafter be diminished, save with the decision of Parliament through primary legislation?

[Lord Keen of Elie]

Clearly, the noble and learned Lord has misrepresented to an extent what I just said to the House, because I did not refer to primary legislation—those words slipped into his observation. However, I did point out that, of course, under the process that we have and will have in place, there will be parliamentary scrutiny of the steps we take to implement these provisions in respect of EU retained law after we leave.

[Baroness Young of Old Scone (Lab)]

Can the noble and learned Lord clarify the position on the provisions, which the Government will consult on imminently, concerning the “governance gap” that will open up on environmental issues after the withdrawal Bill has been enacted? At least a proportion of the powers and functions listed in subsection (2)(a) to (f) of the proposed new clause will be ascribed to a body whose nature is not yet known but is soon to be subject to consultation. It will deal with reviewing and reporting on compliance with legal requirements, monitoring and measuring, and certainly publicising information. Can the noble and learned Lord tell us what the difference is between the body that is going to fill the environmental governance gap and the same sort of governance gap that will open up with respect to other functions outside the environmental field?

[Lord Keen of Elie]

My Lords, with respect, I fear that I do not properly understand the question posed by the noble Baroness, but I will read Hansard, and in so far as I do understand it, I will write to her.

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, does the Minister agree that this particular set of issues is absolutely crucial to small businesses? He will know that many small businesses are happy to export to the European Union because they have protection in case of insolvency; it is as solid as if there were an insolvency from a customer or supplier literally round the corner or down the street.

There are many reasons why those companies choose not to export to many of the markets where we so often hear there are such extraordinary opportunities. It is because—especially for small businesses, I am afraid—there are long histories of non-payment. Large businesses can afford to retain international lawyers in different locations across the globe and across borders. Large companies—especially multinationals—frequently have contacts in governments, at the appropriate level, to make sure that their interests are protected, but that very rarely applies to small businesses, so this protection is crucial.

[Lord Keen of Elie]

My Lords, I share the concerns that the amendment raises about the consequences of failing to maintain our co-operation with the EU in matters of civil justice, in particular, in this present context, matters of insolvency. On the matter of meetings with officials and others, the noble Baroness, Lady Hayter, may recollect that we discussed this topic when we met last week, albeit briefly. It might be that I am not the appropriate individual with whom more specialist bodies would wish to take this matter forward, but I would be content to pass on her request for a meeting to BEIS. I am confident that it will have no difficulty arranging that for the convenience of all parties.

Clearly, should we fail to agree a replacement for our current arrangements when we leave the EU the impact will be felt by both the UK and EU member states. I therefore believe that it is in our mutual interest to agree a close and comprehensive arrangement regarding insolvency, as well as other matters of civil judicial co-operation.

I do not think I can accept the suggestion from the noble Baroness, Lady Kramer, that a small company in the UK can trade as if it is as solid as a domestic supplier that it was supplying in the context of the insolvency regulations. They do not work quite as simply as that. The insolvency regulations as restated in 2015 determine that the insolvency regime for each country stands alone. Each member has its own rules, but the recast 2015 regulations identify the debtor’s centre of main interest and treat that as the principal proceedings for the purposes of insolvency. For example, if we have a centre of interest for a company in the United Kingdom and a liquidator is appointed in the United Kingdom, that appointment would generally be recognised throughout the EU. That is certainly a step better than the insolvency regimes that operate internationally beyond the EU, such as the UNCITRAL rules, where there is not that element of recognition and it is necessary to take further steps if judicial co-operation is secured by way of litigation in each individual country. I recognise the benefits and advantages of the EU regime, although some would say that it is far from perfect or uniform.

There is a clear need for effective dispute resolution and effective jurisdictional recognition when a company enters insolvency or needs to restructure. Indeed, in its absence those who suffer will be the creditors of the company, because the cost of carrying out the insolvency process will be increased. The UK has already said in its position paper, Providing a Cross-Border Civil Judicial Cooperation Framework, published last August, that we wish to continue with substantively the same principles of co-operation as we already have in civil judicial co-operation, including insolvency. As the noble Baroness, Lady Hayter, observed regarding the implementation period, the transition agreement from the EU referred at paragraph 63 to at least a starting point for that for insolvency processes which commenced before the exit date. We wish to build on that and ensure that we can maintain a suitable regime. We have no difficulty with that and we believe that the EU 27 will also recognise the importance, relevance and advantages of maintaining a single insolvency regime with the United Kingdom after our exit date. As I said, that would be based, as we hope it is at present, on identifying any debtor’s centre of main interest and treating it as the primary place from which insolvency proceedings should emanate and be recognised in the other EU states.

Of course, all of this involves a degree of reciprocity. That is why it will have to be the subject of the ongoing negotiation. We consider that at the end of the day we will have the means to persuade the EU 27 that it is in everyone’s interest that, in general, civil judicial co-operation should be maintained. In the context of the present amendment, that should include the insolvency regime. I hope that what I have said will reassure the Committee and the noble Baroness, Lady Hayter, that we are committed to seek and retain current co-operation with the EU on cross-border restructuring and insolvency following our exit from the EU. In that context, I invite the noble Baroness to withdraw her amendment.