Trade Bill

Viscount Trenchard Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 23rd January 2019 Lords Chamber

There are wider questions about state aid and any movement forward on trade. Will it be a single UK operating structure or will there be regional variations? It could be argued—and the arguments need to be made and heard before we make decisions—that conditions in Scotland, Wales and Northern Ireland are different from those applying in the south-east of England. Therefore, there may be a regional or even a national basis under which state aid rules could be developed. Again, what is the statutory basis under which that might happen? Do we have that power already and, if so, how would Parliament be involved? I beg to move.

[Viscount Trenchard (Con)]

My Lords, this amendment is rather strange in the context of this Bill. It seems intended to restrict the Government’s ability to make changes to the state aid rules unless they have consulted a long list of bodies—and even the public. But as the noble Lord, Lord Stevenson, said, the Government do not intend to use this Bill to provide themselves with a device for making such changes. One of the benefits of Brexit is that we will be able to apply our own state aid rules, either based on an equitable free trade area with the EU or consistent with WTO principles. The present EU rules need to be much improved and made proportionate; on occasion, they discriminate against British business and have a negative effect on the economy and jobs.

The UK is, quite properly, a very restrained user of state aid compared with our continental neighbours, spending approximately €90 per capita against a range of €170 to €240 per capita in Germany, France and Belgium. The point is that in cases such as that of Sheffield Forgemasters, the UK Government should be free, with the agreement of another place and your Lordships’ House, to grant state aid under what will rightly be very narrow criteria. Another case in point might be the Horizon Nuclear Power plant, which has been suspended by Hitachi because of a failure to agree the financing structure. Does the Minister agree that Her Majesty’s Government should look again at the extent to which they might commit public funds to ensure the successful completion of a hugely important contributor to our future energy mix—especially against a background where the only other major new nuclear power station, Hinkley Point, is to be financed by the French state and the Chinese state? Does the Minister agree also that this amendment is in any event completely unnecessary, because the Government have no need or intention to implement state aid commitments in rolling over existing free trade agreements?

[Lord Fox (LD)]

My Lords, had we debated this amendment during the last session, the night before last, we would not have had the benefit of yesterday’s report from the IPPR think tank on the subject of state aid. It reinforces the point made by the noble Viscount, Lord Trenchard, that the United Kingdom is a restrained user of state aid when compared to other countries in the European Union. That gives the lie to some of those who believed that the European Union was restricting the UK Government’s decision on the scale of state aid in this country—and that message might be conveyed to some members of other parties in the other place who are alleged to believe that the European Union would continue to restrict industrial support activities.

I was surprised to hear the huge shopping list that the noble Viscount, Lord Trenchard, presented for further state aid—his is not a voice that I had imagined would be making that point. That highlights the need for a state aid strategy. If we have an industrial strategy—which we do, whether some Members opposite like it or not—the purpose of state aid is to find strategic ways of delivering it in the best possible way for the best possible good of this country and its trading environment with the rest of the world.

Whether we trade as an EU nation, through FTAs or, as some people dream of, on WTO terms—which would be a nightmare for the rest of the world—there will still, sensibly, be restrictions and rules affecting what aid we can give and what restraints we have to apply. In spirit, therefore, I support the amendment, and I am interested to hear the Minister’s response.

I have a query that will probably reveal my ignorance of the process of legislation. Paragraph 4(1) of Schedule 2 contains a more general injunction around statutory instruments and consultation. I wonder whether that part of the Bill may pick up, to a large extent, what the noble Lord, Lord Stevenson, seeks to achieve. I would be happy to be wrong about that, but it would be helpful if the Minister, either now or later, would fill us in on that.

--- Later in debate ---

[Lord Hain (Lab)]

My Lords, in speaking in support of both these amendments, in a way I am dealing with the points I raised with the noble Baroness, Lady Fairhead, which she did not respond to—inadvertently, I am sure. Maybe both she and the noble Viscount, Lord Younger, could consider writing to me about this. As I described at the last sitting, it gives rise to concern that we will see an action replay of the power grab that Whitehall tried to pull on the devolved Administrations in the course of the withdrawal process. There was an attempt by Whitehall to repatriate to London those policy areas—for example, the environment and many others—that were devolved but held at a European level because of our membership of the European Union. That caused great aggravation with the devolved authorities, particularly—in the absence of Northern Ireland’s Government—with Wales and Scotland, which in the case of Scotland is festering on. An agreement was belatedly reached with Wales.

In this process, particularly when making regulations, we will potentially see these same issues arising. There is therefore a strong argument for the proposal put forward by my noble friend Lord Stevenson in Amendment 17 for the joint ministerial committee or some equivalent body to be given the overall supervising authority here. Having been a member of the JMC at various times in government, I was never very impressed with it. It was a bit of a talking shop. Since 2010, under the coalition Government and now, I hear from successive First Ministers of Wales and individual Ministers for Wales, with whom I am in direct and regular contact, that nothing has changed.

Yet the issues over Brexit are even more serious and of even more constitutional and policy importance than prior to this whole sorry horror show unfolding. The Government need to consider putting in place, preferably in this Bill and in the form specified by these amendments or some equivalent form, procedures that are recognised and have to be abided by, before we run into the same kind of problems that arose earlier in this whole Brexit saga.

[Viscount Trenchard]

My Lords, surely it is not necessary to set up a joint ministerial committee for this purpose. Insofar as the novation of FTAs affects devolved powers, the Government will in any event be bound to consult. Surely a joint ministerial committee, such as the amendment proposes, would make the process of rolling over the EU’s FTAs much more cumbersome and time-consuming, especially if the EU persists in refusing to enter into a reasonable, equitable agreement without a backstop.

On Monday, in the debate on the GPA, the noble Lord, Lord Hain, referred to this matter, and has just spoken again in similar vein. He referred to a power grab by Westminster but actually, if the powers being returned to the UK from the EU relating to devolved matters were all to go immediately to the devolved Administrations, that would represent a power grab by the devolved Administrations. Surely the powers that were devolved relating to matters that are partly or wholly EU competencies preserve the need in many areas to maintain a UK-wide market; while we have been in the EU that has meant an EU-wide market. We are shortly to recover our sovereignty over our own UK market, I trust, but that in no way obviates the need to maintain the UK-wide market in many sectors. Furthermore, as the noble Lord, Lord Hain, also pointed out, the amendment requires membership of the joint ministerial committee by a representative of the Northern Ireland Executive, which suggests that they might not be operational for some time.

[Lord Hain]

May I clarify a number of points? First, the original Bill, over which there was the power-grab tussle, was actually amended by the Government in response to the Welsh and Scottish Governments’ complaints. They recognised that the original procedure, which the noble Viscount seems to want to wave through again, was the wrong procedure and that it was not right to set out on the course on which they originally set out. I hope that he will accept that point, because I was rather worried about the tone and the content of what he said.

Secondly, since the joint ministerial committee exists already, and its machinery is in place and operates already, the amendment is saying that these regulations under the umbrella of the Trade Bill would formally have to go through the JMC. It need not be a complete convening of a meeting which, I accept, is time-consuming and resource-consuming, but I recall well from my days in government that cabinet committees sometimes operated by a process of written consent and amendment between the different Whitehall departments. I am sure that the noble Lord, Lord Kerr, and many others will remember that operating in that way. It could operate in that way for the purposes of these regulations, but there would be a statutory obligation to process these regulations in that fashion. As I understand it, that is the point that my noble friend Lord Stevenson is seeking to get cemented in.

[Viscount Trenchard]

I thank the noble Lord for correcting my ignorance about the joint ministerial committee already being in existence, although there is obviously no Northern Irish representative on it at present. On the other matter, I still do not understand why it can be sensible in the case of powers that are EU competencies today but which are also devolved. If those powers are repatriated to the UK, it is still necessary to maintain a UK-wide market because, by virtue of being members of the EU market, we have had a UK-wide market within the EU. Therefore, if the entire powers are delegated to the devolved Administrations, we effectively break up our single UK market.

[Lord Mackay of Clashfern (Con)]

My Lords, this is redolent of what we discussed much earlier. The powers that the EU has in the United Kingdom are of different types. Where they go when they are brought back to the UK, as we hope will come to pass—on my present appreciation of what is going on, that is rather a hope—does not just depend on the subject matter. It does not just depend on whether it is agriculture or whatever; it depends on the nature of the power that is devolved. A power that operates only in Scotland would be devolved to Scotland because in the constitutional arrangements there are two restrictions. The reserved powers are one type of restriction, but the other is the geographical restriction. You cannot make laws in Scotland for the rest of the UK. Therefore, if common market policy for the whole of the UK is in question, and that is the power in question, it has to stay with the Parliament in Westminster. But if it is a power related to agriculture, which is restricted only to Scotland, or Northern Ireland or Wales, it is remitted to the legislatures operating there—if a legislator is operating there.