Trade Bill

Report (1st Day)

My Lords, I will call Members to speak in the order listed in the annexe to today’s list. Interventions during speeches, or “before the noble Lord sits down”, are not permitted and uncalled speakers will not be heard. Other than the mover of an amendment or the Minister, Members may speak only once in each group. Short questions of elucidation after the Minister’s response are permitted but discouraged. A Member wishing to ask such a question, including Members in the Chamber, must email the clerk. The groupings are binding and it will not be possible to degroup an amendment for separate debate. A Member intending to press an amendment already debated to a Division should have given notice in the debate. Leave should be given to withdraw amendments. When putting the Question, I will collect the voices in the Chamber only. If a Member taking part remotely intends to trigger a Division, they should make this clear when speaking on the group.

Clause 2: Implementation of international trade agreements

Amendment 1

1: Clause 2, page 2, line 14, at end insert— “(c) an international treaty or private law convention (including any amendment or protocol thereto) that facilitates trade or the financing thereof.”Member’s explanatory statement This amendment, and the amendments in the name of Lord Berkeley to page 2, line 23 and page 2, line 33, will enable the ratification of international treaties which have the UK as a signatory and enable trade or the financing thereof.

My Lords, in moving Amendment 1 I shall also speak to Amendments 4 and 5. The purpose of these amendments is to provide a legal basis for the Government to bring forward a statutory instrument to ratify the Luxembourg Rail Protocol. Noble Lords will probably remember that I spoke about and explained the purpose of this protocol in Committee. Very briefly, I remind the House that the Luxembourg Rail Protocol is a protocol to the Cape Town convention to reduce the risk for creditors, which in turn will reduce the cost of financing for new and current rolling stock.

An Oxera study published this week showed, I think, a saving to the rail sector of about £130 million per year. However, it is particularly important for the British rolling stock manufacturing community looking to develop new markets outside the UK, which I believe is one of the purposes of the Trade Bill. This rail protocol follows an older protocol on aircraft leasing and financing, which I think most people believe has been very successful in financing aircraft.

In Committee, the Minister replied that the Government support the ratification of the protocol. I am very grateful for the support of the noble Lord, Lord Grimstone, and the noble Viscount, Lord Younger, on this. Since they felt it was more appropriate to get the necessary legal basis through the private international law Bill, I agreed that I would not move my amendment. We had discussions with Ministers on the private international law Bill. I am once again grateful to Alex Chalk MP, the Justice Minister, and to the noble and learned Lord, Lord Stewart, for their help in drafting the new amendment to the PIL Bill when it came back to your Lordships’ House for ping-pong. I am grateful to the Ministers for their discussion.

During the debate the noble and learned Lord, Lord Stewart of Dirleton, agreed how important the rail protocol is to the industry but suggested that the application of the protocol was narrower than I might have thought, saying:

My Lords, I rise primarily to support the noble Lord, Lord Berkeley, as I did in Committee, in his efforts to get the Luxembourg Rail Protocol to the Cape Town Convention implemented in the UK. As we have heard, some steps have been taken, thanks to the good offices of the Minister and of Alex Chalk in the other place, but sadly they have not quite done the trick. I refer to my business interests in the register, including the UK-ASEAN Business Council, and a new role as chair of Crown Agents, which curiously, I find, did a great deal of work on rail and rolling stock during its long history.

I see two advantages to the protocol that was signed by the UK as long ago as 26 February 2016—obviously a very different world then. First, it will reduce the risk to creditors, which in turn will reduce the cost of financing new and current rolling stock—everything from engines to equipment and parts, data and manuals. Whether these are for a new line that is being built or for existing lines, by lowering creditor risk the protocol will assist in lowering the cost of new, more efficient, locomotives and wagons for freight and passenger transport. As the noble Lord, Lord Berkeley, has just said, an Oxera study to be published this week suggests a saving to the rail sector of about £130 million a year. This is quite significant when rail funding is under pressure, and particularly desirable as part of a move to net zero as we seek to combat climate change.

Secondly, it would help British rolling stock manufacturers seeking to develop new markets outside of the UK. There is an urgent need, for example in Africa, for more railway equipment both for urban transport—light rail, metro and trams—and for intercity rolling stock. The markets are there for British exporters, but the Governments and their operating agencies do not have the resources. I am talking about countries such as Namibia, Egypt, Ethiopia, Kenya, Uganda, Zambia and South Africa. The lack of resources has been a major constraint, and in a number of cases, operators have bought Chinese rolling stock instead, even when it is less suitable, because it comes with Chinese state-backed financing.

The answer is to bring in private capital through leasing or secured financing structures where UK-based manufacturers will draw on the considerable expertise of the UK financial services community to finance their sales of railway rolling stock and equipment around the world. Without this protocol, many of these sales will not happen or financing will be so expensive because of the risk involved as to make such projects uneconomic. With the protocol operating both in the UK and in the export states, I understand that the export credit agencies will be able to offer better financial terms for exporters. Under an agreement at the OECD, export credit agencies reduce their risk premiums by 10% when the Aircraft Protocol to the Cape Town Convention applies, so British adoption of the Luxembourg Rail Protocol should cost the taxpayer nothing.

I am supporting this measure because it could make a real practical difference to skilled UK businesses and financiers and improve the lives of many people on new or improved railways and trains as we leave the EU. A way must be found, one way or another, to ensure that the protocol is not further delayed, and that the merry-go-round the noble Lord, Lord Berkeley, referred to stops, so I look forward to hearing what the Minister has to say.

Finally, many of the proposed amendments do not offer a practical advantage for discernible UK interests, like the railway interests to which I refer, and I wonder whether this Bill is the place to include them all. This is a continuity Bill first introduced in 2017, and we need to get it on to the statute book.

My Lords, I join the noble Lord, Lord Berkeley, and the noble Baroness, Lady Neville-Rolfe, in utter frustration. The Luxembourg Rail Protocol was adopted at a diplomatic conference in 2007 and is due to come into force in 2021 because enough countries will have ratified it by then to create that effect. It creates a worldwide legal framework to support private-sector investment in railways and rolling stock, as the noble Baroness said, by establishing a new international registry for security interests, making it far more difficult for valuable rail equipment to be lost or stolen. These concerns have limited private investment in railway schemes across the globe, especially in the developing world.

Of course investment in rail matters, because it supports economic development and the battle against climate change. As others have suggested, the UK is a beneficiary both as a buyer of rolling stock—bringing down the price is therefore an advantage—and as a manufacturer, which will be able to market itself more effectively across the globe.

The UK is a signatory to the protocol, but it just cannot seem to get around to ratifying it. The noble Lord, Lord Berkeley, has introduced these amendments to try to achieve that ratification. I am very keen that ratification should happen, but I am concerned that the noble Lord is being forced by the Government to choose a route that adds even more unaccountable powers to the Government’s rapidly increasing range of widening and unchecked powers in this Bill and in others. I will be interested to hear the Minister address this issue because I hope that he will explain that I am wrong, that this could be construed as a narrow power simply to allow us to get the Luxembourg Rail Protocol done. I would like to be wrong, but I fear that I am not. We have already been through one shambles—the noble Lord, Lord Berkeley, did not use this phrase, but I will—with the private international law Bill, which was supposed to enable ratification of this protocol but turned out to be inadequate.

My Lords, on the substance of this amendment, I have very little to add to the excellent speeches that we have already heard from my noble friend Lord Berkeley and the noble Baroness, Lady Neville-Rolfe, with additional support from the noble Baroness, Lady Kramer. As my noble friend Lord Berkeley said, we have watched his progress from Bill to Bill, from department to department and from Minister to Minister almost with affection as he wends his way around, receiving much the same answer from everybody: they all agree that this is a terrifically important thing to do, but, of course, supporting it is not their job or that of their Bill or department. I do not think that he should divide the House on this issue because it is not something that we can progress by amendment or Division but, at the very least, when the Minister comes to respond, he should commit to come back to my noble friend with a clear plan of what he needs to do to get this protocol agreed. Clearly there is willingness and there are lawyers and opportunities; we just need a plan.

My Lords, I turn to Amendments 1, 4 and 5, tabled by the noble Lord, Lord Berkeley. I acknowledge without reservation how much this topic means to him; no one could have worked more assiduously than he has on it.

The amendments before us would expand the scope of the Clause 2 power, creating a power to make regulations implementing private international law conventions as well as agreements that facilitate trade or trade financing. I thank the noble Lord, Lord Berkeley, for his engagement on this matter with DIT, the Department for Transport and the Ministry of Justice in relation to the private international law Bill.

In Committee, the noble Lord outlined that this amendment would allow the UK to implement the provisions of the Luxembourg Rail Protocol; for those who were not present, this protocol relates to the financing of railway rolling stock. Noble Lords will be pleased to know that the Government recognise the competitive advantages of ratifying the Luxembourg Rail Protocol. We have identified the benefits that this could bring to both the UK rail sector and UK financial services. Thus the Government support the ratification of this protocol; the challenge has always been finding an appropriate parliamentary time and a suitable vehicle to implement it, given the very significant pressures on parliamentary time—as your Lordships will be all too aware.

Turning to the appropriateness of this amendment, as we argued in Committee, we believe that the scope of the Trade Bill

“should not expand beyond essential readiness”—[Official Report, 29/9/20; col. GC 40.]

for trading as an independent country outside the European Union. I am afraid that the Trade Bill is not a suitable vehicle to provide powers for the implementation of this agreement. As previously explained, the powers granted by this Bill are limited but vital for the delivery of the UK’s independent trade policy.

My Lords, I am very grateful to all noble Lords who spoke and to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, and my noble friend Lord Stevenson for their support. I am grateful to the Minister for his response, courtesy and offer of further support.

We have not moved very far from where we were in Committee and the Minister did not really answer the question about why it is inappropriate for a Trade Bill that is designed to encourage trading when we become a completely independent country at the end of the year to include a text that allows a trade in railway equipment to be ratified. As I said in my earlier remarks, if this had been the motor or printing trades, I am sure that the Department for International Trade would have been only too keen to do it.

The Minister is pushing me in the direction of the Department for Transport. The most useful way of achieving this would be to have an early meeting with Ministers there and the noble Lord, Lord Grimstone—I hope that he would be happy to join us—to see what we can do. It would be good, and it is important, to have this done before the end of the year for the same reason that so much other legislation is needed. I am doubtful about whether the Department for Transport will have a slot in its parliamentary programme, but we will have to see.

As my noble friend Lord Stevenson said, there is no point in dividing the House on this because it will not help to achieve the objective that I think we all want; on that basis, I look forward to further meetings but, in the meantime, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

We now come to the group beginning with Amendment 2. I remind noble Lords that Members other than the mover and the Minister may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this or anything else in this group to a Division should make that clear in the debate.

Amendment 2