Gareth Thomas
MP for Harrow West · Labour (Co-op) · United Kingdom
“Local councils such as Harrow need to invest more in youth facilities that divert young people away from crime. Some of the CCTV projects in my constituency that Harrow council has turned down—in Wealdstone, south Harrow and central Harrow—should get funding.”
“I congratulate my hon. Friend the Member for Pendle and Clitheroe (Jonathan Hinder) on securing the debate and on the way in which he approached the subject. I join him and my hon.”
“I also want to suggest that the Metropolitan police does not get recognition across the whole of the UK for its hugely important work in tackling national and international crime, and that perhaps more recognition of that is required in the funding formula.”
“In particular, in Harrow, we recently saw enforcement teams contracted out to an organisation called Kingdom. The responsibility for that contract was with Harrow council. There was widespread criticism of the way some of the staff employed by Kingdom tried to levy fines on a number of young people in south Harrow, in my constituency.”
“One way we can further support the Metropolitan police is by allowing it to keep more of the proceeds from successful operations, such as recovering stolen funds hidden in bitcoin assets. I congratulate my hon.”
“Mayor of London Sadiq Khan has done a huge amount to try to redirect funding from other parts of his budget to minimise the impact of that cut.”
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“It could also be barred from access to remedies in Australia, which means that the UK tenderer has lost its time and probably made a loss on the project. That would generate a very big disincentive for anybody to try to tender in future projects. But also, again, there would be a risk of maybe trying to raise this issue as an investment protection issue. That would basically, in simple terms, open up a trade war between the UK and Australia. To me, it is counterintuitive that when we are trying to deepen our trade liberalisation on a bilateral basis, we are creating problems that do not exist under the current multilateral basis, where these issues are not allowed.”
“Then the Australian company is left with maybe one final resort option, which is to try to bring an investment protection claim on the basis of that denial. But certainly it seems strange that if the FTA had not entered into effect, the Australian company would have had access—maybe not to suspending the project if the interest is high, but certainly to claim the damages for that unfair treatment of its tender. The same thing would happen the other way. Let us imagine that an innovative British company that wants to sell low emissions rolling stock for that metro link in Melbourne airport goes and tenders in Australia. It is excluded for any number of reasons and it wants to challenge the decision.”
“What would happen under the FTA is that, because of the specific wording in the provision—I do not want to bore you with the detail—there would be an option for the UK buyer to take a narrow understanding and say, “You are not offering Australian steel and you are not offering British steel, so I no longer have to treat you equally to UK bidders. Therefore I exclude this construction company from the tender.” The construction company probably would want to challenge that, especially because it spent money tendering but also because it is potentially a profitable contract, so it goes to the High Court. Let us say that the High Court dismisses the claim, on the basis that HS2 is already so delayed and so over budget that there is no public interest in looking at this issue.”
“Let us imagine that for any bit of the construction of the lines or for the supply of the rolling stock, the UK conditions wanted to prioritise UK steel, as is Government policy at the moment. Imagine that an Australian construction company wanted to tender for the contracts, but the steel that it wanted to use for the rails was South Korean steel. In the current conditions, before the FTA enters into effect, the Australians have to be treated equally to a UK company even if they want to use South Korean steel, because South Korea is also a member of the GPA.”
“Q That is extremely helpful, professor. I wonder, though, whether you could bring what you have said to life a little more with two examples. Let me give the example of High Speed 2. Obviously it is a big UK national infrastructure project, where clearly we would want competition but we would not want legal problems to delay that investment when it eventually kicked in. Presumably the Melbourne airport link, which the Australian Government authorities are currently tendering for, is also a significant infrastructure project for them and one in which British business might be interested. You have concerns about remedies. Could you describe them in the context of those two big infrastructure projects? Professor Sanchez-Graells: Thank you; those are good examples to flesh this out. Let us take High Speed 2 as the first example.”
“In the tender process that we are imagining for the Melbourne airport rail link, if a French company, a British company and an Australian company was tendering, and the Australian company was preferred, the French would have access to remedies that could not be excluded, at least in terms of claiming for compensation for lost profits, or at the very least for the cost of having bid, but the UK tender could be barred from those remedies. Again, that does not seem like a post-Brexit improvement of the position of UK businesses under these stand-alone free trade agreements.”
“Q To pursue this a bit further, as I understand it from what you are saying, the GPA includes every country that is still in the European Union—the French, the Italians and so on—and if their companies were treated unfairly while bidding for contracts in Australia, they would have better access to remedies than a British company treated in a similarly unfair way. Is that correct? Professor Sanchez-Graells: Yes, that is absolutely correct.”
“So it would keep the same problems under the Australian chapter and make the problems under the New Zealand chapter worse, because on remedies the New Zealand chapter is aligned with the GPA, but once CPTPP entered into force all single relationships with New Zealand would have the problematic clause that would allow the barring of access to remedies. So CPTPP would not make it better, and in any case we would have to live with the consequences of these FTAs for the period between the entering into force of them both.”
“The reason why CPTPP would leave these FTAs without effect is that both Australia and New Zealand are members of CPTPP, and therefore the later international treaty modifies the previous ones. For any tender that started between the entering into force of these FTAs and the entering into force of the UK’s membership of the CPTPP, the rules of these FTAs would apply. So this is not an issue that might be on the books and is then fixed by CPTPP; it could run for years even if CPTPP enters into force. The second and more important point is that CPTPP is very close to the Australian procurement chapter, which is probably where its inspiration was drawn from.”
“Q As I understand it, these agreements are going to be superseded by, on the one hand, the Procurement Bill coming down the line and, on the other hand, the comprehensive and progressive agreement for trans-Pacific partnership, assuming accession takes place. Will these problems be resolved by the CPTPP, so we do not need particularly to worry about this Bill? Or do they just continue? Professor Sanchez-Graells: I would make two points on that. First, even if the CPTPP were to resolve these problems, which it will not—I will explain why later—there would always be the problem of how long it takes between these FTAs entering into force and CPTPP basically overturning them.”
“I do not think the reason why the New Zealand chapter is different from the Australian chapter has to do with the UK Government learning from mistakes; I think it has to do with different starting positions among the New Zealand negotiators and the Australian negotiators. Australia has the same sort of clause in most of its trade deals, and it also pushed for it under the CPTPP. You may call it luck, but I think we may just call it an effect of the rush in which the deals were negotiated. Effectively, they have made the UK a rule taker, because they have accepted the proposals of the counterparty just to progress negotiations. That is my observation.”
“Q What you appear to have just said is that there are significant differences between the procurement chapter under the Australian FTA and the one under the New Zealand FTA. Is your sense that the Government realised they had made a mistake in terms of remedies under the Australian FTA and therefore improved things under the New Zealand FTA? Or was it just down to good luck that we do not have the same problems in the New Zealand FTA as we have in the Australian FTA? Professor Sanchez-Graells: Of course, I am not privy to the negotiations, but my impression is that these chapters very much started from the position of the trading partner.”
“There is a long story, starting with the Brexit process, of very expensive settlements for procurement mishaps, for example, with the ferry contracts or with the Nuclear Decommissioning Authority. Potentially, these could be very expensive claims to settle and the terms of those settlements are never very clearly controlled, and the process whereby those settlements are achieved is also not necessarily well scrutinised in time. That opens up all sorts of other issues with how, instead of being dealt with in the courts, the misbehaviour of a procuring entity in the UK ends up becoming a political and potentially very expensive issue.”
“It is not an issue even of relatively secretive arbitrators determining whether the UK has to compensate the Australian company, but it immediately becomes a potentially very high-profile trade issue between the two countries. It is very difficult in that case to foresee how it will end up being resolved. There will be a panel which will also work relatively similarly to an investment arbitration tribunal. If what the panel decides is not implemented, then we can just go to countervailing measures and other types of sanctions. The prospects are not looking good, unless the UK Government at some point decides to settle the dispute to avoid those problems.”
“Also, they have denied access to remedies on grounds that they cannot play with other companies that are in a very similar position to me, including other companies that come from GPA countries.” They could make the case of having been discriminated against in not being given access to remedies and make that an investment dispute. The difficulty in this context is that under the Australian chapter, to the best of my knowledge, and I am not an investment expert, there is no possibility for the Australian company to sue the UK Government. They have to raise the issue with the Australian Government so that they could raise it as a dispute under the agreement with the UK. That is why I think it opens up the problem of potential trade wars.”
“That would not be a problem in that FTA, but in the Australian investment chapter there is an obligation to provide fair treatments, which includes common customary law on access to justice. The point I am trying to make without being too complicated is that the Australian company that had bid for HS2 and had been thrown out on the basis that it wanted to use South Korean steel goes to the High Court and sees its action thrown out on the basis of public interest. It could then say, “Okay, I was trying to acquire an investment in the UK. The UK has to give me fair treatment in the process of trying to gain this investment. They have denied me access to remedies.”
“Q Okay. You touched on the issue of investment protection. I am not experienced enough in procurement to be able to reprise exactly the line you took, but you mentioned the potential scope for action in terms of investment protection. That brings into play the whole issue around investor-state dispute settlements, as I understand it. Could you confirm that, and explain how that might be a problem? Professor Sanchez-Graells: This would be an issue that would depend on the terms of the investment chapters in the FTAs, and, again, the investment chapters are different under the Australian and New Zealand deals. The New Zealand deal excludes procurement from all of those outstanding obligations of the investment chapters.”
“But those authorities are already covered under GPA, just at the higher value threshold. There is quite a lot of marginal improvement on market access. I would have wanted to see some evidence that UK companies would have been interested in those contracts but were not bidding because they did not have a legal right to bid, which I have not seen anywhere. I think that the £10 billion is a quite theoretical, best-case scenario. I advise caution in assessing that figure.”
“If I were advising a big company, I would flag the risk that going to Australia means we are basically putting all of our investment at risk because we may not be able to recoup it. I wonder whether that was taken into account in the impact assessment, but I would think not. That £10 billion probably has to be adjusted downwards for that uncertainty, which will make some companies not take advantage of the opportunities. The other issue that makes me wonder how accurate the impact assessment was relates to the claims that the Government made in some of the documents that tried to promote the advantages of the FTA. For example, they said that there is now a massive improvement in access to financial services contracts because some authorities in Australia are now covered.”
“Q The last question I wanted to ask was about the impact assessment, where the Government claimed that there would be an extra £10 billion of procurement opportunities for British business. Given what you have said about the legal uncertainties, do you think that £10 billion is a realistic figure or overstated? Professor Sanchez-Graells: I always said from the beginning that it is difficult to know how realistic the impact assessment is because the details have not been made public, so we would need to take the Government’s word at face value. It is difficult to see that some of the touted advantages are going to be exploited, because we are talking about high-profile, high-value projects. We know that usually there is always a risk of protectionism, especially in the current circumstances.”
“Q Very lastly, as I understand it the £10 billion figure is an Australian estimate anyway, albeit that the UK Government claim that they have checked it out and, remarkably, think it is accurate. Is that fair? Professor Sanchez-Graells: That is correct; I think that is what the UK impact assessment claims. When the International Agreements Committee raised this issue in the report, the Government’s response did not provide any further details; they simply said that the figure was properly checked. It may be the cynic in me, but when those figures are not put out for public scrutiny, perhaps we naively accepted the benefit suggested by the counterparty.”
“In the EU-UK trade and co-operation agreement, we made commitments to promote fundamental International Labour Organisation standards, yet in the Procurement Bill and the UK-Australia agreement, we do not see them promoted. I will highlight two more concerns about the Procurement Bill. There is no requirement for high labour standards—”
“It does not give us the assurances that we need that social criteria will be promoted through its provisions, unlike the EU-derived procurement rules in the Public Contracts Regulations 2015, which allowed the Government to refuse a tender on the grounds of its non-compliance with International Labour Organisation conventions, and required social value criteria to be taken into account in the most advantageous tender criteria. There is no such requirement in the Procurement Bill. That means that now, in UK procurement rules, there are no provisions to prevent public money from being given to suppliers who abuse fundamental workers’ rights. For us, that is going in completely the wrong direction.”
“Multinational companies are eyeing up our procurement market—this is a big objective in trade deals—and will be looking for any means of challenging any social criteria that they regard as being a burden for business, such as a requirement to pay a living wage or to provide secure conditions. We are very worried about the language in the UK-Australia procurement provisions, which the Bill would allow to be implemented. Let me connect that to the Procurement Bill going through Parliament.”
“What causes us concern about the Trade (Australia and New Zealand) Bill is that it does not provide guarantees that those social objectives will be promoted through our public procurement procedures. In fact, there is potential to undermine them, particularly in the parts of the UK-Australia trade deal about public procurement, which this legislation would allow to be implemented. Article 16.17 of the UK-Australia agreement says only that environmental, social and labour considerations “may” be taken into account by procuring entities, and only when those considerations are “based on objectively verifiable criteria”. That could open up scope for Australian companies, via their Government, to challenge social criteria in UK public procurement processes as being potentially unverifiable, because that is an undefined term.”
“Q Thank you, Ms Crawford, for being willing to give evidence to the Committee. We are focusing on the procurement chapters of the Bill. The Government have told us that they will offer businesses billions of pounds-worth of new opportunities, and that that is one of the many reasons why these are fantastic trade deals. Do you share that assessment, or could the deals have been improved in any way? Rosa Crawford: We as trade unions believe that public procurement has the potential to create tens of thousands of jobs and many apprenticeships, but they need to be on the right terms; we have to make sure that these are decently paid jobs, on good, secure terms and conditions, that support a just transition and promote equality.”
“It could undermine the expenditure of public money through public procurement— [Inaudible.]— and decent-quality public services.”
“If we accede to the CPTPP, we could be allowing social criteria that we include in our public procurement provisions to be challenged by foreign investors from across the CPTPP countries, which obviously include some of the largest multinationals in the world. It is extremely problematic to us that the UK is considering acceding to the CPTPP, and the TUC is opposed to that, as are the majority of trade unions in CPTPP countries. It should be said that the CPTPP takes a very broad, liberalising approach towards its service commitments, which means that a number of public services that are part-privatised could be locked into that privatisation through the CPTPP. The direction taken by the CPTPP, as well as by the UK-Australia trade agreement, which the Bill will implement, seems to us very problematic.”
“Q Thank you very much, Ms Crawford. You mentioned that the Procurement Bill could supplant the Trade (New Zealand and Australia) Bill. Legislation to implement accession to the CPTPP could do the same, if the Government have their way. Will the problems to which you have alluded be resolved if we join the CPTPP, or will they remain and be similar to those that exist in relation to the two FTAs? Rosa Crawford: CPTPP could create an even more problematic situation for us. Members will know that the CPTPP contains the investor-state dispute settlement provisions, and unless the UK explicitly opts out of those provisions, we will be bound by them. That obviously means that foreign investors could sue the UK Government for any actions that are interpreted as being a burden on business. That could mean living wages and decent conditions.”
“We really want a change of direction; we want trade unions consulted, as they are in other countries, such as the US; there, they are routinely consulted during trade negotiations. We want Parliament to be given a full say, and to have the ability to debate and vote on any trade deal brought before the House.”
“The terms of the deal refer to listing for services, which, in common with the CPTPP, will expose part-privatised services to being locked into that privatisation. The deal also has very problematic provisions on data liberalisation, which could mean that workers’ data is not properly protected. It could allow for that data protection to be challenged as a barrier to cross-border flows of data. We have ended up with a deal that is completely inadequate and threatening, from a workers’ rights point of view, and from the public point of view, because we did not have engagement with that deal. As I said, that is also the case with the UK-New Zealand deal. In fact, we have not had input to any of the trade deals that the Government have negotiated to date.”
“We said that unless trade unions were in the room, we would not get the outcomes that workers needed. The Government made a lot of positive noises about trade unions being included in the negotiations, and last September, the then International Trade Secretary, Liz Truss, said that the trade unions would be included in their trade advisory groups, which are consulted on the text of trade negotiations. We were not given those seats, and we were not consulted on the text of any of the UK-Australia trade deal as it was being negotiated. As a result, we have a trade deal that does not have adequate enforcement mechanisms and has very weak commitments on workers’ rights; there is only a reference to the International Labour Organisation declaration, not to the fundamental conventions.”
“The Bill is the only opportunity we have to debate the provisions of that deal, but the legislation is extremely narrowly drawn, and that is completely inadequate, in terms of the democratic process. Trades unions have also been completely shut out of negotiations. We released a joint statement with our counterpart in Australia, the Australian Council of Trade Unions, at the start of the negotiations, setting out our positive agenda for what we thought a UK-Australia trade deal should look like. We said that trade unions should be in the room to provide expertise from across different sectors about the kind of protections that workers need, as well as the agricultural safety standards required. That impacts on workers’ conditions, and has to do with workers not being exposed to unsafe chemicals and unsafe procedures.”
“We believe that clauses 1 and 2 should be subject to the affirmative procedure. We also have more broad concerns about the lack of scrutiny of the UK-Australia trade deal specifically, as well as of all the trade deals that the Government have negotiated to date. For us, it is really important— [Inaudible.]— scrutiny, and scrutiny by trade unions. Otherwise, those deals will not deliver the best outcomes for workers, public services and all sectors of the economy. We really regret the process that was followed for the UK-Australia deal; Members were not provided with the opportunity to debate and vote on the agreement when it was brought before Parliament in June.”
“Q Some of our other witnesses, particularly those representing farming organisations, raised concerns about the scrutiny of trade deals. When we start line-by-line scrutiny next week, we certainly hope to explore the potential for greater scrutiny of the regulations that will flow from the Bill. What is the TUC’s position on scrutiny of the FTAs, and more generally? Rosa Crawford: We have specific concerns about the lack of scrutiny provided for through the Bill, because paragraph 2 of schedule 2 states that any regulations made under clause 1 will be subject only to the negative procedure. Obviously, that will deny MPs the opportunity to scrutinise the procurement legislation introduced via the Bill, so it will not be possible for Members to challenge legislation that undermines social standards in procurement.”
“We are surprised and concerned that we have not seen progress in over a year since the Government pledged to include unions in the group. As I say, the outcomes are that we are getting trade agreements that are undermining workers’ rights, and new trade talks are being launched with really serious implications for workers’ rights with countries such as Israel, India and the Gulf states.”
“Then our general secretary had a series of meetings with Liz Truss’s successor, Anne-Marie Trevelyan, including a meeting that also included the US trade ambassador Katherine Tai. She also made the pledge that trade unions would be included on these trade advisory groups. After that meeting, she appeared before the International Trade Committee in April this year, where she said that she hoped that trade unions would be included on the trade advisory groups as soon as possible, but we still have not seen any sign of that. We hope that the new Secretary of State for International Trade will make good on that promise. We have written to Secretary Badenoch to request that the Government fulfil their pledge to include trade unions on the trade advisory groups, but we still have not seen anything.”
“Q You said in your earlier evidence that the previous Secretary of State had promised to include the TUC in private discussions about free trade agreements, presumably including the Australia and New Zealand deals, but that that had not happened. Has the general secretary of the Trades Union Congress ever had an apology from the Department for International Trade for not including you and adhering to that promise? Rosa Crawford: No. We have just had several pledges from successive Secretaries of State for International Trade. Liz Truss, when she was Secretary of State, had a meeting with our general secretary, Frances O’Grady, in which she assured her that unions would be included on these trade advisory groups. As I say, that was in September 2021.”
“I do not know whether it is in order, Chair, but to save time for the Committee next week, I wonder whether the Minister might want to reassure the TUC representative that the Secretary of State will grant access to the TUC in the future. It would save a bit of time next week if he were willing to give that pledge.”
“The wine and spirits annex will allow us to have conversations over time, and improve on the deal that is already there. That was not available as an annex in the Australia free trade agreement. There are a couple of things that we were expecting to be able to get out of the New Zealand deal that we are not yet able to get out of the Australian one, particularly around the wider variety of wines and spirits being available on both markets, and better traceability and brand protection, particularly for spirits. There is a distinction you can draw between the two deals, and you can see some progress being made; the New Zealand deal is slightly better than the Australian one.”
“Q Ministers have told us that this is a brilliant pair of deals, and the procurement chapters particularly so. Is there any way in which the deals could have been improved? Miles Beale: I think there is a small difference between the two deals, in any event. From a wines and spirits point of view, there was—still is—a low tariff that the deals are getting rid of in both cases: a 5% tariff for exports and imports in either direction. Obviously, it is of benefit to consumers and businesses in both countries when those fall away. That is pretty straightforward—fairly simple. I think we see an improvement on the Australian trade deal in the New Zealand one, because the New Zealand deal includes an annex and has a bit more of a dynamic element to it.”
“Q Do you think those differences are there because the Australia deal was a bit rushed, or because of inexperienced negotiators? Explain why you think the difference is there. Miles Beale: Yes, in general terms that is true. There was an effort to get the Australia deal done quickly. You could say rushed; one person’s rushed is another person’s achievement in a shorter period of time. We were keen to support a deal that got over the line. There has been a bit more time for the New Zealand deal and it is probably slightly simpler to do, but the New Zealand deal also benefits from being the second one after a 42-year gap. I think that, certainly on the UK side, officials were in a slightly better position and knew a little bit more.”
“We have not been able to do Australia and New Zealand, partly because they are geographically very far way and are smaller markets than some of the others we have chosen to go to, such as parts of the US and Japan. We would like to see significantly more support for British SMEs that have export potential. It is one of the things we have talked to the Department for International Trade about quite a few times. Anything we can do to bring down the costs of entry into markets where we think the products would be successful would be a good idea. We know that other countries do that to a greater or lesser extent. One of the opportunities we see in the next few years is speeding up some of our SMEs getting into exporting wines.”
“Q The former Exports Minister said that there was not enough support for British exporters from the Department in which he had worked. That was back in July. Do you share the assessment that SMEs need more help to get goods to market in Australia and New Zealand? Miles Beale: Yes, I think we would share that view, particularly for our exports. Let us take British gin as an example: we think it has significant cachet, and we particularly see smaller gin brands doing very well in the Australia and New Zealand markets. At the Wine and Spirit Trade Association we have organised our own trade missions for some of our small businesses. We normally take a group of them to markets that we think are likely to prove fruitful for them.”
“Occasionally, there are large food and drink festivals that the DIT—or, in some cases, other Departments such as the Department for Environment, Food and Rural Affairs—encouraged us to point our members towards. In truth, it is rather hard to appear as a small British gin brand or a new sparkling wine brand next to different types of British food and drink where there is probably a more established market, so that tends not to work so well for our members. We would need something more tailored to get the results we need.”
“Q What response have you had from the Department for International Trade? Is it rushing to respond to help, or just pointing you to a website—or are there some promises that the Minister will come and have a chat and things will get better shortly? Miles Beale: It is not quite as simple as that. The Department has certainly listened to what we have had to say. In practical terms, we get some support for our SMEs going into market from the posts—the embassies and high commissions in the markets that are out there, usually in capital or larger cities. What we have not had is any financial support. To be honest, that is the thing that would make the greatest difference for small businesses in particular.”
“Why do you think the financial support has not been provided? Is the Treasury just not interested, or does it prefer to concentrate on other areas of support?”
“Many of my constituents—those who have links to India and Pakistan, or links across east Africa, to Tanzania, Kenya and Uganda, in particular, or across west Africa, such as those with a background in Ghana, or those who have a background in the Caribbean—talk of their immense respect for her, but also of the immense respect of their families and relations back home. The Queen’s was a remarkable life—70 years of phenomenal public service as our monarch. Her skills, her constancy and her considerable diplomatic efforts helped underline and enhance the greatness of our country. The warmth of the tributes from leaders across the globe, the Commonwealth and Europe, and indeed from the President of the United States, have only underlined her importance to our country. God save the Queen, and God save the King.”
“She also came to celebrate the borough’s golden jubilee in 2004, and she was always enormously well received. Like others, I had the privilege of meeting the Queen on a couple of occasions. As a new Member of Parliament, I met her at a reception in Buckingham Palace for young achievers, which is probably the nearest I have ever come to being a rising star. I also met her as a Minister in the Foreign Office. What was obvious on that occasion, and in the many conversations I had with Ministers across the Commonwealth and the globe, was the enormous respect in which she was held. Her quiet work, receiving and meeting diplomats and the leaders of the countries with which our country needed to engage, was always enormously well received and hugely important.”
“It is a privilege to have the opportunity to rise in this debate to pay tribute to Her Majesty the Queen on my own behalf but also, particularly importantly, on behalf of my constituents. The Queen was a remarkable monarch, loved and admired, as many in this House have underlined, across our great country and across the world. As a result, I have not been surprised by the depth, warmth and sheer volume of heartfelt messages that my constituents have shared about her life and their sense of loss at her passing. Harrow was the first borough created by the Queen after her coronation in 1953—that is probably the most important of the many reasons why we have been the most important part of London ever since. She visited our borough many times, and she made many school visits, in particular.”