Former Conservative Deputy Prime Minister, Lord Heseltine, was this week sacked from five government advisory roles that he had held after rebelling over Brexit as the EU Bill passed through the House of Lords.  Lord Heseltine has never met the Prime Minister, but accepts Number 10’s decision to sack him.  You can read below a snippet of what he said during Tuesday’s debate.

Trump: the First 100 Days: new Executive Order reinstating a travel ban for 6 Muslim majority countries, the wheels are in motion for the Affordable Care Act to be replaced for Trump’s American Health Care Act, Housing Secretary Ben Carson claimed US slaves were immigrants, more US states challenge travel ban including Washington, Massachusetts, New York, Oregon and Hawaii

Digital Economy Bill

Apologies for missing this in last week’s monitoring report – the Government has published a responseto a campaign by the Open Rights Campaign regarding the harmonisation of copyright penalties for online and offline infringement.  The response clearly states that the revised offence within the Digital Economy Bill is to deter and deal with deliberate infringement, and that copyright owners are entitled to enforce their rights.

Lord Ashton of Hyde (the Government Minister leading the Bill through the House of Lords) has writtento Peers on the Code of Conduct for search engines, counterfeit electrical items and e-books:

• Code of Conduct for Search Engines – Lord Ashton has shared with Peers a redacted copy of the Code omitting numerical thresholds
• Counterfeit electrical appliances – Lord Ashton explained how the sale of counterfeit electrical appliances are being tackled as part of Operation Jasper, confirming that targeting the sale of counterfeit electrical appliances is included and that seizures of electrical goods have taken place in response to specific intelligence
• E-books – on the lending of e-books by public libraries, Lord Ashton confirmed that the Government wishes for this to be applied throughout the UK.  “The Public Lending Right 1979 is reserved in respect of Scotland, is excepted from the competence of the National Assembly for Wales, but is transferred to the Northern Ireland Assembly” – and Government Officials are currently working with counterparts in Northern Ireland to achieve legislative consent from the Northern Ireland Assembly

The Bill will be returning to the House of Lords on 20^th March for its Report Stage.

European Scrutiny Committee: Access to European broadcasting market post-Brexit questioned

The European Scrutiny Committee has raised some serious questions in relation to the modernisation of the EU Audio Visual Media Services Directive:

“The UK government has said that the automatic fallback to Single Market rules—the Council of Europe Convention on Transfrontier Television—excludes online services, does not include effective enforcement mechanisms, and does not include six Member States. The EU also excludes broadcasting from its FTAs and WTO commitments, because of the “cultural exception”.

The Committee is asking the government to clarify what impact the failure to secure a Free Trade Agreement (FTA) will have on UK-based international broadcasters.

It also asks how many jobs depend, in the Government’s estimate, on the ability of UK-based international broadcasters to retain current levels of market access to the EU market.” 

Theresa May in Brussels for her last EU Leader’s Summit

The Prime Minister visited Brussels on Thursday for the EU Leader’s Summit where despite an attempt to oust him by the Polish Government, Donald Tusk was re-elected as President of the European Council.  Issues discussed on Thursday at the meeting included people smuggling, refugees, the Western Balkans and the Prime Minister also confirmed that her European Partners just want to get on with negotiations for Brexit.  You can read her full statement and questions here.

Interestingly, Jean-Claude Juncker has said that he does not like Brexit as he wants “to be in the same boat as the British”, and said “the day will come when the British will re-enter the boat, I hope,” he said following the EU summit.  In response to his comments, Nigel Farage said “The ship will have sunk by then.” (ouch).

EU (Notification of Withdrawal) Bill Report Stage and Third Reading House of Lords

Lord Newby moved Amendment 1: Clause 1, page 1, line 10, at end insert— “( ) No agreement with the European Union consequent on the use of the power under subsection (1) may be ratified unless it has been approved by a national referendum.”

The Archbishop of Canterbury contributed to the debate:

“The referendum campaign and its aftermath revealed deep divisions in our society… this feels like the most divided country that I have lived in in my lifetime… To meet these opportunities and challenges in every aspect of policy and every level of society, we must find a level of national reconciliation… the complexity of a further referendum a good way of dealing with the process at the end of negotiation. It will add to our divisions; it will deepen the bitterness. It is not democratic; it is unwise”

Responding, Lord Bridges reminded the House:

“On 7 May 2015, the Conservative Government were elected by 11.3 million people, committed to a referendum on the UK’s membership of the European Union and committed to honouring the outcome. On 7 September 2015, 316 members of the other place voted in favour of holding a referendum by a majority of six to one. No condition or caveat was attached to the referendum, as my noble friend Lord Faulks pointed out. Parliament agreed on the question, which was simple: leave or remain? On 23 June 2016, 17.4 million people voted to leave the European Union. On 8 February this year, the other place passed this Bill unamended—a simple Bill to trigger the process of leaving the European Union —by a majority of 372. This is the democratic path that has been followed, a path that will lead this country to leaving the European Union.”

Amendment 1 was put to a vote: 131 Content; 336 Not Content

Baroness Hayter moved Amendment 2: Clause 1, page 1, line 10, at end insert— “( ) Once a notification has been given under subsection (1), Ministers of the Crown must make a quarterly statement on the negotiations to each House of Parliament, with an accompanying report to be made available to relevant parliamentary committees.”

Responding, Lord Keen of Elie explained:

“As noble Lords will be aware, the Prime Minister gives a Statement to the other place following European Councils. We know that there will be a Council this month, and indeed quarterly thereafter. That means that a Statement will be made to Parliament at least once every quarter on European issues, and it will be repeated in this House. Of course, that is just the beginning of a much wider process over which this Parliament has control at the end of the day.​  DExEU Ministers have responded to more than 600 parliamentary Written Questions, appeared at 13 Select Committees and given six Oral Statements to the House on developments regarding our exit. The Secretary of State has agreed to give evidence to the Exiting the EU Select Committee on 15 March, alongside the Permanent Secretary at DExEU, and will shortly afterwards give evidence to the Lords EU Committee on 22 March.

The Government are committed to parliamentary scrutiny, and Parliament will play a key role in scrutinising and shaping our withdrawal.”

Amendment 2 was subsequently withdrawn

Lord Pannick moved Amendment 3: After Clause 1, insert the following new Clause— “Parliamentary approval for the outcome of negotiations with the European Union ​(1) The Prime Minister may not conclude an agreement with the European Union under Article 50(2) of the Treaty on European Union, on the terms of the United Kingdom’s withdrawal from the European Union, without the approval of both Houses of Parliament.(2) Such approval shall be required before the European Parliament debates and votes on that agreement.(3) The prior approval of both Houses of Parliament shall also be required in relation to an agreement on the future relationship of the United Kingdom with the European Union.(4) The prior approval of both Houses of Parliament shall also be required in relation to any decision by the Prime Minister that the United Kingdom shall leave the European Union without an agreement as to the applicable terms.”

(Former) Government adviser Lord Heseltine spoke in support

“This amendment, as the noble Lord so clearly set out, secures in law the Government’s commitment, already made to another place, to ensure that Parliament is the ultimate custodian of our national sovereignty. It ensures that Parliament has the critical role in determining the future that we will bequeath to generations of young people. I urge your Lordships to support the amendment.”

Responding, Lord Bridges assured the House:

“…government commitment is crystal clear, and I shall repeat it: the commitment is to bring forward a Motion on the final agreement to be approved by both Houses of Parliament before it is concluded. We expect and intend that this will happen before the European Parliament debates and votes on the final agreement… The Government will continue to be accountable to Parliament via regular Statements—which I so enjoy—debates and Select Committee appearances. Crucially, Parliament’s role will not just be one of scrutiny. It will make decisions and shape the legislation required to give effect to our withdrawal from the European Union: the great repeal Bill to repeal the ECA and the legislation that will be required for significant policy changes, such as on immigration and customs… The requirements of the Miller judgment are entirely fulfilled by the Bill. The Supreme Court ruled that because withdrawal from the EU involves removing a source of domestic law in the UK, and because of the far-reaching effects of the European Communities Act, the authority of primary legislation is needed before the Government can decide to give notice under Article 50. The Supreme Court did not rule that anything further is required to satisfy our constitutional requirements. ”

Amendment 3 was put to a vote: 366 Content; 268 Not Content

Lord Hain moved Amendment 5: After Clause 1, insert the following new Clause— “Maintenance of citizenship rights set out in the Belfast Agreement Before a notification can be given under section 1(1), the Prime Minister must give an undertaking to negotiate under the process set out in Article 50 to support the right of Northern Irish people to claim Irish citizenship, as set out in the Belfast Agreement.”

Responding, Lord Dunlop explained:

“The amendment in the name of the noble Lord, Lord Hain, seeks an undertaking to support the right of the people of Northern Ireland to claim Irish citizenship, as set out in the Belfast agreement. The Government’s commitment to the Belfast agreement is ​absolutely rock-solid, including to the principles that recognise the birthright of all the people of Northern Ireland to identify themselves and be accepted as Irish or British, or both, as they so choose, and their right to hold both British and Irish citizenship. As the noble Baroness, Lady O’Neill, and the noble Lord, Lord Empey, made clear, this birthright predates the Belfast agreement. The United Kingdom’s departure from the EU will not change this commitment. However, the question of who can or cannot claim Irish nationality and citizenship is not something that would be dealt with through the Article 50 process.”

Amendment 5 was subsequently withdrawn

The Bill has now been passed in the House of Lords and will return to the House of Commons with amendments.

Spring Budget

The Chancellor of the Exchequer presented the (last ever) Spring Budget this week.  Not many surprises and no rabbits out of the hat, but quick summary below:

• The Chancellor started by stating that economic forecasts are better than previously anticipated, and that the UK is the second-fastest growing economic in the G7 in 2016 after Germany, with employment being at a record high (and a further 650,000 people expected to be in employment by 2021).  Office for Budget Responsibility Growth Forecast for 2017 has been upgraded from 1.4% to 2%, however GDP has been downgraded to 1.6%, 1.7% and 1.9% in subsequent years.
• Debt remains high at £1.7 trillion, however the Chancellor confirmed that the Government is going ahead with its plan undetermined by short term fluctuations and stated that they will “avoid saddling our children with even more debt”.  Public sector net borrowing forecast to fall from 3.8% of GDP last year to 2.6% this year, then 2.9%, 1.9%, 1% and 0.9% in subsequent years, reaching 0.7% in 2021-22.  Debt rose to 86.6% this year, but will fall to 79.8% in 2021-22.
• The Chancellor assured the House that the party is listening to the voice of business, and has reviewed the R&D tax credit regime, with the conclusion being that it is globally competitive.  Out of the review, HMT has accepted a reduction on administrative burdens and will be bringing forward measures shortly to deliver them.
• In relation to business rates, the Government will set out its preferred approach going forwards in due course, but has ruled out abolishing them completely.  However, he has confirmed that (1) any business coming out of small business rate relief will have a cap, no more than £50 a month in 2017 (2) local pubs will have a £1000 discount on business rates with rateable value of less than £100,000 (3) local authorities will be given £300 million for discretionary relief on individual complicated cases in their areas.  Taken together, this will equate to a £435 million cut in business rates.
• Due to Government action on tax evasion and non-compliance, we have one of the lowest tax gaps in the world and that £820 million will be raised due to action being taken over the forecast period.  There will also be new financial penalties for professionals who enable tax avoidance arrangements later defeated by HMRC.  The Chancellor has also confirmed that the top 1% of income tax payers pay 27% of all income tax.
• For self-employment, the Prime Minister has instructed the Chief Executive at the RSA to look at different employment practices and discrepancies, but has already said that there are clear differences in tax between self-employment and employment.  The Chancellor explained that the difference in NICs is not fair, and will reduce the gap to better reflect difference in state benefits.  He confirmed that Class 2 NICs will be gone by April 2018 as its regressive and should go, but there will be increases in Class 4 NICs.
• Real wages have grown for 27 straight months, and the poorest householders are having labour incomes rise more than compared with other countries in the G7.  The National Living Wage will rise to £7.50 in April, with 29 million people being better off.
• A new minimum excise duty on cigarettes based on a packet price of £7.35, there will be no increases in alcohol or tobacco duties on top of those previously announced, and vehicle excise duty rates for hauliers and the HGV Road User Levy frozen for another year.
• For the tax free childcare policy, £2,000 per year will be given to families for each child under 12, and will be rolled out by the end of the year for eligible families.  In total, the Government will have spent £6 billion on childcare by the end of the Parliament.  The Government has also committed £5 million in promoting those returning to work after career breaks.
• In addressing productivity, the Government is investing £300 million to support best research talent focussed on STEM subjects.  £16 million will go to a new 5G mobile hub, and £200 million to full fibre broadband networks, and £270 million for new technologies such as robots and driverless vehicles.
• The Government will be publishing its Midlands Engine Strategy tomorrow (Thursday), and today confirmed that more money will be going to devolved nations: £350 million to Scotland; £200 million for Wales; and almost £120 million for Northern Ireland.
• For education, the Government is committed to continued investment and announced that 89% of schools are now good or outstanding.  The Chancellor announced that in addition to the 500 free schools already promised, there will be a further 110 new free schools, and £216 million will be made available for existing schools.  Free school transport will be extended to all children on free school meals who attend a selective school.  The Maintenance Loan will be made available to part time undergraduates for the first time in addition to those studying technical courses at new technical higher education institutions, and there have been 2.4 million apprenticeships in the last Parliament.  The Government is also introducing T Levels (new technical qualifications) and will enable a 50% increase of training hours for those aged 16 to 19 on technical placements.
• The Chancellor saved the most talked about until last – social care.  The Government has committed to an extra £2 billion grant funding to social care over the next three years in England, with £1 billion being made available in 2017/18.  This will enable Local Authorities to start planning and commissioning projects now, and will free up beds in hospitals to enable elderly people to get the care they need in the community.  There will be a Green Paper later this year on future funding.  £100 million will be used to have GPs in A&E departments in time for next winder, and an additional £325 million will allow the first NHS Sustainability and Transformation Plans to proceed.

Due to the proposed changes to NICs for the self-employed, it soon emerged that the Government would face a backbench rebellion, with over 10 Conservative MPs being publicly opposed to the proposition (remember that the Conservative’s working majority is only 18).  The IEA, the Taxpayers’ Alliance and others also oppose any increases in NICs or Income Tax, suggesting that certain forms of employment should not be unfairly targeted (and that regular employers should instead have a cut in NICs to level the playing field), and have also warned that it could threaten the UK’s competitiveness.  As a result of concerns, the Prime Minister has announced that there will be no changes to NICs until the Autumn.

Midlands Engine Strategy

On Thursday, the Government launched its Midlands Engine Strategy – led by Communities Secretary Sajid Javid – which sets out actions that it is taking to address productivity barriers across the Midlands, enabling businesses to create more jobs, export more goods and grow their productivity.  The region is responsible for over a fifth of the UK’s total manufacturing capability, its economy is worth £217.7 billion (13% of the UK’s annual output) and is home to a number of globally significant businesses.  As you will know, the region is also home to nationally significant clusters including advanced manufacturing in the Black County and Derbyshire, the automotive cluster around Coventry and Warwickshire, and the ceramics industry in Stoke and Staffordshire.  In total, the Government will invest £392 million across the Midlands through the Local Growth Fund.

There are five key objectives:

1. Improve connectivity to raise productivity – among other elements, the Government invites the Midlands Engine Partnership to develop proposals for establish 5G testbeds in the region, in order to place the Midlands at the vanguard of the next wave of digital technology, and that even though Birmingham is the second largest city in the UK, the population is considerable more spread out compared with other areas of the UK, making it more expensive for people, goods and ideas to move around which holds back innovation.  The Government is already investing significantly in digital connectivity across the Midlands
2. Strengthening skills to make the Midlands a more attractive location for business – despite the Midlands being a bedrock of highly skilled, specialist employees in high value manufacturing, the Midlands skills base is weak compared to other regions – the West Midlands is the region with the highest proportion of people with no qualifications.  The Government will launch the Midlands Skills Challenge proving work coaches, English language courts, supporting employers to help their employees with mental health issues, test innovative approaches to lifelong learning
3. Supporting enterprise and innovation to foster a more dynamic regional economy – through Local Growth Fund the Government will support industrial clusters across the Midlands (global space technologies hub in Leicester, high value manufacturing in Black Country, Birmingham Thermal Energy Demonstrator supporting low-carbon technologies).  Midlands Engine Innovation Fund will invest over £250 million to over 1,400 SMEs across the region.  Specified sectoral strengths recognised are: advanced manufacturing, automotive cluster, connected and autonomous vehicles, ceramics, life sciences and medical devices, agri-food and drink processing, space technology, digital technology.  In addition to the Industrial Strategy, the Government will: use targeted investments to support the region to build on its existing science and innovation strengths, support industrial clusters to realise their potential, support SMEs to grow and become more competitive  
4. Promoting the Midlands nationally and internationally to maximise trade and investment in the region – Govt is announcing Midlands Trade and Investment Programme including bespoke events in Europe, North America, Asia, Africa and the Middle East.  Midlands has strong connections to the rest of the world (airports, shipping ports), has performed well on inward investment, Midlands exports have performed strongly.
5. Enhancing quality of life to attract and retain skilled workers

Countries/regions specified within the Strategy that the Government hopes to deliver more high value foreign investment projects (from the Midlands) with are North America, China, Dubai, Europe, Asia, Africa (particularly Kenya and Uganda), Middle East, Qatar, India, Japan.  I will ensure that reviews for these countries’ IP regimes are included within the Exports document that I am currently working on.

Of interest to members who represent SMEs, the Government invites every business in the area to consider how they can contribute to the Government’s vision for the region, including through investing in the skills of their workforce, developing their own leadership skills and getting involved in ensuring the Midlands is great place to work and live.  The Government is committed to supporting the integration of the Midlands economy in order to make the region more attractive to businesses and workers.

Dates for your diary

13^th, 14^th, 15^th March – EU (Notification of Withdrawal) Bill Amendments passed in the Lords considered in the Commons

20^th March – Digital Economy Bill Report Stage HoL

29^th March – Digital Economy Bill Third Reading HoL

31^st March – Government’s self-imposed deadline to trigger Article 50

7^th April – Illicit IPTV streaming devices call for views deadline

17^th April – Industrial Strategy Consultation deadline