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SQE, data protection and the Spring Statement

20 March 2018

This week Freshfields Bruckhaus Deringer LLP will be appearing before Hilary Benn's Exiting the EU Select Committee on Thursday to give evidence on the progress of the Brexit negotiations.

In addition, today the UK and the EU jointly published the first draft version of the Withdrawal Agreement, including on the transitional arrangements. While there are other issues that have not been agreed, Member States are expected to provisionally sign off the deal on transition at this Friday's European Council Summit.

Last Wednesday our Head of Justice, Richard Miller, gave evidence to the Joint Committee on Human Rights as part of their inquiry into attitudes to enforcement on human rights. The session focused on the impact of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) on access to justice and human rights, on judicial and legal independence, and cultural factors around the enforcement of human rights.

Last week the Justice Select Committee urged further scrutiny of the proposed Solicitors Qualifying Examination (SQE), saying any decision on its introduction should be shelved for six months.

The Government's Brexit ministers appeared in the Commons for Exiting the EU Oral Questions, where they were asked for updates on the negotiations and about market access after Brexit.

The House of Commons also held a two-day general debate on European Affairs, which focused primarily on international trade and financial services post-Brexit. Chair of the Justice Committee Bob Neill MP mentioned the Law Society specifically and spoke about safeguarding the position of the legal services sector – including securing mutual market access for solicitors and recognition and enforcement of judgments.

The EU (Withdrawal) Bill continued its passage through the House of Lords at Committee Stage and will do so again this week. The Bill remains unamended, and peers are yet to push any amendments to a vote. The Law Society will continue to brief peers throughout the passage of the Bill.

The Commons will also continue its scrutiny of the Data Protection Bill in two further days of Committee Stage. The Law Society was mentioned in last week's debate of the Bill by the SNP's immigration spokesperson Stuart McDonald MP.

Aforementioned in the previous Parliamentary report, the Chancellor of the Exchequer Rt Hon Phillip Hammond MP delivered the Spring Statement last week. No major tax or spending changes were made, instead the Chancellor gave an update on the overall health of the economy, the Office for Budget Responsibility (OBR) forecasts and on progress made since the Autumn Budget 2017. However, he did announce several tax-related consultations. Last week the Law Society outlined some areas for HM Treasury in a submission ahead of the Spring Statement and in preparation for the Autumn Budget.

This week in Parliament

Monday 19 March

House of Lords

Tuesday 20 March

House of Commons

  • Committee Stage – Data Protection Bill [Lords]
  • Oral evidence session – Exiting the EU Select Committee on the progress of the UK's negotiations on EU withdrawal – Dr. Lars Karlsson, President, KGH Border Services

House of Lords

  • Oral evidence session – EU Justice Sub-Committee on Brexit: enforcement and dispute resolution – Martin Howe QC (8 New Square Chambers) and Sir Richard Aikens QC (Brick Court Chambers)

Wednesday 21 March

House of Lords

  • Committee Stage – Day 9 – European Union (Withdrawal) Bill 
  • Oral evidence session – EU Home Affairs Sub-Committee on Brexit and the proposed UK-EU security treaty – criminal justice and international relations academics
  • Oral question – On Government's human rights priorities for the communiqué of the Commonwealth Summit in April 2018 (Baroness Berridge)

Thursday 22 March

House of Commons

  • Oral questions – Digital, Culture, Media and Sport
  • Oral questions – Attorney General
  • Committee Stage – Data Protection Bill [Lords]
  • Oral evidence session – Exiting the EU Select Committee on the progress of the UK's negotiations on EU withdrawal in Leeds – Freshfields and Deloitte

House of Lords

  • Debate on the Commonwealth Heads of Government Meeting 2018 (Lord Ahmad of Wimbledon)

Last week in Parliament

Monday 12 March

House of Lords

EU (Withdrawal) Bill – Committee Stage day 6

The key points in the debate:

  • Market access for financial services: In response to Conservative peer Lord Carrington's amendment that would require a Minister to lay before Parliament a report setting out how access to markets by persons carrying on business in financial services in the EU and UK will be maintained after exit day, Exiting the EU Minister Lord Callanan said that this couldn't be accepted as would limit the UK's flexibility for negotiations.
  • Fees and charges: In response to an amendment tabled by Labour spokesperson Baroness Hayter expressing concern with Ministers ability to levy fees and charges through secondary legislation, Lord Callanan said that these powers will not be used to impose new kinds of charges but will be needed to give Ministers the ability to modify existing regimes where necessary. Lord Callanan reiterated that the Government is listening to peers concerns and will return to this issue at Report Stage.
  • Criminal offences: In response to concerns raised that Ministers could create criminal offences through regulations, Lord Callanan said the Government is looking at the solutions found in relation to the Sanctions and Anti-Money Laundering Bill, where the Government brought forward a requirement on Ministers to make additional statements alongside their statutory instruments.  He added that it is vital for the Bill to provide for 'creating' criminal offences to ensure that no offences that are needed fall away as the UK leaves the EU and that businesses and individuals continue to comply with the law.
  • GDPR: Responding toa Labour amendment that would mean Ministers could not alter the General Data Protection Regulation (GDPR) or the Data Protection Act 2018 using delegated powers, Conservative spokesperson Baroness Goldie said that it is crucial for the Government to have powers to correct any deficiencies that arise as a result from the current text of the GDPR being retained in the UK post exit, for example changing references of 'Union law' to 'UK law' and ensuring specific articles that do not make sense in a UK-only context are altered.
  • Devolution: In response to a group of amendments tabled by cross-party Peers that would prevent modification of the legislation relating to devolved administrations without the consent of the respective devolved administrations, Wales Office Minister Lord Bourne of Aberystwyth announced that the Government will be bringing forward amendments at Report Stage to apply the same protections for the Scotland Act and the Government of Wales Act to the Clause 7 correcting powers that applies to the Northern Ireland Act. Bourne also confirmed that the Government will be seeking legislative consent motions on this legislation in both Scotland and Wales, and on other legislation for example of agriculture, insofar as this involves potentially encroaching on devolved areas. The amendments were withdrawn although Peers encouraged the Government to also bring forward amendments to Clause 8 and 9 in addition to Clause 7.

Tuesday 13 March

House of Commons

Spring Statement

The Chancellor of the Exchequer Philip Hammond MP presented his Spring Statement to Parliament last week. The Law Society made a written submission to the Treasury before the Spring Statement and we will continue to engage with them on some of the consultations below in the run-up to the Autumn Budget later this year.

Early on in his speech Mr Hammond said the country was facing the future with unique strengths, adding "our legal system is the jurisdiction of choice for commerce" and "we host the world's most global city, and its international financial and professional services capital." He also said, "our companies are in the vanguard of the technological revolution."

As expected no major tax or spending changes were made in the Statement, instead the Chancellor gave an update on the overall health of the economy, the Office for Budget Responsibility (OBR) forecasts and on progress made since the Autumn Budget 2017. However, the Chancellor did announce a number of tax-related consultations (see below).

The following announcements were made:

  • Growth forecasts: The economy grew by 1.7% in 2017, up from the previous forecast of 1.5%, and 1.5% next year, up from the November forecast of 1.4%. Growth will be 1.4% this year, 0.1% higher than forecast, with the forecast for 2019 and 2020 unchanged at 1.3%.
  • Economic data: Manufacturing has had the longest period of expansion in 50 years. Employment has increased by 3 million since 2010, which is the equivalent of 1,000 people finding work every day. The unemployment rate is close to a 40-year low. There is also a joint record number of women in work – 15.1 million. The OBR predict there will be over 500,000 more people in work by 2022. The OBR expect inflation to fall over the next 12 months, and wages to rise faster than prices over the next five years.
  • Public finances: The UK's public finances have reached a turning point, with borrowing down and the first sustained fall in debt for 17 years. Borrowing is on course to reach 0.9% in 2022-23 and is set to be used only for long-term capital spending in 2018-19. The public debt is set to peak at 85.6% of GDP in 2017-18, then fall every year to reach 77.8% in 2022-23. Borrowing has fallen by three-quarters since 2010. In 2009-10 the UK borrowed £1 in every £4 that was spent. The OBR expect that we will borrow £1 in every £18 this year. Debt will start falling as a share of GDP next year.
  • Brexit preparations: Over £1.5 billion is allocated to departments and devolved administrations to prepare for Brexit in 2018-19. It is part of the £3 billion to be spent over two years announced at Autumn Budget 2017.
  • Progress since Autumn Budget 2017: The Government are working with 44 areas on their bids into the £4.1 billion Housing Infrastructure Fund, the Housing Growth Partnership, which provides financial support for small housebuilders, will be more than doubled to £220 million. London will receive £1.67 billion to start building a further 27,000 affordable homes by the end of 2021-22. An estimated 60,000 first-time buyers have benefitted since the Autumn Budget abolished stamp duty for first-time buyers of homes under £300,000.
  • Business rates: At Autumn Budget 2017 it was announced that business rates revaluations will take place every three years, rather than every five years, following the next revaluation. The Spring Statement 2018 announces that the next revaluation, currently due in 2022, will be brought forward to 2021. This will mean businesses can benefit from the change to three-year revaluations earlier, with the first taking place in 2024.
  • Inviting views on future changes to the tax system: To ensure multinational digital businesses pay a fair share of tax, the Government set out its thinking on how the tax system can change to give a fair result for digital businesses. To support upskilling and retraining, the Government are also seeking views on extending the current tax relief to support self-employed people and employees when they fund their own training. Mr Hammond also announced consultations on a series of future policies:
  • A reduction in tax on for the least polluting vans to "help the great British white van driver go green"
  • A possible tax on single use plastic
  • A new VAT collection mechanism for online sales to ensure that the VAT that consumers pay "actually reaches the Treasury"
  • How online platforms can help their users to pay the right amount of tax
  • A call for evidence "on whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas"
  • Inviting cities across England to bid for a share of £840m to deliver on "local transport priorities"
  • A plan to make the least productive businesses learn from the most productive
  • Measures to end late payments for firms
  • The future of cash and digital payments.

Data Protection Bill Committee Stage, Day 1

The Data Protection Bill was debated at Committee Stage. The Law Society briefed MPs ahead of the debate. The Law Society was mentioned in the debate.

Amendment 156 was tabled jointly by the Labour Party and the SNP which would remove immigration from the exemptions from the GDPR but was voted down by the Committee by 10 to 9.

In tabling the amendment, Liam Byrne MP (Labour's Shadow Minister for the Digital Economy and former immigration minister) said the exemption 'is a step too far and risks the most terrible injustices'. Brendan O'Hara MP (SNP) said the party supported the amendment and found the exemption to be 'extremely concerning'.

Darren Jones MP (Labour, solicitor) said he supported the amendment because 'there are some harsh realities about this exemption for effective immigration control, including the harsh reality that such an exemption right does not exist under the GDPR.'

In response, the Home Office Minister Victoria Atkins MP said the exemption:

  • is regarded as 'a pause' by the government, not as a long-standing and permanent exemption.
  • is just for the precise circumstances of enabling the immigration system and its protections.
  • does not set aside the whole of the GDPR for all processing of personal data for all immigration purposes.
  • makes it clear that the exemption applies only to certain GDPR articles and they relate to various rights of data subjects provided for in chapter 3 of the GDPR, such as the rights to information and access to personal data.

Byrne asked whether 'the pause' will never jeopardise somebody's ability to submit a valid request for a reconsideration or an appeal with the information that they need within the time windows, as set out by Home Office regulations.

In response, the Minister said information is obtained so that a person can be brought in but stressed this is 'not the permanent exemption from rights', but 'it is simply to enable the process to work'.

The Bill will continue through Committee Stage on 20 March.

Wednesday 14 March

House of Commons

European Affairs general debate – Day One

The Commons held a general debate on 'European Affairs', focussing on international trade.

The Law Society briefed a number of MPs prior to the debate, including Conservative backbencher Antoinette Sandbach MP, who raised the importance of legal services in the debate.

The Law Society was also mentioned in an article Ms Sandbach wrote for the Times Red Box.

In the debate, highlighting the economic contribution of the sector Ms Sandbach also said:

  • The UK legal services industry had made it clear that the CETA model does not provide a comprehensive framework for professional services.
  • The Government should be looking at "Norway-minus, not Canada-plus-plus-plus."
  • The impact of 'no deal' on services in the legal industry would be more dramatic than it would be on the insurance industry, because a widely established series of EU directives have created a well-functioning market for legal services in the EU.

Opening the debate for the Government, International Trade Minister Greg Hands MP said the UK had the opportunity to establish a broader agreement on services than ever before, and that while the UK was leaving the single market it should not mean that they are shackled by existing precedent. Adding that it was strongly in EU countries' interests to reach such a deal, Hands said the UK's "strongest comparative advantages are in the business, professional and financial services that other businesses need to grow."

  • EEA and CETA: Responding to a question from Antoinette Sandbach, Hands said the Government had been clear that its objective was not to seek an EEA- or CETA-style agreement, but a deep and comprehensive agreement with the EU. Hands went on to say that under a "superficially attractive" Norway-style deal, the UK would be subject to any new Commission rules, automatically and in their entirety, with no endpoint, little influence over those rules and no vote. He equally said a Canadian-style agreement was not the answer, given the UK is starting from a unique position of regulatory alignment with the EU and that the Government recognised that a more ambitious deal was needed given the importance of EU trade, "rather than starting our relationship from scratch with something like CETA.​"
  • EU FTAs: Hands said the Government remained committed to ratifying the CETA agreement and supported the EU's work to sign third-country free trade agreements (FTAs) in the future, specifically with Japan, South America's Mercosur union and with Mexico.

Closing the day's debate for the Government, Brexit Minister Robin Walker MP said they were making real progress on building a new and lasting relationship with the EU through the Brexit process. He added that negotiations were progressing positively and the Government were turning the phase I agreement into a draft legal text.

  • Trade in services: Addressing the points raised by Conservative MPs Sandbach and Vicky Ford, Walker reiterated the Prime Minister's points in her Mansion House speech that the Government wanted an agreement that is broader than any agreed before. He also referenced her points on not discriminating against service providers from the EU (and vice versa), limiting new barriers to firms establishing, a labour mobility framework that enables firms and professionals to provide cross-border services and the continued mutual recognition of professional qualifications.
  • Walker added that the UK would push for the greater liberalisation of global services markets after Brexit. He also said that the Government accepted that market access for EU27 and the UK would in certain ways be less than it is now, and that they would seek a new balance between single market benefits and obligations.
  • Transition: Walker said the Government had put forward practical solutions to deliver a smooth exit and protect both UK and EU interests during the transition period. He said an example would be the use of a joint committee to resolve any issues that arose during that period, including in relation to any new EU laws. Walker added the Government remained confident they would reach an agreement by the March European Council next week.
  • Bespoke agreement: Walker saidthe Government wanted the broadest and deepest agreement that covers more sectors and establishes greater co-operation than any pre-existing free trade agreement (FTA). He added that they had specific proposals across the UK economy, including in goods, services, agri-food and fisheries. Chair of the Exiting the European Union Committee, Hilary Benn MP said earlier in the debate that the EU has a long track record of such bespoke agreements with key partners.
  • Divergence: Walker said the Government's default position is that UK law may not necessarily be identical to EU law, but it should achieve the same outcomes. In some cases, the Parliament of the day could choose to pass an identical law. It could also decide not to achieve the same outcomes as EU law, but it would do so knowing that there would be consequences for market access.

EU (Withdrawal) Bill – Committee Stage day 7

The EU (Withdrawal) Bill had its seventh day of Committee Stage debate in the House of Lords. The Bill progresses unamended, after all amendments discussed were withdrawn.

The Law Society's amendment on the mutual recognition of professional qualifications was tabled by Labour peer Lord Brookes of Alverthorpe. However, it was withdrawn after the Government stated it would seek to agree a continued system of mutual recognition as part of the future economic partnership, forming part of the wider negotiations underpinning trade in services.

The other key points in the debate were:

  • Withdrawal Agreement: Labour spokesperson Baroness Hayter of Kentish Town tabled Amendment 150, which would ensure that parliament could vote on the terms of the Withdrawal Agreement before the European Parliament had an opportunity to do so. Peers argued that given the European Parliament had a statutory power to veto the Withdrawal Agreement, it was necessary to ensure that the UK parliament could pass judgement before their consideration. The Government responded that it will make every effort to ensure that the Parliamentary vote will take place before the European Parliament votes on the deal. However, the Government argued that they do not have control of the EU's timeframe and for approving the Withdrawal Agreement and therefore cannot make any statutory assurances.
  • Henry VIII Powers: Crossbencher Lord Lisvane tabled Amendment 153 which would remove the Henry VIII power from Clause 9, including the ability to amend the Act itself. The Government pledged to examine peers' concerns relating to the Government's use of secondary legislation to amend the Bill and present a resolution at the Bill's Report Stage

Joint Committees

Joint Committee on Human Rights inquiry on attitudes to enforcement

Miller spoke on a panel with Nicola Mackintosh QC, Sole Principal, Mackintosh Law, and Gareth Peirce, Senior Partner, Birnberg Peirce and Partners.

The session focused on the impact of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) on access to justice and human rights, on judicial and legal independence, and cultural factors around the enforcement of human rights.

A short summary of the session is below:

  • The panel were asked about whether there were other ways in which human rights can be enforced other than through the courts. Miller noted that without the possibility of taking action through the courts, then other methods of resolving disputes, such as mediation, are not taken as seriously. Mackintosh noted the need for greater public legal education.
  • On cases where the government or the state are party to a dispute, Miller noted the imbalance between the state and individuals, particularly vulnerable individuals, when taking litigation against the state. Mackintosh spoke about the imbalance of power for vulnerable people and cited examples of individuals in care homes. Peirce noted that accessibility to the law is important.
  • On the impact of legal aid cuts on advisory services, Miller noted that while good advice, particularly on benefits can be found elsewhere, solicitors are well trained and regulated and best placed to provide advice but have been impacted by legal aid cuts.
  • On the impact of the Human Rights Act, Peirce described it as a revolution in attitudes to enforcement to human rights, which has caused the legal profession to transform its practices.
  • On LASPO, Miller identified the Law Society's LASPO 4 Years On report, which made 25 recommendations to government, particularly around early advice, the legal aid means test, and exceptional case funding. He criticised the complexity of the exceptional case funding application form. Mackintosh described situations where her clients had been caught out by the means test. Peirce described the impact on the number of firms of solicitors.
  • Mackintosh noted frustrations with the system for how legal aid is applied for, and the impact on solicitors and vulnerable people. 
  • Peirce responded to questions around the Gina Miller Article 50 case and judicial independence by detailing the difficult situation that the judiciary are in where they are not able to get a right of reply. Miller and Mackintosh both spoke about the need for greater public legal education. Peirce noted the declining number of local journalists and reporting of trials and cases and the impact that has had on public legal education.
  • On the rule of law, Mackintosh noted that the Government have a duty to protect, respect and promote the rule of law. She said that access to justice is the most fundamental of human rights, as without it no other rights exist.
  • Questions were raised on the relationship between Government and lawyers. Miller noted that there are appropriate forms of redress. Mackintosh noted the 'embarrass clause' in the criminal legal aid contract.
  • On issues of human rights in the context of national security, Peirce noted that there shouldn't be a concept of primacy in issues of human rights.

Thursday 15 March

House of Commons

European Affairs general debate – Day Two

The Commons concluded its two-day general debate on European Affairs.

The Law Society was mentioned on the second day of the debate, and our arguments were referenced by the Chair of the Justice Committee Bob Neill MP.

At the end of his remarks, Mr Neill asked the Minister what meetings he and his officials had held with the Law Society, the Bar Council and the senior judiciary to "discuss the practical steps we need to take to safeguard the position of Britain's legal services sector going forward and how it underpins the broader financial and professional services sector."

On wider legal services, Mr Neill said:

  • Fly-in fly-out arrangements are critical to the legal sector's contribution to the economy. "We need an arrangement where, after the Establishment Directive, lawyers can: have their qualifications mutually recognised in the EU27 states; move seamlessly from one office to another; have the professional standing to advise their clients in EU27 countries and have their client legal privilege recognised and protected, which can happen only where a lawyer's qualification is recognised."
  • A 'no deal' scenario will mean British lawyers will not be able to advise clients or firms in EU27 countries – because professional privilege will not apply – nor appear in their courts or have the right to arrive in those countries and be present for negotiations with clients in important commercial contracts.
  • It is critical that the legal services sector are squared off in the future arrangements.
  • We must ensure the recognition and enforcement of judgments.
  • We must ensure that commercial contracts have certainty of enforcement, in the transition period and in the future. At the moment, the UK ensures this with one simple EU directive. The UK can mitigate having to replicate this with every country by immediate action to join the Hague Convention, but that is a back-up, not an ideal situation; the UK has to go further. 

Exiting the EU Oral Questions

The Exiting the EU ministers appeared at Exiting the EU Oral Questions in the Commons. The highlights from the session included:

  • Negotiations: Secretary of State for Exiting the EU David Davis MP said the Government's immediate goal was to agree a strictly time-limited implementation period by the March European Council meeting. Davis added that the March European Council is expected to issue the negotiating guidelines to the Commission to negotiate the future partnership, and that they were seeking to ensure that those guidelines are as broad and open as possible to allow the most constructive negotiation to deliver the close relationship we are aiming for.
  • EU FTAs: Chair of the Exiting the European Union Committee, Hilary Benn MP said that at least two of the EU's third country free trade agreement partners [South Korea and Chile] had indicated that they will seek concessions from the UK in return for rolling over those agreements during the transition period. He asked Davis to assure UK exporters that they will be able to continue to trade with those countries on the same basis as now and with the exact same benefits. Davis responded by saying the Labour Party's position on the customs union would risk other countries having access to UK markets without reciprocal complementary access to theirs.
  • Market access: Shadow Secretary of State Sir Keir Starmer MP quoted Davis' comments in January 2017 where he said that the Government was seeking "a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have" and asked him to explain the comments in light of the Prime Minister's admission that there will be reduced access. Davis responded that the Government's intention was to go in to the negotiations with the highest possible aspirations.
  • Trade and Customs Bills: Starmer also said the Government were delaying the Trade and Customs Bills for fear of losing key votes, given parliament was due to consider them this week at Report Stage and Third Reading. He added that there was no sign of other vital legislation coming down the track at what should have been a busy period in parliament. Davis said if Opposition Members continued to "try to thwart the will of the British people by blocking votes at every turn, that was their responsibility, not the Government's."

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