International Trade Committee 

Oral evidence: The work of the Department for International Trade, HC 16

Wednesday 19 April 2023

Ordered by the House of Commons to be published on 19 April 2023.

Watch the meeting 

Members present: Angus Brendan MacNeil (Chair); Mark Garnier; Anthony Mangnall; Lloyd Russell-Moyle; Martin Vickers; Mick Whitley.

Questions 462 - 566

Witnesses

I: Rt Hon Kemi Badenoch MP, Secretary of State for Business and Trade, Department for Business and Trade; and Gareth Davies, Permanent Secretary, Department for Business and Trade.

Examination of witnesses

Witnesses: Rt Hon Kemi Badenoch MP and Gareth Davies.

Q462       Chair: Welcome to the International Trade Committee’s final session. We are very pleased that the Secretary of State has come to see us this afternoon.

Before we get going, as I said this is the last session. In answer to the question I am being asked, yes, I am standing for the Energy Security and Net Zero Committee. I want to thank the many clerks we have had, the witnesses, the advisers, the specialists, and the Committee staff. I want to make special mention of David Turner who has been here since the very beginning of the Committee. I want to mention also Mark Garnier who has stepped in several times when the weather delayed my travel. The bottle of Barra Gin will eventually reach you. I thank Nigel Evans who also stood in as Chair of the Committee several times. I want to make special mention of the first proper clerk we had for the Committee, Lydia Menzies and her husband Greg. Lydia, who gave me this tie when she left, sadly died after giving birth to her young baby Orla, who is now three or four. We have had tremendous staff and help over the years.

I especially thank the Secretary of State for coming, because in politics, Secretary of State, you could have stonewalled this for another week and not arrived at all. You could have played the political game. We won't be any softer on you because of that, but we appreciate that you have come along to perhaps face the music or at least unscripted questions, with you having no idea what is coming during this session.

I understand that you have a statement you would like to make. We will just run the clock over your statement, so if you want to take three hours over the statement, that is fine.

Kemi Badenoch: I wouldn't call it a statement. It is just some opening remarks and it very much echoes your sentiment about the work that the Committee has done and about appreciating the work that all the members and the supporting staff have put towards it, and also to thank you for the invitation for me to appear one final time.

You are right, scrutiny is not easy, but having been a Minister for coming up to four years, I have found this Committee to be very professional and serious about the scrutiny work rather than trying to catch people out. I think that scrutiny improves policymaking. Comments made by various Members across the House were at the forefront of my mind as we were carrying out negotiations. Yes, of course, we will always be on the defensive, but I want to acknowledge that proper scrutiny is very important and helpful for policymaking. There are some Select Committees that I have to sit in front of where the members don’t know the detail, so I am not getting scrutiny at all; we are having an argument at cross-purposes.

I want to thank you for the positive relationship. I am told that you have been Chair of the Committee for six and a half years, so you have seen lots of Secretaries of State come and go. You have seen us all off, as is often said in the House. I want to thank you for that.

On the work, it has been an eventful period since we last met the Committee. We have made lots of commitments around CRaG and what we would do. I hope that your successor in the new guise is able to do what you as members have been doing in looking at the work. I said that CPTPP in particular was a key priority for me. I am pleased to be sitting here having got an agreement in principle. It marks an important moment for the UK and for the Department as well. It is emphasising the independent trade policy that it was set up to deliver. There is also the smooth passage into law of the Australia and New Zealand Act.

The machinery of government change has profoundly changed the Department’s remit and brief, but I want the Committee to know that trade is still very much at the heart of what we do and I look forward to discussing this and other topics with you all. Thank you.

Q463       Chair: Thank you for that. We will go for probably an hour and half maximum from now and it is 13:37 at the moment. Secretary of State, what message is being sent by the Government by merging business policy with trade policy? Do you think something has run out of steam somewhere?

Kemi Badenoch: No, I wouldn't use those words. I will say that it has been an evolution because of where we are versus where we were six or seven years ago. Leaving the EU meant that we needed to heavily prioritise a new independent trade policy function. Liam Fox, the first Secretary of State, almost imbued the Department with his DNA. Even now I see so many things about which I can say, “This is something that Liam Fox did”. Now we are in a new phase. We have left the EU and we have had some continuity agreements. We have a new trading relationship with the EU. We have an FTA with them. We also have new deals upgrading them somewhere in the pipeline, but CPTPP of course is the big one that presents a strategic shift.

The merger needs to be seen through the lens of the Prime Minister’s five priorities, in particular economic growth. We found that DIT had become a business Department and we had two business Departments talking to businesses, and stakeholders kept talking about having to talk to different people in different places. This brings it all under one roof and there will be synergies. There was quite a lot of duplication taking place, so we are trying to ensure that what we deliver now with business and trade is more than the sum of the parts that we had with BEIS and DIT.

Q464       Chair: That all sounds very plausible but you mentioned the first of the Trade Secretaries, Liam Fox, and then we had Liz Truss and Anne-Marie Trevelyan in the post before you. In the beginning these trade deals were the boosters of the former, former Prime Minister. Standalone trade policies around the world were going to make up for and be better than being part of the European Union. Isn't this really a tacit admission by the Government that that is not true and that those sorts of promises made at the beginning about the UK being free in the world to sign its own trade deals really have not yielded very much in comparison to what has been lost?

Kemi Badenoch: No, I disagree with that. We are changing as the world changes with us. There was no Covid pandemic and breakdown in supply chains when we first started exiting the EU. There was no Russia-Ukraine war and the significant damage that has been done to energy prices. There was what the WTO Director-General called the fragmentation that is emerging now. The world is changing and we need to be able to respond to that. I think that it is not helpful trying to look at everything we do as a replacement for EU trade. There is no cold war with the EU. We have not stopped trading; we have a free trade agreement.

One thing that I try to emphasise is that all of this is in addition to our trading relationship with the EU. We have never said that things didn’t change and that some things didn’t become more difficult, but we work on that. We look at what the Prime Minister did in France, for instance. We have a very healthy relationship with EU member countries. I was in Italy talking to my trade counterpart and there is a lot of positivity towards the UK, but we cannot allow our entire foreign policy and trade policy to be decided by the EU.

We are a services-based economy, and distance is not necessarily the factor that it once was, but we must ask where is the new middle class coming from? Where is the growth coming from in the world? It is in the Indo-Pacific, and that is why we are attempting to have a more global trading outlook, but we still need to recognise that there is a different economic environment internationally. Having business and trade integrated is not acknowledging that something has gone wrong, far from it. It is about what do we need to do next to continue to deliver the economic growth that the PM said was one of his priorities.

Q465       Chair: You said that there is no cold war, but certainly I think every observer would say that there has been a trade cooling with Europe. You have laid out there a point about a growing middle class in different parts of the world. The two things are not mutually exclusive; you could have both. I am sure you knew I was going to ask this because I have asked this of every Secretary of State. On your own Government's GDP figures for what you are losing and what you are gaining, and given that none of the trade deals is operational yet, can you tell us the balance of gain to loss?

Kemi Badenoch: I think you asked me this question the last time I was here, and I see it completely differently. It is not a zero-sum game where we are doing something here and we have lost something with the EU. You can grow trade across both regions and that is what we are doing. GDP figures are multivariate. They have lots of elements in them beyond trade. I have talked about the shocks to trade policy or to the trading environment in the previous session, so I think that is how you need to look at what is going on, rather than it being about losing something from the EU to gain something with the CPTPP. The EU could still join CPTPP, it might not; other countries could do.

We need to look at what the potential is there but also make sure that we have control over our trading relationships, and that is what is really good about this new agreement. There is no loss of sovereignty, there is no parliament, and there is no political integration. It is more like what the European Economic Community was. It is a trading community and that is where we think the direction should be for the UK.

Q466       Chair: You used the phrase there "zero sum game". I think the zero-sum game would be a gain on what has happened because it has been less than a zero-sum game. It has been a loss of GDP. Your own figures, Secretary of State, give you—

Kemi Badenoch: Which figures are you referring to?

Chair: There are OBR figures of 4% and the Treasury has published figures of 4.8%, and 4.9%. The gains that you have flagged for the trade deals that are not yet in operation are about 0.08% for Australia, 0.08% for CPTPP and 0.02% for New Zealand. If this was horse racing, these figures are the equivalent of going to the races with £490, £500 and £400 and betting and losing that money, only to be told you are winning £8, £8 and £2. You have got £18, but the bookie has not yet paid out. Secretary of State, this is not really a good way for the Government to conduct economic stewardship.

Kemi Badenoch: I think you know what I am going to say next, which is that I disagree with every single thing that you have said.

Q467       Chair: I have given you the Government figures.

Kemi Badenoch: Allow me to elaborate on why. You talk about the OBR 4% figure. When I looked at that—

Chair: It is lower than the Government figure.

Kemi Badenoch: No. When I looked at that and tried to work out where they were getting this from, that is a figure that they base on us leaving the EU on WTO terms, which we did not do. We left with a free trade agreement. Interrogating the figures and understanding what people are putting into their analysis is part of it. If we were having more Committee sessions, I think it is one of the things that we would need to look at. What are we doing with these numbers? As a new Secretary of State coming in and asking questions and then being told it is 0.08%, then interrogating the figures and looking at the assumptions that come into how they make the analysis, I don't think that they would stack up in how we are using them. What officials are doing with those numbers is different from what we are doing.

I used the phrase, when I made the oral statement, that a forecast is different from a model. We have a model that does not take into account that the figures we used for CPTPP, for example, are based on 2014 figures. We still don’t have the latest figures. It does not take into account the potential growth of the economies that are there and the fact that they are forecasts rather than a model. It does not take into account the new countries that are going to join CPTPP. We can go into detail about whether the numbers are accurate.

Q468       Chair: We might get beyond 0.08%, perhaps 0.09%?

Kemi Badenoch: No, and the models are binary calculations. I came from a background in banking where people built models and others were free to interrogate them. That was what improved the analysis, whereas in Parliament we treat these numbers as if they are sacred texts from on high and no one dares quibble with them. It is not in any way casting aspersions on any of the institutions, whether it is my own Department or the OBR.

Q469       Chair: Is there any value in your own modelling?

Kemi Badenoch: There is value because they give us a data point but it is just one metric. We need to then respond with actions based on asking is this correct? If not, what are we going to do, what is our strategy going to be, and how do we evolve our policy? That is what we are doing.

Q470       Chair: Basically, you are not running with the idea of models when the numbers are going against you. In the real world, do you think it is easier for companies and do you think companies are now trading more or less from the UK to the EU than they were with this new regime?

Kemi Badenoch: Exports have gone up.

Q471       Chair: No, I am talking about companies. Do you think there are companies that find it difficult now to export and trade with the European Union?

Kemi Badenoch: There are companies on which the changes have had an impact. Our job is to try to reduce or remove that impact. I am not going to create a time machine and then go back and try to refight the referendum. I am not interested in relitigating the referendum. The Prime Minister of the day campaigned to stay in the EU. The British public voted to leave. I am not having an argument about that democratic decision.

Q472       Chair: I am just asking you, as the Trade Minister, whether companies find it easier or more difficult.

Kemi Badenoch: Yes, so relitigating the referendum, that is what you are doing.

Q473       Chair: No, I am asking you do companies find it easier or harder now.

Kemi Badenoch: Most companies have said that they have had to make changes and some have—

Q474       Chair: Is it easier or harder?

Kemi Badenoch: It depends on the company. There is no—

Q475       Chair: Do you think some companies find it easier to trade with the EU than they did when they were in the EU?

Kemi Badenoch: There are some companies that do and there are others who have difficulty. My job at the moment, and it is one of the priorities that I set out, is what we can do to make life easier for companies.

Q476       Chair: Secretary of State, with the greatest of respect, some companies will think you are wishing a reality there.

Kemi Badenoch: No, I disagree. Companies speak to me and they tell me about what they would like us to do with regulation now that we have left the EU. I think the challenge now is getting those benefits realised rather than spending time arguing about it.

Chair: Time moves on and I have to move on, much as I would like to indulge myself further.

Q477       Lloyd Russell-Moyle: I would like to have the list of companies that find it easier now, not the same but easier, to trade with the EU. I am sure you will be able to provide that in writing to us, at least one name.

Kemi Badenoch: Companies have confidential discussions with me. I think I would have to ask them.

Lloyd Russell-Moyle: If you could go back and ask them.

Chair: Tell us in confidence.

Q478       Lloyd Russell-Moyle: All I would like is one name. I am interested in the model bit. That was just picking up on what you said. I think you are quite right; a model is something that you put forward as a framework and then you run it in different methodologies and you come out with different answers. You are quite right in saying that people will then pick that apart and people will defend it, but I wonder what you believe is the correct outcome of that model.

Kemi Badenoch: I don’t have a correct outcome of a model. I am not going to say the answer should be 10%. I look at what we are doing. It is incomprehensible to me that one of the models has shown that GDP would shrink by having a free trade agreement. This is why I think that there needs to be some—

Q479       Lloyd Russell-Moyle: Why is that?

Kemi Badenoch: More trade creates more growth. It does not create less. It just is.

Q480       Lloyd Russell-Moyle: That is not economically true, is it? If you have imports that take away from your exports and shrink your manufacturing abilities, the GDP of a country shrinks.

Kemi Badenoch: Yes, but those are not the sort of deals that we are signing.

Q481       Lloyd Russell-Moyle: No, but it is possible theoretically.

Kemi Badenoch: Yes, but I am speaking about a specific deal that is in existence. It is possible if you do something that is completely insane, but we are not doing that.

Q482       Lloyd Russell-Moyle: Why do you think that model says that we might shrink? What is the critique that you would give, not on the outcome but on the methodology of the model that says that we would have no or maybe even reduced GDP?

Kemi Badenoch: It does not take into account the behaviours that will change from having an agreement.

Q483       Lloyd Russell-Moyle: What changes?

Kemi Badenoch: I will give you an example of one of the things that I criticised in the model for a different agreement. It showed that when we had a deal the agricultural sector would shrink. I asked why that was the case and the answer I was given was that we expect financial services to grow, and when one sector grows there is usually a transfer of labour, capital and resources from one to the other. I don’t think anyone seriously believes that farmers are going to down tools and go and be investment bankers. It is a theory that is extrapolated to the point of what I would say is the ridiculous. If you are not looking at the assumptions inside the models, I think you could end up with quite perverse results. It is not to say that a model is in and of itself wrong, but what are the inputs, what are the assumptions and what can we do iteratively to make sure we are coming out with the right answers?

Q484       Lloyd Russell-Moyle: Clearly they have got the elasticity of farming compared to investment banking slightly wrong there. If you tweak that particular critique and you change the elasticity, so you say that there is a change of demand, but not a change of production because it is more fixed, and you allow for the baseline and all that kind of stuff, do you come up with different results?

Kemi Badenoch: I don’t do different modelling. I just ask for assumptions, which can be listed.

Q485       Lloyd Russell-Moyle: But when you present that back to them and say, “This is what I have dug into, this looks a bit strange”, do they not say, “We will go back and adjust that” or do they defend their piece?

Kemi Badenoch: I am often told, “We will look again at it”, but these sorts of impact assessments are just one strand of policymaking, and a comment that I make often in passing is, “What is going on here?” I think that more broadly we should look at how we are evaluating impact assessments. I think it is an interesting area to look at.

Lloyd Russell-Moyle: Maybe an inquiry for the next Committee.

Kemi Badenoch: Maybe.

Chair: I would say there may be an agreement over a “maybe” there. Mr Whitley, the floor is yours for a while.

Q486       Mick Whitley: Good afternoon, Secretary of State. You made a comment to the Chair that we are now a service-based economy.

Kemi Badenoch: We are mostly a service-based economy, yes.

Q487       Mick Whitley: You never said "mostly". You said, "We are a service-based economy". I wrote it down. What does that say to the automotive manufacturing industry, the agricultural industry, and the steel industry? Surely we are trying to grow these industries but what you are saying there, you are putting all eggs in one basket and saying we are service based.

Kemi Badenoch: We don’t create the—this is not a planned economy. That is what individuals and businesses are choosing to do. It does not say anything to them. A manufacturing company is not going to be angry that other people are choosing to provide services.

Q488       Mick Whitley: No, what I am trying to say is that if you grow the manufacturing industry that creates jobs. I was appalled by what you said there. I was shocked.

Kemi Badenoch: I think that might be because you don’t understand what I am saying. It is not something to be appalled by. I think everybody knows the UK is about 60-70% services based and we need to make sure that we are agreeing deals that work for the whole of the UK economy. If you look at CPTPP for example, people will criticise and say, “Why aren’t we doing more with countries closer to us?” Of course we are. We have an EU FTA, but an automotive manufacturer now has better rules of origin agreements to be able to use components from those 11 countries and many of the ones that will join. That is a big benefit for them that they did not have just by being in the EU, and we are still negotiating rules of origin that will work for EU countries as well.

This is not a zero-sum game. Talking about us being mostly services based is just the nature of our economy. We have very high goods exports and services exports. We want to have more manufacturing and we want to see growth, but it is not because the two sides, services and goods, are squabbling. I think it is not something you should be appalled by.

Q489       Mick Whitley: The situation is that the manufacturing part of the economy has shrunk and we need to grow that to create jobs.

Kemi Badenoch: I agree.

Q490       Mick Whitley: When we are talking about the Australia agreement, the New Zealand agreement, we are talking about exporting premium cars.

Kemi Badenoch: Yes, but the manufacturing industry is not purely goods. It uses services, it relies on services, and it provides services. There is a lot of manufacturing that is services based. It is not an either/or. It all feeds into it.

Q491       Mick Whitley: What I am saying is that we have to grow all the parts of the economy, not just one part.

Kemi Badenoch: Yes, on that we agree.

Q492       Chair: You made a point there, or deflected it, saying that the UK is not a planned economy, but all the advanced economies’ Governments stimulate and encourage and maybe cause certain things to happen within their space. The Americans are doing this with the inflation reduction act and the Europeans are responding. There is talk about the UK being squeezed. Are you worried about the IRA and the European Union response and the UK being in the middle?

Kemi Badenoch: I wouldn’t put it that way. The EU is also worried about the Americans, which is why they are looking at how they can respond, but we have to remember that it is member countries who are going to pay and they are not necessarily happy with the way that the response will be shaped. I am worried about increased protectionism and fragmentation. A lot of the work I have been doing is trying to ensure that we do not completely destroy the rules-based trading system, GATT and everything that has come since then, which the UK and the US were instrumental in delivering. That is not to say we are doing nothing and we are being squeezed. We are signing critical minerals MOUs, because all of this is around supply chains. It is about electric vehicles and where we will be getting the components for batteries. It is really less of a green investment than a response to China, making sure that they don’t take the entire supply chain and leave other countries out in the cold, and working out how we can co-operate.

We do have our response and I think if the Chancellor were here he would talk about the five sectors that effectively are what we are putting forward as a strategy, and what we want the UK to excel in. We cannot do exactly what the US does; we cannot do exactly what the EU is doing. Even if we were in the EU, we would still have a problem, so we need to figure out what we do best and how we can make sure we capitalise on our strengths.

Q493       Chair: Do you have any feeling about the resilience and critical industries that might be required on these islands, such as ceramics or steel or a number of other things? Do you have anything or are you relaxed about the possibility of those things not being manufactured in the UK any more?

Kemi Badenoch: No, I am not relaxed about anything. I remember I was asked a question—

Q494       Chair: Back to your earlier point about not being a planned economy, if we are not a planned economy—and this is a sliding scale, it is not a digital point of, no, we are not planned and, no, we don’t care—what do you want to see? If ceramics went or looked like it was going, would the Government do something to try to help the industry? If steel was going, would the Government do something or is it just to be left to the market and Government would advise, “If it doesn’t work it doesn’t work and we will just move on”?

Kemi Badenoch: I think there is still a big gap between having a planned economy and having 100% laissez-faire. Let me answer the question. I was asked not that long ago about steel and what we would do, and the first thing I said was that nothing is a given. I think people assumed that that meant we are giving nothing. What I was trying to explain is that we cannot, even with lots of interventions, control the outcome of every single industry. Using the very easy example of typewriters, should we have done everything we could to protect the typewriter industry? What happens when innovation takes over? What happens when the world economy is changing and evolving?

I am looking at how we can make sure that people and jobs are still thriving, and this is where levelling up comes back into it. How can we make sure that if there are changes to an industry a community can still survive, and there is something to replace it? If you look at what is happening in the north-east, we have put a lot of investment into green tech and green energy. These are towns and cities that were declining and are no longer because of the investment that has taken place there, but we would not call that a planned economy.

Q495       Chair: You mentioned typewriters—we don’t want the Government to go into that.

Kemi Badenoch: It is an example that I think we can all agree on.

Chair: But there are other countries doing things that could put the UK out of business and those things are still required. Typewriters are no longer needed, but ceramics and steel might still be required. If ceramics and steel were to be displaced by activity from China or any other country, how would the Government react on that basis? It is very different from typewriters. Typewriters are, may I say, a red herring or a red typewriter; they have gone. Forget about typewriters. Let’s talk about steel and ceramics. If they looked to be in danger of not being produced on these shores, would you have a worry or a concern or a policy or a reaction to that?

Kemi Badenoch: I think the easiest thing to do is look at what we have been doing so far. We have spent—and I think Gareth can say a little bit more about this—hundreds of millions, if not billions now, on our steel industry.

Q496       Chair: It sounds like you want some plans in the economy.

Kemi Badenoch: No, I disagree. That is looking at the situation in the moment and within the foreseeable future, looking at what we can afford and what is right for the people in those communities where the industries are under threat. Looking at what the Government have done over the last few years I think can demonstrate what our willingness is.

Gareth Davies: Shall I bring a bit of life to that on steel in particular and explain how we think about this? With industries, we consider two aspects. One is around where there is unfair competition globally and the second is where there is an opportunity for a transition to a new model. On steel, the industry is facing significant challenges. The first is unfair trade, and you will have seen our actions in the WTO and the bringing in of various remedies through the WTO. The second is energy costs. The British supercharger was brought in to reduce the cost of energy because there was a risk around offshore in steel production. The third is decarbonisation. We all know that the long-term vision for a vibrant steel industry is through green steel and electric arc furnaces, but that CAPEX is incredibly expensive. We have provided over £1 billion of support for companies to help reduce their emissions

Finally, there is the role of government as a consumer of steel, and we have worked on that through procurements. Back to your earlier point around it not being binary, laissez-faire or not, in terms of the continuum we have to recognise the role that the Government plays in setting the rules of the game and helping particularly around R&D, where there are large externalities at play.

Chair: I would say that it is whether you stop the slide, and that sliding scale is where the political debate comes in. Talking of political debate, I will allow my colleague Mark Garnier to come in.

Q497       Mark Garnier: To finish off on this final point and to bring all this together, there are three fundamental elements of this discussion. The first is where you want to have an Adam Smith type of thing. At the end of the day, you have an issue with making sure your population prospers very well, so the last thing you want them to do is to carry on making typewriters when you know that there will be no point in it. You want to get rid of the typewriters and you want to move everybody on to making keyboards and computers, thereby bringing prosperity to every single worker in this country.

Secondly, you have your security of supply. When it comes to steel, steel is not a brilliant thing to make because of that Adam Smith argument. None the less, you want to make sure you have your security of supply so that if you get disruptions in the supply chain, you can do it.

Thirdly, you have trade remedies. If you have unfair attacking coming on the steel piece, where you have steel dumping from China, which we saw a few years ago, then you have the Trade Remedies Authority that can step in and exercise our rights under the WTO.

The system works incredibly well, focused on those three fundamental things, which ultimately come down to the benefit of everybody in this economy to increase GDP per capita.

Kemi Badenoch: Absolutely. It touches on the point that Angus was making earlier about the merger. If you look at something like steel, on the DIT side we were looking purely at tariffs and remedies, and we would often have a different take on what to do versus BEIS. Now we have all the decision making in one Department. The end-to-end decision making is better on the issues that you are raising because of the merger. It would not necessarily have been the case seven years ago. It is just the world we live in now.

We now have a Minister for economic security. Nusrat Ghani used to just do industry. In the merged Department she is economic security because it is also about having that resilience and looking at the supply chains, not just the industries in siloes but how it all links together to build the economic resilience that we need.

Chair: Thank you. Mr Whitley, do you want to come in at this stage?

Q498       Mick Whitley: Yes. I have a totally different question. What is your full complement of trade negotiations staff and how many vacancies do you currently have?

Kemi Badenoch: I will leave that to the permanent secretary.

Gareth Davies: We have 519 trade negotiation staff. Vacancies are running at about 5% to 6%, which is what you would expect in any organisation with a normal turnover. In terms of recruitment over the last year, we are running at about a 98% to 99% success rate in recruitment, which suggests that these jobs are attractive. It is a real credit to my predecessors and their ability to build trade capability and to Crawford Falconer, the second permanent secretary, and his work on this.

Kemi Badenoch: From the political perspective, knowing how many trade negotiators you need to change a lightbulb is very hard for me to work out. Is five enough or do you need 500? I have noticed—

Chair: How big is the lightbulb?

Kemi Badenoch: Yes. I have been told that when we go to negotiation rounds we are better stocked, I would say, than many of our partner countries. I think that generally we are in a good place. It is not an area that I am worried about at present. It is just making sure that we continue to build that capability.

Q499       Mark Garnier: Thank you, Secretary of State. In the course of this question, I am going to refer to stuff I picked up in my time as a trade envoy and my experience of being a Minister in your former Department up until a few weeks ago, so I think it is worth declaring that interest.

One of the ambitions of the Department was obviously to get more people exporting. I think at the time when we first started the Department back in 2016 there were 245,000 exporting companies out of 5.5 million. I do not think that figure has changed much over the life of the Department. We saw the exports Minister say that he is quite confident that we would hit the target of exporting a trillion on exports each year by 2030, given that is only a 2.8% increase. The OBR is being much more negative about this and is saying that it will be 1.1% growth, which obviously means we are going to miss that one trillion target.

My question is: looking at all this holistically over the last—I cannot work out my maths, what is it?—seven years—lucky I don’t work with figures—has the Department been successful? You have only been responsible for it for the last few months, but do you think that the overall objectives that were set by Theresa May when she set up the Department for International Trade in terms of boosting exports have been successful?

Kemi Badenoch: It is a good question. I think it has been as successful as it could have been, given the shocks that we have seen. It is a testament to British businesses that with all the things I said before—Covid, supply chain, Russia/Ukraine, energy prices and all that—as well as adjusting to a post-EU membership trading environment, they have been doing as well as they have been. Export figures are quite nebulous in terms of nailing down what is going on. Some areas will fall back at particular times. LNG exports have gone up; that has helped boost the numbers.

If what you are saying is that the trend of the growth figures means that it will not reach 2030, we think that there is still quite a lot of reason to be optimistic. The figures that I have here are that exports have grown an average of 4% in current prices over the last decade. We only need 2% in current prices to hit that target, so we will hit the target.

However, I think there is a broader question as to whether that is still the target, given inflation. When I have talked about this with other trade Ministers in looking at how we do the policy formation, I think that is the case. Inflation is just always taken as a given, so this was something that was factored in. I am not sure that the inflation figures we have seen now were expected, but it is something that is known, that there will be other external factors. You need something to be able to hold on to. I am hoping that we can even exceed it. We have brought the target forward to 2030 when I think it was mid-2030s. I think that the Department has done well in as much as it can. We do not export; companies and businesses do.

Q500       Mark Garnier: No, I appreciate that, but—and there is a big “but” on that and this is where it draws on my experience as a trade envoy. I think you will have got my report back from my trip to Bangkok and the far east. It was very interesting going to a trade show. It was a big Asian trade show on agricultural products and food and that type of stuff. What was interesting was that as you walk around a trade show—and this is not peculiar to this; this is a comment that comes back from many businesses that are doing exporting—you see the US set of stands, you see the German set of stands, and you see the French set of stands. Eventually, you come along to the UK’s stand and you have a lot of UK businesses that hold their own stands but then you get the UK general stand, which is where you have a number of businesses coming together. It does not feel when you are in these—and you will have been to loads of these things as well—as though the UK is really pushing as hard as other countries.

To a certain extent, if you look at some of the export data that has been coming through, obviously Covid was an absolute nightmare for everybody. Everything dropped about 14% or so. We bounced along at the bottom and picked up a little bit, whereas other countries have gone back to their trend rate more than us. It is a question of trying to figure out what is going on. We do support businesses with what was a trade show access programme but now is a new version of that, which businesses come back and say, “It is not as good as that”. We do a little bit in terms of putting on trade shows, and there are thousands of trade shows every year. You cannot do every single one of them, but we do not seem to pick the best ones.

I suppose a final point that I pick up wherever I go—again, this is referring back to my experience as a Prime Minister's trade envoy but as a Minister, I was also responsible for this—is the British chambers overseas. The British chambers I think do a variable job. Some of them are brilliant; some of them are less so. None the less, on balance they are very good forward troops, if you like. We have now withdrawn our financial support for them. They can make money elsewhere and I think they will do very well. They are staffed by very competent people and they are very well organised. However, is it sending the right message? There are a lot of things that are going on and I am just wondering if we are looking at too many details and not necessarily looking at the big strategy of how we take ourselves forward into the world.

Kemi Badenoch: This is a good example of the scrutiny helping to improve the policymaking. I don’t think that what you said is unfair. I think it is helpful to highlight what businesses are saying. There is often a reticence on our part when we are looking at budgets and what it is we are going to fund to do some of those things where it is very hard to measure the success of the event. I take very seriously the comments about how much we are spending flying to all these places. It often requires a lot of officials and a lot of people going and when it comes out in a PQ it looks like we have all been on a jolly.

What I am trying to do is to see where we can get some external expertise. I am looking at our NEDs, for instance, who know a lot more about export promotion, and who can give a little bit more detail into what exactly we should be doing. At the end of the day, Ministers and officials may have some experience but it is never as much or as good as those who are at the coalface or even just getting the feedback that you provide being a trade envoy.

I would like to do more on export promotion, but at the moment I want to make sure that we use our budget in the most effective way. What we have done is an export strategy with a 12-point plan and a lot of it is focused on the Export Support Service and the Export Academy, but I am happy to look again at export promotion. I know that this is something that businesses would like to see. I just need to make sure that I am getting value for money for what we are doing.

Q501       Mark Garnier: If I could pass on some positive comments, perhaps, one thing that is confusing for a lot of people is the complexity of the offering in order to support businesses. The simpler it is to understand, the better it is. There is a lot of good advice out there, but it is quite difficult to put it together. That includes how the British Chambers of Commerce in the UK are being used.

However, I would finish on one point. In my experience of being a Minister and in my experience of being a trade envoy and, indeed, on this Committee going out and meeting DIT people as were, DBT people as are now, I think it is extraordinarily well staffed in the posts overseas and I have never felt that the people who are there are anything other than dedicated to the interests of British business and the country. That is just to feed a positive response back.

Kemi Badenoch: Thank you for that.

Gareth Davies: Thank you. I will feed that back to the teams as well.

Q502       Chair: Secretary of State, just for clarification, this “Race to a Trillion” that was set, will that be met, given that the Financial Times has reported that the world saw an average increase of 8.2% in exports, other advanced countries saw a 5% increase in exports between 2020 and 2021, but the UK saw a 14% decrease? It is very different. Again, not zero-sum but less than zero. Will the trillion target be met for 2030?

Kemi Badenoch: From all the stats and numbers that I have seen, I think the answer is yes. The UK is a major world exporter: seventh for goods, and second in services. There will always be difficulties. Some things we cannot control. We cannot control the demand that our international—

Chair: Do you seriously think it is going to be met?

Kemi Badenoch: —consumers have, but from all our projections and figures we are still going to meet it. I have not seen the FT figures that you mentioned, but I do think so.

Q503       Chair: The Financial Times figures are in a graph and we can provide it to you very quickly if you want. Secretary of State—and I mean this gently and remember I am appreciative of you coming here today—in my previous guise as chair of the Energy and Climate Change Committee I had Ministers in front of me telling me that the smart meter rollout was definitely going to be met. I knew and they knew that by the time this was going to be met they would no longer be in position. Secretary of State, if there is an honest appraisal, do you really think that the UK is going to reach the trillion target by 2030?

Kemi Badenoch: If you are asking me if I am still going to be in position in 2030—

Chair: I know you will not be in post; indeed I will not be in post, and it is easy for you to say, but you know what I am looking for, Secretary of State.

Kemi Badenoch: I cannot predict the future, no one can, but what I can—

Chair: On the balance of probability, Secretary of State.

Kemi Badenoch: Yes, I have answered that. I do think that the answer is yes.

Chair: Fair enough. Thank you. We now go to Mr Mick Whitley.

Q504       Mick Whitley: The last time we talked we asked you about the lack of union representation on the Government’s 11 trade advisory groups. You said that it would be dealt with as part of a wider review of stakeholder engagement. When will that review be completed?

Kemi Badenoch: The review I suspect is still ongoing because of the machinery of government change. We have BEIS stakeholders and DIT stakeholders. There is a lot of duplication. What we now have in the Department, bringing in the labour markets directorate from BEIS, is we now have direct interaction with unions. I think in a sense that fixes quite a lot of the problem.

The private secretary has very helpfully told me that I am meeting with the TUC tomorrow, and Kevin Hollinrake, the small business Minister, met with them just a couple of weeks ago, so there is good union engagement. Where we end up with the trade advisory groups and the strategic ones I am not sure, given they are as relevant as they would have been when we had two separate Departments. I think they are going to be reshaped. In terms of the priorities for the transition, letting them carry on as they are is the steer that I have given. I don’t know whether it is something you have had a chance to look at, Gareth.

Q505       Mick Whitley: It is pleasing that you are saying that, but I have spoken to the TUC only yesterday. They are telling me that they still want agreements on the 10 advisory groups but they only have five at the moment.

Kemi Badenoch: Okay. I can pick that up and see where we get to, but it is all changing. When I speak to them tomorrow I do not want it to look like we are avoiding them. I am very happy to meet with everybody, even people who I know will disagree with everything I say. I think the engagement is important. The fact that I am meeting them tomorrow—I thought it was further in the future—just shows that they are not stakeholders that we are ignoring.

Gareth Davies: To add to that on the advisory groups, part of the feedback we have been having is a bit about how the Department needs to evolve. It has been six or seven years now. The trade advisory groups, the strategic trade advisory groups and the thematic working groups we need to have a look at because sometimes these things can get a bit out of date.

On the ex-BEIS side, they had a combination of sectoral and thematic joint working parties within government. It is vital that the Department for Business and Trade has deep engagement with business and with unions. We just have to make sure we are doing that in the right way and, frankly, not wasting people's time because what happens is that if you have too many of these groups the membership becomes less effective and it becomes a talking shop. You want to make sure it is focused on a proper engagement and a proper problem that you are working together on.

Q506       Chair: Secretary of State, returning to the point and something gnawing in my mind, you may have guessed with the way I asked about the "Race to a Trillion" or whatever in 2030 that I do not think that is going to happen, and you say that it is going to happen. We will have moved on and it is quite safe for you to say it now. I was thinking back to the assertions I was given and the assurances I was given about the smart meter rollout. Of course, I will not name those Ministers but they knew exactly that they would no longer be around when that music kept on playing. How confident are you? Would you be confident enough to have a wager that we could meet in seven years? I am not a betting man but this looks like a certain bet to me.

Kemi Badenoch: I don’t know, I think you are.

Chair: Only when I know I can win, and I am pretty sure.

Kemi Badenoch: I am a betting woman so we can have that bet, then. £10 says that in 2030 we will meet the “Race to a Trillion”.

Chair: We will take £10 and we will inflation link it. I will be the Scottish ambassador to Iceland or something at the time. Anyway, moving swiftly on, we accept that bet. It will probably be my only bet this year. Martin Vickers, are you willing to step into the breach at this point?

Q507       Martin Vickers: Yes, Chairman, thank you. Secretary of State, before I ask my question can I echo Mr Garnier’s comments? As another of the PM’s trade envoys, I know that the staff who serve the area that I deal with in the western Balkans are very stretched but they do an excellent job.

Turning to current trade policy, what is your key priority for the UK’s trade policy at the moment? How will you judge whether you have been successful in that role?

Kemi Badenoch: When we last met, I cannot remember but I do not think I had set out my five priorities. I definitely don’t think that I had. The DIT five priorities have been slightly amended to make sure that it encompasses all business and trade.

I had as a priority removing 100 market access barriers, so the sorts of things that companies talk about: “We can’t do this with Korea”, or new things that have come up with EU trading relations, much of it not because of the EU but because different member countries are doing different things. We do just have to unpick them country by country like everybody else does. That was the first one.

The second one was the “Race to a Trillion”, making sure that we are continuing to increase exports to hit that.

The third was making the UK Europe’s top investment destination, so creating an amenable investment environment: going out there, getting the deals, travelling to all the places where it is often relationship based, and managing the funding and investment that is going to come in.

Then we had signing high-quality trade deals. CPTPP was one; India was the other.

The final one was defending free and fair trade, which is one that does not have an easy way to measure. All the other four you can measure; we will know if we got the trade deals or not. Are we the top investment destination? Easy. On defending free and fair trade, it is the economic security issue that worries me. How do we know? It is basically trying to make the world a better place. It is things like making sure that the WTO is functioning well, ensuring that the rules-based trading system continues, getting that economic security, the supply chains, building relations with countries that sometimes feel ignored by us, and going to places that we would not normally go to have conversations. We are sending officials and Ministers there and making sure that the relationship building continues so that people see the UK as a country that helps them achieve their goals so that they can help us achieve ours.

Q508       Martin Vickers: Which sectors in our economy do you think are not perhaps performing as well as they should in terms of international trade?

Kemi Badenoch: Which sectors are not doing as well in terms of trading? On that, I think I have something here, if you can just give me a moment. I have never thought of the question exactly that way.

Without wanting to pick on a particular area, there are some places where we have a list of whose exports could be doing better. Who is doing well? Food and drink and machinery are doing very well. This is in terms of pandemic levels. Textiles have not gone back to pre-pandemic levels. Automotive and aerospace we know have not gone back to pre-pandemic levels. I am doing quite a lot of work, especially with my business hat on, on automotive. The semiconductor shortage has had an impact. What Angus was saying about IRA and people looking at who is going to give them the biggest subsidy could potentially have even more of an impact. I am doing a lot of work, a lot of meetings, with the automotive sector, and Nus is doing quite a lot as well, especially with aerospace. I would like to spend some more time making sure that we build resilience there.

Q509       Martin Vickers: You say you are looking at some countries that perhaps we do not have as good a trading relationship with as we could. Would you like to name any particular countries that you think have possibilities?

Kemi Badenoch: It is not that we do not have as good a trading relationship as we—well, I think it could be better. I do not want to say that we have a bad relationship with them because we don’t, but if I look at a country like South Africa, there is a lot in terms of UK-South Africa relations but they have competitive friendships. Russia and China are also competing in that space. We had a state visit for them, which I think was very successful. I had some very interesting conversations with my trade Minister counterpart.

Even when you are trying to build that relationship, just as we do here, the Ministers change and we have to start again. That is something where I would like to do a little bit more with African countries, so enhanced trade partnerships with Nigeria and Kenya. These are all places where we just need to do a bit more. We have Commonwealth links with them that we can build on, and that is something that I would like to see us do a little bit more of.

With the sectors where I want to see us doing better, going back to Mick’s point, I am working on a plan around manufacturing to make sure that the sector sees the attention that we are paying and that Government does care and we are not just leaving them to events.

Q510       Chair: Well done, and I noticed the good plug for the work in the western Balkans there. That did not go unnoticed, Mr Vickers. I am keeping an eye on the monitor in case there is a Division. No, there is not. We have moved on. There was a threat of a Division on the ten-minute rule Bill, but it has not arisen.

Secretary of State, I want to return in a bit more depth to the point of GDP figures, Brexit, trade deals and what have you. You will just excuse me but I think that it is quite an interesting point, although it is quite long. On trade and productivity, the Office for Budget Responsibility assumed that the volume of both UK exports and imports would be 15% lower in the long run than if we had remained in the European Union, reducing the overall trade intensity of GDP. That assumption is a 4% reduction of GDP in the potential productivity of the UK economy. The reduction builds over time with the full effect felt in 15 years. How are the Brexit assumptions performing? We will come back to those in a second.

Besides the rolled-over agreements, the UK has since the EU exit concluded free trade agreements with Australia, modelled at 0.08%, which I mentioned, and New Zealand, modelled at 0.03% by the OBR. The Government have concluded narrower digital trade agreements with Singapore and Ukraine. Agreement in principle on UK accession to the CPTPP was reached, as we know, at the end of March with a long-term impact of 0.08% of GDP, as we said earlier.

The EU has concluded an FTA with New Zealand, is negotiating one with Australia, and has concluded a digital partnership agreement with Singapore. Brexit, as you have said, has allowed the UK to pursue its own trade policy, as a result of which we have those agreements, although they are not in operation yet, and the prospect of acceding to CPTPP soon.

In those figures, Secretary of State, using a basic calculator, are we better off or are we worse off than we were as an EU member?

Kemi Badenoch: Again, further to the points that I made earlier, I will use the analogy that I did when we first got the agreement in principle on CPTPP. Many of these investments and deals we are making we need to think of as buying a start-up. Looking at what you get on the day and saying, “Is this worth the money we have paid?” is ignoring what the future projections will be. I don’t agree with the assumption that there is only going to be no increase or that these things are just duplicating what we had in the EU. There is a lot of freedom that is coming and there are a lot of decisions that can be made.

In terms of GDP growth, what I have here is that the UK is predicted to grow in every single year of the OBR’s forecast: 1.8%, 2.5%, 2.1%, 1.9%, 2027—

Q511       Chair: It is suboptimal growth, isn’t it?

Kemi Badenoch: Since the EU referendum, we have also grown at about the same rate as Germany on average. It is still in the EU. Trying to make out that everything that is happening in our GDP is purely through the lens of EU trade I do not think is the right way to do that. I remind you that we are not immune to the global challenges that I have talked about at length already.

It is also not just about what those numbers say. The real question is: what are we doing about them? Trade deals I have always said are just like a motorway; it is how we use them. Emphasising more trade utilisation; opening freeports; work that is being done on repealing EU legislation, unlocking billions of pounds’ worth of investments with the Edinburgh reforms—none of these things are factored into those forecasts that you are talking about. They are very simple and I think we need to look in aggregate at what we are doing with the freedoms that we have. The Chancellor can talk about Edinburgh reform. Again, it is not a comparison that I think is fair.

Q512       Chair: I have one point, then. Do you accept that the volume of UK imports and exports will both be 15% lower in the long run than if the UK had remained in the EU? Do you accept that figure?

Kemi Badenoch: It is not about accepting or not accepting. That is a figure that it has produced.

Chair: Surely that is a reality, come on.

Kemi Badenoch: What I have is that UK-EU exports are performing well. Our exports have recovered to pre-pandemic levels in current prices. I do want to read out these figures because I think it is important for context. In 2022, UK exports were £815 billion. That is 25% in current prices compared to 2018. When you remove some of the things, I think, adjusting for inflation, the exports are still increased in 2022 compared with 2021. So the trend is up. These graphs are not straight lines.

Q513       Chair: You have picked a lot of things there yourself, Secretary of State. The question was—

Kemi Badenoch: We are all picking.

Chair: —do you accept or not that the imports and exports will be 15% lower in the long run than if the UK had remained in the European Union?

Kemi Badenoch: No, because there are many things that we are doing now that we would not have done. Those forecasts assume no changes in behaviour and we want to encourage changes in behaviour. It is also a reason why I think it is my job to show what the benefits are. If we end up telling everyone, “Oh, it is so terrible, if only we had not left the EU”, it becomes a self-fulfilling prophecy. Someone has to be able to show what the benefits are and emphasise utilisation.

Q514       Chair: Thank you, Secretary of State. My job is not to make you change your mind. My job is to elucidate where your mind is, to find out so that the wider public knows. The wider public now knows that you do not think that leaving the EU has done that.

Kemi Badenoch: I am optimistic about the UK and its future.

Chair: Very good. Anthony Mangnall, it is great to see you back. You have been a multitasker this afternoon. Let nobody say that men cannot multitask. You have been doing a ten-minute rule Bill. You are now back on point, on parade, at the Committee. We are more than impressed. The floor is yours.

Q515       Anthony Mangnall: Thank you and apologies, Secretary of State, for being late and missing the start. Can I bring us back to the request from the International Agreements Committee around a Government strategic framework for trade policy? Are we going to see anything? It has written to you requesting this. When are we likely to have a response and is it going to happen?

Kemi Badenoch: This is not a new question; it is a question that is asked over and over again and the answer is still the same. Our trade policy is one factor within the integrated review refresh. It is set out within that context and in terms of what I am trying to achieve I have given those five priorities and the actions within them that are going to deliver on trade.

I think that what most people are trying to get at is on negotiating strategy, which again I will emphasise is not something that anyone comes out with and elucidates on in this type of forum. However, it should be very clear what our policy is not just from the integrated review. You look at what has happened with the Windsor Framework. You look at what has happened with AUKUS. You look at what has happened with CPTPP. The direction that the country is travelling in is very clear, and that is the answer that I would give to the Committee. I think that I have written to it already; I cannot quite remember.

Q516       Anthony Mangnall: Could I push you a little bit on that? I share your view and your perspective that this is a huge opportunity for the United Kingdom to sign new trade deals. I like your analogy about motorways. I think that this is all exactly the right way to look at it, and I do not think that anyone on this Committee is asking the Department for Business and Trade to reveal its hand in negotiations. What we are asking for is a metric in some respect to be able to see what we are going into trade agreements with in terms of those ambitions. I think we do get that from other countries. When we have gone to the Gulf and when we have gone to the far east, we have had that.

Kemi Badenoch: Can you give me an example of a metric that you think they have that we do not have?

Q517       Anthony Mangnall: It is about what their ambitions are for trade agreements. It is about them stating the intent that this is where they would like to see some improvement in the relationship or that their negotiators will perhaps be more focused on one issue over another.

For example, when we were in the Gulf, there was absolutely a focus for them on agricultural imports and making sure that they could get the best value deal for agricultural imports. That is great because it benefits us, but it also sends this Committee back with an idea and an understanding that we know the Gulf Cooperation Council will lead to a very good deal for farming. That is the sort of thing we want and that is very clearly put, but I do not think on this Committee we would necessarily argue that from your Department—and I do not necessarily mean it in reference to your handling of the Department but perhaps previous Secretaries of State. We have found it very difficult to get an idea and an understanding of the direction of travel on trade agreements.

Kemi Badenoch: If what you are asking for is, “What do you think will be the specific benefits of any particular FTA?” that is something that we can elaborate on. With something like CPTPP, we have talked about creating a tariff-free area where things like rules of origin will benefit our manufacturing sector but also stressing the geopolitical heft that it gives us and linking back to the integrated review. I do not think we have been shy about something like that.

Let’s take Israel, for example. The UK and Israel are two services economies, but the agreement that we had with Israel, as I have said previously, treats it like an agri-economy. It is far more than that now. It is very services and tech based. They are doing a lot of interesting things with health tech. That is what we are trying to do: upgrade a very old agreement and make it modern and utilise facilities that are based on the economies of today: services, digital, benefiting professional services in particular. That is not something that I think we have been shy about, but is it the—

Q518       Anthony Mangnall: Forgive me, and it is my fault if I am not making myself clear. Coming from wild camping to this is a quick transition. My point, is that it is not about seeing the benefits in the trade agreement—we can all see where there might be potential benefits—and it is not about asking our negotiators to say hypothetically what the best scenario is and what will be the best thing to come out of a trade agreement. It is about, for example, our ability to say, “We have created a fantastic digital partnership agreement around data provisions and intellectual property with Singapore”. It is well recognised. I think we should talk about it a lot more. That should be a benchmark in future trade agreements. To have that understanding that we are going to achieve that standard in future trade deals should be a negotiating objective and we should not be afraid of saying that.

Kemi Badenoch: We do say that.

Q519       Anthony Mangnall: We are not seeing that in trade agreements early on.

Kemi Badenoch: I am surprised that you think so because I think that we do say that. I have heard myself say almost those exact words multiple times. However, it still leads to a scenario where you do not exactly know where you are going to end up in an agreement. At the end of the day, every agreement that we will negotiate is going to be a good one. It will be an improvement on the status quo. It may not necessarily meet—and I have not said that this has happened but I do know that it can happen—100% of what we would have liked.

What I don't want is what we see in the House time and time again: MPs criticising deals and saying that they are no good because perhaps one particular metric out of loads has been agreed. I found it quite embarrassing when we had the Vietnamese and Japanese ambassadors here and we had Opposition MPs talking about how their agreement was low standard.

If there is a hesitation on my part to be very full-throated in terms of the specifics of every deal it is because I am trying to avoid that scenario. Broadly speaking, if you look at what we did with the Ukraine digital agreement and even the Singapore digital agreement, we always talk about, “We have set a precedent here. This is the high standard that we want to achieve”. We are showing, not telling, and I think you are asking us to tell and we are just showing. That is how I would like you to look at this.

Q520       Anthony Mangnall: Because you have now mentioned it, it is this reference around scrutiny. I apologise for boring you and the House about this at regular moments but it is important. Regardless of whether or not we are pro free trade or not, it is important that the House gets a say on trade agreements, even if sometimes the attendance is not what we wish. Can I just start by asking: do you think the CRaG mechanism works?

Kemi Badenoch: I do think the CRaG mechanism works. I would be interested to hear from you, as you have been on this Committee now for a long time, what you think would not have happened or would have happened if there had been a different scenario. What would have been a different outcome?

Q521       Anthony Mangnall: I am almost certain that Angus will fill in the blanks if I miss anyone, but I would say for starters with the Australia trade agreement there was no time given for the House to even debate during the CRaG process within those 21 days. Reports from the Trade and Agriculture Commission were given to the Government before coming to this Committee, making it impossible for us to even produce our report on the New Zealand agreement. On any other agreement, we have not used the CRaG process to scrutinise in the House. Under the 2010 mechanisms of the Constitutional Reform and Governance Act there is the right for a vote. We have not had any of these.

Now, I wholeheartedly agree with you that we as Members of Parliament cross-party must be diplomatic in our language on the questioning of trade deals. I do not think anyone disagrees with that on this Committee. I would say that cross-party we feel pretty strongly on this Committee, and even as we face abolishment we still feel pretty strongly, about the fact that we have not ever been given the proper ability to scrutinise trade agreements in real time. I hope that you are going to tell me that CPTPP is going to be the final swing for us to be able to go out and to show a new Secretary of State who does recognise that CRaG is important that we can have—and I am asking you this—a debate on the Floor of the House and a vote on the terms of the agreement itself.

Kemi Badenoch: I think it is unfair to say that there is no debate and no vote. We had the Australia-New Zealand Bill. That is the—

Q522       Anthony Mangnall: That is on procurement and that is after the deal has been agreed. It is not during the preratification process. It is not during a point in which the House could meaningfully object to the deal and the terms and, therefore, delay ratification. To say we have had a meaningful vote or a meaningful debate on it when none of those things were allowed on Australia and New Zealand shows right now we are zero for two on the two big trade agreements that we have signed.

Kemi Badenoch: What you are saying is that you want more than a veto.

Q523       Anthony Mangnall: No, we do not want a veto. I think that there are big problems with CRaG but I am not proposing now to amend it. That is for other people like the Public Administration and Constitutional Affairs Select Committee to do, and Lloyd can attest to that. I am saying that under the measures we have currently I would like a vote and I would like a debate. Even if the vote is meaningless, which it currently is under CRaG, I would still feel a little bit more empowered and I would still feel a little bit more able to go and talk to my farmers and to my fishermen and to my industries and all that to say, “This is where we are and this is what we have and the House has had a proper debate on it”, bearing in mind the need to be diplomatic.

Kemi Badenoch: I think all that is fine, but you have not actually said what the substantive change might have been had there been a debate on, say, Australia-New Zealand. What could have been taken out or removed? I just think—

Q524       Anthony Mangnall: To be fair, we do need to have it to be able to make the case. It is not just on me. It would be on the 648 other MPs to come in and have a debate on this and to be able to discuss that issue. The fact is that in the last three years we have never had a debate on the Floor of the House pre-ratification of any trade agreement, and that has limited the ability and, I suspect, the interest in trade deals. It has also significantly hacked off, for a polite phrase to be used, the bodies that might normally be supportive of this. Immediately, it comes to mind that the NFU would be in that mindset.

Kemi Badenoch: That is certainly a fair criticism in terms of stakeholders being unhappy. We did quite a lot of work this time to be able to explain to them where the benefits of the deal would lie. I think that this is just a fundamental disagreement between us in terms of where we think the line between the Executive’s role and the legislature’s role should lie. I think that the CRaG is fine. I have no control over parliamentary time. I want to be as helpful as possible. We give briefings in the Department. We give private briefings. We know that the Committee wants to get under the skin of things, but the truth is even I am not a trade negotiator. I will set a direction. We need to be able to give the officials who are doing that as much leeway as possible, and I just do not think that doing it in the way that you have described will improve the deals. It will make them less likely to be done and tie our hands in a way that I do not think would be helpful.

Q525       Anthony Mangnall: The Chair is being very generous and you are being extremely generous with your answers, and I appreciate this enormously. It is not necessarily even the amending of trade agreements. It is the ability for Members of Parliament to be able to question and have extended periods beyond oral parliamentary questions to ask about those trade agreements, while it is not a fait accompli but before the deal is signed and done and it does not really matter what you say because we will just utter at the Dispatch Box kind words and that will be it. I think that is where it comes in. We may not like how it is at the moment but CRaG is there for that specific measure, to approve international regulations.

Can I just be very clear and ask: will we see a debate—I will even let you off on the vote—before CPTPP is ratified on the Floor of the House? If not, because you have said you want to be supportive, will you write to the Leader of the House saying that you emphatically support this Committee’s request for a debate on the Floor of the House within the 21-day period?

Kemi Badenoch: I will have a discussion with the Leader of the House on what we can do to reassure Members of Parliament, but I am not a spokesperson for the Committee. Nice try, but—

Q526       Anthony Mangnall: We are not going to exist next week; you still will, so we need your help.

Kemi Badenoch: What I will do, and I will do for the successor Committee, is ensure that from our Department’s perspective we give you as much information as we reasonably can for you to be able to interrogate what we are doing.

Anthony Mangnall: I appreciate your answer.

Q527       Chair: I just want to come in briefly. I know that Lloyd Russell-Moyle is anxious to get in and we will make a lot of time for Lloyd in a second. We will make sure we do.

You mentioned the Executive vote there and the way that stuff lies. You are in the Executive at the moment and that is fine for you, but another party could come into power. You are disabling the strength of parliamentarians and everybody elected by the population to have a say.

You asked about the differences. There certainly have been differences in the Japan and Australia trade deals. The UK asked for quite a bit of agricultural movement from Japan and Japan said no and that was the end of it. The UK accepted it. Australia asked the UK for some agricultural access and the UK said yes. I had a feeling at the time that the Prime Minister in place wanted things signed quickly. He had three deals in our time. I may be unkind in saying that there were probably people in place who realised that it was helpful to their advancement to do this very thing. Again, that is a contrast with the current Prime Minister, who I think said in hustings—in a leadership he did not actually win for 44 days—in Exeter that these trade deals were signed too quickly.

The point is, Secretary of State, that when there was a previous Prime Minister who was untrammelled in his enthusiasm to rush, rush, rush, get this signed, get people in place, get it signed, doesn’t matter, get it signed, I would say that you probably have a very different agreement in place because of the previous Prime Minister than you would have had from this Prime Minister, and they are of the same party. I do think that that has left, if you like, a landmine in agreements for people in the future to maybe deal with when we are long gone and departed the scene and there has not been enough scrutiny of that.

The trade deal we have is a function of the people in place, the individuals in place, rather than it being a function of the Parliament. I know that you are going to have to bat on a certain wicket, but I think that is something the Executive and yourself, with the greatest of respect, and your Department should take away and chew over a bit more. We could have a situation where your political nemesis could be in government doing things you do not want, and you have emasculated yourself. Do you see the point I am making?

Kemi Badenoch: I do, and if I can provide some reassurance without saying too much, I think that the picture that has been presented of just do a deal, any deal, get whatever you can get over the line, is not quite the case. It is more that different countries—

Q528       Chair: That did not happen with Australia then?

Kemi Badenoch: No, I don’t believe it did. It is more that different countries want different things and, as I said in the House on Monday, sometimes your quid pro quo ends up in a different place. For many things there is a price that is asked that we are not willing to pay, but we have heard the criticism that has been made and we have responded. I repeatedly say it is about the deal, not the day.

I do know that one day it will not be me sitting in this chair, it will be somebody who is wearing a different party’s colours, but I also believe that they will have the right, if they have won an election, to be able to do things their way. I do feel and I do trust that Members of this House and members of the Executive are always doing the best for the UK. Personal advancement aside, and every single person in this room who is a politician certainly has a level of ambition and ego, otherwise we would not be doing this job, but we also keep checks on—I know I am looking at you, Angus, in particular but we also—

Chair: You have me blushing.

Kemi Badenoch: —hold each other to account very well, not just across party lines but also within our own parties. I think that the institution works and the system works. I want to give the Committee the reassurance that we are not doing these things just for personal advancement because our families, our constituents and our communities will feel the brunt of them. That is, to be honest, the biggest check of all.

Chair: Thank you. You have said you hear and we hope you are listening. To move on to the afternoon’s crescendo, probably, as we are coming into the last stretch, we have somebody who could indeed be a future international trade or business and trade secretary, so the floor is yours, Mr Lloyd Russell-Moyle.

Lloyd Russell-Moyle: I am not sure that that is going to happen any time soon.

Chair: Oh, the modesty, the lack of ego that was just mentioned a second ago.

Q529       Lloyd Russell-Moyle: Before I move on to my two substantial points, on the CPTPP, when asked about the publication of the final wording of the agreement, your colleague Nigel Huddleston responded to me saying that the documents in the UK’s agreed market access schedules will be published at the point of signature. In the past the Committee has received a lot of those documents before signature, in camera, perfectly understandably, and sometimes via reading rooms or via special dropbox schemes. I know that was a public response for when it would be published, but I would like to seek reassurance that our successor committee and/or the International Agreements Committee in the Lords if they request and need will receive those documents in camera prior to signature.

Kemi Badenoch: If that is something that we have done before I do not see why it should be a problem again in the future. I do not want to make a commitment without knowing what the previous process was, but it seems fine. I will double check and confirm.

Q530       Lloyd Russell-Moyle: With Japan, if I remember, for example, we received a great deal of detail about two or three weeks before, and that means that we are more able to positively comment and support these matters.

Kemi Badenoch: I am just checking what happened before my time. I will have a look and see what we can do on that.

Lloyd Russell-Moyle: I appreciate that.

Kemi Badenoch: It may depend on something that has been agreed with member countries for a multilateral. I cannot quite remember, but I will see what we can do to make that happen.

Q531       Lloyd Russell-Moyle: That is fine. My understanding is that some other countries have parliamentarians in their delegations, so that is the way they share it with their parliamentarians. When I have visited other countries, other European countries, Norway—not an EU country but a country in a similar situation to us—they include parliamentarians in a number of their negotiating delegations; not the technical delegations but some of the high-level delegations. I do think it would not go amiss for us to consider something like that.

Getting us on board, I think you are quite right, Secretary of State, means that rather than us crowing about problems in the Chamber, you then have us talking up the positives about this in the Chamber and we move forward. Voting and having that debate is cathartic. It brings us all on board. We have the say and we move on, even if we have had disagreements—although I suspect that the Japanese ambassador and the Vietnamese ambassador have heard far worse criticisms before. If I look at some of the debates in their Parliaments, they are just as critical of other respective countries. I suspect most understand that it is a sign of democracy to be slagged off.

I always remember when I took over as MP and the town next door, Lewes, has this process of burning effigies of politicians. Norman Baker, who had just lost his seat at the time, said to me, “You will have only made it, Lloyd, when you’re burnt at the stake in Lewes”. I suspect that most countries know that the sign of a deal that is going to change things is that you have some people criticising it. A deal that does not change anything probably has everyone sitting around the table—

Kemi Badenoch: Not in this Parliament. That would be the most—

Q532       Lloyd Russell-Moyle: I think it is acceptable to have some criticism sometimes and I think countries understand that.

I want to move on to the environmental chapters. What do you think the values are of these environmental chapters that are, let’s be honest, largely non-binding in trade deals?

Kemi Badenoch: There is quite an important element in those chapters in terms of signalling and explaining what our standards are.

Q533       Lloyd Russell-Moyle: Is it virtue signalling?

Kemi Badenoch: No, it is the direction of travel in which we are travelling. I do not do any virtue signalling.

Lloyd Russell-Moyle: I know. I was going to be surprised otherwise.

Kemi Badenoch: It is what the direction of travel is that we are going in. What are some standards that we want to lock in? An extra value of trade agreements is that you are then locking in certain ways of working so that people do not go backwards. It is about helping to create a level playing field. The environment chapters are just one way in which we can influence environmental policy, but the truth is that trade agreements are not the best place to do so. I think it is important that people recognise that what we are doing is not going to be conflicting with other policy.

Even with a good or a strong environment chapter, there will still be challenges that people have on some of the other elements of the trade deal. The conversation that I had on Malaysian palm oil was a good example where people did not understand how we could do that and still be in keeping with our values and our regulations. It just needs explaining. It just needs more explaining.

Q534       Lloyd Russell-Moyle: The palm oil example is a good one. Did we ask for an exclusion on palm oil and the Malaysians say, “No, we want zero tariffs because we are already doing other things to stop it” or was it us saying, “We want to zero tariff that” and the Malaysians agreeing it as part of the discussion?

Kemi Badenoch: Remember this is a multilateral negotiation so it is not—

Lloyd Russell-Moyle: With palm oil, it is the Malaysians. Indonesia is not part of the agreement, but it is those islands and countries that are really affected.

Kemi Badenoch: And also African countries. I find it—

Lloyd Russell-Moyle: Yes, but on this agreement.

Kemi Badenoch: On this agreement, yes, but I come to it from a very different place. This is a product that I grew up not just using but it was quite a fundamental part of the economy of the country that I was from at the time. What we do in these agreements is look at the balance of where we are going to end up and looking at palm oil, all the work that has been done on reforestation and the changes that Malaysians have made to how they do things but also looking at what our standards are, our standards—

Q535       Lloyd Russell-Moyle: Does that mean that we did not even ask?

Kemi Badenoch: I never go into who said what in negotiations. That is not helpful. I think people can imagine that we would have tried to get the very best. As I say, there is no trade deal where one party gets everything they want and the other party does not.

Q536       Lloyd Russell-Moyle: I am trying to assess whether we even wanted it or not.

Kemi Badenoch: Again, it is all part of the negotiating strategy. Many of the asks that we take in come from the consultations and NGOs and others will put all that there, “Let’s look at it as a discussion. What is possible?” At the end of the day, the UK only uses about 1% Malaysian palm oil. We have the standards; that is the important thing. The tariff, where you are going from 2% as Europe has set, that is not the thing that is going to shift the dial. The tariff, in fact, is almost irrelevant when our standards are taken into account, and that is the way that we need to look at what is going on.

Q537       Lloyd Russell-Moyle: Our standards do not prevent the importation of palm oil and the use of it in certain consumer products. They might limit it in certain food products but even that is only very limited. Indonesia has said in its negotiations if it wishes to join CPTPP—and it has expressed, shall we say, a warm but not hot interest in doing so at the moment—one of its red lines would be palm oil. In negotiations with other countries, Indonesia has included restrictions on palm oil so that it does not lead to greater deforestation. I am trying to work out why Britain would not have a similar concern from the other side that a marginal change—because trade is often about the small margins, isn’t it? If you can get a marginal benefit from one thing, you can make a huge amount of money on diverting trade by—

Kemi Badenoch: Well, let’s look at just how much in the margins—

Q538       Lloyd Russell-Moyle: Indonesia thought it was important. Why haven’t we thought it was important?

Kemi Badenoch: We have not said that we haven’t thought it was important. It is about the outcome that you get. There are 9,500 tariff lines of products. We are talking about one thing here. When we are—

Lloyd Russell-Moyle: The environmental degradation.

Kemi Badenoch: When we are looking at what we are trying to do, which is join an existing partnership—this is not a bilateral agreement from scratch; the multilateral negotiation just takes place in a different way—we will now be in a different position, not being the party acceding but being part of the club or of the group when other countries come in. You could argue: is there a benefit in coming in now on particular terms and then changing the terms for another country? Those are all the factors that come into the decision making. What I do not want to do is say, “We asked them this and then they said that” and so on. That does not help us. It exposes how we negotiate when we will be doing the next round, so we have to keep our cards close to our chest. What I will say—

Q539       Lloyd Russell-Moyle: Other countries announce what they asked and what their red lines were. Why don’t we?

Kemi Badenoch: I think they announced what they wanted to announce, not everything that they did. Where they found it helpful they announced. Where it would have been unhelpful, they didn't announce.

Q540       Lloyd Russell-Moyle: Do you think it would be unhelpful to tell us what our position on palm oil was because it would be embarrassing?

Kemi Badenoch: No. This is something that I have said across the board. The more we emphasise what the wider aims are rather than the specifics, the easier it will be for us to negotiate going forward.

Q541       Lloyd Russell-Moyle: Within the environmental chapters, they are loose wording that does not really have much legal standing. Is there any analysis on what measures we could do to reduce carbon using border adjustment mechanisms within this new agreement, bearing in mind that border adjustment mechanisms are being rolled out in a number of countries now and we are consulting on them?

Kemi Badenoch: I think that is the sort of conversation that we can have within the group now that we are members, but again we are not changing the text of the agreement. I do not think trade agreements are the right forum to do that. There are so many other areas where we are looking at these things.

Q542       Lloyd Russell-Moyle: The point of carbon border adjustments is that they are trade mechanisms on carbon, so when you are joining a club you want to see whether it closes down or still allows your options to take certain trade mechanisms that other countries are taking. The US and the EU have discussed and are respectively in different stages of implementing forms of carbon border adjustments. What I am interested in is whether in the environment chapter there is any wording that would keep the door open for us to do similarly.

Kemi Badenoch: The wording in the environment chapter should not stop us from making sovereign regulatory changes. That is something that is very clear. Sovereignty has been very much at the forefront of our minds. That is why we are doing this type of deal. There is nothing in CPTPP that stops us from being able to regulate. We have to emphasise that. What we choose—

Q543       Lloyd Russell-Moyle: A sovereign regulatory change to introduce a border charge for products that have high carbon use and have not paid a carbon tax is allowed under CPTPP?

Kemi Badenoch: This is not my Department’s area so I don’t know the ins and outs of exactly how the carbon border adjustment mechanism—

Q544       Lloyd Russell-Moyle: I thought it was your Department that was consulting on a carbon border adjustment.

Kemi Badenoch: Not at the time that we were doing it. It is now but DESNZ is the one that owns most of the energy policy. We come into it in the margins, things go to write-round, but in terms of free trade agreements that is not the sort of thing that would go in there.

Q545       Lloyd Russell-Moyle: We talk about sovereignty and you talked a lot about that in your statement, but we have signed up to ISDS, which does allow foreign private companies to sue our Government. I grant you that we have been on the lucky side of that regime to date, but other European countries have been on the very negative side. That does allow a supranational body to regulate and restrict sovereign decisions of a country. When you met us last with Crawford Falconer you and he said that some information can be made available about the risk and benefits long term of these mechanisms. You have not yet managed to get around to sending us any—

Kemi Badenoch: I did provide a response to the Committee. I think I had one response with all the questions. I did not hear that we did not answer a question then, so sorry, this is—

Q546       Lloyd Russell-Moyle: My understanding is that you answered the questions and said you have done the analysis, but I am interested in what the detail of the analysis said on the risks and benefits. Could you outline to me what the risks and benefits of an ISDS long-term look like?

Kemi Badenoch: ISDS is very common in international agreements. The UK has not been lucky, it is because of the way that the rule of law is—

Q547       Lloyd Russell-Moyle: Australia and New Zealand have explicitly opted out of them with CPTPP.

Kemi Badenoch: I don’t think that that is quite the case because I asked about that. There is no carve-out, it is just that there are bilateral agreements that already—

Q548       Lloyd Russell-Moyle: There is a carve-out for New Zealand because that was explicit for them signing up to CPTPP in the first place.

Kemi Badenoch: I think that that is a general way of describing it. When I spoke to the negotiators they said there was not a carve-out for New Zealand.

Lloyd Russell-Moyle: Well, side letters, but yes.

Kemi Badenoch: In seven of the 11 countries there were already deals on ISDS, so it is not necessarily needed in CPTPP and that is why it has happened.

In terms of how it has impacted us, advantages and disadvantages, we have 90 countries, I think, and investments globally where we have ISDS. We have never received a successful claim from any investors of CPTPP countries or any other country that we have those commitments with. It protects UK companies as well, so it is not a one-sided thing. The merits of an individual ISDS or which country it is we can debate, but in principle ISDS is not a bad thing. I think the question we should ask is: why is it that other European countries keep getting sued successfully and we do not? What are we doing right that they are doing wrong?

Q549       Lloyd Russell-Moyle: In principle, there is something wrong with a supranational court of the European Court of Justice being able to rule over us, even though the majority of cases went in our favour but, in principle, there is nothing wrong with a secret court that meets behind closed doors that could in theory overrule British policy doing it because it has not happened yet? I do not quite understand. I understand the practical argument that we have always been on the right side of the law and it has worked for us and our companies so far, but the theoretical argument of having a supranational body that rules over us, I do not understand the consistency.

Kemi Badenoch: There is no inconsistency. ISDS cannot force countries to regulate. These are agreements that we have made. It is like a contract. If you break a contract, there needs to be some system of arbitration. What we ensure is that we negotiate investment protection and ISDS provisions in FTAs while maintaining our right to regulate in the public interest, especially on the environment and labour standards areas. That right to regulate is recognised in international law, so we do not think that there is an inconsistency. There is a totally different issue with a contract where somebody is arbitrating a contract versus a supranational court that is looking at all your regulation completely and forces you to regulate. It does not force people to regulate.

Q550       Lloyd Russell-Moyle: Well, it forces you to fall in line with something that might be out of date or not even necessary.

Kemi Badenoch: Whatever is out of date is something that you may have signed. You can come out of an agreement if you no longer require it. These agreements are two-sided.

Q551       Lloyd Russell-Moyle: Yes, but so is the ECJ. All supranational agreements are two-sided.

Kemi Badenoch: I have already said I am not relitigating Brexit arguments. I am talking about how ISDS—

Q552       Lloyd Russell-Moyle: I am just trying to see the consistency between the two.

Kemi Badenoch: I don’t think that there is an inconsistency. I think we are talking about two totally different things.

Q553       Lloyd Russell-Moyle: Do you not think that there is a problem that these bodies meet in private and nobody knows their deliberations until they have finalised?

Kemi Badenoch: The fact that the UK has never been successfully sued and a claim made against us gives me reassurance that this is a system that functions well.

Q554       Lloyd Russell-Moyle: Is your view that we should just sit pretty and wait until we are sued and it does not matter about the theoretical risk, it does not matter about doing a risk-based analysis?

Kemi Badenoch: No, we do a risk-based analysis case by case but what we cannot do is just ask people for every single thing we want and tell them that they cannot have anything that they want. These are negotiations and what we do is come to a decent landing zone that we think is fair and mutually beneficial to both sides.

Q555       Lloyd Russell-Moyle: New Zealand got side letters because its risk-based analysis was that it was not worth the risk of giving up a bit of sovereignty. It is giving up a bit of sovereignty. I support giving up a bit of sovereignty for greater goods in the end, but it did side letters—

Kemi Badenoch: Are you talking about the bilateral FTA or CPTPP?

Q556       Lloyd Russell-Moyle: New Zealand on CPTPP did side letters with all the other CPTPP members with an agreement from those members, “We will not enforce ISDS against you, New Zealand”. ISDS against New Zealand is null and void under CPTPP.

Kemi Badenoch: I think we should check whether that is the case because I have asked and I have been told that that is not the case.

Q557       Lloyd Russell-Moyle: I think that is, under international law, the case.

Kemi Badenoch: There are no carve-outs and where—

Lloyd Russell-Moyle: On the CPTPP—

Kemi Badenoch: No, let me finish. Where we have agreed to disapply CPTPP ISDS between our countries, it is because we have other agreements that come into force there. It is not that they are just disapplying it, it is that there are other things that are there in place.

Q558       Lloyd Russell-Moyle: Yes, but in the New Zealand and the Australian bilateral ISDS was not included either. With New Zealand, there are side letters that it has with all the other CPTPP members and our bilateral agreement with New Zealand also excludes ISDS. Why have we given special preferential treatment to New Zealand but not asked for that preferential treatment from other countries?

Kemi Badenoch: Again, that is not quite the case. I can get a more factual account of exactly what the status quo is, but I do not think it is quite as you present it. Again, there are provisions elsewhere that will cover the same protections that ISDS is supposed to provide. These are things that help companies on both sides and I do not think that they are a problem in the way that they are presented. I do not think that there is that inconsistency.

Q559       Lloyd Russell-Moyle: Why is there not a line in ISDS or any of this to require companies to at least go through the national courts so that a national company has to go through the same process as an international company?

Kemi Badenoch: I do not have enough information to answer that question. We probably need an ISDS session to go into that level of detail. There is probably a very good answer, but I do not have it to hand.

Lloyd Russell-Moyle: Thank you very much, Secretary of State.

Chair: Secretary of State, we are just a little bit over but I want to ask a couple of questions that have come in from other areas. They are not Committee questions. I know you are giving me a wee look there, but I am sure you are—

Kemi Badenoch: I am just thinking about my next appointment.

Q560       Chair: British Glass has asked a wee question about woven glass being exported to Europe—filament glass fibre that makes reinforced wind turbine blades in the renewable energy sector. Because of duties coming back in when they are from Europe, they are unlikely to be reimported, which means that many people will then go to the cheaper imports that come from China. It is wondering about what it finds is an absurd situation. Is the UK pursuing anything around this that is going to help the glass fibre industry to not be undercut by China?

Kemi Badenoch: I do not know the specifics of that. I want to make sure I understand correctly. It is woven glass fibre?

Q561       Chair: Woven glass fibre exported to Europe to make the blades, and then, because of the way the tariffs and duties work coming back in, it is more expensive, apparently, so people are then going to China for Chinese-made product.

Kemi Badenoch: Who are the people, people in the UK?

Chair: Yes, people in the UK.

Kemi Badenoch: Okay. That is something that we can look at.

Chair: Thank you. That is all I am asking.

Kemi Badenoch: I don’t know about that case but we can pick that up.

Q562       Chair: In the wine area around the Australia trade agreement, importers in the UK are talking about how the benefits may be undercut by UK domestic tax policies reversing those benefits because of alcohol banding. I am not sure if that has come across your radar at all. If it has not, can you maybe deal with it?

Kemi Badenoch: A matter for the Chancellor. As you know, I would be in trouble if I started commenting too much on tax policy.

Q563       Chair: But you can raise your voice in government.

Kemi Badenoch: I absolutely can. That I can do.

Q564       Chair: Okay. I had something come in from Make UK, from a Wiltshire viewer who has been a regular over the years. You mentioned a minerals MOU that is on the way. Did you mention something about a minerals MOU?

Kemi Badenoch: We are signing them with different countries. I know that the Foreign Secretary signed one; I think it might have been with Kazakhstan. My Department did one with Canada. It is all about assuring critical mineral supply chains.

Q565       Chair: Okay. Obviously, Make UK disagrees with the services economy, that the UK is very much manufacturing and has big manufacturing interests, as you would expect. The other point around this that it is asking is: what discussions are you having with Washington to raise some form of access to the IRA?

Kemi Badenoch: Lots of discussions, not just at ministerial level but at official level. You would have seen that the Prime Minister was in the US not that long ago. These are the things that we are talking about with our counterparts. I am meeting Make UK tomorrow, so they can ask me themselves and maybe I will have a more detailed answer.

What you are raising is exactly the stuff I was talking about: economic security. How can we make sure that we are thinking about the economic environment of tomorrow? What are manufacturers’ needs in order to not just survive but thrive and contribute to economic growth? We hear the examples like the woven glass fibre. I do not know about that one specifically. We don’t ignore them. There are issues on both sides that it is our job to unpick one by one. Those are things that used to happen in the EU that we never saw. Now we see them. They are not new problems, especially when we are thinking about third countries that are outside the EU. They are just existing problems that we are dealing with ourselves.

What I want to leave people with is the reassurance that the Department for Business and Trade very much believes in making life easier for business and making trade easier, and we are doing every single thing we can in order to deliver that for people.

Q566       Chair: Thank you very much, Secretary of State. You have given us 10 more minutes and, as I said at the beginning, you did come along when you could have dodged this quite easily, so we are appreciative of that. I hope you have found this afternoon useful and informative.

Kemi Badenoch: Yes, always.

Chair: I hope those watching in Wiltshire or elsewhere also found it interesting. Certainly, former staff found it interesting. Emily and Eligio came into the room, so that is, I think, a testament to what they thought of their time on the Committee.

As this is the end of the Committee, I would like to thank staff past and present for their excellent support to all the members that we have had. We would be nothing without the staff, to be absolutely frank, and I am sure everybody who has served on a committee knows the great truth of that.

Finally, Secretary of State, our genuine thanks to you for coming in.

Kemi Badenoch: Thank you, Chair.

Chair: Hopefully, you have heard and you will be listening going forward. Thank you.