Lord Ashton of Hyde

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That the House do now adjourn.

Lord Ashton of Hyde (Con)

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My Lords, in moving that the House do now adjourn, I would like to wish all Members and staff who have remained to this late hour a very happy Christmas. I beg to move.

The Deputy Speaker (Lord Russell of Liverpool) (CB)

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My Lords, hybrid proceedings will now resume. If the capacity of the Chamber is exceeded, I will immediately adjourn the House.

Proceedings on consideration of Commons reasons and amendments on the United Kingdom Internal Market Bill will follow guidance issued by the Procedure and Privileges Committee. When there are counterpropositions, any Member in the Chamber may speak, subject to the usual seating arrangements and the capacity of the Chamber. Any intending to do so should email the clerk or indicate when asked. Members not intending to speak on a group should make room for Members who are. All speakers will be called by the chair. Short questions of elucidation after the Minister’s response are permitted but discouraged. A Member wishing to ask such a question, including Members in the Chamber, must email the clerk.

The groupings are binding. Leave should be given to withdraw. When putting the Question, I will collect voices in the Chamber only. Where there is no counterproposition, the Minister’s Motion may not be opposed. If a Member speaking remotely intends to trigger a Division, they should make this clear when speaking on the group. Noble Lords following proceedings remotely, but not speaking, may submit their voice, content or not content, to the collection of the voices, by emailing the clerk during the debate. Members cannot vote by email. The way to vote will be via the remote voting system. We will now begin.

Motion A

Lord True

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That this House do not insist on its Amendments 1, 19 and 34 to which the Commons have disagreed for their Reason 1A.

The Minister of State, Cabinet Office (Lord True) (Con)

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My Lords, I think I was on mute for a minute there.

Lord Adonis (Lab)

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Keep it up.

Lord True (Con)

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The noble Lord, Lord Adonis, says, “Keep it up,” which I know is a sentiment widely shared.

Noble Lords have been clear throughout this debate on the UKIM Bill about their support for the common frameworks programme. I and the Government concur with those sentiments, and I reiterate the Government’s continued commitment to this programme. I am pleased to update your Lordships’ House that common frameworks are developing well, with three common frameworks currently undergoing scrutiny, including in this House’s committee chaired by the noble Baroness, Lady Andrews—and I pay tribute to the work of that committee.

Out of 33 active frameworks that we have assessed are needed, we expect 30 to be agreed by the end of 2020, mostly on a provisional basis, pending scrutiny by Parliament and the devolved legislatures. The common frameworks programme embodies the value of strong intergovernmental relations. The UK Government and the devolved Administrations are working together, on a voluntary basis, in support of cohesive policy-making and the maintenance of high standards in respect of the specific needs of each part of the United Kingdom. While recognising this positive collaboration, we also need to acknowledge that the common frameworks were always intended to cover only a specific set of issues where powers are returning from the EU. Common frameworks support the functioning of the internal market but cannot by themselves ensure regulatory coherence across the whole UK internal market—the key objective of this Bill.

As the Government have noted previously, we regret that the Scottish Government walked away from the joint internal market workstream in spring 2019. Detailed engagement has been ongoing with the Welsh Government and Northern Ireland Executive on this Bill, and the door remains open to the Scottish Government to join similar discussions. The strength of common frameworks lies in the fact that they provide a forum for discussion and collaboration, with a clear process in defined, but limited, areas of economic activity.

I thank the noble and learned Lord, Lord Hope, for his thoughtful participation in these debates and his considered amendments to the Bill, which he has now partly revised. I welcome also the willingness of the noble and learned Lord to continue engaging in discussions on his amendment with my officials, and those discussions may continue. I also thank noble Lords opposite for their own positive and practical engagement on these matters. Discussions are not exhausted on this topic.

On the amendment before us, I have cautioned your Lordships’ House before, regarding the previous amendments of the noble and learned Lord, Lord Hope, that this would lead to the automatic disapplication of the market access principles, creating a very broad exclusions regime, with the attendant risk of legal uncertainty for businesses and consumers over whether or not market access principles apply. It is the Government’s view that these revised amendments carry similar risks, both in terms of the breadth of the exclusions regime created and in terms of uncertainty. As to the latter, there is no safeguard against different Administrations attempting to implement different interpretations of an agreement into law, potentially leaving the courts in the unenviable position of adjudicating on these different interpretations. That would potentially invite the courts into the common frameworks process, which is inherently undesirable. Any such litigation would create great uncertainty for businesses. This is clearly not in keeping with the need to provide certainty and a stable trading environment for citizens across our United Kingdom.

Moreover, Amendments 1B and 1C prevent the introduction by a UK Government Minister of any new regulations in any area where discussions under the common frameworks process are ongoing. This could mean Ministers would be unable to act, even if there were an urgent need to do so.

Furthermore, the common frameworks programme was established in 2017 to manage the powers returning from the EU in devolved policy areas. In line with its voluntary nature, the programme has not been put into legislation, although I recognise that it is alluded to, in very high-level terms, in Schedule 3 to the European Union (Withdrawal) Act.

While it is a key objective of common frameworks to agree consistent regulatory standards, in practice there may be cases where divergent approaches could be agreed through a common framework. If this were to occur, and if any such divergence were to fall within the scope of the market access principles, we should be in no doubt that the market access principles set out in the United Kingdom Internal Market Bill would apply. That means that even if divergence is agreed in a particular case, it would not prevent businesses from other parts of the United Kingdom being able to sell their products into the relevant place. This would ensure that barriers to trade are not erected through the introduction of divergent policy.

We must also bear in mind that common frameworks are jointly owned by the devolved Administrations. Any proposal to legislate them into this Bill would need to take into account their involvement in the programme. While we have carefully reflected on the arguments made in both Houses, I respectfully suggest that the approach put forward in these amendments brings significant drawbacks to the Government’s ability to provide businesses with the certainty they need to operate across the United Kingdom.

I and colleagues across government look forward to discussing further with our partners in the devolved Administrations and devolved legislatures to consider how we can capitalise on the ways of working agreed through common frameworks. We are also working towards concluding a joint review of intergovernmental relations with the devolved Administrations. These future intergovernmental structures will create a system that secures strategic co-operation and proactive discussions on shared areas of interest, including on common frameworks. The aim of any reform will be to establish an adaptable and effective system of governance that facilitates building long-term trust between the Governments.

We are, of course, open to considering how to put these areas of co-operation on a sustainable footing for the longer term, complementing the IGR review and the market access principles to the benefit of citizens and businesses. I beg to move.

Motion A1 (as an amendment to Motion A)

Lord Hope of Craighead

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At end insert “and do propose Amendments 1B, 1C and 1D in lieu—

Lord Hope of Craighead (CB) [V]

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My Lords, I shall speak to Amendments 1B, 1C and 1D in lieu, which are in my name. The fact that the Commons have disagreed with your Lordships’ amendments about the common frameworks process is a matter for regret, but they were good enough to give us a clear and simple reason. They told us that these amendments

“will create legal uncertainty, which would be disruptive to business.”

I took this to be a reference to what the noble Lord, Lord True, said when we were considering these amendments on Report:

“No one could know for sure, until the question was determined in court, whether a regulation or requirement, or a combination of regulations or requirements, was giving effect to an agreement reached within a common framework. There would be uncertainty as to whether or not the market access principles applied”.—[Official Report, 18/11/20; col. 1466.]

I can well understand the point that he and the other House are making, but I do not believe that it is incapable of being met, so I have added some words of my own to each of my proposed amendments to suggest how this could be done.

To be given the benefit of exemption from the market access principles, the regulation or exemption would need to state that it was their purpose to give effect to an agreement that had been reached through the common frameworks process. It seems to me that, if this were to be stated in the relevant instrument, the problem that the noble Lord referred to on Report would be overcome: everyone would know what it was and why it was there. No doubt there are other and better ways of achieving this, but my point is that, if there really is a will on the Government’s part to make this system work, a solution can be found. There is surely room for further discussion on this issue; the door must be kept open—and I am encouraged by some of the points that the noble Lord, Lord True, made in opening this debate. I ask your Lordships to invite the Commons to think again, and I will be seeking the opinion of the House as to whether we should do so.

Of course, I appreciate that it is not as simple as that; there are important issues of principle too. The Parliamentary Under-Secretary, Paul Scully, said in the other place that to legislate the common frameworks into the Bill would,

“not sit well with the flexible and voluntary nature of the common frameworks programme.”—[Official Report, Commons, 7/12/20; col. 601.]

I appreciate, as has been stressed many times in your Lordships’ House, that the whole purpose of the market access principles is to enable traders to do business without internal barriers to trade across the UK. It is about

“a job, someone’s pay packet at the end of the week”,

as the Minister, Chloe Smith, said in evidence to the Common Frameworks Scrutiny Committee last week. But it all depends on how this is done.

It has to be said, too, that the issues about market access and the problems it may create are not all one way. Spare a thought for the trader in one of the devolved nations who has to have regard to the relevant requirements of all the other parts of the UK when considering whether a good which does not meet his own area’s requirements is something that he can properly market in his own area. It is not sunshine and roses for everyone.

Simply to say that the market access principles do not apply to an agreed decision, which is all that my amendments seek to do, does not seem to me to justify the concern that this would deprive the common frameworks process of its flexible and voluntary nature. Whether a given policy divergence really does create what amounts to a barrier, given its purpose, nature and effect, should be a matter for examination and assessment: that is what the common frameworks process is designed for. It is not about creating barriers, but about allowing for policy divergence in ways that are found, by agreement, to be consistent with the internal market.

The Deputy Speaker (Lord Russell of Liverpool) (CB)

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The following Members in the Chamber have indicated that they wish to speak: the noble Lords, Lord Moylan and Lord Naseby. I call the noble Lord, Lord Moylan.

Lord Moylan (Con)

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My Lords, I recognise that the noble and learned Lord, Lord Hope of Craighead, and many other noble Lords who have spoken on this subject burn with a passion for their interpretation of the rule of law, but I ask them to reflect that statute needs to have more than principle; it needs to have practicality in its application as well. The effect of these clauses resubmitted in lieu would be to tie the Government’s hands completely in response to any emergency that might arise in Northern Ireland which might need to be addressed. I look in vain in these clauses for any exception that says, for example, “in an emergency”, “if the food in the supermarkets runs out” or “if there is a shortage in supply of medicines”. In such cases, those matters, as I understand these clauses, would need to be addressed through the joint committee, and if the European Union was not willing to accept them, it would need to go through a lengthy process of arbitration. I do not believe that that is acceptable.

My second point relates to devolution and democracy in Northern Ireland. The effect of these clauses is to privilege a particular interpretation of a particular international treaty, the withdrawal agreement.

Lord Cormack (Con)

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You have got the wrong bit of the Bill.

Lord Moylan (Con)

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This is very much how I read the clauses, but if noble Lords generally feel that I have got the wrong bit of the Bill, then I shall subside at that point.

Lord Naseby (Con)

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My Lords, the news that my noble friend from the Front Bench gave us this afternoon is encouraging. Clearly, discussions have been taking place and issues have evolved from them. I do not think that any of us in your Lordships’ House expected every single one of the agreements necessarily to be in a state to be written in and accepted in toto. To hear that 30 agreements have been agreed in broad principle is very encouraging news.

As someone who had a commercial life before coming into the political world, I wonder sometimes whether all your Lordships really understand. A chief executive—such as I was for a division of Reckitt and Colman Group—needs to know, as a certainty, what is happening. They cannot call in the company lawyer and say, “Well, it’s no good, George, you telling me on the one hand this and on the other hand that.” They have spent 15 months producing a new product—or whatever it may be. I sat as MP for an industrial town, Northampton, and I know the industrialists there. I spoke to them on Zoom only yesterday morning, and they are deeply concerned. I then read that the reason why the Commons have disagreed with our Amendments 1, 19 and 34 is

“Because they will create legal uncertainty, which will be disruptive to business.”

I also reflect that I had the privilege—as some of my noble friends in the Chamber did—of being in the other place. They are elected by the people. They have close contact with industry and commerce. When I am told, in writing, that it will be disruptive to business and that is why these Motions A and A1 are before us, I accept it. We have done our part. We are a Chamber that asks people to reflect. We have done that bit and we have done it well. The time comes, at a certain point, when you have to decide one way or the other. In my judgment, Her Majesty’s Government have got it right at this point.

The Deputy Speaker (Lord Russell of Liverpool) (CB)

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Two other Members in the Chamber have indicated that they wish to speak—the noble Lords, Lord Adonis and Lord Foulkes, and I will call them in that order. I call the noble Lord, Lord Adonis.

Lord Adonis (Lab)

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My Lords, in respect of the point made by the noble Lord, Lord Naseby, that because the Commons has given a view we should therefore immediately defer, the proposition is shown to be totally absurd by what is happening with amendments we will consider later. Between the Commons itself expressing a view on Monday and your Lordships meeting today, the Government have changed their mind. We have the unprecedented situation where a Minister of the Crown will move from the Dispatch Box in this House—maybe it will be the noble Lord, Lord True; I cannot wait to watch this performance take place—that this House do insist on its amendments when, 48 hours ago, a Minister of the Crown in the other House moved that the Commons should disagree with the House of Lords. If the noble Lord, Lord Naseby, is concerned that we should respect the will of the House of Commons, since its will appears to change every day at the moment—in response to the invitation of Her Majesty’s Government to take stock of negotiations in Brussels—I think our duty to the Government is to send back everything at the moment. This will give them maximum flexibility to disagree with themselves over the remaining four days of this week. Then let us see how the cards fall next Monday.

These are not trivial matters; they go to the fundamental integrity of the United Kingdom and our relationship with the European Union. I strongly urge your Lordships, in respect of all these amendments, that we obey the precautionary principle. If we are not sure whether there is an impediment to the proper conduct of negotiations or the flexibility that we wish to give the Minister and his colleagues in these negotiations with the President of the European Commission, we should send everything back so that the Government have the maximum opportunity to disagree with themselves over the next week. Let us see where we are thereafter.

The House holds the noble and learned Lord, Lord Hope, in extremely high regard—there is nobody who has a greater grasp of the technicalities of the issues we are addressing. We pay huge tribute to him and his colleagues, and the assiduous attention that they have given to the Bill’s passage in this House. He made a very good technical response to the Minister. In his Amendment 1B, the words at the end of his proposed new subsection (1),

“and states that its purpose is to give effect to that agreement”

make it absolutely clear that any divergence will be within the framework of the common frameworks process. Therefore, it cannot be outside it under the terms of the noble Lord’s own amendments. The only issue—which I think the Minister raised; we are all very fair-minded on this side of the House and give full credit to the noble Lord where he makes persuasive arguments—is what happens if the discussions, during the conduct of which it is not possible to make regulations under the terms of the amendment from the noble and learned Lord, Lord Hope, do not come to a conclusion. The noble and learned Lord’s proposed new subsection (2) says that:

“No regulations may be made by a Minister of the Crown with regard to a matter that is under consideration”.

I hope that the noble and learned Lord can respond to that point when he replies. As a non-lawyer—I fear to tread in this territory—my reading of this is that all parties to these discussions would have to behave reasonably. It would not be open to a devolved Government to keep these discussions going interminably purely for the purposes of avoiding a Minister of the Crown making a regulation. I say that with some trepidation, because I am surrounded by former Supreme Court judges and Lord Chief Justices who will no doubt correct me on that, but if that is the case, then I think that would give a response to the Minister.

I make no apology for speaking on this as a non-lawyer, because behind all this is a very important political point, which comes shining through the words of the Minister. The basic, fundamental political point is whether devolution is a reality or a sham. If it is a reality, then it is absolutely right that the devolved Governments exercising powers conferred by Parliament—these are no small matters—should have the right to engage in discussions about a proper level of divergence that meets the market access principles and common frameworks process. Indeed, I am amazed at how restrained these amendments are because, under their terms, it is not the case that devolved Governments can simply diverge, even if their opinion of the law is that they have the power to diverge. They can only do so with the consent of the United Kingdom Government, because there has to be consensus between them. The amendment from the noble and learned, Lord Hope, in fact gives a very narrow scope—but proper scope, it seems to me—for the devolved Governments to engage in discussion with the United Kingdom Government to meet the United Kingdom market access principle on a level of divergence that would meet their judgment of what is appropriate for their own territories. The noble and learned Lord gave the example of higher food standards. This seems be the absolute minimum, consistent with the proper operation of devolution.

The big underlying point, which we might as well flush out, because it is right to be frank about this, is that the Prime Minister believes—he has told us this—that devolution was Blair’s biggest mistake. He does not believe in these devolved institutions at all; we know that because he has told us. It is always a good idea when people tell you what they think that you take them at their word. He has said that setting up the Scottish Parliament and Welsh Assembly was Blair’s biggest mistake. If we take the view that the establishment of the institutions was itself a fundamental mistake, then of course we would not want to give them any power—even to discuss divergence—because we would think it was a mistake. If on the other hand we take the view that devolution is a beneficial part of the arrangements for the governance of the United Kingdom—which I take to be the official policy of the Government as opposed to the unofficial view of the Prime Minister—without which that governance might well collapse, then it seems to me that the provision that noble and learned Lord, Lord Hope, sets out, for a proper level of divergence to reflect the judgment of devolved governments on what is appropriate for their territories, is absolutely right. We should therefore insist on these amendments.

Lord Foulkes of Cumnock (Lab Co-op)

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My Lords, I fear I will not match the eloquence of my noble friend Lord Adonis. I want to say a few words in support of the amendments of the noble and learned Lord, Lord Hope, who, like me, is a member of the Common Frameworks Scrutiny Committee. In his introduction, the noble Lord, Lord True, praised my noble friend Lady Andrews and the work she and that committee are doing. If the Minister thinks that method is so good, why does he not accept these amendments, since that is exactly what we are suggesting—that it should be done through the kind of procedure that the Common Frameworks Scrutiny Committee is operating? He argued that case, perhaps without realising it, from the Dispatch Box.

Yesterday, I heard a very interesting debate. On one side of the argument was the importance of a level playing field for an internal market—I thought the United Kingdom Government were arguing that case in relation to what we are discussing—and on the other was sovereignty. I thought it might have been the Scottish or Welsh Governments arguing that case. Ironically, it was not. It was the European Union arguing the case for a level playing field for a common internal market and the United Kingdom Government arguing the case in relation to sovereignty. The tables were turned; the UK Government were arguing entirely the opposite case in relation to Europe that they argue in their dealings with the devolved authorities. It is about time they got their arguments right on this and accepted these amendments.

Lord Fox (LD)

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My Lords, throughout the many stages of this debate the common frameworks have been given a great airing, and many of your Lordships have had a chance to vent their respective spleens on the subject. The Minister may be assured that my spleen will remain in its correct place, because enough has been said on this issue. Indeed, he observed that noble Lords have made their position on common frameworks very clear.

However, the Government have shown great and steadfast reticence on writing the common frameworks into this Bill. The Minister set out two reasons for this: first, in stressing the word “voluntary” on several occasions, and, secondly, in pointing out the joint ownership of the common frameworks between the devolved authorities and the UK Government. On that second point, have any of the devolved authorities objected to the idea that common frameworks might be a central part of this Bill? I have seen no such objections; on the contrary, I have seen enthusiasm from devolved authorities that this might happen.

The noble and learned Lord, Lord Hope, has drafted elegant solutions in his amendments, which I hope will help the Minister to get to the point of developing the market access principles and legal certainties—the Minister is right to say that we need them—but, at the same time, respecting the devolution settlement. A key part of the noble and learned Lord’s speech was about the respect that this Bill needs to show the devolved authorities and the settlement that has developed so well there.

I was impressed by the tone of conciliation and consultation in the Minister’s speech, which came through in his “willingness to continue to engage in discussion”, “discussions have not been exhausted” and “open to discussions.” The door is clearly open. With respect to the noble Lord, Lord Naseby, there is time; I have also worked in commercial life and while the idea of “give me certainty” works within a correct framework, if it is “give me certainty” in a terrible framework then I would rather wait a little and get it right. We can spend a few days more getting this right. A vote for the amendments set out by the noble and learned Lord, Lord Hope, would help keep the door open for those discussions with the Minister. That is why we on these Benches will vote in favour of them.

Baroness Hayter of Kentish Town (Lab)

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My Lords, the noble Lord, Lord Callanan, who is not in his place, will recall how the notion of common frameworks evolved. When we were doing the first EU withdrawal Bill, it became clear that some of the powers returning from Brussels clearly fell within devolved competences. It was therefore widely understood that, to facilitate trade throughout the UK—as otherwise the rules affecting trade could vary across internal borders—a coming together of the four authorities would be needed to balance the desire for, and attraction of, diversity on some issues with a UK-wide approach to help consumers buy and manufacturers trade throughout the UK.

From the start, it was agreed that such frameworks would be established where needed—this is from the communiqué of October 2017—to

“enable the functioning of the UK internal market, while acknowledging policy divergence”

and that they would

“respect the devolution settlements … based on established conventions … including that the competence of the devolved institutions will not normally be adjusted without their consent”.

That was how they started. At that point, a list of 24 such topics was identified and, with a lot of good faith and hard work—as the Minister has acknowledged—the initial three Governments, along with Northern Ireland officials, set to work developing frameworks to enable that UK-wide market to flourish while recognising where devolved authorities might want variations for whatever reason. The basis was, to quote again from that document signed by the Government, to

“maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory”.

Until this Bill arrived, everyone thought the system was working well and would accomplish the aims set for it. This should have been something for the Government to celebrate, as they have today, and build on. In fact, it has never been necessary for the Government to use their powers to freeze any devolved authority’s power—a provision set into the EU withdrawal Act, as the Minister has acknowledged.

While this Bill was anticipated, the expectation was that it would help build a new, in some ways unique, internal market across our four nations, which have different cultural, linguistic, agricultural, geographical and industrial histories and realities. Above all, our nations have different democratic governance structures from when we ceded rule-making to the EU in 1973. We thought the Bill would respect the devolution realities while helping to ensure the UK market could prosper for the sake of business, consumers, workers, our agriculture and the environment. As we now know, in addition to throwing the quite unnecessary Part 5 grenade into the Bill, the Government pulled the pin on another grenade by writing into the Bill market access rules which trumped, rather than solidified, the common frameworks programme, which is an approach built on consensus rather than top-down diktat.

The noble and learned Lord, Lord Hope, is not a revolutionary. He is not trying to rewrite the Bill. He is seeking—rather like the Minister himself through the Government’s welcome amendments on regulation-making, for which we will give thanks when we come to them later—to start the process on the basis of consent across the four devolved authorities, and, where that is not possible, leaving it to the UK Parliament, rightly, to legislate. We support a union, and therefore we support Parliament’s right at that point to have its proper role. But we start with consent, and then move to Parliament. What we do not support is starting here in Parliament and government, rather than with the four-party common frameworks. So, we welcome the noble and learned Lord’s upending of the procedure, starting with common frameworks and, where or if those do not work, using the market access approach of the Bill in areas obviously otherwise within devolved competencies.

I think we would all warn the Government to be very careful about clawing back decisions from our now quite long-established devolved settlements. I find today’s vote in the Senedd, by 36 to 15, to deny legislative consent to this Bill extraordinarily regrettable. It is an important Bill; it is not a small one. That was denied because of the message sent to Wales and the other devolveds by the rejection in the Commons last night of this approach. So we need a backstop for any failure to agree, but we fail to understand that what should be a backstop has become the starting gun.

The amendments in the name of the noble and learned Lord, Lord Hope, build on the devolution settlements and would support and strengthen the union, as well as creating what we all want: a successful, growing internal market, which is in the interest of all our citizens. We are right, as my noble friend Lord Adonis said, to ask the Government very genuinely to think again about the mechanisms—because that is what we are discussing—to achieve what I think we all want.

The noble and learned Lord, Lord Hope, said that if there was a will on the Government’s part to make the common frameworks system work, a solution could be found. Along with the noble Lord, Lord Fox, we concur with that view, and we welcome the Minister’s saying that “discussions are not exhausted”—I think I have his words right. Whether we do that by recognising the framework system in some way, extending the freeze provisions when they expire or pausing market access for a period of time while the four Governments talk—as mentioned by my noble friend Lord Adonis—there is surely a way forward. But I believe we need this amendment to get the Government to continue to discuss, so that we can get that way forward. That is why we will support the noble and learned Lord, Lord Hope, when he calls for a vote shortly.

Lord True (Con)

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My Lords, I am grateful to all those who have contributed to this short debate and for the general tone of the interventions made. I was of course intrigued by the noble Lord, Lord Adonis, who emerged as a tribune of the people in this august senatorial assembly with his powerful oratory—a latter-day Gaius Gracchus, who said that your Lordships should reject everything sent to us by another place as a constructive contribution to law-making. I would respectfully give to the noble Lord, and indeed to any others who may share his views, the advice I would give to an overweight gentleman like myself: rejecting some of what is set before you, whether it is legislation or food, may well be desirable from time to time, but to reject everything is not conducive to the health of the legislature or of an individual. I hope that rather “Radical Jack” approach will not carry too much weight on the Opposition Benches.

I preferred the broader tone of the debate, which, as I heard it, actually reflected this Government’s resolve and the resolve of the parties represented in this place, at least—I cannot speak for down the Corridor: that all of us are committed to the security and future of this great union, to the common frameworks process and, as part of that, to hopefully developing further the next stage of inter-governmental relations, as I have explained to the House during the course of this Bill.

This Bill, however, works in tandem with the common frameworks programme by providing a broad safety net and additional protections to maintain the status quo of seamless intra-UK trade across all sectors of the economy, and there ought to be agreement on that in your Lordships’ House. It will ensure maximum certainty for businesses and investors, both domestic and overseas. I agree with what my noble friend Lord Naseby said from his perspective and experience in business. I am sure all noble Lords at heart support that objective and understand the need for a coherent internal market.

Lord Hope of Craighead (CB) [V]

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My Lords, I am grateful to all noble Lords who have contributed to this debate. I must say that I entirely agree with the noble Lord, Lord True, that we need to create and indeed preserve a coherent internal market. I do not think anything I said in my presentation, or anything in the aims I am seeking to achieve through my amendments, is in any way in conflict with that overriding aim. It is all a matter of finding a solution that is consistent with that and with the devolution system to which the noble Baroness, Lady Hayter, spoke so movingly this afternoon.

I think the noble Lord, Lord True, will agree that the noble Lord, Lord Adonis, did raise an interesting point about subsections (2) of my Amendments 1B and 1C. All I can say to the noble Lord is that I would rather not go into the details at this stage in the debate. It is, among all the things I have raised in my amendments, a subject for further consideration and discussion—if, as I hope, discussions will continue. It was with that aim that my amendment was framed for debate this afternoon.

I think we all know what the issues are; they have been thoroughly debated several times. It is time for a decision. With reference to Amendments 1B, 1C and 1D, I wish to test the opinion of the House.

Lord Callanan

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That this House do not insist on its Amendments 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 30, 31, 32, 33 and 56 to which the Commons have disagreed for their Reasons 8A, 10A and 15A, but do propose the following amendments in lieu—

Commons Reasons

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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My Lords, this group covers the exclusions to the market access principles and delegated powers-.

I turn first to Amendment 8L and other consequential amendments relating to the exclusions from the market access principles. These amendments, to which the other place have already disagreed, would replace the current Clause 10 with an expansive list of aims, which could be used to justify creating trade barriers for goods in the United Kingdom. The exclusions approach, as originally drafted, achieves a careful balance. It sits within the fundamental framework of the market access principles which protect the UK’s highly integrated internal market, but allows the Government to remove very targeted and specific policy areas from scope so that they continue to operate for the particular conditions where they are needed under the bespoke constraints relevant to those circumstances. This targeted approach provides certainty to businesses while ensuring that important or high-risk policy areas, such as chemicals, pesticides or sanitary and phytosanitary measures, can operate effectively.

However, the protections and benefits of the internal market proposals would quickly begin to fade with an expansive list of exclusions for part 1. This would allow unnecessary trade barriers and unjustifiable costs to businesses and consumers. The Government’s view is that a targeted list of exclusions in the Bill, combined with how the principles of mutual recognition and non-discrimination interact, is the best way in which to allow each part of the United Kingdom to meet its respective goals while avoiding unnecessary damage to the UK’s internal market.

The noble Lord’s amendment would not achieve that balance. Although the new list of exclusions that he has presented is slightly changed from his earlier amendment, the list remains very wide. It captures almost all kinds of public policy objectives, and only requires a new regulation “to make a contribution” to any of the aims in the list. This means that almost any regulation proposed by the UK Government or the devolved Administrations in future could be excluded from the scope of the market access principles. The Government reject the idea that a large list of exclusions is needed to preserve standards. The UK Government share with the devolved Administrations commitments to maintaining our existing high standards, whether environmental protection, animal welfare or consumer standards. We will continue to work together on these as a united kingdom as we leave the transition period. We should not forget that the Bill’s design will continue to allow all Governments to innovate, so that new ideas can emerge—as they did with plastic bag charges, for instance—to build better and higher standards for us all, including in the many social policy areas that the noble Lord clearly is concerned about.

I turn to the amendments relating to delegated powers, which underpin the realisation of these market access principles and make sure that they continue to function as effectively as possible. Noble Lords will be aware that the Government’s view remains that these key delegated powers are necessary. My colleague, Minister Scully, successfully argued in the other place that the amendments to remove these powers should be rejected. These powers will ensure that the system continues to evolve, facilitating frictionless trade across the United Kingdom. This will be necessary to react to developments in technology and regulation that cannot be foreseen at present. They also allow the Government to respond rapidly to business and wider stakeholder feedback—for example, to amend the list of exclusions, if implementation shows the need for adjustment.

It is important to note that any of these powers would require an affirmative procedure statutory instrument to be made in Parliament. This will ensure that there is full transparency on any changes and that MPs from all parts of the UK can scrutinise and vote on any changes. Furthermore, these powers are now supplemented by the comprehensive and reasonable package of amendments that we have proposed. This includes new amendments tabled ahead of this debate, giving more certainty on the role of the devolved Administrations in developing changes. I thank the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson, for their constructive engagement on this matter.

We have listened to your Lordships’ House carefully. Indeed, at Report, we removed the power for the Secretary of State to amend the list of statutory requirements which are in scope of the mutual recognition principle for goods. In this case, having looked again after hearing from your Lordships, we changed our position, having assessed that the removal of the power will not substantially undermine the operation and flexibility of the internal market system.

We have also retabled the Government’s amendment from Report, removing the main affirmative power in relation to the exclusions to part 2. When the other place disagreed with this House’s amendment, removing the main affirmative power and the draft affirmative power, both parts of that power were restored to the Bill. I am happy to make the change that I proposed in my amendment at Report once again. We have also proposed new amendments that give an enhanced role to devolved Administrations in relation to these powers, building on the model proposed by the noble Baroness, Lady Hayter, at Report and ensuring that agreement across all Administrations to the use of the power is achieved whenever possible. The Secretary of State will be required to seek the consent of the devolved Administrations prior to any use of this power. If consent is not provided within one month, the Secretary of State will be able to proceed without that consent but must publish a statement setting out the reasons for proceeding in this way. As this adapts the model that your Lordships previously supported, I hardly need to stress the merits of this approach, which ensures that the devolved Administrations have a say but not a veto. I am hopeful that this time noble Lords will support it. The noble Baroness, Lady Hayter, is nodding; we are in a good place on this one.

Thanks to government amendments introduced at Report that are retabled today, the impact and effectiveness of any use of these powers will be subject to review within five years. A report setting out the conclusions of that review must then be laid before Parliament. I hope this offers comfort to this House that we are taking seriously the concerns that have been raised, and we are working to address them constructively. The uses of the powers to make delegated legislation contained in parts 1 and 2 of the Bill will be scrutinised, not only when they are being laid before Parliament, but also in a more holistic way, after a suitable period has elapsed. This review will again give an opportunity for the devolved Administrations to provide their views.

I briefly address the power to issue guidance, to which we have deliberately taken a more distinct approach. Clause 12 explains that the Secretary of State may issue explanatory guidance on the practical operation of the market access principles for goods. It is not a power to make or amend legislation and, therefore, it differs from other delegated powers in part 1 of the Bill. As part of this process, we will, of course, engage with all the relevant stakeholders, because we are committed to helping regulators and traders to understand the principles and make the best possible use of them. This includes the devolved Administrations, and we are including a legislative commitment to consult them before issuing, amending or withdrawing that guidance. Guidance will not change the rules themselves, so a requirement to seek the consent of devolved Administrations, as proposed for other powers, is not needed.

I urge your Lordships to support all the amendments to these powers, which I hope noble Lords will agree represent a reasonable approach. Crucially, they also enable the internal market system to remain up to date while ensuring the highest degree of scrutiny and accountability. I beg to move.

Motion B1 (as an amendment to Motion B)

Lord Stevenson of Balmacara

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Leave out from “12,” to end and insert “15, 16, 17, 18, 30, 31, 32 and 33 to which the Commons have disagreed for their Reasons 8A, 10A and 15A, do propose Amendments 8B to 8D and 8F to 8K in lieu, do propose Amendment 8L in lieu of the words restored to the Bill by the Commons disagreement to Amendment 12 and do insist on its Amendments 13 and 56—

Lord Stevenson of Balmacara (Lab) [V]

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My Lords, I thank the Minister for his opening remarks and have listened carefully to his views. I will reverse the order in which he spoke and hope he will not mind and is able to follow.

I start with the question about powers, on which he ended. I thank him and his colleagues for the considerable time over the last few months—and increasingly the last few days—that they have provided to discuss this Bill and the wider context with which it engages. I confirm that we are happy to continue to talk in the remaining time. We agree with the stated aims of the Bill to ensure that our internal market works well for consumers in all parts of the United Kingdom for workers and businesses trading here and for importers. But we also support the DPRRC in its criticisms of the delegated powers which were initially included in the Bill. The DPRRC argued that they were not appropriate and were in excess of what was needed to ensure the continued operation of the UK internal market, so we are delighted that the Government said in their letter issued this morning that they have:

“listened closely to and acknowledged the strength of Peers’ concerns regarding the position of the devolved administrations in relation to the application of … delegated powers”.

Your Lordships owe a considerable debt of gratitude of my noble friends Lady Andrews and Lady Hayter for their work on this over the last few weeks. They have been tireless in their pursuit of the issue and it has resulted, as the Minister said, in three major concessions, which we welcome, and some other changes. The concessions require the Secretary of State to seek the consent of the devolved Administrations before exercising the powers, setting a time limit for that and a process if consent is withheld, and introducing a statutory requirement to consult with the devolved Administrations before issuing, revising or withdrawing guidance. We welcome these, and the statutory requirement for a review of these powers in Part 1 and Part 2 of the Bill within five years. Finally, on this issue, it is good to see the change in tone towards the devolved Administrations, which is reflected in these changes, in the speech today, and in the letter to which I have already referred.

I turn to Amendment B1 in my name, and the amendment in lieu, and look forward to the debate. I give notice as requested that I intend to test the opinion of the House at the end of that debate. We agree with the Government that, at the core of any approach to setting the rules for the UK internal market, there should be harmonised rules underpinned by a strong consultative process. We seek a combination of common frameworks on the one hand and market access principles on the other.

In the debate that has just occurred on the amendment in lieu offered by the noble and learned Lord, Lord Hope, the House has confirmed its position on the common frameworks process, which, as my noble friend Lady Hayter said and the Minister agreed, builds on substantial progress made to date. The Government’s main objection continues to be that as the common frameworks are, at heart, a voluntary and co-operative system, with all the strengths and benefits that brings to the devolution settlement, it could bring unnecessary uncertainty into the system. We acknowledge that, but we think that there are ways in which that could be tackled, some of which are based on powers that the Government already have in place. We remain willing to explore a possible solution to the Government’s concerns over the next few days—perhaps over dinner, if that is how things are done these days.

However, there is also a need for statutory underpinning of the internal market. The purpose of our amendment is to preserve the potential for managed policy divergence that is central to the devolution settlement. As the noble Lord, Lord Anderson of Ipswich, said on the first day of Report:

“That potential is squeezed out for the future, save in limited and inconsistent respects, by the non-discrimination and mutual recognition principles as they appear in the Bill.”—[Official Report, 18/11/20; col. 1508.]

My amendment provides the derogations to the market access principles. They are commonly available in devolved, federal and confederal states all over the world. Their purpose is more a safety valve than a threat to market integrity, and their use would remain subject to strict statutory controls. As currently drafted, the structure is unbalanced. The common frameworks incentivise co-operation and consensus, and my amendment would diminish in a strictly controlled fashion the crudely centralising force of the market access principles, provide balance and encourage innovation.

The Deputy Speaker (Lord Faulkner of Worcester) (Lab)

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Does any noble Lord in the Chamber wish to speak on this amendment? If not, I call the noble Lord, Lord Fox.

Lord Fox (LD)

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My Lords, like the noble Lord, Lord Stevenson, I will take the amendments in the opposite order to the Minister, if the House is happy with that.

The delegated powers issue has almost become a ritual in your Lordships’ House. A Bill is published and in it are many very draconian powers, which seek to change almost everything the Bill can do at the will of the Minister. There is then a report from the DPRRC which condemns it, and then there is a debate and we start to move towards a more reasonable situation. I hope, perhaps, that we can learn from this and maybe cut out a few of the steps, so that we can get to the reasonable situation. The Government have given considerable ground on this, and for that we should all be accepting and reasonable and, I suppose, grateful, although perhaps gratitude is the wrong word.

With respect to Clause 12, I think we will all be watching quite closely to see how those powers are exercised, because advice can come in many forms and we will be seeking to observe that.

The characterisation that these delegated powers are required in order for the Government to react and act with speed has been absolutely confounded by the way in which the Covid crisis has been addressed by the Government. There has been very rapid legislation and very rapid reaction. Looking forward, we have got to a better place than we were in when we started. I still do not think that we would call it perfect, but we have taken a long time to get there.

My reading of the amendment proposed by the noble Lord, Lord Stevenson, is that it is the return of Amendment 21, or at least most of it. Listening to his very reasonable presentation of the amendment and having listened to the debates on Report, I am somewhat surprised that the Government continue to dig their heels in. I can understand that the list in subsection (2) of the proposed new clause might have raised some concerns, and it can of course be subject to negotiation, but as the list now stands—with environmental standards and protection; animal welfare; consumer standards, including digital; employment rights and protections; the health and life of humans, animals or plants; the protection of public health; or equality entitlements—it seems that the Government could not possibly object to it, so I am surprised. The Minister has set out his concerns about an ordered market, but it is very clear that any market that did not observe these things would not be one that we wanted anyway.

With that response, I suggest that we will be supporting the noble Lord, Lord Stevenson, when this Motion is put to a vote. We hope that the Government will be able to have discussions with the noble Lord and others, so that next time they can come back with something much closer to what we have seen today.

Lord Callanan (Con)

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I thank both noble Lords for a good, albeit brief, debate. To summarise, earlier I expressed my concerns about Amendment 8L and the expansive list of exclusions from the market access principles that it introduces. The list that we have included has been carefully drafted to strike what is, in our view, a measured balance. It protects the ability of the devolved Administrations and the UK Government to deliver policy, while avoiding harmful or costly barriers to trade within the UK internal market. The Bill does nothing to stop all nations working together to achieve mutual goals and build on our shared high standards.

On the delegated powers in the Bill, it is not proportionate to remove the Government’s ability to ensure that the list of exclusions and legitimate aims remains appropriate. The Government have already set out a comprehensive package of changes to the delegated powers in the Bill, including for the removal of certain powers and for reviews and reporting to Parliament, and new amendments on the role of the devolved Administrations. This provides for effective transparency and scrutiny of the remaining powers.

We believe that there is a reasonable middle ground here. Many noble Lords tabled and supported amendments to alter, but not remove, the powers in the Bill. We agree with those colleagues. These powers are necessary, and we believe that the changes we have proposed should address their concerns. I therefore hope that noble Lords will be able to support the Government’s approach to reinstating these powers in the Bill.

Lord Stevenson of Balmacara (Lab) [V]

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My Lords, I thank both speakers in this short debate. We have not had much buy-in from others, but that just shows that the issues are very clear, and I think that people may well have already made up their minds.

I was interested that the noble Lord did not really come back on the points that I made. His concern seems to be that the list is too expansive, although he does not seem to attack the principle on which it is based. I signal again, and reaffirm, that we would be very happy to discuss how such a list should be configured better to suit his interests and meet his concerns. I hope that I am not misreading the willingness to do that over the next few days—we would certainly be available to talk if he wanted to do so.

I think that we have covered the ground very carefully. We support and welcome the Government’s amendments in the area of delegated powers, but I would like to test the opinion of the House on my Motion B1.

Lord True

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That this House do not insist on its Amendments 14 and 52 to 55 to which the Commons have disagreed for their Reason 14A.

Lord True (Con)

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My Lords, it seems that I am muted again, but I will find my way to the right spot. I turn now to Part 5 of the Bill. These clauses, as your Lordships may be aware, have been the subject of much debate here and in the other place.

Noble Lords will have seen that the Government announced yesterday that they have reached agreement, in principle, on all of the issues in the UK-EU withdrawal agreement Joint Committee. The Government have been clear throughout that they are committed to implementing the withdrawal agreement and the Northern Ireland protocol. We said that when the Bill was introduced to Parliament and have done so at every stage of its passage. We are also clear that, as a responsible Government, we could not allow the economic integrity of the United Kingdom’s internal market to be compromised inadvertently by unintended consequences of the protocol. That is why, through clauses in this Bill, we have sought limited and reasonable steps to create a legal safety net by taking powers in reserve whereby Ministers could guarantee the integrity of our United Kingdom and ensure that the Government are always able to deliver on their commitments to the people of Northern Ireland.

We sought these measures to guard against the possibility of not reaching agreement with the EU in the Joint Committee. As we have now reached agreement with the EU, I am pleased to say that the clauses which provided for the safety net are no longer needed and the Government are content for them to be removed from the Bill. I refer to Clauses 44, 45 and 47.

Lord True (Con)

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However, as I said in Committee, the clauses that provide for the safety net are not the only ones that make up this part of the Bill. It is vital that the other clauses are passed so that we can deliver on our commitments to the people of Northern Ireland. The protocol is clear that Northern Ireland is part of the UK customs territory, while our manifesto is clear that we would maintain and strengthen the integrity and smooth operation of our internal market. Clause 42 delivers on that commitment by ensuring that all authorities must have special regard to the following fundamental matters when exercising functions that relate to the implementation of the protocol on the movement of goods within the United Kingdom.

The first is the need to maintain the integral place of Northern Ireland in the United Kingdom’s internal market. The second is the need to respect Northern Ireland’s place as a part of the United Kingdom’s customs territory, while the third is the need to facilitate the flow of goods between Great Britain and Northern Ireland. The clause is also entirely in line with the protocol. Indeed, Article 4 states

“Northern Ireland is part of the customs territory of the United Kingdom.”

Article 6 goes on to state

“Nothing in this Protocol shall prevent the United Kingdom from ensuring unfettered market access for goods moving from Northern Ireland to other parts of the United Kingdom’s internal market.”

In the recitals it states that the application of the protocol

“should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland”.

This clause delivers on the commitments made in the Government’s manifesto, in the Command Paper published by the Government in May on the implementation of the protocol and on the protocol itself. These are not controversial aims, and indeed some were surprised that your Lordships feel differently.

Let me be clear that as there was some confusion about this in Committee, this clause is not dependent on any other in the Bill. There is no infection or so-called contamination here; it is merely about a Government fulfilling their commitment to the people of Northern Ireland. Indeed, the fact that the Government are seeking to ensure that the clause remains in the Bill, while Clauses 44, 45 and 47 are removed, proves the point. This clause does not provide for or allow for a breach in any way of the withdrawal agreement and is entirely in keeping with the protocol.

I turn now to Clause 43. As I have said, and as noble Lords will know, the Government have committed to providing unfettered access for Northern Ireland’s businesses on multiple occasions. Clause 43 gives effect to that commitment by prohibiting the introduction of new checks and controls on Northern Ireland goods, with some very limited exceptions. This is in keeping with what the Government have said constantly and with what was promised in our manifesto. That commitment is critically important to the businesses and people of Northern Ireland. By including Clause 43 in the Bill, we will protect the vast majority of the £8.1 billion-worth of goods sales from Northern Ireland to Great Britain, and guarantee Northern Ireland’s place in the United Kingdom’s internal market. I hope all of us can now agree on the importance of providing unfettered access for Northern Ireland goods to the rest of the United Kingdom. This clause delivers on that.

As with Clause 42, this clause is not dependent on any other in the Bill. I of course recognise that Clause 43(3)(b) refers to Clause 47, but that is only part of spelling out that it in fact allows checks where applicable international obligations require them. That subsection is being removed. This clause does not provide for or allow for a breach in any way of the withdrawal agreement and it is entirely in keeping with the protocol.

Given the broad support there is for unfettered access, the Government’s repeated commitments to legislate for unfettered access—including in the New Decade, New Approach Deal to restore the Executive, our May Command Paper on our approach to implementing the protocol and the manifesto that brought this Government to office in the last election—and given how important it is to protect access for Northern Ireland businesses to their most important market, it would be hugely disappointing for them and for business certainty in Northern Ireland if noble Lords were to remove these subsections unduly.

I turn to Clause 46. Under state aid rules, notification is the process through which EU member states inform the Commission about state aid or potential state aid. This process will continue to apply to the United Kingdom from 1 January 2021, but in relation only to the limited circumstances where Article 10 of the Northern Ireland protocol applies. This clause simply establishes a statutory requirement that no one besides the Secretary of State may notify the European Commission of state aid or potential state aid. It codifies existing practice in legislation and would not be considered novel or controversial to the Commission, as it is unlikely to accept notification from anyone other than authorised persons.

Motion C1 (as an amendment to Motion C)

Lord Judge

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Leave out “not”.

Lord Judge (CB)

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My Lords, I am relieved that Clauses 44, 45 and 47 are being removed from the Bill. They were constitutionally improper and a constitutional aberration. They subverted the rule of law. As we have known for centuries, and was summed up by a former Lord Chief Justice in the 17th century, Edward Coke, the rule of law is our “safest shield”.

The way in which the debate over the Bill unfolded perhaps reminded us of something else, something which perhaps noble Lords do not need to be reminded of, but needs occasionally to be drawn to the attention of the Executive: we are a Parliament of two Chambers. The Executive has no sovereignty; Parliament has sovereignty. Of course, the Commons is the first, the prime, the pre-eminent, the most significant and the most important part of the two Houses of Parliament, but that does not mean that this House is without some modest power.

The Deputy Speaker (Baroness Garden of Frognal) (LD)

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The following Members in the Chamber have indicated that they wish to speak: the noble Lord, Lord Howard of Lympne, the noble Baroness, Lady Hoey, the noble Lords, Lord Naseby, Lord Cormack and Lord Dodds, the noble Baroness, Lady Fox of Buckley, and the noble Lord, Lord Adonis. I therefore call the noble Lord, Lord Howard.

Lord Howard of Lympne (Con)

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I will be brief. I agree with everything that has been said by the noble and learned Lord, Lord Judge. I welcome how the Government have seen fit to remove these clauses, which, for the reasons given by the noble and learned Lord, should never have found their way into draft legislation. The Government should never have asked Parliament to agree to the breaking of international law, which these clauses would have provided.

I also welcome how the issues to which this part of the Bill gave rise have been resolved in the way that so many of us asked of the Government: through the procedures for dispute resolution that are set out in the withdrawal agreement. Who knows? Could this conceivably form a precedent for the resolution of other issues yet to be resolved? We must devoutly hope so. For the moment, I rise to welcome the removal of these clauses from the Bill. They should never have been there and it is a great relief that they will not be there any more.

Baroness Hoey (Non-Afl)

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My Lords, I understand the pleasure that many noble Lords have in the fact that the Government have withdrawn—or want and are likely to withdraw—these clauses. However, it is a pity, in a way, that this House did not have the Statement from the Cabinet Office Secretary, heard already today in the other place, before discussing this. It is very wrong that that Statement will not come to this House before last business tomorrow. If you read it, you will find that much of what has been said is not set in stone. Yes, an agreement in principle was made yesterday—it is important to mention the words “in principle”—by the Secretary of State going over to Brussels. After all this time, he suddenly came back, after a cup of tea or, perhaps, a lunch, with something that was meant to make everything okay. It is important that your Lordships consider today what we are doing about this protocol and are under no illusion about what has now been agreed in principle by the Secretary of State and the European Union, and the co-chairs of the committee.

Noble Lords should look at why these clauses were originally put in. I accept that the noble and learned Lord, Lord Judge, has been very clear about the breaking of international law; he talked about the constitutional improperty. I urge your Lordships to think about the constitutional improperty of what is being done to a part of the United Kingdom. Let us be clear: nearly 45% of Northern Ireland people voted to leave the European Union; they voted to leave as the United Kingdom. We are not now in a position where Northern Ireland is leaving with the rest of the United Kingdom. This is important, because of all the safeguards that were being put in by these clauses. For example, the Commons Reason says:

“Because the regulation-making power conferred by clause 44 provides a necessary safety net to ensure Ministers can secure that qualifying Northern Ireland goods have full, unfettered access to the whole of the UK internal market.”

The other clauses were all designed as a safety net. Let us be clear: that safety net has now gone. We are now in a position where Northern Ireland will still be subject to the European Court of Justice, which will still exercise control there. Northern Ireland will be subject to any new European rules to do with trade. Much of the agreement announced by the Secretary of State is only for six months. What happens after six months when we have seen it on the ground? The proof of all this will be in the implementation. For example, we have already seen the very welcome announcement that, now we have left the EU, the Government can ban the export of live animals. That will not apply to Northern Ireland. There are even discussions that, if you move your dog from Great Britain to Northern Ireland, you will need a special permit. So let us not kid ourselves—to use words that are not very House of Lords—that we are not starting down the road of setting up Northern Ireland to be different and a place apart. We were promised that we would leave as a United Kingdom. Northern Ireland is not leaving the European Union in the same way as the rest of the United Kingdom. In future, noble Lords will look back on this as a very sad day for the unity of our United Kingdom.

Lord Naseby (Con)

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My Lords, I think I am brave enough to suggest to the noble and learned Lord, Lord Judge, that his ruling or reading that Part 5 was illegal is not shared by those I have consulted since. David Wolfson QC said:

“The mere act of laying a bill before parliament which, if it were passed into statute, would breach a treaty obligation (and would amend domestic legislation bringing that treaty obligation into effect in domestic law) is not itself a breach of the treaty or of international law. Nor would merely laying such a bill be itself a breach of the rule of law”.

The noble Baroness who has just spoken is absolutely right. I had the privilege of being a very junior Minister in Northern Ireland. The safeguards of Part 5 of the Bill were there for a purpose, for a very difficult area of the United Kingdom. We all know that it needs sensitivity, understanding and, as anyone who has served in Northern Ireland will know, patience. Things do not happen quickly there—and against that particularly the Belfast/Good Friday agreement.

I welcome the joint statement received from the co-chairs of the EU-UK Joint Committee that:

“Following intensive and constructive work over the past weeks by the EU and the UK, the two co-chairs can now announce their agreement in principle on all issues, in particular with regard to the Protocol on Ireland and Northern Ireland.”

In my judgment, as a practical man, the original procedure has worked, not the threats from a certain section of the upper House. I therefore thank my noble friend on the Front Bench, who I imagine has been in detailed discussion with those who have come to this decision.

As an aside, I am someone who looks at votes and the results of Divisions. Noble Lords may have noticed that, in the first Division this afternoon, the votes of those voting for the Motion and, therefore, against the Government, appear to have dropped by about 100 from last time. On the second Division it dropped to 45. I venture to suggest that the Government have taken action, worked hard and made progress. It would be good if this House now got on and accepted some of the proposals from Her Majesty’s Government.

Lord Cormack (Con)

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I do not think this is the occasion for a heated and contentious debate, although I say to my friend, the noble Baroness, Lady Hoey, that 56% of the people of Northern Ireland did vote to remain in the European Union. To assert superiority from a position of inferiority does not really do justice to the noble Baroness, whom I have known for many years, who served on my Northern Ireland Affairs Select Committee, and whom I admire.

I believe very strongly that the noble and learned Lord, Lord Judge, did this House, and this country, a service when he introduced his Motion at the end of Committee, which deleted the whole of Part 5. I was proud to support him, as I know my noble friend Lord Howard of Lympne was. We were devastated at the thought of a British Government—particularly, for the two of us, a Conservative one—putting themselves in a position where they were not destroying but tarnishing their reputation in the wider world.

However, we are we where we are, and I am extremely grateful to my noble friend for what he said this afternoon. Inspired by sitting on the same Bench as a Bishop, I say that there is more joy in heaven—as she well knows—over one sinner that repenteth; and there is more joy in the House of Lords over one Government who see the light than over many that are benighted.

Lord Dodds of Duncairn (DUP)

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My Lords, I will speak briefly. I listened carefully to the eloquent contributions of the noble and learned Lord, Lord Judge, and others on these issues of international law, although I am struck that, over the years, there have been examples of Governments backing away from commitments in international treaties. It happened under a Labour Government and during the coalition Government, so it was nothing particularly new. What was new was the stark way in which the Minister outlined it at the Dispatch Box. I only wish that Ministers in the Lib Dem/Conservative coalition and past Labour Governments had been equally free and open and admitted honestly that they had done it.

What was behind the Government’s efforts in the United Kingdom Internal Market Bill? It was to deal with the state-aid point, as we heard, but also to guarantee unfettered access for Northern Ireland goods to the rest of the United Kingdom. That is hardly, in itself, terribly contentious, since it is to the benefit of everyone in Northern Ireland that business should flow free and unfettered. It is to the economic benefit of business, all communities, employment and the creation of jobs, all of which add to the stability and prosperity of Northern Ireland going forward. It was agreed by the EU itself in the joint report of December 2017, and by the parties in Northern Ireland that signed up to the New Decade, New Approach document. All the parties agreed: nobody reneged from it. It was in the Conservative Party manifesto, as the Minister has mentioned. So, there should not be anything contentious about that principle, which was well outlined, clear and supported—indeed, in amendments put down in the other place—by parties other than unionist parties as well.

Section 38 of the European Union (Withdrawal Agreement) Act 2020, passed by more than 120 votes in the other place, allows for “notwithstanding” arrangements. Article 16 of the Northern Ireland Protocol itself makes it clear that where the protocol would do serious economic, societal or environmental damage to Northern Ireland, the Government have the right to act unilaterally. I can think of nothing more designed to cause serious economic damage than putting extra, multiple costs, restrictions and administrative burdens on businesses in Northern Ireland, the vast bulk of which do their trade with the rest of the United Kingdom, thereby causing economic damage, job losses and the rest of it.

I appeal to noble Lords as they consider these matters to think of the practical consequences of some of the arguments being put forward. Think of the effect on people’s businesses in Northern Ireland, most of which are small or medium-sized. Think of the people working there, who will lose their jobs if unfettered access is not guaranteed or if some of the other restrictions, from Great Britain to Northern Ireland, are not dealt with. The protocol, as noble Lords know and as the Government know all too well, was opposed by these Benches and by many in Northern Ireland for the reasons set out, passionately and rightly, by the noble Baroness, Lady Hoey. It creates differences within the internal market of the United Kingdom, with economic and constitutional implications.

People have pointed to the Belfast agreement, but I hear very little reference among noble Lords and commentators to the St Andrews agreement, the Stormont House agreement and so on. I urge people to refresh their memories of all those agreements which, taken in the round, are about a consensus in Northern Ireland of unionists and nationalists. If border restrictions, a presence and north-south tariffs on the island of Ireland are utterly unacceptable because they might breach the Belfast agreement, then likewise, it is unacceptable for many people in Northern Ireland that such restrictions—tariffs et cetera—should be imposed between Northern Ireland and the rest of the United Kingdom. That is a simple principle that should not be contentious. We hear people saying that Part 5 of the Bill drives a coach and horses through not just international law but the Belfast agreement, but they have no regard, it seems, to the serious concerns that many people have voiced, including many who were instrumental in drawing up the Belfast agreement.

This does serious damage to the agreement in Northern Ireland and importantly, it destabilises the Executive. I am a believer in devolution and I want to see it succeed, but it will not succeed if we have a one-sided approach to the Belfast agreement. It has to be a rounded approach. The Government have said that they are withdrawing certain clauses in the Bill and standing by others. I welcome the clauses they are putting in and those they are standing by; they are important statements of principle. But we will now have to wait and see how the Statement made in the other place today is actually implemented.

The noble Lord, Lord Howard, talked about matters being resolved. Some have been, perhaps, but others have deliberately been put on hold and are not resolved. It will therefore be important to see how this works out in practice, but the Government must keep under review how these measures, taken under the provision I mentioned at the start of my speech, help to preserve stable government and economic prosperity and uphold the agreements made in Northern Ireland by both unionists and nationalists, and those of neither persuasion.

Baroness Fox of Buckley (Non-Afl)

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I would like to remind noble Lords, especially on the Government side, that the clauses being removed were themselves argued for as a necessary legal shield for the internal integrity of the United Kingdom and its sovereignty. I am told now that the Government are content with assurances. I am not sure that many leave voters are content simply to be assured. Goodness knows, he might be surprised when I say this, but the noble Lord, Lord Adonis, made a very important point when he said that at the beginning of the week, he did not anticipate this debate. Many in the House did not expect these clauses to be removed, and now we are told to be assured; yet they were crucial clauses only last week. I therefore at least want to raise the question of trust and whether we should be expected simply to trust. It sometimes feels as though some of us have been marched up a hill and marched down it again.

Noble Lords

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By whom?

Baroness Fox of Buckley (Non-Afl)

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We know by whom. As an aside, I rather like a heckling atmosphere, but I would prefer it if it happened not just when I am speaking.

With absolute due respect to the noble and learned Lord, Lord Judge, who speaks so eloquently about constitutional and unconstitutional principles—I have listened very carefully to him for many years, not simply in recent weeks—I would be rather disappointed, and I think it would tarnish those principles, if it was thought that the decision was made because of the strength of feeling in this House. I would rather think that it was because the Government were satisfied by the debates, not that this House, rather unconstitutionally, might have got in the way of parliamentary sovereignty. There is a danger that some of the comments being made are self-aggrandising and self-congratulatory.

However, the main point for me—made clearly by the noble Baroness, Lady Hoey, and emphasised by the noble Lord, Lord Dodds—is that Northern Ireland is being treated separately, as a different entity. I am afraid that some seem to relish this: in many debates that I have sat through in this House, I have felt as though the 2016 referendum of the whole United Kingdom was being used as an excuse to interpret devolution as some kind of federalisation of the United Kingdom. Interestingly, even today, one noble Lord noted that 56% of Northern Ireland voted to remain in the European Union—that is of no matter, indeed no interest, if you believe in the United Kingdom.

Baroness Fox of Buckley (Non-Afl)

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Here we go. There will be those who would say that the debate about the unity of the United Kingdom and the status of Northern Ireland might be contentious. That is a different debate; a different referendum would need to be called. In 2016, the United Kingdom was asked whether it wanted to leave the EU; all of it voted to do so, and yet one part of it is now to be held in thrall, to a certain extent, to the EU—a body that I do not entirely trust to respect the integrity of the sovereign rights of the United Kingdom, I am afraid. Therefore, I am not content.

Lord Adonis (Lab)

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I am not sure how far I should follow the noble Baroness except by making a few obvious points. First, the Good Friday agreement and the Northern Ireland protocol were warmly welcomed in Northern Ireland; this is not being done to Northern Ireland against its will. These provisions are very warmly welcomed because the people of Northern Ireland see them as a guarantor of peace and stability there; this requires an open border with the Republic of Ireland, so I do not follow the noble Baroness on that point.

I also did not follow the noble Baroness when she said that the House of Lords was standing “in the way” of parliamentary sovereignty. We are part of Parliament and performing our functions as a part of it. In that respect, I pay great tribute to the noble and learned Lord, Lord Judge, and—I never thought I would hear myself saying this—the noble Lord, Lord Howard, who have played an absolutely central part in the ability of this House to perform its proper constitutional role to see that the House of Commons is invited to reflect further on provisions that it believes are injurious to the public interest.

We have reached this point in a very convoluted way, because the Government changed their mind mid-way through the parliamentary process. However, the noble Lord, Lord Cormack, likened the noble Lord, Lord True, to the prodigal son, and we welcome all those who have seen the error of their ways and repented. The process by which they do so is not significant; what is significant is the opportunity that this House gives to Parliament at large—including the Government, which operate as a part of Parliament—to consider its view on these big and important matters that are of concern to us. We have reached the right decision on this matter.

The only point I want to make is about the consequences because, as we now move forward, they are significant. To understand them, we need to understand why the Government did what they did. It was never my view that they intended these provisions to become law; they knew that the noble Lord, Lord Howard, the noble and learned Lord, Lord Judge, and a whole galaxy of the most heavyweight Members of your Lordships’ House would object to them—they knew that.

The Deputy Speaker (Baroness Garden of Frognal) (LD)

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Does anyone else in the Chamber wish to speak? No one does, so I shall go to the listed speakers. I call the noble Lord, Lord Newby.

Lord Newby (LD)

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My Lords, it is a great pleasure to be able to support the noble and learned Lord, Lord Judge, again in his amendments before your Lordships’ House. These amendments will remove the stain of illegality from the Bill, and we should be grateful that that is what we are going to achieve this afternoon—but in doing so, they also let the Government off the hook. Were it not for the ability of this House to ask the Commons to think again, and to give a pause, the Government would now still be wriggling on the hook, because this would not be a Bill any more, but an Act, and we would be stuck with those illegal clauses, which would have caused longer-lasting damage to the reputation of this Government, and of this country, than will, I hope, now be the case.

I am amazed by the coincidence that just by chance, yesterday, after months of toil, Minister Michael Gove reached an agreement. It seems like an extraordinary coincidence, but when we read what he says about it, we see that there is no coincidence at all. This so-called agreement, in which everything is allegedly resolved, is simply a point in the negotiations at which it was appropriate for the UK Government to announce some progress. Although a number of principles have been agreed, the letter that we received from the noble Lord, Lord True, says that

“The parties have also reached an agreement”

on the issues on which decisions have still to be taken

“before 1 January.”

That is the agreement in principle, on some quite significant things, including

“the practical arrangements regarding the EU’s limited and light touch presence in Northern Ireland when UK authorities implement checks and controls under the Protocol, determining criteria for goods to be considered “not at risk” of entering the EU when moving from Great Britain to Northern Ireland, thereby ensuring that the overwhelming majority of goods will not attract tariffs”.

So there is quite a bit of substance there.

Among the substance is, first, that there will be EU officials based in Northern Ireland, at the ports, checking that our customs officers are doing their jobs—something that, I believe, the Government said at an earlier stage they would never countenance. There will also be— because the letter says so—checks and controls on goods moving from Northern Ireland to the rest of the UK. Indeed, one of the principles that has been agreed is the detail of the export declarations.

There is also the possibility—although obviously, this will apply only if there is no deal—of tariffs being applied to some goods moving from Great Britain to Northern Ireland and vice versa. If the noble Lord, Lord Dodds, thinks he has unfettered access, he needs to read what the Government are doing. Every declaration takes time. Every declaration costs money. Every declaration fetters trade.

The dilemma that a number of noble Lords have referred to, which this agreement merely seeks to amplify, is where we have the border. There has to be a border; it could be on the island of Ireland or in the Irish Sea. We as a country have decided, in the agreements that we have made, that it will be a border in the Irish Sea. There should be no question but that that border exists or that there are checks across any customs border —and they cost, which means that trade is fettered.

We will no doubt spend many happy hours discussing these detailed issues in future, but for today we should simply be grateful that the stain on our legislation, at least, if not the entire stain on our reputation, has been removed by the amendments tabled by the noble and learned Lord, Lord Judge, and accepted by the Government.

Lord Falconer of Thoroton (Lab)

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We are in a much better place now, thanks to the Statement made by the Chancellor of the Duchy of Lancaster yesterday, and the statement made by the noble Lord, Lord True, to us today. The effect of what the noble Lord is proposing is that all the unlawfulness is stripped out of Part 5. He proposes that parts of Part 5 remain in the Bill, but none of those parts can legally overtop the withdrawal agreement entered into in 2020, as the Government of the United Kingdom agreed at the time to legislate so that the withdrawal agreement, including the Northern Ireland protocol, could trump everything except primary legislation that purported to overrule it.

Now, as a result of what the noble Lord, Lord True, has said, the Government accept that there shall be no provisions in the Bill that can overtop the withdrawal agreement, which they agreed to give direct effect to. They have gone back to the position they committed themselves to with the European Union.

I completely respect what the noble Lord, Lord Dodds, and the noble Baroness, Lady Hoey, have said. They have issues with the Northern Ireland protocol. They are both right when they say that Northern Ireland is being treated differently, for reasons that have been widely debated. But that is not what these issues, in this Bill, are about. For better or worse, this Parliament, earlier, had agreed to the Northern Ireland protocol and the withdrawal agreement.

Why did we see the Government try to escape from the provisions of the Northern Ireland protocol? I cannot remember whether it was the noble Baroness, Lady Hoey, or the noble Baroness, Lady Fox, who said that it meant that their troops were marched up to the top of the hill and then marched down again. The reason given was that the Government feared what the European Commission might do in the negotiations.

Let me tell the House how the Chancellor of the Duchy of Lancaster described the attitude of the European Commission in these negotiations. He described Maroš Šefčovič, the vice-president of the Commission, and his team as displaying

“their pragmatism, their collaborative spirit—and their determination to get a deal done that would work for both sides.”

If that was the attitude of the Commission, it is difficult to see why we needed those provisions.

I agree with everything that the noble Lord, Lord Newby, said about this being an agreement in principle, not a locked-down agreement, as is much more candidly accepted in the letter sent by the noble Lords, Lord True and Lord Callanan, to Members of this House this morning, than it was by the Chancellor of the Duchy of Lancaster.

Later, in the Statement that he made earlier today, the Chancellor of the Duchy of Lancaster said:

“the agreement we have reached also enables the Government to withdraw clauses 44, 45 and 47 of the United Kingdom Internal Market Bill … Having put beyond doubt the primacy of the sovereignty of this place … we rest safe in the knowledge that such provisions are no longer required.”

I understand him to be saying that putting in these provisions and then running scared from them when it looked as if they might stand in the way of a trade deal constitutes putting beyond doubt the primacy of the sovereignty of this place. That is absolute nonsense.

I agree with what my noble friend Lord Adonis said, and I am glad that the Government have retreated. However, what they did has damaged the position of this country, and shows a terrible misjudgement. I am glad that the noble Lord, Lord True, has been so gracious in his withdrawal, and we are all grateful for it—but it would have been so much better if the Government had been straightforward about why they did this. They did it because they know they cannot get a trade deal without withdrawing those clauses. I do not know whether they will get a deal, but they hope for one and they cannot get one without withdrawing them. That is why it has been done—and it was done today because this House is debating this today.

Although I apologise to the noble Baroness, Lady Fox, for the fact that some attention has been paid to the Lords, I am glad that she is here to help the Lords influence the Government, which is what it does. It is because the Lords stood firm that constitutional crisis is averted. A good message is sent by the work of the noble and learned Lord, Lord Judge, and I single out the noble Lord, Lord Howard, for his stalwartness in standing up for the principle. If we had not, goodness knows what a mess this Government would have got this country into. We send a message that there are certain principles we will stand up for and will not be moved from.

Lord True (Con)

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My Lords, I am not a lawyer, as I am frequently reminded in your Lordships’ House, but I am a historian by vocation and occasional practice, and I know that history is the study of cause and effect. I have heard one version of a proto-history just put to us by the noble and learned Lord, Lord Falconer; there are many other versions which no doubt could and will be put—indeed, some have been put in this debate. The thing to do now is to move forward. Once all the documents are revealed, no doubt people will be able to say what had an effect on what. We are here today to make a judgment on carrying draft legislation, a Bill, forward.

I, too, welcome prodigal sons, and indeed prodigal daughters, if I may say so. The noble and learned Lord was kind enough to say that the Government had graciously changed their position. I heard less comment in the debate—although the noble Lord, Lord Dodds, and the noble Baroness, Lady Hoey, referred to it—about the change of mind, if I may use the phrase, by your Lordships. I hope it is forthcoming on Clauses 42, 43 and 46. I welcome that change of mind. I do not believe that unfettered access should have been called into doubt in your Lordships’ House, and I heard no one speak against that principle, although the noble Lord, Lord Newby, appeared at one moment to exult in the idea that it might not exist. I welcome and am grateful for what I hope will be the change of mind on those other clauses, and I hope that the noble and learned Lord, Lord Judge, will be able to confirm that.

I thank all those who have contributed to the debate. I must say to the noble Lord, Lord Adonis, although I do not want to pick him out particularly, that I do not think that, whoever he or she may be, personal vilification of the Prime Minister is a conducive or beneficial way to broaden consensus in debate in your Lordships’ House. I counsel the noble Lord that vilification of the current Prime Minister will not particularly persuade me to listen to his arguments.

As I said in my opening speech—I thank noble Lords for their comments on the facts of it, not the speech —the Government will not be opposing the removal of Clauses 44, 45 and 47. I can confirm to the noble and learned Lord that new Clause 45 is in accordance with the rule of law. However, as I have argued, the remaining clauses in the Bill are vital to the Government delivering on their commitments to the people of Northern Ireland.

I must say to the noble Baroness, Lady Hoey, that I will be repeating a Statement tomorrow, and I will obviously answer questions on that matter. I am sorry, but I do not make the rules and customs of the usual channels in this place, but I understand her feeling, and no doubt she will examine that Statement tomorrow. I do not think I am telling anybody anything that they do not know when I say that, unfortunately, that Statement will be repeated relatively late tomorrow.

The clauses which I hope your Lordships will allow to return seek to protect Northern Ireland’s place in the UK’s customs territory and internal market, and that is something, as the noble Lord, Lord Dodds, recited, that not only this Government and the Northern Ireland Executive but the EU absolutely committed to—unfettered access, so please let us see that back in the Bill.

Whatever the rights and wrongs of the history, I hope that the reality of the day is that people in different parts of this House will be able to have some satisfaction in where we have reached at this point. I always agree that, in life, negotiation is desirable. As I said in my opening remarks, Clauses 42, 43 and 46 have now been sent to us twice by the democratically elected House, and on those I urge your Lordships, if the Question is put, not to vote them out again. I beg to move.

Lord Judge (CB)

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I do not think there is anything I could usefully add; I think we should get on.

Lord True

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That this House do not insist on its Amendment 42 to which the Commons have disagreed for their Reason 42A.

Lord True

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That this House do not insist on its Amendment 43 to which the Commons have disagreed and do agree with the Commons in their Amendments 43A and 43B.

Lord True

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That this House do insist on its Amendment 44 to which the Commons have disagreed for their Reason 44A.

Lord True

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That this House do insist on its Amendment 45 to which the Commons have disagreed for their Reason 45A.

Lord True

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That this House do not insist on its Amendment 46 to which the Commons have disagreed for their Reason 46A.

Lord True

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That this House do insist on its Amendment 47 to which the Commons have disagreed for their Reason 47A.

Baroness Penn

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That this House do not insist on its Amendments 48 and 49 to which the Commons have disagreed for their Reason 48A.

Baroness Penn (Con)

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My Lords, the Government have reinserted into the Bill the power to provide financial assistance. This was removed by your Lordships’ House through Amendments 48 and 49. There is a point of parliamentary principle at play here, which is that the other place wishes to assert financial privilege and preserve that House’s right to decide on public spending arrangements. Indeed, that is the reason for disagreement that has been sent from the other place, and we must respect its financial primacy. It would be contrary to normal practice for noble Lords to insist on any amendment disagreed for a privilege reason. Indeed, it is the only reason given by the Commons, as it alone should be deemed sufficient.

However, we have also heard clearly from the other place that this is a power they wish to remain in the Bill for other reasons, when asked to think again by your Lordships’ House. These clauses form the financial assistance power, which enables the UK Government to deliver strategic investment in all four corners of the United Kingdom. This is all the more important as businesses and communities throughout our countries recover from the Covid crisis. The past few months have demonstrated clearly how important the responsiveness and scale of UK Government support can be to protecting lives and livelihoods.

This power will cover infrastructure, economic development, culture and sport, and will support educational and training activities and exchanges both within the UK and internationally. These are policy areas in which funding was previously provided by EU programmes under terms and conditions set by the EU. It is right that, as we leave the transition period, the UK Government have the right tools to make sure the whole country can benefit from investment which strengthens the communities, economies and connectivity within and between all parts of the UK.

I emphasise again that this power is in addition to the devolved Administrations’ existing powers. It does not take away responsibilities from the devolved Administrations; rather, the power will enable the UK Government to deliver investment more dynamically and in collaboration with the devolved Administrations and other partners. The Government will work with the devolved Administrations to make sure that we can complement their existing and continuing powers, used to support citizens in Scotland, Wales and Northern Ireland. We will also work collaboratively with other crucial partners, including local authorities and wider public and private sector organisations.

We have taken this collaborative approach to investment with devolved Administrations already: for example, through our successful city deals programme. The UK Government intend to continue to work in this spirit of partnership with stakeholders as we deploy support with this power. Practically, the power means that the UK Government can make good on our commitment to the UK shared prosperity fund. We have published our heads of terms for the fund online. The UKSPF will help to level up and create opportunity across the UK in those places most in need—such as ex-industrial areas, deprived towns, and rural and coastal communities —and for people who face labour market barriers. These places will then develop investment proposals, with input from a range of local partners, to be approved by the Government. We will set out further details on the objectives and administration of the UKSPF in a UK-wide investment framework published in the spring. We will continue to engage the devolved Administrations as we develop the investment framework and in advance of its publication.

The noble and learned Lord, Lord Thomas, has put forward Amendments 48B and 48C. Let me be clear that the UK Government intend to work with both the devolved Administrations and local communities to ensure that this power is used to best effect and that the UK shared prosperity fund supports citizens across the UK. Indeed, the devolved Administrations will be represented in UKSPF governance structures. Our intention is to work with the devolved Administrations and respect the devolution settlements, and I hope that noble Lords will take this as a demonstration of that commitment. I can assure the House that officials in the Ministry of Housing, Communities and Local Government will continue their ongoing conversations with their counterparts in the devolved Administrations, and will discuss the detail in due course. This provides one example of what we seek to deliver with this power, but I hope it makes plain our intended approach for working collaboratively, while taking a UK-wide view of investment opportunities, to support all parts of the country. As such, I hope that this will encourage the noble and learned Lord not to test the opinion of the House on his Motion.

Motion K1 (as an amendment to Motion K)

Lord Thomas of Cwmgiedd

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At end insert “and do propose Amendments 48B, and 48C to the words restored to the Bill by the Commons disagreement to Amendment 48—

Lord Thomas of Cwmgiedd (CB) [V]

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I thank the Minister for the opportunity to discuss this matter with her. In light of what she said about wishing to set up a governance structure, I am sure that progress could be made. However, there are five short reasons why I hope the House will accept the compromise I have offered in Motion K1, which I now seek to move. First, the Commons reasons were, as has been stated by the Minister, to do with financial primacy. With the utmost respect, they are not correct. Powers to spend in devolved matters are powers of the devolved Governments, not the UK Government. Most of what is covered in this clause are matters that are devolved. Secondly, the clause therefore seeks to change the devolution settlements to enable the UK Government to override the devolution settlements. The clause is therefore a constitutional and not a financial issue.

My second reason is that, at present, funds provided by the EU for regional aid for matters within devolved powers are provided to the devolved Governments, who have to agree how the funds are to be spent. The amended clause would continue this architecture for the shared prosperity fund, the successor fund to that. Under the amendment, the UK Government would agree with the devolved Governments the way in which the funds would be spent where the funds were for matters within the devolved competences—roads, health, education and the like. This would combine the benefit of an overall strategy for the UK with the benefit of devolved Governments agreeing how funds were to be expended in the areas for which they and they alone were responsible.

The Deputy Speaker (Lord Russell of Liverpool) (CB)

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One Member in the Chamber has indicated he wishes to speak. I call the noble Lord, Lord Adonis.

Lord Adonis (Lab)

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My Lords, I do not wish to cover the ground that the noble and learned Lord, Lord Thomas, has just covered so compellingly. He has made absolutely compelling arguments for why we should send this matter back to the Commons again. As he says, it goes to the heart of the devolution settlement: you just need to read the wording of his amendment to Clause 48 to see why it is so compelling.

What the Government are proposing is a provision that says they should make financial arrangements in respect of spending in the devolved territories of the United Kingdom without consultation with the relevant authorities, whereas the noble and learned Lord’s amendment says that it should take place only with consultation with the relevant authorities. So the noble Baroness would need to explain to us why it is appropriate that these arrangements should be entered into with no consultation with the devolved authorities to which they apply. That is an absolutely fundamental point about whether devolution is for real.

The point I want to add, which is so important and why it is a vital that we send this back to the other House, is that what is essentially going on here is an attempt by the Prime Minister to undermine and make as weak as possible the existing devolution settlement. He said, and we should take him at his word, that devolution was the worst mistake of the Blair Government; he does not agree with the setting up of the Scottish Parliament; he does not agree with the Welsh Assembly; he has played very fast and loose with the role of the Northern Ireland Assembly in the way he has conducted policy in respect of Ireland over the last year.

We have a constitutional duty to see that that the devolution settlement, as constructed by Parliament in successive Acts, all of which have represented consensus settlements between the territories concerned and the United Kingdom Parliament, is safeguarded. This Bill is deliberately intended to cut across and undermine the devolution settlements because the Prime Minister does not agree with them, and it is therefore vital that we send this matter back to the House of Commons again.

The Deputy Speaker (Lord Russell of Liverpool) (CB)

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Does any Member in the Chamber wish to speak? No? Then I call the noble Lord, Lord Fox.

Lord Fox (LD)

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My Lords, this has been, again, a short but important debate. I thank the previous speakers and I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, for his detailed proposal.

First, I will address the comprehensive and well-laid out response by the Minister on why your Lordships’ amendment has been knocked back. I will not come between the noble and learned Lord and the Minister when it comes to deciding whether it is a financial issue; I shall leave those two to have that argument. However, I will pick up on the second issue. The Minister painted a genuinely exciting picture of all this wonderful investment that will happen across the country—I am not being ironic—and I agree that there needs to be a response to what we have seen this year, and it needs to be comprehensive, co-ordinated and well organised. This cuts to the point made by the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Adonis: without working with the devolved authorities, the efficiency and the effectiveness of any investment are massively undermined. Leaving aside the devolution issue for now, the efficiency issue raised by the noble and learned Lord, Lord Thomas, is absolutely called into question here. The measures from the noble and learned Lord in Motion K1 bring the devolved authorities back into this process. It recognises the importance of the devolved settlement, as set out by the noble Lord, Lord Adonis, and makes sure that this investment, which will be so important to the future prosperity of this country—if indeed there is enough of it and it is delivered properly—can be made efficiently and in keeping with the needs of the people of that particular country.

As someone who comes from Herefordshire, which is a far-flung part of England, I wish that we had similar regional structures in England, whereby the same level of consultation that should be coming through this amendment could also be offered to the regions of England. While some parts of England have unitary mayors and some parts have negotiations directly with Government, places such as Herefordshire that are in as much need as some of the worst-affected places across the United Kingdom, do not have the benefit of that access. This is not the place, but going forward, I ask that when these proposals are brought, an approach towards the English regions that the Government have towards the devolved authorities would be appreciated.

With that, we look forward to supporting the noble and learned Lord, Lord Thomas, when he presses this.

Lord Stevenson of Balmacara (Lab) [V]

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My Lords, I thank the Minister for her clear and concise introduction to this topic. Although she said she was relying primarily on the Commons argument that this issue engages financial privilege, she recognised there were other issues going on, and it was good of her to take the argument a bit further. We are, as the noble Lord, Lord Fox, has also said, completely cognisant of the restrictions placed on the House due to financial privilege being engaged. The noble and learned Lord, Lord Thomas, made a compelling case about the wider issues, and it is important to have those on the record. I will add to the list of points he made.

The Government clearly assert—and we believe them —that these will be additional to existing powers, and we should not be concerned, as we have been, that the devolved Administrations will have their responsibilities and authority challenged in this way. The Minister said that the driving force behind the shared prosperity fund is to add and complement existing arrangements. If she wishes to repeat it when she winds up, that would be helpful. In that sense, there should be no need for the concern that is currently in the devolved Administrations about that particular aspect of it. We do not have the detail, and I think she said the likely outcome for their consultation would not be before spring 2021, which seems a long way away in terms of what we are doing. We accept that existing programmes are currently running out—but they are running out; they are not being continued at the same level and, therefore, there will be a shortfall unless the Government are prepared to move a bit faster than the current timescale suggests.

The Minister also confirmed—and this is good news —that there will be engagement with the devolved Administrations. When she responds, perhaps she could explain a bit more about what that means. We have already heard from the Government today about programmes of engagement that have involved substantial change in previous views; it would be good to hear that language repeated when she talks about how the devolved Administrations might be engaged with this process.

The Minister has confirmed there will be some form of shared prosperity fund board, which is interesting. She may recall that at the previous stage of this Bill, we proposed a shared prosperity commissioner. I said at the time, and I still think, that that was code for a board, because we were trying not to engage financial privilege. We have clearly failed in that. Can she confirm the board will be independent and say more about the powers that might be invested in that board? Can she also talk a bit more about whether the programme itself, when it is brought forward, will be subject to guidelines? Will those be published and discussed before they are invented? Will there be themes to it, as there have been in previous rounds of the regional structural funds? Will the funds be competitive and open to all countries to bid for? Can she confirm, most importantly, that the plan will be for the funds under the shared prosperity fund to be separate from any Barnett formula calculations? That is not in the sense of making people not eligible for funding—that is not what we are about here—but a needs-based or different set of indicators to set out the ideas under which the shared prosperity fund will operate. I look forward to hearing her response.

Baroness Penn (Con)

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My Lords, I thank noble Lords for this short but very useful debate. I think it might be useful to take the points of the noble and learned Lord, Lord Thomas, in turn. On the first point on financial privilege, I think the noble Lord, Lord Fox, was wise to stay out of that one. All I can say to this House is that the decision on financial privilege is made by the Speaker on advice from the clerks. It is the only reason, when invoked, that can be given. Though I have spoken to others, that is the process in the other place.

On the second point on the consultation of, and consent from, the devolved Administrations on spending on these matters, I have said before, and will again, since the noble Lord, Lord Stevenson, asked me to reiterate, that this is about an additional programme of spending to support the work of the devolved Administrations but also about taking a strategic look across the whole of the UK. It is important to remember that the main fund we are talking about, when it comes to the use of this power and the shared prosperity fund, replaces EU structural funds that were determined at an EU level for the needs of many different nation states. They were determined at an EU level and, while they may have been managed and delivered at a local level, the structure, framework and principles that people had to deliver were decided at an EU level.

The third point was about a principled basis for the funding. The Government set out, at the spending review, the heads of terms for the shared prosperity fund. Those have begun to outline how the shared prosperity fund will work. A portion of the SPF will target the places most in need across the country, such as ex-industrial areas, deprived towns and rural and coastal communities.

The Deputy Speaker (Lord Russell of Liverpool) (CB)

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I have received a request to ask a short question of elucidation from the noble Lord, Lord Fox.

Lord Fox (LD)

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The Minister will be aware that the current structural fund does not reach many regions across the United Kingdom, compared, I think, to the planned extent of the new shared prosperity fund. Can the Minister confirm whether that is true? If it is, and the money put into the shared prosperity fund is only—I use the word advisedly—as much as that put into the structural fund, it will be spread more widely. There will be losers among those who have been able to take advantage of the structural fund, because the money they would bid for will be spread to other regions and countries. Will the Minister acknowledge that? Is that perhaps one reason that the Government are rather reluctant to allow the devolved authorities any more involvement in this, because they know there will be issues around losing out on money that would have come through the structural fund but is now to be spread more widely across the United Kingdom?

Baroness Penn (Con)

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My Lords, the Government made a number of commitments on the shared prosperity fund in the manifesto, both about the overall quantum of the fund and the funding that different parts of the UK can expect to receive. We set out in the spending review that that would ramp up to £1.5 billion per year as the structural funds tail off. Our approach will be guided by that but, as I say, more detail will be set out in advance of the operation of the fund in spring next year, with the multiyear settlement coming in the following year.

Lord Thomas of Cwmgiedd (CB) [V]

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I thank all noble Lords who have spoken in this short but interesting debate. I will deal with the Minister’s points in turn.

First, it seems clear that these powers—the Minister actually said this in Committee—were being taken to give the UK Government power to spend across the United Kingdom. These powers would plainly not be needed unless they were encroaching on devolved powers. City deals can be done without them; the Government can spend without them. I say respectfully to the Minister and to those who say this is a financial matter that it is not. When powers are devolved, the spending power goes with them. The reason of financial privilege is not correct.

Secondly, on how the funding works, I find it difficult to understand why, in light of what the Minister has said, she cannot agree to the very short amendment I have put forward. It spells out the principles, deals with consultation and ensures that, within the areas of devolved spending only—the amendment is clear on this—there should be agreement so that funds are spent together. With respect, the importance of this amendment is to show that, as we go forward, we do so as a United Kingdom with the central UK Government and the devolved Governments working closely together. Putting this provision in the Bill, particularly the structure under which this is to be done in this area, would be an enormous reassurance. It would strengthen the union, not imperil it, by enabling inconsistent spending to occur in devolved areas. Having listened to the debate and heard what all noble Lords have said, I seek to take the opinion of the House on this issue.

Lord Callanan

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That this House do not insist on its Amendments 50, 57 and 61 to which the Commons have disagreed for their Reasons 50A and 57A, but do propose Amendment 50B in lieu—

Commons Reasons

Lord Callanan (Con)

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My Lords, I now turn to the amendments on the office for the internal market and the subsidy control grouping.

First, I want to emphasise that Part 4 establishes the office for the internal market within the Competition and Markets Authority, which is, in our view, a natural home for the OIM, given its existing technical expertise that is highly relevant to the operation of the UK internal market. But, as I have set out, the office for the internal market will be independently governed within the CMA, and Schedule 3 sets out a carefully balanced set of governance arrangements which guarantee that independence and ensure a meaningful role for the devolved Administrations through the appointments process to the OIM panel. This gives the devolved Administrations a proper voice, while guaranteeing that the OIM can operate without delay or obstruction if four-nation consensus cannot be reached on appointments.

The Government have listened carefully to the discussions in this House and have acted, tabling a number of pragmatic and constructive amendments throughout Part 4. These make it clear that the OIM will work in the interests of consumers and ensure that it will operate in the interests of all parts of the United Kingdom and on an equal basis towards the four UK Administrations. This is further to the significant change put forward previously, requiring the Secretary of State to seek consent from all Administrations within a one-month timeframe, based on proposals developed originally by the Welsh Government. This change provides yet another enhancement for the devolved Administrations in the appointment process, which, as I have explained, fully reflects the even-handed approach to governance that runs throughout Schedule 3.

I hope your Lordships can appreciate that the Government have listened and moved accordingly. However, I cannot support your Lordships’ Amendments 57 and 61, which go further than this, requiring direct devolved Administration appointments to the CMA board. As already set out here and in the other place, it is the OIM panel that will undertake the work of the OIM. The CMA board is responsible for the operations of the organisation as a whole, which otherwise fall wholly within reserved competence. It is therefore not appropriate for the devolved Administrations to make appointments to the CMA board, as those board members would, in consequence, be involved in a range of reserved matters with no relation to the OIM functions set out in Part 4.

With regard to Amendment 50, your Lordships will be aware that this has invoked a financial privilege claim and has not been agreed to by the other place. Although this of course is sufficient in itself, I will remind your Lordships’ House that there is a consultation forthcoming on this matter of subsidy control. It would be premature and unjustified to agree to confer specific regulatory functions on the OIM in respect of subsidies before the wider details of any legislative UK domestic subsidy control regime—including the appropriate mechanism for oversight and enforcement—have even been developed and brought before Parliament, let alone agreed.

However, I have listened to concerns regarding the decision to have the CMA perform these duties, and I am pleased to announce that the Government have tabled Amendment 50B, which will require the Secretary of State to review, after between three and five years and in close consultation with the devolved Administrations, the appropriateness of, effectiveness of and potential alternatives to the CMA carrying out its Part 4 functions. This will allow Ministers from all Administrations to closely consider the CMA’s performance and the pros and cons of continuing with the CMA as the delivery vehicle for the Part 4 functions. This proposal makes it clear that the Government are committed to ensuring due diligence on the CMA’s new functions and facilitating further scrutiny by all Administrations.

This amendment requires the devolved Administrations to be consulted as the review is carried out—but it goes further, giving the Administrations the right to consider and make representations on the draft report itself, and requiring the Government to fully consider those views. Subsection (5) rules out an unlimited obligation to consider repeated rounds of representations that could block the review, but I want to be clear that the Government will consider all views offered in good faith. I note for the benefit of noble Lords that this final point applies equally to Clause 50—to which I will now turn—which reserves to the UK Parliament the exclusive ability to legislate for a UK-wide subsidy control regime in future.

I was pleased to note in the debate on Report that many noble Lords did in fact recognise the importance of maintaining a consistent approach in what is a nationally significant area of economic policy. In addition, I welcome the devolved Administrations’ support for the principle of a unified approach to subsidy control throughout the United Kingdom. For these reasons, the Government believe it is right that we retain the provisions for the reservation of subsidy control in the Bill.

Now we have left the EU, it is important that we continue to take a coherent approach to the system that governs how public authorities subsidise business across the UK. I reiterate that this reservation is not about sources of funding or who makes decisions on individual subsidies across the UK. This reservation will ensure that any future system we put in place to regulate against the distortive or harmful effects of spending on subsidies then applies to the whole of the UK.

A unified approach to that overall framework will reduce uncertainty for UK businesses and prevent additional costs to supply chains and consumers. As such, continuing our UK-wide approach to subsidy control and confirming it in law remains the best way to ensure that we continue to take a consistent approach to regulating the harmful effects of subsidies across the United Kingdom.

To be clear, all UK public authorities are and will remain responsible for their own spending decisions on subsidies—how much, to whom and for what—within any overall subsidy control regime. This reservation is not seeking to change public authorities’ responsibilities for spending decisions. However, the wider rules which they operate should continue to be consistent across the United Kingdom.

I acknowledge the concerns that some of your Lordships have raised in previous debates regarding the principle of reserving a policy area in advance of the forthcoming consultation the Government have committed to publish. However, this reservation is a necessary step to ensure that, if a legislative regime were introduced, it would apply then to the whole of the UK. Given that this is a national issue, the future subsidy control mechanism should be the responsibility of the UK Parliament to determine.

Baroness Finlay of Llandaff

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Leave out from “House” to end and insert “do not insist on its Amendment 50 to which the Commons have disagreed for their Reason 50A but do propose Amendment 50B in lieu, and do insist on its Amendments 57 and 61 to which the Commons have disagreed for their Reason 57A”

Baroness Finlay of Llandaff (CB) [V]

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My Lords, I will speak to Motion L1 as an amendment to the Motion L. We now come to the vexed issue of oversight through the Office for the Internal Market. I preface my remarks by making it clear that these amendments relate to the risk as to whether the union is strengthened or weakened. They are concerned with the fundamental constitutional question of parity of esteem across, and long-term future of, the United Kingdom.

I recognise that the Government have thought and listened, and I appreciate that there is now a consultation and that they have modified their views. At the helpful Cabinet meeting today, hosted by the noble Lord, Lord True, the Government discussed the JMCEN, stressing the importance of an independent secretariat to the IGR to avoid disputes and ensure transparency. The importance of a strong, prosperous and thriving union was stressed, with emphasis on the importance of getting right the structures and the cultures within them. To lock in those cultures, the devolved Administrations wish to have a seat at the Competition and Markets Authority board. At Report, the Minister asserted that

“OIM appointees should reflect a range of expertise from all parts of the United Kingdom.”—[Official Report, 23/11/20; col. 102.]

The amendment that we inserted in the Bill and which I seek to reinstate would ensure that the CMA’s annual plans, proposals and performance reports are laid before the devolved legislatures, as well as Parliament, ensuring equal scrutiny and oversight of these developments. This would allow them to be discussed between Ministers from all Administrations.

It is the desire of the devolved Administrations to have their voice heard. Perhaps I may quote the noble Lord, Lord Cormack, in his belief, which I echo, that the union is in peril. He urged Ministers to take that reality into account. Without representation, it reads as if the Government want to have a monopoly of power and control in the country.

In rejecting Amendment 50, which we passed after our debates, the Government have tabled their own amendment. Amendment 50B from the Government appears to recognise that the CMA may not be the appropriate place for the effective and efficient performance of the OIM and that they have agreed that it needs its Part 4 function subject to review. Their amendment requires a formal review of between three and five years and they will consult with the devolved Administrations over conducting the review—so far, so good. But then the sting: the amendment from the Government allows the devolved Administrations to see the draft and comment on it, but only once. There is no need whatever for the Government to pay any attention to what they say. To quote from the amendment:

“The Secretary State need not consult the devolved authorities further if the draft is altered as mentioned in subsection (4)(b) (but is free to do so if the Secretary of State thinks fit).

That makes a mockery of seeking views. The Secretary of State can put the views of the devolved Administrations into the shredder. In disbelief, I called the Bill team to check whether I had understood correctly.

If the Government want this House to accept that Amendments 57 and 61 are not reinstated in the Bill, and to accept the Government’s proposal, we must hear from the them today a clearer commitment that the devolved Administrations will be respected as equals; that their views, at review, will be taken into account; and that they, the Government, will ensure that the finalised report represents all views, which may include a minority view within such a report.

I will repeat the words we heard from the noble Lord, Lord True, in the meeting today, because they are so important. He said that the Government were committed to a strong and thriving union. If that is the Government’s view, they must prove it by clear words today that determine future actions.

The Senedd does not believe that. Members voted today by 36 votes to 15 to deny legislative consent to the Bill, given the reversal of the Lords amendments in the Commons. While accepting that Amendment 50B replaces the deleted Amendment 50, and not wishing to reinstate the deleted amendment, I reserve the right to seek the opinion of the House on Motion L1, reinstating Amendments 57 and 61, if I do not have further adequate assurances from the Government. I beg to move.

The Deputy Speaker (Lord Faulkner of Worcester) (Lab)

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I now call the noble Lord, Lord Thomas of Cwmgiedd, to speak to, but not at this point move, Motion L2.

Lord Thomas of Cwmgiedd (CB) [V]

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I am grateful to the Minister for the opportunity to discuss this clause with him. I hope that there is a basis on which we can move forward to agree this. I will explain the purpose of the amendment in five short reasons. First, it has always been the position that there must be a competition regime that must apply to the whole of the UK. The issue is how we get there in a way that preserves and strengthens the union.

The position at the moment is that there is no agreed new competition policy. We will be operating, subject to anything that may be agreed with the EU, under the WTO regime, which devolved Governments are bound to apply under the existing devolution settlements. There is therefore time to set about this constructively. It is clear that, in devising a competition regime for the control of subsidies, a lot of things need to be ironed out. What is the role of the CMA to be? Is it to be an independent adjudicator or merely advisory? If so, whom does it advise? What does control over subsidies mean? These issues need to be examined carefully.

There are two ways forward. Way one—what I would call the UK Government’s way—is, first, to change the devolution settlements. This is a change to the devolution settlements because they operate on the basis that, if a power is not reserved, it is devolved—and there is no reservation in respect of this matter. It is therefore plainly devolved, and the purpose of this amendment is to change the devolution settlement. Having changed the settlement for a policy that they have not yet devised, the Government then wish simply to consult—and I am grateful for the clauses that affirm that they will at least do that—and then announce their decision. That is what I would call “way one”—the UK Government way.

But there is a better way, which is to do it by agreement but with a backstop. I think that there are good prospects of agreement. The Welsh Government offered unequivocally, in a letter sent on 24 November—the day before the Report stage of the Bill—to try to agree a common framework, but what I do not think many have appreciated the significance of is that the Scottish Government committed themselves to joining in that. I am not sure the extent to which that might have been appreciated at the highest levels of government, but if we simply reject this offer by the Scottish Government, that will, in my view, have very serious consequences.

Therefore, the amendment seeks to build on the progress that we have been able to make and to provide that an attempt should be made to agree a common framework—which is a regime that can govern the control of subsidies. However, if one is not agreed in the specified period of time—I have suggested three years—this clause would then take effect. If there is a view that that period is too long, obviously that is a matter that can be discussed.

The vital question is that the amendment, I respectfully urge, would allow for a further strengthening of the union, with an agreed way forward and the UK Government and the devolved Governments working together to achieve a regime applicable across the UK under the mechanism of consensus through a common framework. This would achieve what the Government want by consensus, not simply consultation. To reject the amendment and restore Clause 50 would be to impose unilaterally a change in the devolution settlement by reserving a power that is not reserved. This would be a gratuitous present to those who say that the union does not work.

There is an offer to work together from the Scottish and Welsh Governments. This House should not allow the Government simply to reject a consensual solution, as there is a time limit for that consensual process. In due course, I will move my Motion and seek t test the opinion of the House.

The Deputy Speaker (Lord Faulkner of Worcester) (Lab)

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My Lords, the following noble Lords have indicated that they wish to speak: the noble Baronesses, Lady Bowles of Berkhamsted and Lady Neville-Rolfe, and the noble Lord, Lord Liddle. I call the noble Baroness, Lady Bowles.

Baroness Bowles of Berkhamsted (LD) [V]

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My Lords, I speak in favour of Motion L2 in the context of having been the mover of the original Amendment 50, which was rejected as involving a charge on public funds, despite my budget reference endeavours.

I broadly welcome the Government’s Amendment 50B in lieu. It picks up the final point of my Amendment 50 regarding a review. The review also specifically includes the concern underlying the first part of Amendment 50 around the location of the OIM by requiring an assessment of the advantages and disadvantages of continuing with the provision of Part 4 functions via the CMA, compared with alternatives, including possible arrangements not involving the CMA.

I also welcome the fact that the relevant national authorities are to be specified as consultees at the stage of both review and draft report, but I hope that it will also be fulsome at the finalising stage as well as the draft stage.

Both in Committee and on Report, concerns about the CMA culture and the enforcement provisions were brought forward by myself and other noble Lords. It would be good for the OIM and the CMA to know that they will be watched and that these issues will be among those which are checked when it comes to the review and the report. I thank the Minister for the various amendments and assurances about the OIM, and in particular I note and thank him for the reassurances made regarding the penalties relating to information gathering, including proportionality, consultation with the devolved Administrations, and that

“these penalty powers in Part 4 will not be commenced unless there is a clear and credible need for them”—[Official Report, 25/11/20; col. 259.]

or unless

“there is evidence that they are called for, and even then they will not be used except as a last resort,.”—[Official Report, 25/11/20; col. 270.]

There are further quotations like these.

A review clause is often seen as a weak compromise, but here it serves an important function in the context of new regulatory powers and as a vehicle for monitoring and checking the concerns raised in Parliament and the assurances given.

Baroness Neville-Rolfe (Con)

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My Lords, I share the feeling of the noble Baroness, Lady Finlay of Llandaff, and the noble and learned Lord, Lord Thomas of Cwmgiedd, that the Government have come a long way on this Bill, and I thank my noble friend the Minister for that. Noble Lords will recall that I had reservations about locating the Office for the Internal Market within the Competition and Markets Authority. I believe that it is the wrong place with the wrong culture, a point just echoed by noble Baroness, Lady Bowles. There is a practice of aggressive enforcement that is hardly suitable to some of the sensitive issues that it will be asked to investigate. I am concerned in particular that small businesses in those sectors that are not lucky enough to be excluded will be fearful and suffer relative to the way they are being treated at present in the EU single market. A formal discrimination is now being introduced between services that are in and those which are not included within Schedule 2. I therefore very much welcome the review being proposed in the government amendment. It is an idea that featured in an earlier amendment to which I added my name.

However, I have a question on the wording. Could that review look not only at the track record of the OIM panel and its task groups, which are mentioned in Clause 30, and its constitution as set out in Schedule 3, but also at the location of the OIM itself and whether it should be within the CMA or somewhere else? I ask this obviously without commitment, but it would certainly be helpful to know that the review would be suitably wide-ranging.

I rise also to express doubts about Motions L1 and L2. Many of us have been clear in the endless debates on this Bill that we should avoid a situation where a particular nation can veto important new measures that are in the national interest. The Government have, of course, wisely conceded that the devolved Administrations should be included as a statutory consultee and, of course, the views of all the four nations will be properly taken into account in that process. But I agree with my noble friend the Minister that we should not accept Amendment 50C. It risks a delay of up to three years in implementing a UK subsidy control regime because of the need for agreement with the devolved Administrations. The existing arrangements for spending decisions on subsidies under the devolved settlements will continue, so I strongly support the Government on this matter.

Lord Liddle (Lab)

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My Lords, I make a brief intervention in the hope that the Government will listen to the wise words of the noble Baroness, Lady Finlay of Llandaff, and the particularly wise words of the noble and learned Lord, Lord Thomas of Cwmgiedd. We are at a delicate moment in our constitutional history. The future of the United Kingdom, with Brexit, is now in doubt. This will be the great issue of the next two years: can we keep the United Kingdom together? In that context, these are detailed matters, but the UK Government should go out of their way to ensure that those who want to break up the United Kingdom are not given just cause. I think that elements of the Bill and the Government’s position on it will be used in this way.

First, in the argumentation, I recognise that the Government have tried to strengthen consultation with the devolved Administrations in the amendments that they have put forward. So well done to the noble Lord, Lord Callanan, on that—we are to be thankful for that. But the line that state aid is a reserved UK matter and the devolved Administrations have never had any power over it will not go down well in Scotland, Wales and Northern Ireland. Wales and Scotland have had their development agencies. To tell the Welsh and Scottish people that these bodies have had no rights or independence to make decisions that promote economic development in their nations is very odd. To them, it looks as though the Government are taking away powers that they presently have. That is how it looks. The noble Lord shakes his head but, honestly, it is how it looks. Therefore, I think the Government should be bending over backwards to carry the nations of our United Kingdom with them.

I cannot understand the reasoning behind rejecting the proposal that has come from both Cardiff and Edinburgh to see if we can sort out, by consensus, a regime of state aid through a common framework. I do not understand how the Government can arrogantly say that this is something that we must control ourselves. It seems that the consensus for the future of the United Kingdom is much the best way forward.

The same applies to the argument about appointments to the body that is going to administer the new regime. The devolved nations should be treated as equals in this process. They should be able to nominate their own people to this body, not just be consulted. That is on the principle of equality between the nations and not appropriating to the UK Government, who, in my part of England, northern England, are seen as a London Government. That is how people look at it; it is not seen as a United Kingdom Government. I am sure that in Edinburgh and Cardiff it is not seen as a UK Government, particularly because of the Prime Minister we have. We have to bend over backwards to bring the nation together. Here is an opportunity, and I am very sorry that the Government appear to be wasting it.

The Deputy Speaker (Lord Faulkner of Worcester) (Lab)

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Does any other noble Lord in the Chamber wish to speak? No noble Lord does, so I call the noble Lord, Lord Fox.

Lord Fox (LD)

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My Lords, as the Minister set out, this group relates to state aid, the Competition and Markets Authority and the office for the internal market. At Report, your Lordships removed a clause that changed the devolution statutes to specify that state aid powers are a matter exclusively for the UK Government. This was overturned in the Commons. Notwithstanding that, the Government have come back with the proposals set out by the Minister, which are welcome. My noble friend Lady Bowles set out where they have come from and should be congratulated for her work on this Bill.

Notwithstanding that, the noble Baroness, Lady Finlay, has tabled Motion L1, which would enable the devolved Administrations to appoint people to the CMA board. The Minister has stressed that the OIM, while being within the CMA, will be independently governed. One of the reasons for not allowing previous amendments was a financial rule. This indicates clearly that the CMA will be holding the OIM’s purse strings. In that respect, culture is one thing, but budget is something completely different. We have heard from the noble Baroness, Lady Neville-Rolfe, and from my noble friend Lady Bowles, and as I have said, we remain extremely concerned about the culture and role of the OIM. The Minister again stressed the technical expertise in the CMA, but the OIM is being asked to do something that is essentially different from the CMA. Frankly, this technical expertise, if deployed in the way the Minister hopes, is the problem we are warning the Government about. That accepted, one of the small ways of dealing with this issue is to support the amendment from the noble Baroness, Lady Finlay, and to make sure that there is at least some board-level representation from the devolved authorities.

Motion L2, from the noble and learned Lord, Lord Thomas, would insert a new provision relating to Clause 50, on state aid. As the Minister has acknowledged, it would create a common framework process whereby state aid is managed.

The noble Lord, Lord Liddle, and others have talked about the message all this sends to the devolved authorities, at a time of great fragility and change. To set this up in this way sends a bad and dangerous message to the devolved authorities. The noble and learned Lord, Lord Thomas, set out a reasonable response—a reasonable way of involving the devolved authorities centrally in the process of delivering the structures and frameworks for, and areas of, state aid. To simply consult with the devolved authorities on draft and not go back on the final decision is a little derisory, to say the least. The Government need to understand the message they are sending—a message clearly articulated in the Senedd vote today.

We are pleased that the noble and learned Lord, Lord Thomas, is going to test the mood of the House regarding his Motion, and we will support it when he does.

Lord Stevenson of Balmacara (Lab) [V]

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My Lords, this has been an interesting debate, covering a wide range of issues previously discussed in Committee and on Report. I will not go through them in detail but I will say three important things. First, I welcome the Government’s movement on the matters raised in the Minister’s opening address on the OIM: its membership, the review within three to five years of the potential location of the OIM, and the firm commitment to ensuring that the DAs are consulted and their views fed in to this report. That was not as much as we wanted, but it is certainly a positive step forward that we welcome at this stage.

Lord Callanan (Con)

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My Lords, I thank all noble Lords who have contributed to what was another short but powerful debate. I have listened carefully to the points that have been made. I will set out in my closing remarks why I cannot support Amendments 51, 57 and 61 in the name of the noble Baroness, Lady Finlay. Turning first to the OIM, I emphasise that the Government have listened and responded directly to points made in this House. This is reflected in the meaningful changes made throughout Part 4. They include putting beyond doubt that the OIM will work in the interests of consumers, and making it clear that its functions will be available to the benefit of all parts of the UK, and for all Administrations, on an equal basis.

The Government have recognised the need for the devolved Administrations to be closely involved in OIM panel appointments. That is why the proposal for a one-month consent requirement on OIM panel appointments with the devolved Administrations is being introduced, providing them with an enhanced role in the process. This amendment originated with the Welsh Government.

Finally, the Government have tabled an amendment that will require a review and a report between three and five years after the CMA takes on the Part 4 functions. This will examine the way in which the CMA has carried out these functions, and the devolved Administrations will be closely involved throughout. The review and the report will provide the necessary assurances that the operation of the OIM within the CMA will be closely scrutinised, providing enhanced transparency and accountability to all four UK Administrations.

I will reply to the point made by the noble Baroness, Lady Finlay: in seeking to go further than a normal requirement to consult the devolved Administrations on the review of the OIM, the Government have included an additional and explicit requirement to share and allow for representations on the resulting draft report. As I have said, providing that the Government are not required to follow this operation an unlimited number of times is simply intended to prevent a procedural impossibility if no consensus is reached. I am happy to say again that all views offered in good faith will be considered by the Government in preparing their report, as required in the proposed clause. The amendment makes clear that the Government have the option of sharing as many drafts and considering as many rounds of representations as are appropriate and feasible in the circumstances.

I am happy to assure my noble friend Lady Neville-Rolfe that these proposed reviews would assess the pros and cons of the CMA as the delivery vehicle of the OIM, including whether possible arrangements not involving the CMA could carry out the Part 4 functions in the future.

I turn to the knotty issue of subsidy control. The purpose of this reservation is to provide stability and continuity as we move forward in forging a new UK-wide subsidy control regime. This Bill continues the UK-wide approach to subsidy control and confirms this in law. State aid has never been a devolved issue, as I have said on a number of occasions, and this reservation will ensure that we can continue to take a uniform approach to subsidy control across the UK. I reiterate that, in practice, nothing will change for the devolved Administrations. All UK public bodies, including the devolved Administrations and in the areas that the noble Lord, Lord Liddle, highlighted, will still have responsibility for spending decisions on subsidies and should make these in a way that is consistent with the overall approach taken across the United Kingdom.

In the coming months, we intend to publish a consultation on whether we should go further than our World Trade Organization and international commitments, including whether further legislation is necessary. We will take the necessary time to listen closely to the devolved Administrations and design a system that promotes a competitive and dynamic economy throughout the whole of the United Kingdom.

The proposed amendment makes clear that the UK Government are committed to involving the devolved Administrations in the forthcoming development of proposals for a UK-wide subsidy control regime. We recognise the importance of working constructively and co-operatively in this policy area, and it is in all our interests that a new regime works to the benefit of the whole country. That is why the Government cannot agree with Amendments 50C, 51, 57 and 61, so I urge noble Lords to accept Amendments 50B and 51B put forward in my name and reject the others.

Baroness Finlay of Llandaff (CB) [V]

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My Lords, I am most grateful to the Minister for providing me with the additional reassurance that I was seeking, that they will share and allow representation and that the hold-up would only be to prevent procedural deadlock in the review of the OIM panel within the CMA. In light of those assurances and the tone of wanting to work with the devolved Administrations in relation to the issue of the CMA, I will withdraw my amendment.

Lord Thomas of Cwmgiedd

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Leave out “Amendment 50B” and insert “Amendments 50B and 50C—

Lord Thomas of Cwmgiedd (CB) [V]

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My Lords, I am very grateful to all who have taken part in this very interesting and difficult debate. The points may seem obtuse, in that they concern state subsidies, but there are very real issues of principle involved. In the first place, it is quite clear, as the noble and learned Lord, Lord Hope of Craighead, pointed out earlier in this debate, that the state subsidies are devolved. For example, Schedule 5, Part III, paragraph 4(1) of the Scotland Act says:

“This Schedule does not reserve giving financial assistance to commercial activities for the purpose of promoting or sustaining economic development or employment.”

When one then looks at the amendment that is brought in by Clause 50, it speaks of:

“Regulation of the provision of subsidies which are or may be distortive or harmful … to persons supplying goods or services.”

There can obviously therefore be an argument, as any subsidy may be distortive, that the whole of the power is subsumed in what the Government are seeking to do through their Amendment 50.

Where we have got to is an almost Alice in Wonderland situation: they want to change the devolution settlement first, in this way, which cuts right across agreed provisions, quite apart from the general reservation, and then work out the policy second. Surely, the better way to do this is to work out the policy first, and to do it in consultation with the devolved Governments. The amendment I have put forward gives a way of doing that and, most importantly of all, apart from these technical issues, to take away power—express power in the devolution agreements—because all these powers are not reserved. The Government would not need this change. Not having a clear idea that you can explain and work out how this works with the devolution settlement in my view is a gift to those who say, “The union will not work. We offered to co-operate and they won’t”. I therefore want to test the opinion of the House on this amendment, which is a compromise to try to secure the future of our union, in which so many of us have such faith.

Lord Callanan

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Moved by

That this House do not insist on its Amendment 51 to which the Commons have disagreed for their Reason 51A, but do propose the following amendment in lieu—

Commons Reason

Madam Deputy Speaker (Dame Rosie Winterton)

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I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 48, 49 and 50. If any Lords amendment engaging financial privilege is agreed to, I will cause the customary entry waiving Commons financial privilege to be entered in the Journal.

Having given careful consideration to Lords amendment 50, which refers to state aid and the Office for the Internal Market, Mr Speaker is satisfied that it would impose a charge on the public revenue that is not authorised by the money resolution passed by this House on 14 September. In accordance with paragraph (3) of Standing Order No. 78, the amendment is therefore deemed to be disagreed to and is not available for debate.

After Clause 1

Common frameworks process

The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)

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I beg to move, That this House disagrees with Lords amendment 1.

Madam Deputy Speaker

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With this it will be convenient to discuss the following:

Lords amendments 2 to 7.

Lords amendments 8 to 19, and Government motions to disagree.

Lords amendment 20 to 29.

Lords amendments 30 to 34, and Government motions to disagree.

Lords amendments 35 to 41.

Lords amendment 42, and Government motion to disagree.

Lords amendment 43, Government motion to disagree, and Government amendments (a) and (b) to the words so restored to the Bill.

Lords amendments 44 to 57, and Government motions to disagree.

Lords amendments 58 to 60.

Lords amendment 61, and Government motion to disagree.

Paul Scully

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This Bill has generated a lot of debate in both Houses, and rightly so. It is a Bill that is vital in providing certainty for businesses and for protecting the Union. It is a Bill that allows the continuing smooth functioning of our UK internal market at the end of the transition period. Our approach will give businesses regulatory clarity and certainty and ensure that the cost of doing business in the UK stays as low as possible, and it will do so without damaging and costly regulatory barriers emerging between the nations of the United Kingdom.

In the other place, the Government and peers had good discussions and debates on the principle behind the Bill, and they have come to very reasonable proposals in some areas. It is right that both Houses work constructively to scrutinise and improve legislation, and the Government are therefore accepting a number of Lords amendments. That is why the Government are disappointed that in some cases amendments put forward by the other place would do the opposite and generate more ambiguity and uncertainty. Other amendments put forward go further, in hampering the Government’s ability to protect the Union and our internal market, to level up the country and to take advantage of the opportunities afforded by the end of the transition period. That is why today the Government are disagreeing with a series of amendments, to which I will now turn.

Regarding Lords amendments 1, 19 and 34, the other place and Her Majesty’s Opposition in this House have been clear about their strong support for common frameworks. I am pleased to hear that, because the UK Government are strongly committed to them as well. Joint work with the devolved Administrations to develop common frameworks is progressing well, and the first three frameworks are currently undergoing parliamentary scrutiny.

The common frameworks programme represents successful joint working, ensuring that our shared objectives of making coherent policy, upholding high standards and supporting the distinct needs of each part of the UK can advance as one. They are evidence of our mutual respect for devolution.

I am pleased that work is well under way on the 33 frameworks that we expect to conclude jointly with the devolved Administrations. Thirty of those will be provisionally agreed by the end of 2020 and will then be scrutinised by Parliament and the devolved legislatures. A small number are likely to clear scrutiny by the end of the transition period, at which point they will become full frameworks.

Alan Brown (Kilmarnock and Loudoun) (SNP)

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It is good that the Minister recognises the importance of common frameworks. All four nations of the United Kingdom have agreed a common framework on an emissions trading system, so why is the Treasury now considering imposing a carbon emissions tax instead, against the wishes of the devolved Administrations? Surely that does not respect common frameworks.

Paul Scully

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Discussions on that are ongoing and it is right that we have them. On the common frameworks, the devolved Administrations and representatives of England in the UK Parliament have made their views well known.

Jim Shannon (Strangford) (DUP)

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We have a strong agrifood sector in Northern Ireland. There needs to be an understanding between the Northern Ireland Assembly and this place, to ensure that our agrifood sector can continue to expand and sell its products around the world. Will the Minister reassure us that that will happen and that nothing will hinder it?

Paul Scully

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The whole purpose of this is that we can get the internal market right. We do not want to hamper any business, wherever it is in the UK, from being able to trade overseas with the opportunities afforded by global Britain at the end of the transition phase and beyond.

I want to make progress because I want to get across some detail and allow other Members to have their say. The common framework programme was never designed to be an all-encompassing solution to the maintenance of the internal market. This Bill will instead provide the additional legislative protection to internal UK trade, which is required for business certainty. As an aside, I note that half of the active frameworks have little or no interactions with this Bill, as they do not pertain to the internal market. That has sometimes been forgotten in recent debates.

The flexibility that underpins the framework programme is key to its success. It was set up in 2017 with an objective to manage regulatory coherence in specific devolved policy areas of returning EU law. While the frameworks are envisaged in very high-level terms in schedule 3 to the European Union (Withdrawal) Act 2018, they are taken forward by voluntary agreement, which is the reason why neither the UK Government nor the devolved Administrations have so far felt the need to codify the common frameworks process in legislation. I thank the noble and learned Lord Hope for his considered contributions to the debate and for his thoughtful amendments to the Bill. However, while the Government have carefully considered the arguments made in both Houses about putting common frameworks on the face of the Bill, we feel that that may not sit well with the flexible and voluntary nature of the common frameworks programme.

In addition to their voluntary nature, we must also bear in mind that the current frameworks are jointly owned by the devolved Administrations. Any proposal to legislate them into this Bill would need to take into account their involvement in the programme overall. I am therefore concerned that the Lords amendments would automatically disapply mutual recognition and non-discrimination principles. This would create a very broad exclusions regime and uncertainty for businesses and consumers over the terms of trade within which they are operating. That is clearly not in keeping with the aim of this Bill, which is to provide maximum certainty and a stable trading environment.

Joanna Cherry (Edinburgh South West) (SNP)

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I will just take the Minister back to his statement that the common frameworks were never supposed to be all-encompassing in relation to the internal market, because I am looking at the Joint Ministerial Committee communiqué from 16 October 2017, which says in its first principle that the common frameworks were to be

“established where they are necessary in order to…enable the functioning of the UK internal market”

The Government have gone back on that, have they not?

Paul Scully

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The hon. and learned Lady will note that the document states “where…necessary”. As I said earlier, many of the common frameworks do not relate to the internal market. That was my point exactly.

It is a core point that none of us should wish to see internal barriers to trade erected inside our country to the detriment of jobs and growth. We have been clear in the other place about how we see the common frameworks programme and the market access principles interreacting with this point at the heart of the argument. While common frameworks are jointly owned, the UK’s full internal market regime can only be owned by the UK Government and overseen by the UK Parliament.

The Minister for the Constitution and Devolution, my hon. Friend the Member for Norwich North (Chloe Smith) looks forward to completing the delivery of the common frameworks programme, discussing further with our partners in the devolved Administrations and the devolved legislatures how we can capitalise on working ahead through common frameworks and put these areas of co-operation on a sustainable footing for the longer term to the benefit of citizens and businesses. We welcome the support of right hon. and hon. Members in achieving that, but we have been clear that amendments 1, 19 and 34 are not necessary and have considerable drawbacks. I therefore call on the House to disagree with them.

To speak to Lords amendments 8 to 13, 15, 16 to 18, 30 to 33 and 56, the Government have taken positive steps to reach a compromise position that balances concern about delegated powers with the ability of the Government to act to protect our internal market. The Government have already made significant steps. We have removed the power, which is no longer considered essential, for the operation of flexibility in the internal market system. We have made further changes on transparency and accountability, such as a review mechanism on the use of such powers. In the other place, we tabled amendments to require consultation with the devolved Administrations before the use of key powers, reflecting our previous commitments. However, once consultation is undertaken, the right place for final decisions should be back in Parliament where parliamentarians from all parts of the UK can debate and vote on the proposed use of the powers. The Government are therefore disappointed by the decision in the other place.

Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)

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My understanding is that the Welsh Senedd will vote tomorrow to decline to approve the legislative consent motion for the Bill. Does that not indicate the problem with the British Government’s approach to consent? Consent means nothing without the power of veto.

Paul Scully

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If the Welsh Assembly decides that way, that will be regrettable—[Interruption.] The Welsh Senedd. It will be regrettable, because it is important that we continue to work together and allow continuity of trade and business between Wales, Welsh businesses and, indeed, the other nations of the UK. That is what

Welsh businesses have been asking us for as we have been talking to them. They want certainty, and this Bill will give them certainty.

The Government are disappointed that the other place did not take up our reasonable offer and removed key provisions needed to ensure the operation of the internal market.

Sammy Wilson (East Antrim) (DUP)

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Does the Minister not accept that for places such as Northern Ireland, Wales and Scotland, common standards that allow free trade between those parts of the United Kingdom and their main market, which is probably in England, are an advantage to everyone? The provisions in the Bill should not scare or frighten anybody.

Paul Scully

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The right hon. Gentleman puts it correctly. When I have spoken to businesses in Scotland, Wales and Northern Ireland, they have agreed with businesses in England. The main market for so many of these businesses is within the United Kingdom. We talk about global Britain, but we have to make sure that we have our internal market right. The opportunities for business, including those in Northern Ireland, are absolutely at the heart of this Bill, and I appreciate his intervention.

Removing the powers that I have outlined would make it difficult for the Government to respond to businesses and the wider stakeholder feedback and act rapidly to respond to changes in the UK internal market due to the shifting economic landscape. The other place also added in conflicting, inconsistent amendments accepting our consultation offer, but also adding consent mechanisms.

Moreover, the other place’s three amendments 12, 13 and 56 introduce a new system for excluding requirements from market access principles, based on a long list of legitimate aims. This new clause would render the protections in part 1 almost meaningless. The regulator or legislator could justify a very wide variety of discriminatory measures using the justifications in the new clause. It would result in uncertainty as to what is in scope and leave little protection from regulatory barriers for businesses operating across the whole of the UK. However, the door remains open to the other place to reconsider, and we have kept our offer on the table.

I will turn now to Lords amendments 48 and 49. Clauses 48 and 49 support the Government’s determination to deliver the commitments on which we were elected—levelling up and delivering prosperity for the whole United Kingdom and strengthening the ties that bind our Union together. They provide for a unified power that operates consistently UK-wide.

Alan Brown

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Will the Minister give way?

Paul Scully

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I will just make progress for a minute.

The power will allow for strategic investment throughout the UK, underpinning the United Kingdom Government’s determination to see all parts of the UK flourish. It will make sure that we can deliver UK-wide replacements for EU funds, including meeting our manifesto commitment to replace EU structural funds, and allowing the UK Government to invest directly to support communities and businesses across all four parts of the UK.

Liz Saville Roberts (Dwyfor Meirionnydd) (PC)

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Can the Minister explain how this can be strategic investment if the Senedd and the Scottish Parliament have no say in arranging it?

Paul Scully

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As we said in the last debate in this place, this is complementary to existing spending powers in Wales and Scotland. We will always look to work for the good of the people there, which will reflect—undoubtedly, I am sure, on so many occasions, if not all occasions—the mood and direction from their elected politicians in the Senedd.

We need to make sure that we can deliver the UK-wide replacements for EU funds, including meeting our manifesto commitment to replace EU structural funds and deliver the UK shared prosperity fund, which will allow the UK Government to invest directly to support communities and businesses across all four parts of the UK. Previously in many of these areas, the EU mandated how our money had to be spent, with little say from elected representatives in the United Kingdom. The UK Government intend to take a much more collaborative approach in delivering any funding that replaces EU programmes.

The UK Government remain committed to working collaboratively with key partners, including devolved Administrations, in the provision of financial assistance under this power. Let me be clear that this power is in addition to the devolved Administrations’ existing powers. It will allow the United Kingdom Government to complement and strengthen the support given to citizens, businesses and communities in Scotland, Northern Ireland and Wales. It does not take away responsibilities from the devolved Administrations.

Chris Elmore (Ogmore) (Lab)

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The frustration at this utter confusion is that this actually circumvents the devolution settlement. Devolution has been in place for some 20 years, and it is Ministers in Wales who have been working with the European Union on how European funding is allocated within projects in Wales. This new system removes the decision making from Welsh Ministers and circumvents the devolution that has existed for more than 20 years. Can the Minister not understand the frustration on the Opposition Benches and the bewilderment of Welsh, Scottish and Northern Ireland Ministers about why they are just not being consulted on priority projects in Wales and any of the other nations of the UK?

Paul Scully

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I can understand the frustration if that is the wilful misinterpretation of what is actually happening. The EU mandates so much of this spending before it gets to the Welsh Senedd, the Scottish Parliament and the Northern Ireland Assembly and, indeed, here in England, from where we are speaking, but we will work collaboratively to ensure that so many of those concerns are met.

We are disappointed as a Government that the other place has decided to take out the power and hamper the Government’s ability to level up the country and drive investments into all parts of the UK. These Lords amendments also alter the financial arrangements made in this House, and I therefore call on this House to disagree with them.

Turning to Lords amendment 51, I emphasise the importance of the UK continuing to take a clear and consistent approach to subsidy control as we move away from EU state aid rules. The Government have always been clear in our view that the regulation of state aid and the EU’s approach to subsidy control is a reserved matter. This reservation does not change the devolved Administrations’ position in practice. The devolved Administrations have never previously been able to set their own subsidy control rules, as this was covered by the EU state aid framework, but they will continue to make their own spending decisions on subsidies, as they do currently.

The effect of the amendment would be to create unacceptable uncertainty regarding the extent to which subsidy control is a reserved or devolved competence. This would potentially give rise to inconsistency if there were different regimes to regulate subsidies across the UK. Ultimately, that could undermine fair and open competition across our internal market, inevitably discouraging investment in the UK, bringing additional costs to supply chains and consumers.

This reservation will enable the UK to design a bespoke subsidy control regime that meets the needs of the UK economy. The Government have been clear that any future domestic regime will operate in a way that works best for all UK businesses, workers and consumers. In the coming months, we intend to publish a consultation on whether we should go further than our World Trade Organisation and international commitments, including whether further legislation is necessary. The House should therefore disagree with this amendment.

Sir Robert Neill (Bromley and Chislehurst) (Con)

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The Minister will appreciate, having had some hand in the amendments, that I have an interest in this matter. He will have seen that a statement has been put out by the Government—following the meeting of the Joint Committee earlier today—in which they undertake that they would, in effect, remove clause 44 and deactivate clauses 45 and 47, which were the subject of some concern in this place. Will he confirm that that is the case? Will he also confirm that were there to be any like clauses included in the taxation (post-transition period) Bill, which may come before us, they should, at the very least, be subject to the same parliamentary lock as was inserted in this Bill, if they were to be required at all?

Paul Scully

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I thank my hon. Friend for his contributions not just here and now, but in the earlier stages of this Bill, which allowed for that important lock. The taxation Bill and this Bill work in lockstep as well, and I can confirm his interpretation. I will come on to that in a second regarding the statement earlier today.

After the transition period ends, Northern Ireland will and must remain fully integrated with the UK’s internal market. There should be nothing controversial about that. The protocol expressly recognises that Northern Ireland will remain part of the UK’s customs territory and qualifying Northern Ireland goods will enjoy unfettered access to the rest of the UK market. We will never accept additional burdens or barriers on goods moving from Birmingham to London, and neither should we accept those on goods moving from Belfast to Liverpool. Moreover, clause 46 would codify in legislation the existing practice where state aid is notified to the European Commission by the Foreign Secretary via the UK mission in Brussels.

Ian Paisley (North Antrim) (DUP)

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I thank the Minister for the commitment he has made about goods travelling from GB to Northern Ireland. Can he tell us whether the same assurance will be in place for all goods moving from Northern Ireland to GB?

Paul Scully

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I can indeed.

Part 5 of the Bill contains vital provisions to ensure that this will always be the case, whatever the outcome of our negotiations within the EU. Since these clauses were originally introduced, the UK and EU have worked constructively together through the withdrawal agreement Joint Committee discussions, which continue to progress, and final decisions are expected in the coming days. I can confirm today that if the solutions being considered in those discussions are agreed, the UK Government will be prepared to remove clause 44, concerning export declarations, from the Bill. The UK Government would also be prepared to deactivate clauses 45 and 47, concerning state aid, such that they could be used only when consistent with the United Kingdom’s rights and obligations under international law.

Stephen Farry (North Down) (Alliance)

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I wonder whether the Minister could reflect on two points. First, I am relatively new to this place, but my understanding is that there has not been a bigger vote in the other place against a proposal from this House for many decades, if not centuries. Secondly, does he recognise that the majority of people and businesses in Northern Ireland want to see the solutions he set out work through the Joint Committee and not through any breach of international law? It is important that there should be a solid legal framework to enable businesses in Northern Ireland to conduct their affairs.

Paul Scully

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Indeed, we all want this to be dealt with through the Joint Committee. That is why the discussions are continuing, and that is why, in these crucial hours of negotiations between the UK and the EU, we wish them well in that regard.

Sir Robert Neill

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I will not trespass on the Minister’s time again, but will he confirm that the deactivation of clause 47 would remove one of the areas—the “notwithstanding” clauses—that caused most concern, particularly to legal commentators? Does he agree that that is a significant gesture of good faith on the part of Her Majesty’s Government’s and that it will hopefully remove some of the real concerns that have, for legitimate reasons, been expressed in other places? Does he agree that this demonstrates that we want to find a constructive way forward?

Paul Scully

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My hon. Friend is right again. I know the debate that has surrounded the “notwithstanding” clauses, and it is important that we work in collaboration and partnership as we do these difficult negotiations, but, ultimately, that is where we want to solve these problems, rather than having to legislate for them in the first place. As I say, we will deactivate them when we get to the point that that is consistent with the United Kingdom’s rights and obligations under international law. While we are hopeful of success, it is only prudent that until such time as the discussions have successfully concluded, we retain these clauses in their current form as a fall-back option.

As has been said many times, the Government are fully committed to implementing the withdrawal agreement and the Northern Ireland protocol, and we have already taken many practical steps to do this, but these clauses will ensure that, irrespective of the outcome of our negotiations with the EU on implementation of the protocol, we will always protect Northern Ireland’s place in the United Kingdom. They will ensure that businesses based in Northern Ireland have unfettered access to the rest of the United Kingdom and that there is no legal confusion or ambiguity in UK law about the interpretation of the state aid elements of the Northern Ireland protocol.

Sammy Wilson

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I thank the Minister for giving way again. I just want to get some clarification. Article 16 of the Northern Ireland protocol makes it quite clear that where the protocol does serious economic, societal or environmental damage to Northern Ireland, the Government have the right to act unilaterally. If this clause is to be removed and set aside, how will the Government be able to take unilateral action if changes in the protocol or demands from the EU do the kind of damage that is outlined in article 16?

Paul Scully

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As I have said before in regard to these clauses, the changes that we set out in a statement earlier today work on the assumption that we have had success in the discussions and that we can solve this elsewhere. We hope that the “notwithstanding” clauses will never have to be used, and we understand the concerns that have been raised. Making regulations of this nature would not be done lightly. That is why, before this clause is commenced, this House, as we have discussed, will be asked specifically to approve a motion to that effect, and the other place will hold a take note debate. Any regulations made under this clause would be subject to the affirmative or made affirmative procedure, meaning that they will be subject to debates requiring a vote in both Houses.

Moreover, as the Prime Minister has made clear, in addition to taking these steps in domestic law, if we had to make it clear that we believed the EU was engaged in a material breach of its duties of good faith as required and provided for under the withdrawal agreement and the Vienna convention on the law of treaties, we would seek an arbitration panel and consider safeguards under article 16 of the protocol in parallel. We must ensure that, in any scenario, we are upholding the economic integrity of the United Kingdom, maintaining the Belfast or Good Friday agreement and the gains of the peace process and protecting the delicate balance between communities in Northern Ireland.

These “notwithstanding” clauses are a limited and reasonable step that create a safety net to enable those aims to be met. They ensure that the UK Government can always act as necessary to protect and maintain our UK internal market and Northern Ireland’s integral place in it. That is entirely in keeping with what the Government have constantly said, including in public commitments from the Prime Minister, our manifesto commitments and our commitments to the people of Northern Ireland. That is why the Government cannot agree with the Lords amendments, which would remove what was part 5, and why I urge hon. Members to disagree with the Lords amendments and restore the critical provisions in full.

Ian Paisley

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I thank the Minister for allowing me to intervene in this way. Does he welcome the comments made by the Irish Foreign Minister, Mr Coveney, who said that, essentially, all the commentary for the past three years on erecting borders on the island of Ireland was basically a game of bluff by the Irish Republic? Does he welcome the fact that it has now conceded that point?

Paul Scully

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I have not heard those words, so I will not comment on them. There has been a lot of commentary, but what is important is the reality. Northern Irish businesses want the certainty offered by this Bill and the unfettered access to the GB market.

Madam Deputy Speaker (Dame Rosie Winterton)

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Colleagues will see that there are a large number of right hon. and hon. Members who want to contribute to this debate. If we have any chance of getting them in, I will have to start with an immediate five-minute limit on Back-Bench speeches, but that may well have to go down.

Edward Miliband (Doncaster North) (Lab)

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It is a pleasure to be opposite the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam (Paul Scully). This big Bill began its life with the Prime Minister, then the Secretary of State and now it is a pleasure to be opposite him. I must say that I have enormous respect for him, but I did feel that I was living in a parallel universe when I heard him this afternoon. This Bill has been absolutely savaged in the other place. It has been absolutely savaged not just on international law, but on devolution as well, not just by Opposition parties, not just by Cross-Benchers, not simply by the former Lord Chief Justice or the Archbishop of Canterbury, but by the heart of the Conservative party—by Lord Howard, Lord Hague, Lord Clarke, Lord Cormack, Lord Lamont, and Lord Barwell, the former chief of staff to the right hon. Member for Maidenhead (Mrs May). The right hon. Member for Gainsborough (Sir Edward Leigh) laughs from a sedentary position. He may not consider him exactly Conservative, but he is a Conservative peer. Believe it or not, Madam Deputy Speaker, even the Duke of Wellington spoke out against this Bill.

I gather that he has recently left the Conservative party—and who can blame him?—but nevertheless, he said this:

“In a single piece of proposed legislation, the Government have managed to antagonise almost everyone, including a multitude of counterparties and international public opinion.”—[Official Report, House of Lords, 18 October 2020; Vol. 806, c. 1342.]

The Duke of Wellington is right, and given his family history around our relationship with Europe, he is in a position to know. That is why we saw the largest defeat in a generation on this Bill, including 44 Conservative peers, seven former Conservative Cabinet Ministers and many other former Ministers.

I make that point because I think we heard the beginnings of the grinding wheels of the climbdown in what the Minister was saying. After three months of posturing, undermining our reputation in the world, today, an hour before the debate begins, we perhaps see some preparations for the brakes being applied before we go over the cliff. I am not going to give the Government any credit for that, and I do not take their word for it either. The one thing that this whole sorry saga has shown the world beyond any doubt is that this Government’s word is not their bond—they cannot be trusted, because they are willing to rip up international agreements they made less than a year ago.

Sir Bernard Jenkin (Harwich and North Essex) (Con)

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I was going to congratulate the right hon. Gentleman on endorsing the hereditary principle, which I did not know he was such a big supporter of. The real question I want to ask him is, what should a state do if it finds that its obligations under one treaty conflict with those under another treaty or its own constitutional law?

Edward Miliband

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As the hon. Member for Richmond Park (Sarah Olney) says, do not sign it, but I make another point. This is an agreement that the Government signed, and as the right hon. Member for East Antrim (Sammy Wilson) exposed, under article 16 of the protocol, there is not only a Joint Committee set up but a capacity for unilateral action in the case of social and economic disruption. He asked whether the protection will still be in place for unilateral action if these clauses go away—I can answer him, since the Minister did not: yes, they will still be in place, because they were in place all along. This has all been a completely unnecessary charade.

It is not just on international law that this Bill was savaged; it was savaged on devolution as well. This is very important, because it goes to the heart of the way we are governed as a country and the heart of our future as a country. Like the Government, the Opposition believe in our United Kingdom, but many people—including Conservatives—feel that this Bill deeply undermines devolution. Let us just listen to Lord Dunlop. For the benefit of the House, Lord Dunlop is the Government’s devolution guru—he is the guy advising the Government on devolution. He describes the Bill as

“an unnecessarily heavy-handed approach to balancing the demands of free trade within the UK with respect for the roles and responsibilities of devolved institutions.”—[Official Report, House of Lords, 19 October 2020; Vol. 806, c. 1336.]

He also says that the Government should

“think long and hard before overturning…on the back of Conservative votes alone, any sensible changes”—[Official Report, House of Lords, 2 November 2020; Vol. 807, c. 585.]

made to the Bill on devolution. So on devolution and international law, the Bill has been savaged.

Something has changed in Government on the Bill during the last three months. The truth is that the top brass of Government are running a million miles from the Bill, not just on international law but on devolution as well. We learned a few days ago from the very reliable Paul Waugh that the Chancellor of the Duchy of Lancaster has some thoughts on the Bill. He wrote:

“Even some Whitehall officials were baffled why the bill was drafted in the first place.”

He went on:

“Sources tell me that Gove has been looking at ways to either amend the devolution section of the bill, or ditch it altogether. If the whole bill is quietly left”—

Andrew Bowie (West Aberdeenshire and Kincardine) (Con)

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It is untrue.

Edward Miliband

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The hon. Gentleman says that that is completely untrue. I hope it is true, in the following sense: unless we remove the provisions in the Bill on lawbreaking and amend the provisions on devolution, we are massively undermining the Union, because as I will explain, we are departing from the principles of shared governance that we have developed over 20 years.

It is not surprising that the Government top brass are running from this Bill. Has it succeeded in improving our international standing? No—it has been calamitous, embarrassing and toxic for our international reputation. President-elect Biden, among others, is deeply concerned about the Bill. Has it succeeded in upholding and strengthening the United Kingdom, which I know the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) supports? No, it has not—it has given a stick with which those who want to undermine the United Kingdom can beat the Government.

Has the Bill succeeded in getting the Brexit deal that the Government told us it would hasten? Remember what they said—that it would show we were standing up to the EU, show that we meant business and face them down. This is a very important day to be talking about this issue. Where is the deal then, less than a month before the end of the transition period? Where is the deal? As a country, we desperately need a deal for business, workers and our economy. It is 12 weeks since this piece of legislation had its Second Reading and still no deal has been struck. And on this of all days the Government choose to bring this Bill back to the House. Our message to the Government is simple: deliver the deal that they said was oven-ready so that business can plan, even in these short weeks. Deliver what was promised.

Let me turn to the detail of the Lords amendments from the Opposition point of view. I start by going back to the issue of the rule of law. As I said, Members across all parties in the other place worked together to defeat the Government on part 5 of the Bill. I cannot do any better than Lord Howard—I have never said that before—who said:

“I do not want”

the UK

“to be an independent sovereign state that chooses as one of the first assertions of that sovereignty to break its word, to break the law and to renege on a treaty that it signed barely a year ago.”—[Official Report, House of Lords, 19 October 2020; Vol. 806, c. 1295.]

That is not some remoaner, as I think the saying goes—it is not some person who voted remain; it is Lord Howard, a Brexiteer and the former leader of the Conservative party.

The House could instead listen to Lord Cormack, who said

“this is shameful; there is no other word for it. I am deeply ashamed that a Conservative Government should have embarked on this course.”—[Official Report, House of Lords, 19 October 2020; Vol. 806, c. 1301.]

I am proud to be defending the rule of law.

Sir William Cash (Stone) (Con)

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Would the right hon. Gentleman be kind enough to give way on that point?

Edward Miliband

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It is always a pleasure to give way to the hon. Gentleman, so I shall.

Sir William Cash

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Perhaps the right hon. Gentleman recalls the fact that section 38 of the European Union (Withdrawal Agreement) Act 2020 was passed not only by the House of Commons—by 120 votes—but by the House of Lords itself. That contained the same principle regarding the notwithstanding arrangements specifically in relation to section 7A of the European Union (Withdrawal) Act 2018.

Edward Miliband

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I think the hon. Gentleman and I have had this exchange before. The fact is that the reason this Bill has caused such concern—among five former Prime Ministers and all the people in the House of Lords I have mentioned—is that it will rip up a treaty that we signed. That message has been sent loud and clear around the world. As I said, there is already provision in article 16 of the protocol for unilateral action in the event of

“serious economic, societal or environmental difficulties”.

The provisions are not only wrong, then, but unnecessary.

I wish to deal with the “insurance policy” argument that has been put forward—the Minister used the term “safety net”. This legislation is not a safety net or an insurance policy; it is a trapdoor for us, and I will tell him why. Let us say that the worst happens and we fail to get a deal, and we then trigger these provisions. What then? We set off an escalating dispute with the EU, and we do not know where that dispute ends; we further alienate President-elect Biden and scupper any chances of a US trade deal; and we destabilise the politics of Northern Ireland. This is no insurance policy; it is a guarantee of the destabilisation of our country piled on to no deal—in other words, the very last thing the country needs. That is why we will vote to uphold the Lords amendments that keep part 5 out of the Bill.

Sir Edward Leigh (Gainsborough) (Con)

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Of course we all want agreement and we all want a trade deal, but what happens if relations break down? Will the right hon. Gentleman confirm that, first and foremost, the Labour party is a Unionist party that believes 100% in the economic integrity of the United Kingdom and will not act as a poodle for nationalists? Can he give me an absolute guarantee that if relations break down and we reject this Bill, we will not be in a very difficult place in terms of the economic integrity of the United Kingdom?

Edward Miliband

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The right hon. Gentleman and I agree absolutely about the United Kingdom, and I am now going to come on to why I have such fear about this Bill. I fear that it is ignorant and blundering on the most important question about the way in which we share power across the United Kingdom. My fear about that and about the Bill is that it has given those who want to undermine the United Kingdom a further weapon with which to do so. That is why I want to turn to the devolution aspects of the Bill.

I particularly want to put on record my thanks to Lord Hope, former Lord President of the Court of Session and Lord Justice General, for his work on the Bill. The common frameworks are a complex issue, but it is worth spending some time explaining them. The common frameworks process—the Government deserve some credit for this—was established in 2017 to enable us to agree high standards across the United Kingdom and manage any divergence in those standards. The problem with the Bill is that there is no mention of common frameworks. Instead, it provides a blunderbuss principle that the lowest standard in one jurisdiction is the standard for all, with no voice for the devolved nations.

Take the issue of single-use plastics, which is a very concrete example. The Welsh Government want to legislate to ban the use of single-use plastics, but the problem is that the Bill as it stands enables the UK Parliament to simply come along, without discussion and without a voice for the Welsh Government, and legislate to stop them doing that. In a written answer earlier this month, they said very clearly that they believe that they will not be able to make that legislation stick. The Bill in its current form allows the UK Government simply to undercut the powers of the devolved Administrations in key devolved areas, including the use of plastics, other environmental standards, animal welfare and other consumer standards. That is very serious, because the common frameworks are a way in which we can both secure high standards—this is the intention of Lord Hope—and manage divergence when it occurs across the United Kingdom.

Jonathan Edwards

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The right hon. Gentleman is making a very valid point. Does he agree that the problem with the Bill is that it enables the British Government, through its control of the UK Parliament, to become like a boa constrictor around the devolved Parliaments, restricting their ability to act in the policy fields for which they have responsibility?

Edward Miliband

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However we describe it, I do not believe that the Bill properly respects the principles of devolution. These are principles that we have developed in a very British way, in a sense, over the past 20 years or so. The principles of devolution are, I think, principles that it is crucial that we uphold. I ask the Minister to think again. He should think again, and should agree to Lord Hope’s amendments, which put the common frameworks into the Bill. It makes no sense that the Governments of the four nations have spent three years working on the common frameworks only for them to make no appearance in the Bill.

Then we have a related issue, which is that in the absence of legislation for the common frameworks—the Minister mentioned this—amendment 12 seeks a wider set of exclusions for market access principles. The reason for that is very simple. In the absence of common frameworks, the market access principles apply with very narrow exclusions—on human, animal and plant health, I think—so if the Government are not willing to agree on the common frameworks, another way forward would be to have broader exclusions that allowed the devolved nations to uphold their powers. This is very important. It is about whether powers that have been devolved over 20 years are effective or ineffective, and whether this Parliament can simply override them without a voice for the devolved nations. These are deeply serious issues, and I think that their importance is recognised by Conservatives such as Lord Dunlop. 

Let us be absolutely clear what will happen if the old version of the Bill is restored and passed into law—this is a sort of prediction, but I am afraid that this is what will happen: this is a recipe for a constitutional punch-up within a very short period of the Bill’s becoming law. Frankly, if that does not happen naturally, it will be provoked by those who wish to have the punch-up. The Government will find themselves accused, rightly, of undermining the devolution settlement, and it would be a disaster for those who believe in the United Kingdom—and I think that includes the Government. The most generous interpretation is that the Government have been cavalier and have blundered into this. [Interruption.] Yes, that may be too generous. I hope that they will put it right.

Alan Brown

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On that point, the national infrastructure strategy has just been published, and under the heading,

“changing how decisions are taken”,

it says:

“Increasing the UK government’s ability to invest directly in Scotland, Wales and Northern Ireland through the UK Internal Market Bill”.

Does that not just smack of, “We’ll spend the money and we’ll make the decisions, and it won’t be collaborative at all.”?

Edward Miliband

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I think there is a very legitimate anxiety, which I hope the Minister will reflect on. Again, it was expressed in the Lords. Yes, the Government were defeated in the Lords—all Governments get defeated in the Lords at some point—but we are talking about unprecedented margins, because of the depth and breadth of concern among their lordships about the Bill, including on devolution. In a sense, because the Bill went through so quickly here, there was less time for us to discuss the devolution issues, and the focus was more on international law, but there is deep concern about this.

It is the same on state aid. We support a UK-wide state aid regime, but once again there was no mechanism in the Bill to engage with the devolved nations on setting out this regime. Again, the best that can be said is that maybe the Government have blundered in; the worst would be that they simply do not believe in giving power away when it comes to it in practice; they believe in holding it here. We cannot overestimate the seriousness of this collection of devolution issues. I believe deeply in the United Kingdom; the way we uphold it is by upholding the settlements of the last 20 years, and recognising that commitment to shared governance, but that is not what this Bill does.

Ian Paisley

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I make this point very genuinely. Fidelity to devolution is now being expressed from the Dispatch Box, but Members from Northern Ireland and the Northern Ireland Assembly ask: where that was six, eight or 12 months ago? The Labour party was prepared to ride roughshod over the views of the people of Northern Ireland on the issue of abortion, and to impose laws on Northern Ireland that are there forever, even though the Northern Ireland Assembly has a completely different view from this House on those matters. This fidelity to devolution rings very hollow tonight in many houses in Northern Ireland.

Edward Miliband

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The hon. Gentleman and I have known each other a long time, and if one looks at the record of Labour Members on the devolution settlement, and at everything that has happened over the past 20 years, I think we have absolutely shown fidelity to that devolution settlement in what we have done. [Interruption.] I will conclude because lots of Members wish to speak.

This not just a technical discussion about the Lords amendments; it is about a much deeper set of issues to do with what kind of country we want to be. We must be a country that is confident of our place in the world, and in working with others on the basis of shared democratic principles. We must be a country that stands up for the rule of law, and that recognises that we will be better governed if we share and devolve power, and do not hoard it at Westminster. The Bill achieves none of those things. Indeed, it undermines them. I am afraid that is a mark of cavalier government—cavalier with our international standing, cavalier with the law, and cavalier with the United Kingdom. Labour Members will fight for the values that our country needs, and I hope that as the Bill proceeds back—and, I suspect, forth—from the other place, the Government will listen and work with us in the national interest.

Madam Deputy Speaker (Dame Eleanor Laing)

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We will now have a time limit of five minutes.

Sir William Cash

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When I read the account of proceedings in the House of Lords, I found that the Lords were very strong on assertion, but empty when it came to the question of argument. I found that rather disturbing, because, after all, they have potential power under the Parliament Acts. I also appreciate that, towards the end of the proceedings, in reference to the powers in part 5 of the Bill, and the clauses under discussion regarding “notwithstanding”, Lord Judge said:

“‘We may need these powers at some stage’. Maybe we will; I hope not.”

He then said that it would be

“open to the Government to come back to us, to Parliament, to put before us emergency legislation.” —[Official Report, House of Lords, 20 October 2020; Vol. 806, c. 1431.]

The circumstances that we face could not be more important and relevant, and my view is that what he said effectively conceded the principle.

Sir Bernard Jenkin

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I was going to make exactly that point. Lord Judge, very respected as he is, basically conceded the principle that we might need “notwithstanding” provisions to overturn the provisions in the withdrawal agreement. We are not talking about the principle anymore; we are just talking about when it would be appropriate to introduce the provisions. They might as well be introduced now with the parliamentary safeguard that the Government have conceded.

Sir William Cash

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More or less the same took place in my exchanges with my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill), who said very much the same. There is a threshold beyond which it would be necessary for us to take such action. Without going into the detail, I just wanted to put those two things on the record.

The issue is, and basically always has been, about parliamentary sovereignty. In the UK context, this is an internal law of fundamental importance, as expressed in article 46 of the Vienna Convention. It is by virtue of parliamentary sovereignty that we have taken the line that we have. I certainly have taken that line on many occasions, including in my proposal for section 38 of the European Union (Withdrawal Agreement) Act 2020, which I referred to earlier, and which has the whole concept of “notwithstanding” built into it. Section 7A of that Act also deals with direct effect. Given that the Act was passed with a large majority in the House of Commons, and then passed again in the House of Lords without any dissent of any description, I find it quite extraordinary that this has been turned into a matter of such fundamental anxiety, without any supporting argument that I have ever seen.

When I read the debates, I found there was a great deal of posturing going on. I understand the emotional concern of some people who are quite incapable of accepting that we have lawfully left the European Union; that a series of enactments were passed by both Houses; and that, on top of that, we had a general election—not to mention that under the Salisbury-Addison convention, it would be inconceivable, in the context of a general election manifesto, for the Lords to take a stand against these clauses if the House of Commons passed them again tonight, and perhaps again on another occasion.

Why do I say all this about constitutional and international law? I will deal with that very briefly. First, in my judgment, the European Union has breached article 184 of the withdrawal agreement, which is about negotiating in good faith. It has manifestly multiplied that fault over the past few days by refusing to accept the manner in which the negotiations have been conducted so far. There is also the question of its demand to retain power over crucial aspects of our sovereignty—both economic and relating to our national interest—as a precondition to concessions on trade.

The EU has also, in my judgment, breached article 184 on the basis of the recognition, as it puts it, of our internal market. I believe in the basic principle that one party to a treaty cannot obtain from the other the execution of its obligations if it does not respect its own commitments. If the EU continues to act as it has done in the negotiations, particularly over the past few days, the United Kingdom would be entitled to terminate the withdrawal agreement on the basis of the EU’s breach of article 184.

Lastly, as I said in Committee and on Report, there is a long list of occasions when Conservatives, Labour and Lib Dems, as part of the coalition, have agreed to override treaties. There are not just one or two quite explicit examples, but hosts of them. In infinite Finance Bills and Independence Acts, and in relation to prisoner voting and various other things, there have been quite clear and deliberate overrides of treaties. The EU, as well as the EU member states, frequently violates international law; the Western Sahara case, the defiance of security council rulings, and breaking the Lisbon treaty are a few examples.

Indeed, in conclusion, the EU grants supremacy to its own constitutional principles when they are in conflict with international law. In the Kadi case, the European Court stated:

“The obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the…Treaty”.

So there it is. I say again that I strongly support the Government’s position, and reject the amendments by the House of Lords.

Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)

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In. Out. Reinstate? As the right hon. Member for Doncaster North (Edward Miliband) has pointed out, the Prime Minister and the Secretary of State have dropped this, and it is left to the Minister to hold Dominic Cummings’s baby, and to front this up in Parliament. I almost feel sorry for him, but then I remember that both the Treasury solicitor and the Advocate General for Scotland have already resigned over this, because it is such a terrible move by the Government.

The House of Lords, as we have heard, has rightly carved up this disastrous, petty, grubby, law-breaking, power-grabbing Tory Bill—and after the announcement made just an hour before we came in here tonight, we can add “shambolic” to that as well. We welcome the Lords’ removing a number of threats to devolution from the Bill. We already know that the Tories hate devolution, as the Prime Minister has made clear.

Clause 42 authorises the UK Government to spend on devolved areas. The UK Government intend to use clause 42 for the purpose of a shared prosperity fund. However, as we have heard, we have yet to see details of that. I personally have been asking about it since 2017, yet we have heard nothing on it. As we have heard, we have also yet to see any sign of the long-promised consultation. It has been repeated over and over that there will be a consultation, but we have not seen it. Lord Thomas confirmed in the other place:

“It is therefore plain that the purpose of Clause 42 is to cut across the powers of the devolved Governments to provide financial assistance in areas such as economic development and commercial activities”.—[Official Report, House of Lords, 25 November 2020; Vol. 808, c. 276.]

That takes away a power from the Scottish Parliament. Baroness Finlay said that

“Clause 42 would enable the Government to work around, rather than work with, the devolved Governments”.—[Official Report, House of Lords, 25 November 2020; Vol. 808, c. 280.]

Andrew Bowie

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The hon. Gentleman may disagree with the right of the UK Government to intervene financially on all the areas that have been specified, but he cannot say that this amounts to us taking away a power from the Scottish Parliament, because that is fundamentally untrue, and he is in fact misleading the House when he does so. [Hon. Members: “Withdraw.”]

Madam Deputy Speaker (Dame Eleanor Laing)

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Order. The hon. Gentleman is not misleading the House.

Drew Hendry

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Thank you, Madam Deputy Speaker. I could have come back with a different response, but I appreciate you intervening.

The hon. Gentleman tries to say that this is not a power grab—not taking back powers from the Scottish Parliament. What I am quoting is not SNP folks saying this, and not even the Scottish Government—it is other people, as we have heard from around the different parties, including his own, right across the nations of the UK, and across the world. What he says really does not hold any water.

On clause 49, the Lords amendment removes the UK’s Government’s attempt to re-reserve state aid. Lord Thomas noted that

“unashamedly, the Government want to use this legislation to alter the devolution settlements…They are trying to make state aid a reserved matter by the device of expanding or extending the competition policy reservation.”—[Official Report, House of Lords, 25 November 2020; Vol. 808, c. 317.]

Lord German confirmed:

“Blunting and reducing the power of the devolved authorities is deemed to be a price worth paying so that the UK Government alone can determine the route they wish to follow in directing the new regime. Yet we do not know what this regime will look like.”—[Official Report, House of Lords, 25 November 2020; Vol. 808, c. 319.]

Leading for the Government in the Lords, Lord Callanan confessed that

“Clause 44 reserves to the UK Parliament the exclusive ability to legislate for a UK-wide subsidy control regime.”—[Official Report, House of Lords, 25 November 2020; Vol. 808, c. 325.]

I can tell the House that the SNP will not accept this brazen power grab. State aid must remain a devolved competence.

Lords Amendment 11 means that devolved Governments must either give their consent to regulations within a month, or the Government could continue but would have to explain to Parliament why they were proceeding without agreement. Lord Bruce noted that it

“takes the need for consultation but adds to it by saying that there must be a requirement to secure consent.”

That is absolutely what is required. He went on to say:

“That draws on the common frameworks principles, which suggest that every sinew should be bent to secure consent.”—[Official Report, House of Lords, 23 November 2020; Vol. 808, c. 50.]

I stress: not consultation but consent.

On Lords amendment 57, Lord Thomas noted that

“the composition of the CMA should now reflect its different position and role under this Bill...it is critical that it commands the confidence of all the people of all the nations of the United Kingdom and therefore that it has representations from them.”—[Official Report, House of Lords, 23 November 2020; Vol. 808, c. 103.]

Lords amendment 1 seeks to protect the role of the common frameworks from the Bill. When moving his amendment on Report, Lord Hope summarised:

“Not only does the Bill ignore the common frameworks process but it destroys one of the key elements in that process that brought the devolved Administrations into it in the first place: it destroys policy divergence. It destroys those Administrations’ ability through that process to serve the interests of their own people, and to innovate.”—[Official Report, House of Lords, 18 November 2020; Vol. 807, c. 1432.]

Baroness Finlay warned that the Bill

“is not based on warm support for devolution but rather on hot resentment of the fact that the devolved Governments and legislatures can innovate at speed and take their populations with them.”—[Official Report, House of Lords, 18 November 2020; Vol. 807, c. 1434.]

That is something that this Government cannot do.

Lords amendment 8 removes sweeping Henry VIII powers that allow the Minister to alter the definition of key requirements for the Bill and in each case rewrite those principles substantially in secondary legislation. In the Lords proceedings, the Government accepted the argument and removed the Henry VIII powers from clause 3, but refused to remove them from clause 6. Under clause 6, the Secretary of State can act without the need to introduce new primary legislation or to obtain the consent of the devolved Governments, taking power away from them. As I have said before, the UK Government’s offer to consult is meaningless. “Consult” is not the same as consent, which is what is required.

David Linden (Glasgow East) (SNP)

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The truth is that the Bill is an absolute abomination and drives a Trojan horse through the devolution settlement, but my hon. Friend is right to put his finger on that very issue. Brexit was supposed to be about Parliament taking back control. How does he reconcile the idea that Parliament is taking back control with granting these sweeping Henry VIII powers to the United Kingdom Government?

Drew Hendry

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Indeed, it is the UK Government who are seeking to take back control from Scotland, and from Wales, with the Bill, which is a clear and utter power grab.

Jonathan Edwards

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I am extremely grateful to the hon. Member for his forensic analysis of the British Government’s tactics in relation to the Bill. Essentially, the British Government are hollowing out devolution as the middle ground in the constitutional debate in Wales and Scotland. For the people of Wales and Scotland, the choice becomes independence or direct Westminster rule.

Drew Hendry

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The hon. Member is absolutely right. It is no surprise that in Scotland we have now had 15 opinion polls in a row that show that a majority of people support independence. That has not happened overnight; that has happened because they have been watching what has been happening here, and have seen the contempt with which Scotland and Wales’s Parliaments have been treated. The result is the growing demand for us to protect our Parliament in that way.

When it comes to devolution, the Tories used to wear a mask to hide their contempt, but the Bill, and recent comments from the Prime Minister and the Leader of the House, have ripped it away once and for all. The Prime Minister recently told his MPs that devolution was a disaster and Tony Blair’s biggest mistake—the latest in a long line of statements that he has made to show his distaste. We all remember him saying that

“a pound spent in Croydon is far more of value to the country…than a pound spent in Strathclyde.”

The Leader of the House has called devolution a failure and is arrogantly dismissing it, while the Scottish social attitudes survey shows that only 7% of the Scottish people do not support devolution. As I have said, the Bill is an orchestrated attempt by this Tory Government to re-centralise powers.

Andrew Bowie

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I thank the hon. Member for giving way to me for a second time. I simply cannot sit here and listen to him describe this party and this Government’s position on devolution in the way that he is. Under the Calman commission and the Scotland Act 2016, we have devolved more powers to Scotland than any Government in the history of devolution. We have created police and crime commissioners across England and Wales. We have devolved power to our greater cities and regions across England and Wales. Next year we will publish our devolution White Paper. To stand there and say that the Government do not respect or believe in devolution is simply baloney.

Drew Hendry

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This is the man who said:

“The UK Government is back in Scotland. Get used to it.”

We have seen the Tories for an awful long time. In Scotland, we have not voted Tory since 1959, I think. [Interruption.] Sorry, 1951. That is how long the Scottish people have seen what the Tories are at. We do not want a Tory Government making decisions for people in Scotland. That is why the vast majority of Scottish people voted, with a settled will, to have their own Parliament, and all polls and the social attitudes survey show that, more and more, they support not only devolution but independence.

The Government want to drive a wrecking ball through the devolved settlements. That is reflected by the fact that this Bill, as we have heard, has been ripped apart in the House of Lords. On the shared prosperity fund, it said:

“The Government should explain why such a broad power for the UK Government to spend money in devolved territories has been included in this Bill.”

It also said that the delegated powers in the Bill are “extraordinary” and “unprecedented”,

“and many of them are constitutionally unacceptable.”

Of course, we know from experience what happens when UK Ministers have control of spending. The former Tory Prime Minister John Major took much-needed cash from the highlands and redirected it to Tory marginal seats that were under pressure in the south-east of England. Decades on, nothing has changed. As we know from the pork barrel scandal whereby the Secretary of State for Housing, Communities and Local Government directed funding to 61 towns that were key to the Tories gaining or retaining seats in the general election, priorities for Scotland will mean little or nothing to the Tories—probably the latter—unless they see some political advantage. Their naked intention to break devolution and break the law has been condemned across the world and even from their own Benches.

This Bill is not worthy of this or any other Parliament. Outside of Tory Government circles, it has been rightly and absolutely panned. Catherine Barnard, professor of European law at Cambridge University, said

“This is a remarkable piece of legislation and it expressly contravenes our international legal obligations to a point that the legislation itself says this is the intention”.

Imagine that. Steve Peers, a professor at the University of Essex, said:

“It is an obvious breach of international law.”

David Anderson, QC, tweeted:

“The Ministerial Code still mandates compliance with international law, despite a change to its wording, as the Court of Appeal confirmed in 2018”.

Simon Davis, president of the Law Society of England and Wales, said:

“The rule of law is not negotiable.”

Perhaps most tellingly, George Peretz, QC, tweeted:

“But it is hard to think of a better argument for Scottish independence than a UK government that is prepared to use Westminster’s unconstrained sovereignty to override a binding treaty commitment it entered into less than 12 months ago.”

Former Tory Prime Ministers, including a Member still sitting in this House, have savaged this shoddy piece of legislation. From their own Benches, the Government have been told that

“a willingness to break international law sits ill for a country that has always prided itself on upholding the rule of law.”

They have also been told by their own Members that it is an act of bad faith and that the rule of law is not negotiable.

The Bill has also been condemned in the United States. This is a Government who are really good at negotiating no deals, and it looks like they are about to negotiate another one with the US. Nancy Pelosi, the Speaker of the US House of Representatives, said:

“The U.K. must respect the Northern Ireland Protocol as signed with the EU to ensure the free flow of goods across the border.

“If the U.K. violates that international treaty and Brexit undermines the Good Friday accord, there will be absolutely no chance of a U.S.-U.K. trade agreement passing the Congress.”

We have also heard comments from the Taoiseach and others across the European Union. In America, Antony Blinken, the chief foreign policy adviser to Joe Biden, said that Joe Biden

“is committed to preserving the hard-earned peace & stability in Northern Ireland. As the UK and EU work out their relationship, any arrangements must protect the Good Friday Agreement and prevent the return of a hard border.”

Sammy Wilson

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I am glad that the hon. Member is so supportive of the Belfast agreement, but would he accept that the Belfast agreement was all about ensuring that Northern Ireland stays within the United Kingdom as long as the people of Northern Ireland wish that to be the case, and a border between Northern Ireland and the rest of the United Kingdom, as is in this protocol, certainly does not protect the Belfast agreement and therefore does not even meet the criteria he has set himself?

Drew Hendry

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Indeed, it should be the right of people living in any country to determine their own future, and he is right: if the people of Northern Ireland choose a different path, they should be respected, as should be the case for those in Wales and Scotland as well.

I will start to wind up my comments now, Madam Deputy Speaker. I could go on for much more time, but I know that you have packed Benches of Members waiting to come in. I was just about to talk about Joe Biden. He said:

“We can’t allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit. Any trade deal between the U.S. and U.K. must be contingent upon respect for the Agreement and preventing the return of a hard border. Period.”

That is what he said.

This Bill continues to facilitate a race to the bottom on standards, threatens our quality food and drink, opens the door to genetically-modified beef and chlorinated chicken, among other products, and opens the door to privatisation of our water and our NHS. As I have pointed out, the House of Lords has rightly carved up this disastrous, petty, grubby, law-breaking, power-grabbing, messy Tory Bill. Its amendments must be respected and agreed. The Scottish Government have always engaged willingly to take forward the common frameworks progress this devolution-wrecking—

Andrew Bowie

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Rubbish.

Drew Hendry

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The hon. Member says “Rubbish”, but he knows that is not the case. We understand that the Tories have a very casual relationship with the truth, but we expect them to at least have a one-night stand with it.

This Bill confirms the contempt that the Prime Minister and his Government have for devolution. People in Scotland see this clearly. As I have said, 15 polls in a row are showing that independence is the only way to save our Parliament’s powers and the voice of the Scottish people, and as the Defence Secretary confirmed earlier, we can have that discussion in the referendum that is coming.

Madam Deputy Speaker (Dame Eleanor Laing)

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There is a five-minute limit on speeches.

Dr Liam Fox (North Somerset) (Con)

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When I voted to leave the European Union, it was not primarily over concerns with immigration or concerns about how we would divvy up the money that came back from the contributions we would not be making to the European Union; it was entirely as a constitutional lever. I believe in the principle that the people who live under the law should have the right to choose the people who make the law. Incidentally, that also shapes my views on how the House of Lords should be reformed. However, that principle could not survive as soon as we had the direct application of EU law and the use of the ECJ. Therefore, for me that meant that there was only one choice, which was to leave the EU. I explained that to an American audience by saying that, if in the United States there was a court in Ottawa or Mexico City that could override the US Supreme Court and there was nothing legislators could do in the US, how would they like it? They said, “Absolutely, we would never ever accept it.” That, for me, is the key principle.

When I first heard of this internal market Bill, I was at the World Trade Organisation in Geneva and, frankly, I was shocked to hear that the Government were intending to break international law. That was until I came back and looked at the provisions themselves, and found out that nothing whatsoever was actually being broken in this Bill. In fact, nothing was actually being done in this Bill, other than setting out a set of contingency measures, which is of course a well-accepted legal principle.

Sir Edward Leigh

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Will my right hon. Friend give way?

Dr Fox

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I will give way once—to my right hon. Friend.

Sir Edward Leigh

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There has been virtually no discussion during this entire debate about the fact that this is a safety net, which we hope will never be used. If we are on the high wire—and when we are dealing with the EU, we are on the high wire—we may not want to use a safety net, but it does no harm to have one.

Dr Fox

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I entirely agree. I have used the analogy myself that this is a lifeboat that we hope we never have to launch. We hope the ship will never go down because we will reach a trade agreement, and we should reach a trade agreement because, as I said earlier in the House, there has never been a trade agreement that has begun with the two parties in complete identity of trade law, of tariffs and of regulation. It should be, if it was only about trade, an easy agreement to reach, but it is not just about trade. The main stumbling blocks are constitutional—the very constitutional issues that made me want to vote to leave the European Union in the first place.

There are those who have said that this Bill is outrageous and that it sets new precedents, but in fact it says only that, under certain circumstances, domestic law might have to be used to overrule treaty law. Is it revolutionary? Is it unprecedented? Well, on 12 February 2016, the German federal constitutional court said:

“Treaty overrides by national statutory law are permissible under”

the German constitution. It added:

“Under the system of the Basic Law, international treaties have the same rank as statutory federal law. Therefore, they can be superseded by later federal statutes that contradict them.”

That is merely the power that the United Kingdom Government are seeking to use as a contingency power, should they need it, yet nobody screams about the German Parliament being able to exercise an identical power.

In the short time that I have, I want to make a couple of comments about the value of free trade in the internal market to the Union itself. The 1707 articles of Union between England and Scotland, and those between Great Britain and Ireland in 1800, abolished all customs duties between the different parts of the United Kingdom. Free trade across the whole of the United Kingdom was not only integral to the development of the whole of the United Kingdom from the industrial revolution on, but it was particularly important to Scotland and Ireland, whose citizens could freely trade with the much bigger English market—something that exists today. That point was made very well by the right hon. Member for East Antrim (Sammy Wilson) earlier in this debate.

It is easy, given how successful it has been, to forget how important that single market is, and how easily it could be damaged and what the what the implications would be if it were interfered with or restricted. Of course, that is why the hon. Member for Glasgow North (Patrick Grady)—I am sorry that he has left his place—was unwilling to engage in debate with me last week when I asked what estimates had been made by the Scottish nationalists of the break-up of the UK internal market in terms of the Scottish economy. He said, “We will come and make those arguments in due course,” because they do not want to hear those arguments aired in front of the Scottish people at the present time.

The devolved legislatures were created after the UK joined the European Community and then the European Union. Because the single market rules apply to regional Governments and legislatures as well as central Governments of member states, there was no pressing need during our membership of the European Union for specific UK-based rules maintaining the UK internal market against fragmentation. Brexit changes all that, and that is why I believe that we should reject the Lords amendments tonight.

However, in supporting the Government, I just ask this one question: when did the Government’s legal advisers advise Ministers that the withdrawal Act indeed, by direct application, threatened the internal market of the United Kingdom? It was not something that I heard discussed at the time, but I would like to know the answer to that question, as would many of us who are supporting the Government tonight and who believe that what we are seeing is proportionate contingency planning, fulfilling the duty of the maintenance of the UK internal market, the key part of the United Kingdom itself.

Hilary Benn (Leeds Central) (Lab)

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Who would have thought that we would be here on 7 December—there are 24 days to go—with the Government wanting to put these international law-breaking clauses back into the Bill and the Brexit negotiations still going? I have always thought that there will be an agreement, but I must confess that in the last few days I have felt a bit gloomy. I do not know whether the announcement in the last 20 minutes that the Prime Minister and Ursula von der Leyen are going to meet later this week to pore over the areas of disagreement should raise our hopes or not. What do they say? It’s the hope that kills you.

Anyway, the truth about this Bill is out. The offending clauses are nothing more and nothing less than a piece of negotiating leverage, which we now know will be dropped the moment a satisfactory resolution is found to the questions that the Joint Committee is properly considering. That was confirmed in the Prime Minister’s statement this afternoon.

The Prime Minister’s dilemma with this Bill and, indeed, with the talks is best explained in this way. Four and a bit years ago, he famously decided to publish the second of two articles that he had written about Brexit. One of them was for leaving the EU, and the other was against. When he made that decision, he climbed on the back of what I would describe as the Brexit tiger. It has taken him on quite a journey—it has taken him through the door of 10 Downing Street, which I am sure was his hope, but there is just one problem: it is not entirely clear he knows how to get off the tiger in order to secure a deal. He is the prisoner of the fateful decision that he made.

It is not that he was not aware of the consequences, because thanks to Tim Shipman, we now know what he wrote in the other article, which was not published. He said:

“Almost everyone expects there to be some sort of economic shock as a result of a Brexit. How big would it be?”

Well, we know the answer, because the Government have done their own economic assessment, and we saw what the Office for Budget Responsibility reported a couple of weeks ago: the economy is hit either way, but it is much worse if no agreement is reached.

The question now for the House and for the negotiators is, how do we get out of this? It is clearly not by the clauses that the Government are seeking to put back in the Bill. One of the reasons why the Government are having so much trouble with the level playing field negotiations is the existence of those clauses. Let us think about this for a moment. Why do Ministers think that the EU negotiators are so keen to tie down commitments that both sides will be asked to give in the negotiations? It is for the very simple reason, as my right hon. Friend the Member for Doncaster North (Edward Miliband) made clear in another brilliant speech, that we have shown that we are not to be trusted to keep our word. If a country is in the process of negotiating a new international treaty, it does not do wonders for its credibility if it is busy preparing to tear up part of the previous treaty that it negotiated with the same partners and signed just over a year ago.

The other issue is sovereignty, about which we have heard an enormous amount today. If sovereignty is absolute, and if we were to take it to its logical and absurd conclusion, for example, why should we be negotiating on fish at all? Would not giving any of “our fish”, as some people describe it, be a betrayal? If sovereignty is absolute, what are we doing in the World Trade Organisation? As the right hon. Member for North Somerset (Dr Fox) knows only too well, the WTO has a dispute resolution body that gives other countries, if they win a case against the UK, the ability to impose countervailing measures upon us, including tariffs. How could that be acceptable to a sovereign country that claims complete sovereign control? The truth, of course, is that sovereignty is not absolute. It is what we choose to do with it that matters, and we cannot avoid that choice. We cannot avoid that choice in these negotiations, because the only way out of this mess, in the interests of the country, is for both sets of negotiators to grasp the heavy responsibility that they have at this moment to make the choices that will secure the deal that the country desperately needs.

In conclusion, since German car makers, as was once rather fancifully suggested, are not going to turn up late in the day to rescue the negotiations, a bit like Blücher at Waterloo, we have to save ourselves. That is what we have to do at this point. Whatever the bluster, I simply say to those on the Front Bench that the country will not forgive this Government if they impose no deal upon us.

Sir Bernard Jenkin (Harwich and North Essex) (Con)

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It is always an enormous pleasure to follow the right hon. Member for Leeds Central (Hilary Benn). For decades, the EU was a train that we had to stay on, and now Brexit is a tiger that we have to get off. There is not time to re-engage in the old arguments about sovereignty, but it was very telling that he thought the importance of sovereignty was what a country chooses to do with it, not what it is imposed with.

There is no international organisation of which we are a member in the world that is like the EU, which imposes its will on us through our own laws and courts; every other international body—such as the WTO, to which the right hon. Gentleman referred—is a voluntary association governed by international law, which is a completely different matter.

Sammy Wilson

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As the hon. Member for Harwich and North Essex (Sir Bernard Jenkin) pointed out, one of the most important principles of the United Kingdom is to have a common market and trade between the different parts—that is where the prosperity that attracts people to be part of the United Kingdom comes from. My view, which I have expressed in the House many times, is that the withdrawal agreement undermines the United Kingdom’s economic integrity as well as of course undermining its constitutional integrity, because as a result of the withdrawal agreement part of the United Kingdom will now have its laws made in Brussels and not in London or, indeed, in Belfast. That is why I believe this internal market Bill is so important. First, it ensures that standards within the UK internal market are maintained and that each part of the United Kingdom, for maybe very selfish, very parochial and even very temporary reasons, may want to make differences in its laws, regulations and standards, and, in doing so, damage not only the internal market but their own markets as well.

When it comes to the controversial clauses, I believe that the Lords have done a great disservice to Northern Ireland. I believe, as someone has already pointed out, that they are strong on assertions but very poor on arguments. The withdrawal agreement, while it promises unfettered access, while it promises that Northern Ireland will remain part of the UK customs territory, while it promises that the integrity of the United Kingdom will be maintained, in reality means that we will finish up with a plethora of trade barriers. We will finish up with laws made that are different from the laws in the rest of the United Kingdom. We will finish up with Northern Ireland being part of the EU single market, rather than the UK internal market.

Paul Girvan (South Antrim) (DUP)

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Does the withdrawal Act that has been put forward or the Northern Ireland protocol included in this Bill not send the message to those who are from the Unionist community, “Your views do not matter, but appease those who are nationalist and republican, and who are only interested in their links with the Irish Republic. Europe has done us a disserve in not giving us free access to both the Republic of Ireland and the UK, and forget about the links we have with the United Kingdom”? That seems to be the message they are sending.

Sammy Wilson

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Any agreement that means laws can no longer be made in the United Kingdom, and puts economic barriers between ourselves and our main market, is bound to be a change in the position of Northern Ireland that is totally contrary to the Good Friday agreement, which requires consent.

Some have argued that the Bill puts a safety net in place and that some of the aspects—only some of the aspects; I have to make that very clear—of the withdrawal agreement which could damage the Northern Ireland economy can be countered through the measures in the Bill. That, by the way, is totally in line with the withdrawal agreement itself, which allows the UK Government to act unilaterally where there is economic or societal damage done by the withdrawal agreement. The right hon. Member for Doncaster North (Edward Miliband) said, “Well, there you are. You’ve got your assurance in the withdrawal agreement.” But all the withdrawal agreement states is that the Government will have the right to act unilaterally. They must have the means to act unilaterally. The provision in this Bill gives them the means to act unilaterally. Ministers, notwithstanding what is in the agreement, can make new regulations and new laws that protect the Northern Ireland economy and the Northern Ireland market. That is why it is so essential to have these provisions.

What disappoints me is that we now have the Prime Minister today saying, “By the way, once we have a negotiated settlement and the work of the Joint Committee, then we can withdraw this.” That fails to recognise the nature of what we have entered into. The safety net is there not just for a one-off event, but because we will be continually walking the withdrawal agreement tightrope. Northern Ireland is still going to be subject to the rules of the internal market. Indeed, the withdrawal agreement makes it quite clear that the work of the Joint Committee will go on and on. At any stage, EU officials could demand that checks be placed in Northern Ireland and that UK officials would have to adhere to that. If those demands become unreasonable, we will then need a safety net. If we need a safety net, we do not need it until these negotiations are over. We need it while any part of the withdrawal agreement and the Northern Ireland protocol is in place.

I would therefore like an assurance from the Minister that if the Government intend to withdraw the safety net—if negotiations turn out fine this week—what protection will there be for Northern Ireland from the depredations of the withdrawal agreement in the future? That is important. I believe that this Bill is essential. The Government owe it Northern Ireland, having signed a disastrous agreement this time last year. If the integrity of the UK is to be maintained, the provisions in this Bill and, indeed, other provisions will be necessary.

Sir Robert Neill

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It is a pleasure to follow the right hon. Member for East Antrim (Sammy Wilson), although I fear that I cannot agree with him on one point. I understand the point of view of those who voted against the withdrawal agreement that they can attack what they regard as its inadequacy. I voted for the withdrawal agreement, as did pretty much everyone else on the Government Benches, and I take the view that one should not deviate or depart from it, save under the most exceptional and pressing circumstances. At the end of the day, despite a great deal of debate, that is pretty much where we have ended up. I would not be comfortable about doing so were it ever necessary. I would not find it attractive. Sometimes, though, events occur in the nature of international negotiations that may render it necessary.

The Government having reflected, as I am glad they did in the Bill’s passage through this House and added the parliamentary lock to clause 56, there is a proportionate means of dealing with such an unwelcome eventuality should it arise. It is not something that we should look to. It is not something that we should desire and it is not something that we should make easy either. It is something that should be done only if a high bar of evidence is met and if this sovereign Parliament—to use a phrase that has been much used—is itself satisfied of that. That is reasonable. It is also not inconsistent with the international law approach under article 46 of the Vienna convention where it is possible, in limited but urgent circumstances, to deviate from an international rule of law if it is necessary to maintain the fundamental internal rule of law of the state. This is not something that has been dreamed up without sound legal foundation, which is why, while I am normally most reluctant to disagree respectfully with two former Lord Chief Justices, Lord Judge and Lord Thomas of Cwmgiedd, both of whom I regard as friends and admire greatly, I do take the view that they take a more restrictive approach than is necessary in this case.

To take a contingent power is not of itself a breach of international law, or of itself a breach of good faith. If that were used disproportionately, or without the sort of checks and balances and proper lock that we have now adopted, I can see that that would be the case. I do not believe that the taking of the power, which has not yet been brought into force and would not be without certain hurdles having been met, itself offends against the principle of the rule of law with every respect. Indeed, I hope that, in that respect, we have managed at all times to adhere to the rule of law. That is why, I am pleased to say, the Government intend to reinstate the parliamentary lock, which was removed by their Lordships as well as those clauses that they found offensive. That was perhaps surprising. I say charitably to my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) that it was perhaps seen as consequential and inevitable if we removed the commencement part of part 5, to be kind.

The reality is that, because the Government have committed to, and reaffirmed today that they are committed to, restoring the parliamentary lock and gone further and indicated that, in subsequent related pieces of legislation, they will adopt the same approach, that does show an internal consistency, a logic, in what is being done. The situation makes me, as somebody who was a lawyer before I came here, and will, I suspect, still regard myself after I have left here, not happy but satisfied that the proper tests have been met in these exceptional circumstances. That is why I am content to support the Government in these motions to disagree tonight, but with the very profound hope that this is never necessary, that we never come anywhere near this, and that the Prime Minister is able to achieve a deal.

If he does come up with a deal, he will have my wholehearted support, and the support of many others with a like view, because that is by far the best outcome for the whole country, for the Union and for business.

At the end of the day, I do not think that the clauses that the Lords sought to remove actually offend against propriety and, for that reason, I am prepared to support the Government tonight. They have shown willingness to be pragmatic, to make compromises and to listen. That should be something that one should applaud. I hope therefore that we will be able to return the Bill to their lordships so they can perhaps reflect that it is not necessary for them to insist upon their amendments.

Alison McGovern (Wirral South) (Lab)

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It is a pleasure to follow the hon. Member for Bromley and Chislehurst (Sir Robert Neill). I feel that if anybody has a chance in this place of persuading the vast ranks of angry Lords in the other place that my right hon. Friend the Member for Doncaster North (Edward Miliband) described earlier, it is him. Unfortunately, even he does not have much of a chance given the levels of consternation down the corridor at the clauses in particular that we have been discussing.

Unfortunately, to add insult to injury, this afternoon—while we have been debating—the Prime Minister has given the game away, because he has said that if the negotiations that we are all very concerned about are completed in a positive way, these clauses will not even be needed. I am worried about that because, as any parent knows, when it becomes clear that it is just a negotiation tactic and you do not really mean it, you have already lost. More seriously, I listened to the right hon. Member for East Antrim (Sammy Wilson) describe the situation—he and I do not agree on much politically, I would think—and he said that, if these clauses are really needed, they are needed. If they are just able to be removed, depending on the negotiations, they are not really needed, and that is at the heart of the problem.

Their lordships have explained why the rule of law matters for its own sake. I am no great legislative or legal theorist, but I know why the rule of law matters for all our sakes. It is because of the terrible economic impact of the current situation that we all face. Unfortunately, the Chancellor, when he gave his statement last week, did not make much of it, but the OBR described it in all its horrendous glory—that on top of the gruesome impact of the pandemic on jobs and the economy of this country, the situation that we are facing next year with Brexit could be horrendous.

This matters, because this Bill describes exactly how economies function by common rules, by frameworks applying consistently to markets over space and time. They do that because there are institutions that police those rules, and therefore the institutions that we create matter, and the trust in those institutions matters. They matter not just for their own sake, but for the markets that they underpin, the jobs of the people who work in them and the fate of the people who are part of them. Every step that we take either builds those institutions or knocks them down. Every action creates trust or undermines that trust. Because trade is a repeated exercise, as others have mentioned, all of this debate makes it harder for us to agree new institutions, new frameworks and new rules in the future. That is how our reputation as an international party is won or lost. I know this: when we engage in this kind of madness, there is always a price, and not just some kind of theoretical, legalistic nicety of a price. There is a price in jobs for my constituents and there is a price at the shops every time my constituents do their shopping. So we can have no more of this.

Finally, on devolution, we have heard about the deep consternation among those in the devolved institutions about the clauses in the Bill that relate to them. It is about time we realised the connection between unpredictable and unreliable action from the UK Government, and the deep dissatisfaction in the constituent parts of the United Kingdom. I speak not only having heard those from Scotland, Wales and Northern Ireland; I speak from Merseyside, where European structural funds made a profound difference to our economy. Why? Because the investment was predictable; it was possible to understand why that investment was being made; and it was possible to understand what would happen to that investment for the future. The European Union was a reliable investment partner. If the UK Government choose never to be reliable, the people in this country will pay the price.

Madam Deputy Speaker (Dame Eleanor Laing)

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After the next speaker, the time limit will be reduced to four minutes. With five minutes, I call Andrew Bowie.

Andrew Bowie

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It is a pleasure to speak in this debate and to follow the hon. Member for Wirral South (Alison McGovern).

There is a distinct sense of déjà vu today. The House of Commons is debating Brexit legislation, and the Prime Minister is locked in talks with the President of the European Commission regarding our exit from and future relationship with the European Union, so hon. Members will forgive me if I break out into a cold sweat when the Division bell rings later today. It will bring back some rather tense memories for me in this place.

I will focus my remarks today on the devolution aspects of the Bill, but I want first to say a bit about the common frameworks. We know that there is still work to do regarding common frameworks. The Government and the devolved Administrations have already agreed the principles that will guide the development of common frameworks. Indeed, Lords amendments 1, 19 and 34 address the issues. However, I do not agree with those amendments, as they would have the effect of undermining the UK Government’s ability to set new rules and divergence through modifying appropriate exemptions to market access rules, and the power to ensure unfettered access for Northern Irish goods into Great Britain. That is why I will be opposing those amendments this evening.

Let me turn to devolution. It was a real pleasure to listen to the right hon. Member for Doncaster North (Edward Miliband). I believe him when he says that he is a passionate advocate for our United Kingdom. I remember him campaigning in the referendum in 2014. I disagree with him, however, because this is a very good Bill for the Union of the United Kingdom of Great Britain and Northern Ireland. I know that because the SNP is so vehemently opposed to it. If this was not a good Bill for our United Kingdom, they would of course be supporting it. This Bill is good for business, good for jobs and good for people, and it will bind the United Kingdom closer together. This Bill will deliver a significant increase in decision-making powers to the devolved Administrations. There will be no power grab, as we have heard time and again.

Joanna Cherry

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The hon. Gentleman has repeatedly said that there is no power grab, but Lord Hope of Craighead, who is very widely respected in Scotland and across these isles, said in the Lords that when the SNP described the Bill as a power grab, he initially thought it was “hyperbole”, but

“having read the Bill and…report of the Constitution Committee,”—[Official Report, House of Lords, 19 October 2020; Vol. 806, c. 1361.]

he could very well see why the expression “power grab” is being used. Who is right: Lord Hope or the hon. Gentleman?

Andrew Bowie

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There is disagreement about this Bill, of that there is no doubt. But we have debated this matter time and again in this place and in other places, and every time that it has been put to the Scottish National party, the Scottish Government or anybody else who opposes the Bill that the term “power grab” is false, they cannot in any way describe one power that is being taken away from the Scottish Parliament.

Andrew Bowie

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I will give way because I like and respect the hon. and learned Lady.

Joanna Cherry

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It is not as simple as listing a power. [Interruption.] No, it is the whole scheme. This is not my view. It is the view of Professor Michael Keating, a very well respected constitutional expert across these islands. It is about the cross-cutting powers that give not just this House, but this Government, the last say across a whole range of devolved fields that Donald Dewar devolved to Edinburgh.

Andrew Bowie

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The hon. and learned Lady knows full well that this place will not have the last say over vast swathes of devolved powers. No powers are being taken back to this place. In fact, we are giving more than 70 powers to the Scottish Parliament and the Scottish Government as a result of our leaving the European Union. Professor Keating, who I know very well, as he was a professor of politics of mine at the University of Aberdeen, knows that it will not be the first time I have disagreed with him on such a point.

Sir Bernard Jenkin

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Will my hon. Friend give way?

Andrew Bowie

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I will not, because I know there are far more people who want to speak.

It is not just me who says it is not a power grab. Former SNP deputy leader Jim Sillars said that

“Nicola Sturgeon has been dancing up and down on the ball saying, you know you’re stealing powers from us. The irony is that if she gets these powers, she wants to hand them all back to Brussels. That’s a massive contradiction in her policy position.”

The hon. and learned Member for Edinburgh South West (Joanna Cherry) cannot shake her head and disagree with that, because that is a fact.

Joanna Cherry

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Will the hon. Gentleman give way?

Andrew Bowie

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I am afraid I cannot, because we have not got very much time.

This Bill will amount to more money being spent in Scotland. That is a fact. As a result of the Bill, no powers are being taken away and the Barnett consequentials will not be affected. Jobs will be safeguarded as a result of the Bill. It does amuse me to hear Members of the Scottish National party defending and supporting amendments being put in the other place. I hope the Scottish National party one day will come in here and stand up for democracy and the democratically elected Chamber of this United Kingdom. When will the Scottish National party defend the democratic will of the British people?

I seriously urge SNP Members to reconsider their support for the Lords amendments and to stand up for the Bill because it is good for Scotland. But I know they will not. Frankly, the Scottish National party and the Scottish Government do not care that the Bill protects jobs and is good for business and for the country because it binds the United Kingdom closer together. That is why they do not like the Bill: it binds the United Kingdom closer together. That is the truth of it. They do not want the internal market to succeed. They do not want it protected. They do not want the United Kingdom to succeed, and they will sacrifice Scotland’s prosperity, Scottish jobs and anything else, as long as they achieve their aim of undermining the United Kingdom and achieving separation.

As if to make my point, on BBC Radio Scotland’s “Good Morning Scotland” today we heard from Mike Russell, the Minister for constitutional affairs in the Scottish Government. Like the hon. and learned Member for Edinburgh South West—I congratulate her on her election, by the way—he is a member of the national executive committee of the Scottish National party. He said that the Scottish National party will not vote for a Brexit deal even if one is achieved. The SNP would vote against the deal. It has not even seen a deal, but it would rather say no, because it thinks that will further the cause for separation. SNP Members want the United Kingdom to fail, and that is why they are against the Bill this evening, and that is why they will vote against the Brexit deal if we get one in the coming days.

We want to level up the United Kingdom and, as my hon. Friend the Minister has set out, that is why we are disappointed that their lordships have in amendments 48 and 49 attempted to remove the power of the UK Government to intervene to provide financial assistance across the United Kingdom. It is a fact that formerly EU assistance powers now rest with the UK Government. It is right that through the UK prosperity fund, and with consultation with the devolved Administrations, we have the same powers now that the European Union had previously.

I have great respect for my hon. Friends and, indeed, some Members across the aisle for supporting the Lords amendments tonight. I disagree with them, but they have principled objections to the Bill, as do many of their lordships. Although I respect the hon. and learned Member for Edinburgh South West personally, I am afraid I do not respect the position of the Scottish National party, which, as ever, is opportunist, divisive and seeks only to further the aim of breaking up our country, with everything that that means. I will back the Government today because this Bill binds our country closer together and is good for trade, good for jobs, good for people, good for Scotland and good for our entire United Kingdom.