Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
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Blood Safety and Quality (Amendment) (EU Exit) Regulations 2020
(4 years, 1 month ago)
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Lord Bethell
That the Grand Committee do consider the Blood Safety and Quality (Amendment) (EU Exit) Regulations 2020.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con)
My Lords, these regulations are critical in giving effect to the Ireland/Northern Ireland protocol for the safety and quality of blood, organs, tissues and cells, including reproductive cells.
I will give a brief moment of context. In January, the European Union (Withdrawal Agreement) Act 2020 was agreed by this House. It brings into domestic law the withdrawal agreement between the UK and the EU. Included in the withdrawal agreement is the protocol on Ireland/Northern Ireland, commonly referred to as the Northern Ireland protocol.
On 20 May 2020, we set out our approach to implementing the Northern Ireland protocol as part of meeting our obligations under the withdrawal agreement. We are committed to meeting these obligations, all the while recognising the unique status of Northern Ireland within the UK and the importance of upholding the Belfast, or Good Friday, agreement.
These SIs covering donated blood, organs, tissues and cells support the vital role that these materials play in life-changing treatments for UK patients—whether it is blood transfusions to treat major blood loss, heart transplants to treat heart failure, stem cells to treat blood cancer, or eggs and sperm to treat infertility, patients rely on these treatments every day. Last year in the UK, there were 3,760 deceased organ transplants, approximately 1,100 people benefited from UK-donated stem cells and approximately 13% of IVF cycles used donor eggs or sperm. Many people would not be alive today if it were not for the generosity of donors.
The UK’s current high safety and quality standards for blood, organs, tissues and cells are derived from EU law. The application of these standards makes Britain one of the most progressive regulatory environments in the world.
Last year, in preparation for the UK leaving the EU, the Government made four statutory instruments to fix shortcomings in the current law caused by EU exit. These were made on a UK-wide basis and come into effect on 1 January 2021. These 2019 statutory instruments maintain the current safety and quality standards across the UK.
So let me explain for a moment what these regulations do. The Northern Ireland protocol requires Northern Ireland to remain aligned with the EU blood, organs and tissues and cells directives for as long as the protocol is in force, including any future changes to the directives. These four instruments will come into force on 1 January 2021 and will ensure that Northern Ireland continues to be aligned with the directives after the end of the transition period. There are five ways in which they do this.
First, the regulations ensure that the safety and quality standards will remain the same across the UK from 1 January 2021. These standards are currently aligned with EU directives. Secondly, the UK regulators for blood, organs, tissues, and cells will continue to act as the competent authorities for Northern Ireland in respect of the EU. This means that the Medicines and Healthcare products Regulatory Agency, the Human Tissue Authority and the Human Fertilisation and Embryology Authority will continue to meet the same EU obligations for Northern Ireland as they do now.
Thirdly, these instruments amend the definition of “third country” for imports into Northern Ireland to ensure that we meet the terms of the Northern Ireland protocol, but also meet our commitment to unfettered access. This means that from 1 January 2021, when establishments in Northern Ireland receive blood, organs, tissues and cells from Great Britain, they will need to treat them the same as those received from outside the EU. In accordance with our commitment to unfettered access for goods moving from Northern Ireland to Great Britain, there will be no changes to the requirements when sending blood, organs, tissues and cells from Northern Ireland to Great Britain. The movement of blood, organs, tissues and cells around the UK is critical for patient treatment, and we are committed to ensuring that this movement can continue from 1 January 2021.
Fourthly, these instruments will require tissue establishments in Northern Ireland to continue using the single European code for traceability purposes, as they do now. Fifthly, the 2019 statutory instruments introduced some limited regulation-making powers into UK law for each of the UK nations. The EU withdrawal agreement Act 2018 contains the powers needed to make changes in relation to the safety and quality of blood, organs, tissues and cells for Northern Ireland to ensure future alignment with any changes to the directives. Therefore, the powers in the 2019 statutory instruments are no longer needed for Northern Ireland, and consequently these regulations limit those regulation-making powers to Great Britain.
Let me be clear: the fact that Northern Ireland will remain subject to EU law in this area does not mean that the UK as a whole will be prevented from making changes to the safety and quality regime in this area. The EU directives in this area set minimum standards of safety and quality. They allow member states to go further if they wish. If the UK as a whole wished to move forward and change the safety and quality standards, this could be done. They are a floor, not a ceiling.
A lot of preparatory work has already taken place. The regulators for the relevant sectors are working with licensed establishments across the UK to help ensure they are ready for any changes that will arise from 1 January 2021. They are supporting establishments to put any necessary import licences and agreements in place, preventing any disruption in the supply of blood, organs, tissues and cells. These changes affect only a very small number of establishments in Northern Ireland: one blood establishment, one transplant centre, two licensed tissue establishments and four fertility clinics. There will be some minor administrative costs for establishments in Great Britain moving blood, organs, tissues and cells to Northern Ireland.
Regarding the DAs, legislative competence for the donation, processing and use in treatment of human reproductive cells remains reserved to Westminster. Competence in respect of all other human tissues and cells, blood and organs is devolved, and the relevant instruments are being made on a UK-wide basis with the consent of the devolved Administrations. Work is under way to put in place a common frame- work between the UK Government and the devolved Administrations, to support co-ordinated decision-making on the safety and quality of blood, organs, tissues and cells after the end of the transition period.
To conclude, these regulations are vital to the Government’s preparations for the end of the transition period. It is essential that they are made to allow the UK to fulfil its obligations under the Northern Ireland protocol. The UK already has high standards for the safety and quality of blood, organs, tissues and cells. These instruments ensure the UK will continue to work to these high standards after the transition period; that blood, organs, tissues and cells will continue to be able to be moved around the UK; and that we have a platform to build the regulatory regime even further. I beg to move.
Lord Hunt of Kings Heath (Lab)
My Lords, I thank the Minister for introducing and explaining so carefully the statutory instruments. Clearly, as he said, they are very important. The key statement he made, which is repeated in paragraph 7.7 of the Explanatory Memorandum, is:
“Neither the 2019 SIs, nor the 2020 SIs make changes to the safety and quality standards, which will remain the same across the UK from 1 January 2021.”
However, for Northern Ireland, these standards are expressed by reference to EU legislation, whereas for Great Britain they are not; although, at the moment, the substance is the same in both cases. So I ask the Minister: what are the implications of any future change made in EU directives or in UK law? Since we may not stay aligned with the EU, there must be some inevitability, at that stage, of that arising. Will that not then lead to a confusing situation in future where UK regulators are responsible for overseeing different laws in separate parts of the UK? If that is the case, and given that this is a hugely sensitive area, will this inhibit the movement of tissues and organs between Ireland and Great Britain? The Minister mentioned such movement, but will he clarify how much movement there is at the moment?
I would also like to ask the Minister about the six-month transition period from exit day to allow establishments time to put the necessary arrangements into place for importing and exporting tissues and cells with the EU? Is he confident that that is sufficient time for those establishments?
I refer to our recent debate on the Human Tissue Act during the passage of the Medicines and Medical Devices Bill. As the Minister knows from our debate, it is our view at least that the Human Tissue Act does not require appropriate consent for imported human tissue, and, in addition, imported human tissue for use in medical research does not require traceability. Of course, this is very relevant in the case of China and the shocking use of organs of prisoners and minority groups for commercial exportation. I readily acknowledge that we are currently in discussion with the Minister’s department about a suitable amendment to deal with this, but will any such amendment agreed in the Medicines and Medical Devices Bill apply also to Northern Ireland?
I am sure the noble Lord, Lord Alton, will speak in some detail on this, but, as I have the opportunity, I would like also to talk about human tissue. As the Minister will know, we have been concerned about the view of the WHO on the practices in China, as it is based upon a self-assessment by China itself. This has been the subject of correspondence between the Government and the World Health Organization. The Minister, the noble Lord, Lord Ahmad, has now turned down a freedom of information request from the noble Lord, Lord Alton, and I want to express my disappointment. This is so important that the Government really ought to publish the correspondence. Having said that, I am very grateful for the opportunity to debate these regulations.
Lord Scriven (LD)
I too thank the Minister for presenting the statutory instruments. I will speak in particular to the blood safety and quality regulations. These are clearly very important and, as we get closer to the date by which a deal was meant to have been arrived at and there is not one, they become even more important, particularly given the shelf life of blood.
I will follow on from what the noble Lord, Lord Hunt, said. Standards in Northern Ireland are linked to the EU and will continue to be linked to the EU under the agreement. For Great Britain, divergence can take place. I note that the Minister said it was a floor and not a ceiling, but sometimes the floor can fall in, even with small changes—for example, on the storage of blood. So how will the Government ensure that divergence does not mean that standards will change before they come before Parliament and are passed into law, which could mean that the supply of blood becomes slower than is operationally required?
I note that 6.5% of plasma is imported from the EU to the UK. Can the Minister confirm what arrangements have been made to ensure that that plasma will continue to be available to those in GB—and speedily? If we go to a no-deal arrangement, what arrangements are there and what discussions have been had with the EU with regard to our position on getting this supply of plasma? Will it change if we are a third country? I seek exactly the same assurances on the supply of blood for patients with rare diseases who require imported blood and blood components. What arrangements have been made to ensure that the supply and standards remain the same over a period of time?
If the EU brings in new technical updates, what processes for Great Britain will be in place and how will they be linked to future EU standards? What proactive work will take place, or will we have to reactively change if the EU changes its standards and is seen to diverge?
It is clear that the arrangements on this seem certain—but only if the GB Government decide not to diverge at any point. I want assurances in particular on that, but also with regard to supply. In the House of Commons debate at the time of the 2019 regulations, the Under-Secretary of State at the Department of Health and Social Care stated very clearly that the fast-tracking of shipments at ports and alternative routes were being prepared. Have those now been prepared and, if they have, what arrangements are in place for the fast-tracking of shipments at ports and alternative routes for the supply of blood into the UK, Northern Ireland and GB?
Lord Lansley (Con)
My Lords, I am likewise very grateful to my noble friend the Minister for his very clear explanation of the purpose of these regulations. I wish to speak only to the first set, relating to blood safety and quality.
As the Minister quite rightly explained, the purpose of the regulations is to enable the protocol to be applied and therefore for the regulations in Northern Ireland to continue to be those prescribed by EU law, rather than those under UK law. So the issues, as noble Lords have already said, including the noble Lord, Lord Hunt of Kings Heath, are very much around what will happen if there is some degree of divergence in the future.
My point is that I do not regard this as an unlikely prospect: I fear that it is a quite likely—and perhaps even an imminent—prospect. I say this because it is just over a year since the European Commission published its working document, Evaluation of the Union Legislation on Blood, Tissues and Cells. My expectation is that, probably this month, an inception impact assessment will be published by the European Commission, and its working plan says that it expects to publish a legislative proposal in the third quarter of next year—so this is not a speculative prospect.
It may not occur because the United Kingdom chooses to have different regulations. Notwithstanding my noble friend’s optimistic scenario, it is not simply a question of whether the United Kingdom chooses to have higher standards of regulation. Divergence does not necessarily mean that one jurisdiction has high standards and one has low standards; they have different standards.
Let me give some examples of where this might arise. The first relates to advanced therapy medicinal products; here, I am talking about gene therapies and somatic cell therapies. It is clear from the European Commission’s work on what it terms “strategic value chains” that one of the nine areas it has identified is personalised medicines. We know from discussions in the European Parliament in relation to these matters, and from the way in which the Commission has responded to them, that it does not simply regard this as strategic but also regards Europe’s own legislation on the governance of gene therapies as potentially differing from where it is now—and it may well be different from the way in which we choose to govern gene therapies in this country. So we may diverge in that respect.
Secondly, the noble Lord, Lord Scriven, referred to plasma and plasma products. The European Union is dealing with substantial excess, and rising, demand for plasma and plasma products. There is a serious deficiency in supply in the European Union, much of which is presently met from the United States. It may well be that the European Union adopts measures the purpose of which is to increase supply within it. That may have implications for the supply of plasma products heading out of the EU to non-EU member states. Of course, for these purposes, the United Kingdom will become a non-EU member state, so we may have divergence in that respect.
This is not confined to the European Union. On 30 October, the US Food and Drug Administration published a list of 230 sensitive products in this area, five of which relate to plasma and plasma products. There are rising demands for products in this area and international constraints on supply. I will not repeat him but the noble Lord, Lord Hunt, asked a perfectly reasonable question about the ability of the HTA to be a competent authority for two different jurisdictions, and whether my noble friend the Minister is happy that the HTA can exercise both roles.
Finally, if I may be forgiven for this question, how are we at this moment discussing these regulations in this Committee to give effect to the protocol, while discussing a Bill this afternoon in the Chamber Clauses 43 and 44 of which seem on the face of it to give the Government the power—indeed, give Ministers the responsibility—potentially to disapply the protocol in relation to regulations in this area? This is an absurd proposition. Perhaps my noble friend would be kind enough to explain how we arrived at this place.
Lord Alton of Liverpool (CB)
My Lords, in thanking the Minister for introducing these statutory instruments, I am conscious of two things. First, they are procedurally necessary because of the decision to leave the European Union, but inter alia, honour a commitment not to use such transitional arrangements to dilute our commitment to uphold the highest possible standards in relation to the use of organs, tissues, blood and cells. I think that the Government have honoured that commitment. Secondly, I am conscious that it is only a few days since we had a full-blown debate on an amendment to the Medicines and Medical Devices Bill, which is currently in Committee, relating to human organs. The noble Lord, Lord Hunt of Kings Heath, referred to this earlier. Like him, I would like further clarity on the one notable change in the regulations—also touched on by the noble Lord, Lord Lansley, a moment ago. It relates to Northern Ireland, where European Union law will continue to apply while not doing so in the rest of the United Kingdom.
The opportunity for confusion and inconsistency is therefore written into the very DNA of the statutory instruments. It reminds us of what is one of the most troubling and unresolved aspects of the withdrawal agreement. I would be interested to know who within the Northern Ireland Executive has been the point man or woman in discussing the implications of the SI; who has been consulted within the Northern Ireland Assembly and what response has been received; and whether these arrangements have been signed off by the Commission in Brussels and the relevant health authorities in Dublin.
When he comes to reply, I would also be grateful to the Minister if he would return to the questions that I put to him last week concerning the trade and exhibition of body parts. Given that the Human Tissue Act does not require traceability, how is that to be resolved in the context of these statutory instruments or in the legislation being taken through the House? Will that principle now be treated differently in Northern Ireland and Great Britain?
Yesterday I sent the Minister an 87-page report, with 270 footnotes, The Economics of Organ Harvesting in China, published by the Institute to Research the Crimes of Communism. It describes forced organ harvesting as
“one of the most inhumane crimes in the entire history of humanity”.
In harrowing detail, it describes what it calls “the business offer” and details an international spider’s web of companies—including some from the United Kingdom—which have aided and abetted what it describes as primitive barbaric practices. I am grateful to the Minister, whom I had a chance to speak to just before we came into this Committee, for already having had a glance at the report. I hope that he will commit to looking at the report further and say how he intends to take forward an investigation into the companies referred to in it. Will he agree to refer it to the World Health Organization for its consideration?
In that context, and further to the remarks of the noble Lord, Lord Hunt of Kings Heath, I might add that only today the information rights unit at the Foreign, Commonwealth & Development Office has written to me in response to the freedom of information request to which I referred during our debate last week, asking for the correspondence between it and the WHO to be made public. In its response, the unit says:
“Some of the information has been withheld using section 27(1)(b) on International Relations. Section 27 is a qualified exemption and is subject to a public interest test. The application of section 27(1)(b) requires us to consider the public interest test arguments in favour of releasing and withholding information.”
The letter also says:
“The disclosure of information could potentially damage the bilateral relationship between the UK and the World Health Organization. This would reduce the UK Government’s ability to protect and promote UK interests through its relations with the WHO, which would not be in the public interest.”
I would obviously contest that strongly, not least because of the vast amounts of public money that pour from the United Kingdom into the WHO. This sits very uncomfortably with our belief in transparency and open government. Elsewhere, the letter says:
“The disclosure of information detailing our relationship with China could potentially damage the bilateral relationship between the UK and China.”
Why should information pertaining to the forced harvesting of organs and their use in organ tourism be damaging to our relations with China?
Let me conclude. I would be grateful if the Minister could say how in further legislation, whether brought through SIs or within the current Bill, we can demonstrate our determination to stamp out organ tourism that relies on the killing of non-consenting victims, and which then trades in their remains in ways which the United Kingdom should demonstrate to the rest of the world that it will not tolerate.
Lord Bourne of Aberystwyth (Con) [V]
I thank my noble friend Lord Bethell for setting out these regulations so clearly. I strongly support all four sets of regulations; as he has said, they are vital to honour the withdrawal agreement. Indeed, that withdrawal agreement is at the base of the regulations we are considering. They essentially ensure that for the purposes of the quality and safety of organs intended for transplant, human tissue, blood and blood products, gametes, embryos and reproductive cells, Northern Ireland is still treated as if it were part of the EU and still a member state. Great Britain—England, Wales and Scotland—is to be treated as a non-member state. Current EU law will therefore remain in place in Northern Ireland, and Great Britain is a third-party state as far as Northern Ireland is concerned.
Initially, this will perhaps not create any day-to-day problems because there will be no initial divergence. However, paragraph 7.13 of the Explanatory Memorandum to these regulations sets out clearly that Northern Ireland establishments will consider Great Britain the same as a non-EU member state, and that Northern Ireland will ensure that there are “equivalent standards” for blood and blood products—those words are used—and for organ issues. Again, it provides for equivalent safety and quality standards. That perhaps is the answer: the standards could be divergent, but they must be equivalent, so there cannot be too much divergence from the norm. That is reassuring.
I do not have an issue with the purpose of these recognitions—I have no problem with that at all; it is a matter of practical common sense. I was briefly a Minister in Northern Ireland, and I saw that the invisible border meant that in practice, ambulances from one side of the border that were near the border would help out when needed on the other side. That was very sensible—it was pragmatic, practical common sense and it happened on a daily basis. However, the withdrawal agreement provided for the situation that we are dealing with here. Like my noble friend Lord Lansley, I ask: why, then, it is then a problem in relation to the United Kingdom internal market legislation? It does not make sense. What we are doing here is sensible and was foreseen—indeed, it was foreseen elsewhere. So why is it a problem with, as it were, the “mothership” legislation? I do not know whether the Minister will feel able to answer that, but it is a real issue for me.
As I say, I have no problem with this legislation at all, which seems very sensible for these purposes. It is a matter of geographic reality rather than anything else. I suspect that the problem is the same in relation to energy regulations that may well be coming forward. For these purposes, once again, if there is a problem with supplying energy on one side of the border because of a failure of supply, the first place one looks is the other side of the border: that is geographic reality and common sense. These matters are being dealt with pragmatically and sensibly, so why are we proposing to breach international law in relation to a broader front? It does not make sense. So I will be very grateful if the Minister feels able to deal with that issue, and I hope that he will. However, the regulations themselves are sensible and I certainly support them.
Baroness Walmsley (LD) [V]
My Lords, I intend to focus my remarks on the human tissue and organ transplant regulations and, in particular, on the issues of timeliness and trust.
I have a particular interest in both of these issues. Back in 1995, I gave my consent in Brussels for organs from my deceased husband to be removed for transplantation. I was happy to do so and received considerable comfort from the fact that, even after his death, he could do some good for other human beings somewhere in Europe. I mention this because, at the time, we and Belgium were both members of the European Union, and the administration and procedure were expedited smoothly and professionally. Since the 2016 referendum, I have been anxious that no barriers should be put in the way of the continued smooth running of this process.
As we have heard, in 2019 a set of regulations was approved to ensure that EU standards would continue during the implementation period, and today we have regulations that take account of the unusual position of Northern Ireland following our exit from the EU. The regulations ensure that, as long as Northern Ireland takes certain steps which have little or no cost, the same standards will apply and no barriers will be put in the way. I am reassured about that—in theory.
However, there are many practical considerations when you are dealing with human tissues that must be delivered in a timely way. The numbers we are dealing with are significant. Between April 2019 and March 2020, 32 organs from deceased donors moved from GB to Northern Ireland, and 126 organs moved in the other direction. As the Minister said, there are two tissue establishments in Northern Ireland, and they will continue to be able to receive tissues and cells from GB, but they will treat GB as a non-EU member state for this purpose.
I understand that Northern Ireland must continue to meet the requirements of EU directives for as long as the protocol is in force. But, as other noble Lords have said, changes to these instruments may be needed if there are changes to the directives. Can the Minister confirm that the Northern Ireland Administration intend to make these changes if they happen, and, if that is the case, what is the British Government’s intention?
My interest in the human tissue regulation is both personal and general. I have a family member who is currently awaiting a bone marrow transplant and, fortunately, matches have been found in other countries, possibly Northern Ireland. Time is of the essence, so my concern is whether organs and tissues from abroad will reach UK patients in a timely way after the end of the transition phase. If the ports are blocked, the Government have suggested that tissue and medicines—and indeed pharmaceuticals—will be flown in. But look what has happened to the aerospace industry during the pandemic. Will there be enough resource? Will the military be used if there are blockages?
I am also concerned about UK bioscience research. There are about 5,000 imports of tissues and cells from the EU alone in a typical year, so it is essential for UK life sciences that there are no barriers to this work. Can the Minister reassure me?
These SIs are to bring EU regulation into UK law, whether or not we get a deal. It is looking as if we will not. When the 2019 SIs were debated in Grand Committee on 9 January 2019, in Hansard col. 201 the Minister said that such materials would be “prioritised”. However, the problem is that everything will need to be prioritised.
In that debate my noble friend Lady Barker raised the issue of inspection of premises, pointing out that the UK and the EU will each inspect their own premises. But what happens if there is a serious incident on one side or the other? Will this not destroy the trust that is needed for this system to work? It is also essential that the public trust the regulations since, in many cases, such as transplantation, their permission is needed. How will the Minister reassure any member of the public listening to this debate that they can have the confidence to give that consent once we are independently responsible for our own standards? As the noble Lord, Lord Alton, said, confusion and inconsistency can destroy trust.
Baroness Barker (LD)
My Lords, I thank the Minister for introducing these regulations. Indeed, I remember taking part in that debate in January 2019—I am looking at the noble Baroness, Lady Thornton, and clearly she does, too. Although much time has passed, little has changed. We are still facing a situation in which we live under the threat of leaving with no deal and therefore being a third country in terms of EU regulation. These matters are of immense importance. We are, as the noble Lord, Lord Lansley, said, talking about tissues and materials and so on which are in high demand and of which there is not a great surfeit.
It is important now to realise that we are talking in these regulations simply about the circumstances under which we would import such materials from the EU into Northern Ireland and into Great Britain. I will say one thing for Brexit: it has educated the British public in what the United Kingdom is and what Great Britain is and what the differences are between the two. Some of us who were brought up in Scotland have long known the difference.
I understand what the Minister says about these regulations being important in order to enable the current regime, or congruence of regimes, to continue. However, we are still talking about these regulations applying only for a transitional period of six months. The noble Lord, Lord Lansley, is absolutely right that we will face the prospect very shortly of having part of the United Kingdom under a regulatory environment into the terms of which the UK Government have had no input. I happen to think that that is an inevitable part of Brexit, and I am not surprised that that was never put on the side of a bus. None the less, it has important consequences for people in Northern Ireland and for the rest of us in the United Kingdom.
Can the Minister say who will have the responsibility for keeping under review the regulatory burden and costs of operating two different systems within the United Kingdom, and who will be responsible for the long-term monitoring of issues such as the availability of organs and tissues within Great Britain on a long-term basis? My noble friend Lady Walmsley is right: there is a degree of danger here to the supply of these necessary items.
When we debated these regulations in 2019, I did not get a satisfactory answer on inspection of premises and what would be the responsibility of both the British authorities and others to notify serious incidents within 24 hours. Perhaps in his response the Minister might take that up.
I also think that the noble Lord, Lord Lansley, is absolutely right that Clauses 42 and 43 of the United Kingdom Internal Market Bill have no place on our statute book. They certainly have no place in relation to the importation of these materials from the EU.
So politically we are no further on, but perhaps the Minister might be able to enlighten us with a bit more detail than was the case back in January 2019.
Baroness Thornton (Lab)
Like the noble Baroness, Lady Barker, and others in this Room, I have been involved in the legislation that is the subject of these regulations for, in my case, 20-odd years. I thank the Minister for his explanation of these regulations. If he looks back in the record to last year and the statutory instruments that we were discussing in Grand Committee—I think we might even be amending some of them today—he will see that his noble friend Lady Manzoor was given a particularly hard time by the Committee, because of course we were at the time putting on the statute book regulations just in case we crashed out of the European Union in March last year, and many of us resented the amount of legislative time that we wasted preparing for something which did not then happen.
It is of course important to acknowledge that these regulations are of vital and often life-saving importance, and concern literally matters of life and death.
The UK legislation for the safety and quality of blood, organs, tissue and cells, including reproductive cells, is of course based on European law. The European Union (Withdrawal) Act 2018 ensures that EU-derived domestic legislation will continue to have effect after the end of the transition period. In 2019, regulations were introduced to ensure that UK legislation in this area could function effectively after the transition period. However, Northern Ireland will remain subject to relevant EU laws as a result of the Ireland/Northern Ireland protocol. So today we are looking at four statutory instruments that would amend the 2019 regulations and enable Northern Ireland to continue to meet European law.
Like other noble Lords, I have two questions that flow from that. First, what effect will the United Kingdom Internal Market Bill have in this regard? Is it a complete waste of our time discussing these things? Secondly, as the noble Lord, Lord Lansley, and my noble friend Lord Hunt asked, what happens when there is divergence in the regulatory framework between the European Union and Great Britain?
As noble Lords have said, there is one blood establishment in Northern Ireland, and it will of course be able to continue receiving blood and blood components from Great Britain establishments. However, Northern Ireland establishments will treat Great Britain as a non-European Union member state—a third country—for this purpose. What does that mean? In practical language, will this delay or impede the use of blood products?
The provisions for importing blood or blood components from a non-EU member state are set out. The Northern Ireland blood establishment already has the required import authorisations in place, and GB blood establishments currently prepare blood and blood components to meet EU and UK standards, so Northern Ireland blood establishments can continue to receive blood or blood components from Great Britain. There are 10 hospital blood banks in Northern Ireland, which will not, I think, need to take any action as a result of this SI.
On organs for transplant, the NHS Blood and Transplant service will continue to be responsible for organ donation and retrieval in the UK. Between April 2019 and March 2020, as other noble Lords have said, 32 organs from deceased donors moved from Great Britain to Northern Ireland, and 126 organs moved from Northern Ireland to Great Britain. Organs will be able to continue moving from Great Britain to Northern Ireland. However, Northern Ireland-based establishments again will be treating Great Britain as a non-EU member state for these purposes. We are told that these are the same provisions that currently apply to organs moving within the UK, and so the changes made by the 2020 SI will make no difference. However, what of the future? What happens when and if the European Union changes the regulations in this area? How will this be impacted? For tissues and organs, as the noble Baroness, Lady Walmsley, said, time is absolutely of the essence in these matters.
The HFEA says on its website:
“As the regulator of the fertility sector we continue to support clinics during the transition period. We have been communicating regularly with clinics through our Clinic Focus publication and have developed an EU exit webpage for clinics. We believe that fertility clinics are minimising the possibility of disruption of patient treatment.”
Well, I wonder whether that is the case, actually, for fertility treatment between Ireland, Northern Ireland and Great Britain.
The Human Tissue Authority website says that
“establishments that are licensed under the Human Tissue (Quality and Safety for Human Application) Regulations 2007 (as amended) may require changes to their licence. This applies to establishments in the Human Application sector from 1 January 2021.”
So the HTA is saying that human tissue establishments will need to vary their licence in order to continue their activities post transition. This includes establishments that intend to import or export tissues and cells as the starting material for the manufacture of an advanced therapy medicinal product. That is extremely important. In what way will this take place? Will there be delays? How will it happen?
I will look briefly at sperm banks, and I asked this question last year. The UK currently imports sperm primarily from sperm banks in the USA and Denmark. How will that traffic in particular be affected by these new regulations and instruments? In the regime that we currently have, we will be a third country and no longer a member of the EEA. So I would like to have explained how that will affect the import of sperm from the sperm banks that we use in Denmark.
Lord Bethell (Con)
My Lords, I start by saying a profound thank you for a lively, insightful and patient debate, because I recognise that these issues have been visited before—and the debate only improves in the retelling. I shall try to trot through a number of points in quick order, because the debate has been wide-ranging and taken on a number of issues.
I want to start on the most important one, divergence, which was raised by a number of noble Lords, including the noble Lord, Lord Scriven, my noble friend Lord Lansley and the noble Baroness, Lady Thornton. On the question of divergence and one regulator overseeing different territories, I reassure noble Lords that we are moving towards developing a common UK framework for blood, organs, tissues and cells with the devolved Administrations precisely in order to avoid this problem. This is the mechanism whereby the four nations can work together to ensure that they are all aligned and that companies and individuals in each nation can feel confident that they are in one common legislative framework. Policy issues will continue to be considered on a four-country basis going forward. I reassure noble Lords that officials and Ministers in Northern Ireland will continue to be involved in policy development, as they have been to date.
After 31 January, blood, organs and tissues will keep moving from the UK to Northern Ireland and from Northern Ireland to the UK, and they will keep moving from the UK to the EU and from the EU to the UK.
There may be at an appropriate point in the future an opportunity for the department to review whether the UK’s exit from the EU offers us opportunities to reappraise current regulations to ensure that we continue to protect the nation’s health. When that moment arrives, we will consult, analyse and assess. The regulations put in place the opportunity to do that—but that is for a moment in the future and it is not envisaged in the near future. To reassure the noble Lord, Lord Alton, who asked about the devolved Administrations, Scotland, Wales and Northern Ireland have provided their consent to these statutory instruments and they continue to be closely involved in the development of policy.
The noble Lord, Lord Scriven, asked about the Medicines and Medical Devices Bill. I reassure him that the Bill as drafted would already allow us to strengthen the requirements governing the use of human tissues in the development of medicines, were it deemed necessary and appropriate to do so. For instance, powers under Clauses 1 and 2 would enable us to introduce new requirements to the Human Medicines Regulations 2012 for medicines manufactured using human tissues.
The noble Lord, Lord Scriven, and others asked about the movement of blood and blood components. This is a hugely important issue. Currently, the UK is largely self-sufficient in the supply of blood and blood components. It occasionally exports rare blood cells—fewer than 10 units per year—to the EU and to non-EU countries. However, as the noble Baroness, Lady Thornton, observed, blood components are frequently shared across the four nations, as needed to meet demand, and the regulations will ensure that that flow is not interrupted. The movement of blood, organs, tissues and cells around the UK is absolutely critical for patient treatment. That will continue as it is now. There will be some minor administrative changes for tissue establishments in Northern Ireland to receive tissues and cells from Great Britain, but there will be no change to the requirements for Northern Ireland establishments to send blood, organs and tissues to GB.
The noble Baroness, Lady Thornton, and my noble friend Lord Bourne asked about the United Kingdom Internal Market Bill. As they will know, the Bill has passed Second Reading. Amendments have been tabled to enable safety emergency exclusion functions as intended that can be applied, if required, to Northern Ireland qualifying goods. However, I absolutely reassure noble Lords that we are totally committed to upholding our long-standing track record of high standards on health and food, including in respect of the materials which are the subject of these statutory instruments. We have kept healthcare and social care services out of the scope of the services framework rules, ensuring that there is no disruption to the regulation of health and care services.
My noble friend Lord Lansley was right to point out that it is fast-changing world for blood plasma. This could not be more relevant than it is right now. Covid has shown the international constraints on supply and the potential for huge demand. I reassure him that this is uppermost in our minds and that we will put in place all the regulations necessary to ensure that British access to blood plasma from overseas remains as secure as it is today.
To the noble Lord, Lord Alton, I say personal thanks for the report which he sent me. It includes charges which we take very seriously. We are of course against organ tourism. I noted the powerful points that he made in Committee on the Medicines and Medical Devices Bill last month and look forward to further discussion on Report. I reassure him that my noble friend Lord Ahmad has written to the World Health Organization encouraging it to give careful consideration to the findings of the report of the International Coalition to End Transplant Abuse in China. The Government welcome any work that is rigorous and balanced, and that raises awareness of the human rights situation in China. We continue to monitor this issue closely and to consider carefully all the evidence presented to us.
I note the personal testimony of the noble Baroness, Lady Walmsley. My family has been the beneficiary of organ transplantation, so I completely endorse her concerns. Traffic between Great Britain and Northern Ireland will remain, as it will between GB and the EU. I am glad to confirm that Northern Ireland will align with the EU, but we will find a way to work with Northern Ireland within the UK common framework to ensure that this trade continues. I am reminded that between April 2019 and March 2020, the UK exported 13 organs to the EU and imported 13 organs from it. While these numbers may seem low, they are extremely important to those concerned and it is a priority to ensure that those movements continue. With those thoughts, I commend the regulations.
Human Fertilisation and Embryology (Amendment) (EU Exit) Regulations 2020
(4 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bethell
That the Grand Committee do consider the Human Fertilisation and Embryology (Amendment) (EU Exit) Regulations 2020.
Human Tissue (Quality and Safety for Human Application) (Amendment) (EU Exit) Regulations 2020
(4 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bethell
That the Grand Committee do consider the Human Tissue (Quality and Safety for Human Application) (Amendment) (EU Exit) Regulations 2020.
Quality and Safety of Organs Intended for Transplantation (Amendment) (EU Exit) Regulations 2020
(4 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bethell
That the Grand Committee do consider the Quality and Safety of Organs Intended for Transplantation (Amendment) (EU Exit) Regulations 2020.
The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
The Grand Committee stands adjourned until 3.45 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit for debate on the following statutory instrument is one hour.
Tobacco Products and Nicotine Inhaling Products (Amendment) (EU Exit) Regulations 2020
Baroness Penn
That the Grand Committee do consider the Tobacco Products and Nicotine Inhaling Products (Amendment) (EU Exit) Regulations 2020.
Baroness Penn (Con)
My Lords, thanks to the cross-party achievements on tobacco control legislation over the past two decades, smoking rates are at their lowest levels on record in the UK and extensive public health gains have been made. However, we cannot be complacent. Smoking still causes over 78,000 deaths each year and is one of the leading causes of preventable illness and premature death in England alone. That is why we have set out an ambition for England to be smoke-free by 2030. We are developing our plans here and will share them as soon as we can.
As noble Lords are aware, the United Kingdom is a global leader in tobacco control and the instrument we are debating today will ensure that we continue our strong commitment to robust levels of tobacco control legislation after the end of the transition period. Through these regulations, we are making the necessary arrangements to implement the terms of the withdrawal agreement and the Northern Ireland protocol in law for tobacco control. This will ensure that tobacco control functions effectively from 1 January.
The 2020 regulations will amend the existing 2019 regulations, which were made in preparation for our exit from the European Union. The amendments made by this instrument to the 2019 regulations will mean further amendments to the way in which the Tobacco and Related Products Regulations 2016 apply in Great Britain and Northern Ireland after the end of the transition period.
The 2020 regulations introduce four main changes. First, it is essential that tobacco and e-cigarette producers provide notification of their products. This ensures that companies comply with legislation on product standards and competent authorities are aware of all the products on the market. In accordance with the Northern Ireland protocol, the European Union’s tobacco products directive will apply to Northern Ireland after the end of the transition period. Therefore, this instrument requires that suppliers of tobacco and e-cigarette products wishing to place a product on the market in Northern Ireland will continue notifying via the EU common entry gate system. As legislated for in the 2019 regulations, those wishing to sell in Great Britain will be required to notify through a domestic system. The domestic system is already developed and will be hosted by Public Health England for tobacco products, and by the Medicines and Healthcare products Regulatory Agency for e-cigarette products. The format and information required for notifying on both systems will be very similar, to place as little burden on industry as possible.
Secondly, to limit the financial burden on industry, this instrument makes amendments to the Tobacco Products and Herbal Products for Smoking (Fees) Regulations 2017 and the Electronic Cigarettes Etc. (Fees) Regulations 2016. The amendments will reflect that, if a producer notifies via both the Northern Ireland and Great Britain systems, they are required to pay only one fee. If a producer wishes to notify in relation to placing products on just one of the markets, the same one fee will be payable. We will, however, keep the fee structure under review.
Thirdly, the instrument amends requirements for picture warnings, which are central to tobacco control. Due to the Northern Ireland protocol, the European Union’s library of picture warnings will continue to feature on tobacco products sold in Northern Ireland. However, our Government do not hold the copyright for the European Union’s pictures for use in a Great Britain market. We therefore require the industry to switch to the picture warnings as set out in Schedule A1 to the 2019 regulations, kindly licensed by the Australian Government free of cost. I would like to highlight to noble Lords that the tobacco industry is already accustomed to supplying different markets with varying packaging requirements across Europe and worldwide.
Lastly, the regulations will amend the sell-through period for existing stock that features the EU picture library on the Great British market, in accordance with the withdrawal agreement. This will allow stock first supplied before the end of the transition period to continue to circulate until it reaches its end user.
This instrument will allow goods to move freely between Great Britain and Northern Ireland, subject to the tobacco picture warning requirements.
Although this instrument will have some impact on industry, we have tried to minimise this as much as possible by communicating with stakeholders in August and making them aware of the legislative changes. We also circulated guidance in October regarding the specific requirements for picture warnings. Public Health England and the MHRA will be publishing detailed guidance on notification requirements for both notification systems later this autumn.
Officials at the Department of Health and Social Care have engaged with the devolved Administrations throughout the development of this instrument, and I am grateful for that positive collaboration.
This instrument is a necessary measure in order to ensure that the withdrawal agreement and Northern Ireland protocol are reflected in law for tobacco control. It is crucial that the robust level of tobacco control currently operating in the UK remains after the end of the transition period, ensuring that we continue to protect the nation’s health. I beg to move.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the Minister for introducing these regulations. I want to ask her two or three questions.
First, on notification, as the Minister said, the regulations provide that producers will be required to pay only one fee if they notify a new product on either or both of the notification systems. However, products which are required to carry picture warnings will not have mutual access to the two markets because of the different legal requirements that apply within each area. Can the Minister confirm that this approach will minimise the amount of additional work involved in the notification process if there were to be a no-deal Brexit, that products notified to the UK prior to the UK leaving the EU will not require renotification, that data will be accepted in the same XML format as currently submitted to the EU common entry gate, and that the UK will continue to recognise submitter IDs issued by the European Commission, including those issued after the UK exits the EU?
In the longer term, the Tobacco and Related Products Regulations 2016 require the Secretary of State to review the regulations and publish a report before 20 May 2021. The review needs to examine the objectives intended to be achieved by the regulatory provision made by the regulations, and assess how far they can be met and whether they remain appropriate. Can the Minister set out a timeline for that?
E-cigarettes continue to be the most popular aid to quitting for adult smokers. A recent international review by the Cochrane group found that evidence had grown that e-cigarettes are effective in helping smokers to quit and that they may be more effective than traditional medications such as nicotine patches and gum. However, recent research from ASH points to a slowing of use among adult smokers, which may be linked to deteriorating understanding that vaping is safer than smoking. This raises the concern that more smokers could be successfully switching if they correctly understood that it was safer than continuing to smoke. At the same time, data shared with me by ASH shows that over 80% of 11 to 18 year-olds have never tried an e-cigarette, with less than 2% vaping at least weekly. However, ASH has also raised concerns that the way e-cigarettes are marketed may be shaping young people’s choice of products, and hence influencing their behaviour. Given the importance of balancing the needs of smokers against any impact on young people, it seems important that a review of these regulations is undertaken. If the Minister could set out a timeline, I would be grateful.
On picture warnings, I understand from ASH that it considers that, for the purposes of providing an alternative to the current picture warnings in the event we leave the EU without a deal, switching to one set of pictures from Australia is a sensible but short-term quick fix for an emergency. Does the Minister agree that best practice, as is the case in both Australia and the UK at present, is to rotate and regularly review and update health warnings? It is essential in the longer term that the Government review the warnings, which I gather are currently being evaluated by the Australian Government, to find ways to increase the number to allow for rotation, as is currently the case.
On cropping, the Government have stated in the consultation that they will provide further guidance in relation to cropping and sizing the images to ensure that they can be easily adapted by industry and will conform to existing legislative requirements on images and pack size. This is obviously essential, as it ensures a smooth transition to the new picture library. Can the Minister say when the guidance will come?
Finally, the Minister opened with a very welcome statement about government intent towards a smoke-free nation by 2030. However, this is a challenging target, and it is time for a revitalised tobacco strategy which includes the new measures envisaged in the public health Green Paper. Those are essential if we are to achieve the smoke-free 2030 ambition. In her opening remarks the Minister mentioned the work that is being done, but can she tell me when we expect to see publication of a new tobacco control plan?
Lord Rennard (LD)
My Lords, I declare an interest as a vice-chair of the All-Party Parliamentary Group on Smoking and Health. As an officer of that group, I was pleased to welcome the ambition set out in the Government’s prevention Green Paper last year, which sets out the aim for England to be smoke free by 2030.
The APPG has since endorsed the Roadmap to a Smokefree 2030, produced by Action on Smoking and Health and which was also endorsed by over 70 leading health organisations, including the Royal College of Physicians, the British Heart Foundation and Cancer Research UK. It sets out the actions needed to fulfil the Government’s ambition. The recommendations in the road map include measures that build on the regulations we are discussing today, including policies such as raising the age of sale for tobacco products and introducing what are called dissuasive cigarettes. The post-implementation review of the Tobacco and Related Products Regulations, which this instrument amends, provides an opportunity to take forward these policies.
Currently, 280 children take up smoking every day in England. This means that since the Government announced their ambition to be smoke-free by 2030, over 130,000 children have started smoking, risking a lifetime of addiction and premature death. Nearly 80% of smokers aged 16 to 24 say that they took up smoking before the age of 18. Raising the age of sale from 16 to 18 was associated with reductions in youth smoking, with a similar impact across different socioeconomic groups. Raising the age of sale further from 18 to 21 is a popular measure, with 62% of British adults reporting that they would support that move.
Similar evidence shows that dissuasive cigarettes, which have health warnings printed on the cigarette itself, could be effective. There is evidence that, to some extent, smokers become immune to the existing warnings on packets, and so new techniques are needed to gain their attention. Dissuasive cigarettes are under consideration in Canada, Australia and Scotland, and would provide a simple and effective means of reinforcing health messages such as “Smoking causes cancer”.
These actions are needed now more than ever. The coronavirus pandemic has exposed the impact of health inequalities on our society, with people in the most deprived communities twice as likely to die as a result of it. It is not a coincidence that these are also the communities worst affected by smoking. In Liverpool, where I grew up, 23% of people in routine and manual jobs still smoke. My mother was a nurse, but her life was undoubtedly shortened by smoking. It is clear that the poorest communities bear the brunt of smoking-related diseases, such as heart and lung disease, diabetes and hypertension, which worsen the impacts of coronavirus.
The Government’s manifesto last December committed to levelling up, to delivering five extra healthy life years by 2035 while narrowing inequalities. Reducing smoking is key to delivering those ambitions. However, we are still awaiting the Government’s response to the prevention Green Paper consultation and the promised further proposals to move us towards a smoke-free 2030 in England. Action is needed now, or our poorest communities will continue to be left behind and bear the brunt of smoking-related disease.
We are still awaiting the Government’s response to the prevention Green Paper consultation. I hope the Minister may also tell us what has happened to the Government’s response to the consultation on the Nicotine Inhaling Products (Age of Sale and Proxy Purchasing) Regulations 2015, covering England and Wales. That consultation closed in September last year and is referred to in these regulations. A response to that consultation was due last September but, almost a year on, there has been no word from the Government about when it will be published. We are waiting for the Government’s response to two consultations and for the launch of another, which needs to report before the end of the financial year. All three consultations are related to the regulations being amended by the statutory instrument before us, so can the Minister confirm when the Government will deliver on all three?
Lord Berkeley (Lab) [V]
My Lords, first, I apologise for arriving during the Minister’s introduction: I had some connection problems.
I welcome the regulations. They are necessary with Brexit imminent, but the complexity is well illustrated in the Explanatory Memorandum, which takes some reading. One thing that caught my eye was in paragraph 7.1.8, relating to Northern Ireland. Special regulations covering many issues relating to smoking and tobacco get tied up in the relationship between Northern Ireland and the rest of the EU. Has any thought been given to the reintroduction of smuggling across the border between the Republic and Northern Ireland? Cigarettes are wonderful things to smuggle—they very easy to hide. A lot of that will be going on unless some effort is made to discuss these and other regulations with the relevant people in the Republic, and with the European Union. I will be glad to hear what the Minister has to say on that.
My other question arose this morning when I got an email from the IBVTA, which represents vape stores. In response to the announcement on Saturday of the closing of all but essential shops, it terms a vape store as an essential shop. According to this organisation, and as we all know, more than 70,000 people across the UK die of smoking-related illnesses every year. It also says—which is relevant and which confirms the view of my noble friend Lord Hunt of Kings Heath—that more than 3 million vapers are ex-smokers or current smokers. If for the next month, vapers will not be allowed able to buy their vapes, I suggest that there is a really good chance that they will revert to buying cigarettes, assuming they can buy them. Perhaps the Minister can explain why or if this is happening and, if not, write to me, because that is a retrograde step if we are to get to the target of being smoke free by 2030.
In the same way, if we are to have that target and make some changes, we ought to set an example ourselves and completely ban any tobacco smoke within the Palace of Westminster. That may be above the Minister’s pay grade—it is certainly above mine—but we should not forget about it. I look forward to her comments.
Baroness Northover (LD) [V]
My Lords, I thank the Minister for introducing the regulations. The decline in smoking that we have seen in the United Kingdom is indeed a major public health achievement and has, as she said, commanded strong cross-party support. My noble friend Lord Clement-Jones, working with others, including the noble Lord, Lord Hunt, and the noble Baroness, Lady Thornton, was central in bringing about the ban on smoking in public places, and that was transformative.
I was very pleased that when I was in the Department of Health in the coalition Government, we were able to build on that progress, and I pay tribute here to the noble Lord, Lord Lansley, who was then Secretary of State. The draft instrument before us today must protect those achievements as we leave the EU, and I ask the Minister to ensure that it does with respect to warnings on tobacco packaging. I hope that we will continue to work with the EU: yet again, we maximised our influence by being in the EU.
I turn to the pictorial warnings. Evidence shows that one of the benefits of standardised tobacco packaging is that it makes the graphic health warnings on packs stand out. Research has consistently shown that pictorial warnings are more effective than text-only warnings at motivating smokers to quit. It is therefore welcome that the Government will be able to use the Australian Government’s library of graphic pictorial health warnings as an interim solution to ensure that tobacco packaging continues to warn smokers, following the end of the transition period. However, I emphasise the point made by the noble Lord, Lord Hunt: that it is best practice to change these health warnings around to ensure that they maintain their impact. The reduced number of warnings in the Australian picture library compared to the EU’s is therefore a concern, and that is why this can be only an interim solution. Will the Government conduct a review of the picture warnings to ensure that we can increase their number, allowing for the rotation of warnings, as is currently the case? It is also worth noting that Northern Ireland will continue to have access to the EU picture library, meaning that packs sold in Northern Ireland will continue to have a wider range of picture warnings.
As the Minister says, we cannot be complacent. Smoking prevalence remains the leading cause of preventable premature death, killing almost 100,000 people a year in the United Kingdom. It is striking that there has been a decline during the pandemic. People know that smoking kills and fear for their health, but while more than half of smokers report wanting to quit, many take 30 or more attempts to do so. More must be done to help smokers to quit if we are to achieve the Government’s ambition of a smoke-free England by 2030. Like my noble friend Lord Rennard, I very much welcome the Government’s intention that England is smoke free by 2030.
While health warnings on the outside of packs motivate smokers to quit, the Government could and should go further, introducing pack inserts, which provide evidence-based advice on how to quit successfully. In Canada, for example, pack inserts highlight the benefits of quitting and provide tips on how to do so. Research into their impact has shown that while reading on-pack health warnings significantly decreased over time, reading inserts significantly increased, with more frequent reading of inserts associated with quitting. Introducing pack inserts in the United Kingdom would require a simple amendment to the standardised packaging regulations.
The Government’s prevention Green Paper mentioned pack inserts but highlighted that they would wait until Brexit was completed to bring this forward. Now, as we approach the end of the transition period, and the review of the Tobacco and Related Products Regulations is due, could the Minister say what is being done to take forward this proposal as another step towards achieving a smoke-free 2030?
I also ask the Minister about her department’s engagement with the local government department over countering smoking. I expect she knows that the Government agreed that at least part of areas outside pubs and restaurants should be smoke-free. Is she aware that the Secretary of State for local government, Robert Jenrick, wrote to Manchester local government in effect warning against this, saying that jobs might be lost, even though there is no evidence of this? Can she tell me whether this letter of his received prior approval from the Department of Health and Social Care?
I look forward to the noble Baroness’s reply and, if she cannot answer the last point, to a letter from her clarifying the matter—not a letter saying that the regulations were jointly approved but a letter telling us whether the local government letter sent in August was jointly approved. I look forward to her response.
Baroness Jolly (LD) [V]
[Inaudible]—necessitated this draft instrument. It also necessitates additional plans from the agencies responsible for the enforcement of the legislation under discussion, notably Public Health England, an agency that itself is facing an uncertain future.
Public Health England is currently the designated UK competent authority for the notification of novel tobacco products. The Government’s decision to close Public Health England mid-pandemic, and at a time when we are working through the complexity of leaving the EU, is astonishing. The lack of current detail on where key responsibilities discharged by PHE will go is extremely concerning. These regulations require the producers of products coming to the UK market to notify Public Health England against a mandated set of criteria, including information such as ingredients and emissions, as well as an obligation to share their existing research on the products. This is important information about novel tobacco products entering the UK market, yet it is unclear where these responsibilities will sit once Public Health England closes.
The lack of clarity around the responsibilities discharged by Public Health England with respect to the Tobacco and Related Products Regulations 2016 raises the risk of poor compliance by business and enforcement gaps in the Government’s response. I therefore ask the Minister to urgently provide clarity on where these functions will sit and provide assurances that public health experts will continue to have oversight of this process and that the population impacts of these products can be properly considered and effective advice provided to Ministers.
However, the current system is far from perfect and the change brought about by leaving the EU and reforming our public health system creates an opportunity to make improvements. In 2018, Philip Morris International reported that it had spent $4.5 billion since 2008 developing smokeless tobacco products. It currently costs producers £200 to submit a notification of a novel tobacco product. The low fees inevitably mean that the system is underresourced. Fees should be set that allow for products to be independently tested and assessed. Will the Minister consider making such changes to improve the effectiveness of the system?
But what of the role of Public Health England, which currently provides advice on tobacco and nicotine? Its role in these matters extends beyond the issue of novel tobacco products: it also played a key role in generating the evidence needed to effectively review these regulations.
In the House on 14 September 2016, the noble Lord, Lord Prior, said:
“The Government will continue to monitor and develop this evidence base, adapting policy accordingly, to ensure that policy on e-cigarettes best supports the protection and improvement of public health.”—[Official Report, 14/9/16; col. 1537.]
What steps have been taken? This work has been undertaken by Public Health England in the interim years through a series of world-class reports that were commissioned from experts. We have been provided with a solid foundation of evidence on which to review the impact of regulations, as well as policy advice for front-line staff on how to respond to this fast-moving area of public health. Again, I ask the Minister: where will these vital functions go in the future? Will there be evidence reviews into the impacts of e-cigarettes?
My key point on the impact of leaving the EU on these regulatory changes relates to flavoured tobacco. All characterising flavours for tobacco, bar menthol, were banned across the EU from May 2017, when menthol products were given a further three years to comply. Ahead of the ban for menthol coming into force in May, Imperial Tobacco launched a new green filter product range. Retailers were encouraged to stock this range, which allowed them to retain menthol customers. Accusations have been made that these products still have a characterising flavour of menthol. Japan Tobacco has similarly been accused of developing products that break the rule banning characterising flavours.
However, determining whether or not a flavour is characterising requires expert analysis. This is currently the responsibility of an independent advisory panel, set up by the EU to assist member states and the Commission in determining whether or not a tobacco product has a characterising flavour. Following our exit from the EU, it will be for Public Health England, as the competent authority, to take on this function. However, with Public Health England due to be abolished in spring 2021, which body will take over this function? I would be grateful if the Minister could provide further details on this.
Before we conclude this debate, it is worth taking a look at the effect of the legislation on Northern Ireland, which has been used to working with the Republic. Tobacco products came freely across the border, as did many other products. I sit on the environment Select Committee and we have spent many sessions looking at how the Republic and Northern Ireland will work next year. Much has been said about warning photographs in this debate, so I will not pursue that particular area. However, looking 10 or 20 years hence, I wonder what will be made of this decision, and others like it in all areas of trade in Northern Ireland. I also worry whether, in the end, Northern Ireland will acknowledge that the situation it finds itself in is untenable and decidej to leave the union. As a unionist, I would be hugely sad about that, but I really would understand. Time will tell.
Baroness Thornton (Lab)
We have had a very good discussion. I thank the Minister for her introduction of the regulations and all Members who spoke, who have shown yet again the expertise, interest and commitment that there is in the House on this subject, and why tobacco regulation has always been close to the hearts of many noble Lords.
I think all the questions on picture warnings have been covered by noble Lords, so I do not intend to repeat those. I am, however, going to draw the Committee’s attention to what I think is a significant loophole in the legislation being amended by this statutory instrument—one which needs urgent consideration.
In effect, while it is illegal for e-cigarettes to be sold to children under 18, according to advice from trading standards, it is not illegal for them to be given out as free samples to anyone of any age. This is because e-cigarettes are not covered by Section 9 of the Tobacco Advertising and Promotion Act, “Prohibition of free distributions”, as they are not a tobacco product. Meanwhile, the age of sale regulations contained in Regulation 3 of the Nicotine Inhaling Products (Age of Sale and Proxy Purchasing) Regulations 2015 inhibit their sale only to those under 18. While the Tobacco and Related Products Regulations 2016 prohibit packaging or vouchers offering free or discounted products, they do not prohibit the handing out of free e-cigarettes in Regulation 38(4).
A recent article in the Observer highlighted that a supplier working on behalf of British American Tobacco had been caught handing out BAT’s popular e-cigarette brand Vype to a 17 year-old without carrying out any kind of age check. This clearly contravenes the spirit of the existing regulations, which set the age of sale at 18 to protect children from using e-cigarettes. While evidence shows that e-cigarettes are likely to be significantly less harmful than tobacco cigarettes and can be effective in supporting adult smokers to quit smoking, it is of course absolutely vital that children are prevented from taking up vaping because, while it is a lot less harmful than smoking, it is not risk free.
Allowing the tobacco industry to market its products to children not only undermines the Government’s ambition for a smoke-free 2030 but threatens the availability of e-cigarettes for use by adults who want to quit smoking. E-cigarettes clearly have a role to play in reducing the burden of death and disease from smoking, which falls on the poorest in society and still kills almost 100,000 people a year in the United Kingdom. The Government must commit to revising the regulations to remove this serious loophole in the law. I am sure that the Minister would agree that the UK does not want to go the way of the United States, where in 2019 12% of high-school students reported using e-cigarettes on a daily basis, compared with only 1.6% of 11 to 18 year-olds using them regularly in Great Britain.
BAT would no doubt argue that this was a one-off and that it is serious about preventing underage access to vaping products. However, I have to say that it is another example of big tobacco saying one thing and doing another. The tobacco industry, and BAT in particular, has a track record of trying to get around legislation designed to protect children across the world from tobacco company marketing. In 2019, BAT was investigated by the Advertising Standards Authority for promoting its Vype e-cigarettes to young people on social media. There, the company used Instagram hashtags completely unrelated to Vype or its product features to link Vype to significant cultural and popular current events. That meant that anyone, including children and young people, searching for things such as the 2019 Oscars, the best actor, the BAFTAs or London Fashion Week, would have seen promotions for Vype e-cigarettes.
One BAT Instagram post included the hashtag #LilyAllen, which includes nearly 83,000 Instagram posts and could be seen by anyone searching for #LilyAllen on the platform. This was described by the Campaign for Tobacco-Free Kids as a concerted, consistent, systematic approach to BAT’s online promotion of its Vype nicotine e-cigarettes, outside the guidance and the Tobacco and Related Products Regulations 2016. The ASA subsequently ruled that BAT’s celebrity-driven ads
“clearly went beyond the provision of factual information and was promotional in nature”.
It has been proved beyond doubt that the tobacco industry, over many years, cannot be trusted to self-regulate and will inevitably exploit any loophole in the regulations, so can the Minister commit that the Government will revise the regulations to prevent tobacco companies marketing their addictive products to children and young people? I would appreciate the opportunity to meet her to discuss this in further detail, including what more can be done to protect children from big tobacco.
Baroness Penn (Con)
My Lords, I thank all noble Lords for their participation today. This has been a really good debate on a really important issue. It is crucial that this legislation is in place to ensure that the UK meets its obligations under the withdrawal agreement and the Northern Ireland protocol. The changes will allow a continuation of the UK’s robust tobacco control legislation after the end of the transition period, ensuring that we remain committed to protecting the nation’s health and helping people to stop smoking. I would like to highlight that this instrument is being made under the withdrawal Act, meaning that it is limited to achieving its primary purpose and does not aim to make any significant changes to tobacco control legislation. Nevertheless, I reiterate that the Government remain committed to a smoke-free generation by 2030, and I would like to answer as many of the questions asked by noble Lords as possible in that spirit.
The noble Lord, Lord Hunt of Kings Heath, and the noble Baroness, Lady Northover, asked about picture warnings. We consulted international experts and it seems that creating our own picture library would require one to two years for us to produce new and original content that is evidence based. Subject to future proposals after the transition period, we may wish to reconsider this option in the future. For now, I reassure noble Lords that we will work with the Australian Government to look at the rotation of pictures, in line with best practice. I also reassure the noble Lord that guidance on cropping has been circulated to industry and was uploaded on 1 October.
I am afraid that I am going to have to disappoint the noble Baroness, Lady Jolly, in that the department will set out its plans regarding where Public Health England’s functions to provide the tobacco notification system will sit at a later date. She also raised the question of novel tobacco products; the DHSC currently holds responsibility for policy and legislation in that area. However, I reassure the noble Baroness that the changes coming to Public Health England in future, and the new body that will be established, in no way diminish our commitment to tobacco control and to delivering a smoke-free England.
I say to the noble Baroness, Lady Thornton, that I was surprised when I saw the detail of regulation in this area. We are aware of the issue that she raised about free samples, and it is our understanding that this was an isolated incident. The current regulatory framework for e-cigarettes aims to reduce the risk of harm to children and other young people—but I would happily meet her to discuss the regulation of this in further detail. We do not think that it is a widespread problem, but the DHSC will review the regulatory framework in future to see whether there is a public health concern that needs addressing.
The noble Lords, Lord Hunt and Lord Rennard, asked about the post-implementation review of the Tobacco and Related Products Regulations. I can confirm that this will take place by 20 May 2021. The response to the consultation on nicotine products will be published soon. I am afraid that I do not have more specific timings for the other reviews that we have undertaken or the Government’s response to them.
The noble Lord, Lord Berkeley, raised the risk of smuggling. There will be no difference from 1 January in tobacco duties. They cover the whole of the UK, so we do not see an increased risk of smuggling after the end of the transition period. The noble Lord is correct to say that vape stores will be closed during the coming lockdown as non-essential retail stores. However, products will be available in supermarkets and other shops that are classed as essential retail and stock these products. I agree with him that the banning of smoking in the Palace of Westminster is way above my pay grade.
The noble Baroness, Lady Northover, asked me about pack inserts and about a letter that went from the Secretary of State for MHCLG on smoke-free areas outside cafés and restaurants making use of table licensing. I remember that issue coming up in debate and discussion on the Business and Planning Bill. Perhaps I could write to her on those issues.
The noble Lord, Lord Hunt, asked some specific questions on notification. My understanding is that if a product was notified before the end of the transition period, it will not need to be notified again afterwards. I will write to him on a couple of the more detailed points that he raised.
To conclude, I reiterate that the Government remain committed to a smoke-free generation by 2030. We are exploring policy options to work towards this ambition, and we will announce more of these in due course at a later date.
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, that completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room.
House of Lords
Arrangement of Business
The Lord Speaker (Lord Fowler)
My Lords, the Hybrid Sitting of the House will now begin. Some Members are here in the Chamber, respecting social distancing, while others are participating remotely, but all Members will be treated equally.
Death of a Member: Lord Shutt of Greetland
The Lord Speaker (Lord Fowler)
My Lords, I regret to inform the House of the death of the noble Lord, Lord Shutt of Greetland, on Friday 30 October. On behalf of the House, I extend our very sincere condolences to the noble Lord’s family and friends.
Arrangement of Business
The Lord Speaker (Lord Fowler)
My Lords, Oral Questions will now commence. Please can those asking supplementary questions keep them short and confined to two points. I ask that Ministers’ answers are also brief.
Jammu and Kashmir: Human Rights
(4 years, 1 month ago)
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Lord Hussain
To ask Her Majesty’s Government what assessment they have made of the human rights situation in Jammu and Kashmir.
Lord Hussain (LD)
In begging leave to ask the Question standing in my name on the Order Paper, I declare an interest as someone who was born in Kashmir and who has family and friends living on both sides of the line of control.
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, the Government recognise that there are human rights concerns in Indian-administered Kashmir. We encourage all states to ensure that domestic laws are in line with international standards. Any allegation must be investigated thoroughly, promptly and transparently. We also welcome reports that some restrictions are being relaxed and detainees released. We call on the Government of India to lift all other restrictions as soon as possible. We continue to raise our concerns with the Indian Government directly.
Lord Hussain (LD)
I thank the Minister for that Answer. Have the British Government taken note of the four letters written recently to the Indian Government by UN rapporteurs on torture, arbitrary detentions, extradition and custodial killings in Indian-administered Jammu and Kashmir? Furthermore, do we know what the Indian Government’s response was? If there was no response, what course of action do our Government, as a P5 member of the UN Security Council and a defender of human rights, suggest that the Security Council takes?
Lord Ahmad of Wimbledon (Con)
My Lords, we are aware of these letters and reports that the Government of India have not yet responded. As I said, we recognise human rights concerns and encourage all states to ensure that their domestic laws are in line with international standards. Any allegation of human rights violations or abuse is deeply concerning and must be investigated thoroughly. Where we have such concerns, as I said, we raise them directly with the Government of India.
Lord Collins of Highbury (Lab)
My Lords, Amnesty International raised particular concerns over the crackdown on civil society and journalists in Kashmir and Jammu. Can the Minister detail what steps the Government have taken to protect press freedom? Have they engaged with the International Federation of Journalists, which has consistently fought for reporting rights in Jammu and Kashmir, as well as globally?
Lord Ahmad of Wimbledon (Con)
My Lords, I will write to the noble Lord on his final point about formal engagement. As he knows, media freedom and the protection of journalists is a priority for Her Majesty’s Government; we are leading on a coalition with Canada. On the specific issue of Amnesty International and its situation in India, I assure the noble Lord that I have raised that directly with the Government of India.
Baroness Northover (LD)
My Lords, the former Chief Minister of Indian-administered Kashmir, Mrs Mufti, was detained in August last year when the Indian Government stripped the region of its partial autonomy. She was put under house arrest under a law that allows detention without charge for up to two years. She has only just been freed. Have the Government raised this and other arbitrary detentions in the region with the Government of India?
Lord Ahmad of Wimbledon (Con)
My Lords, I assure the noble Baroness that we have; we raised that specific case.
Baroness Warsi (Con) [V]
My Lords, in Indian-administered Kashmir, Kashmiris enter their 16th month of lockdown, with curfews, a ban on communication access, closing of media outlets and widespread arrest of politicians and human rights activists. Will the Government press for a free and independent plebiscite for Kashmiris, as mandated by the United Nations? Does the Minister recognise the urgency of Kashmiris having their voice heard at a time when the BJP Indian Government are deliberately changing the population reality on the ground, in contravention of UN resolutions?
Lord Ahmad of Wimbledon (Con)
My Lords, as I have said, we welcome the lifting in recent weeks and months of some restrictions in Indian-administered Kashmir, including the restrictions on the internet; 2G and, in certain parts of Indian-administered Kashmir, 4G have been restored. However, we remain concerned, as my noble friend has said, at the ongoing detentions. While we welcome the recent release of the former Chief Minister, other detentions continue, and we continue to raise them. It is the long-standing position of Her Majesty’s Government on any dispute between India and Pakistan that it is for both countries to sit down and resolve their disputes and differences.
Lord Loomba (CB) [V]
My Lords, the population of the Kashmir Valley is 95% Muslim. To allege that Muslims suffer human rights abuses cannot be true. It appears to be propaganda against India by troublemakers and terrorists. Even after the revocation of Article 370, cases of terrorism are sadly still being reported in the union territory of Jammu and Kashmir today. The terrorists are the worst violators of human rights. Does the Minister agree that we cannot accept continued religious hatred against a particular community in Jammu and Kashmir, or acts of terrorism, regardless of their motivation and where they take place?
Lord Ahmad of Wimbledon (Con)
My Lords, as I have already said, we raise concerns about human rights in Indian-administered Kashmir regularly and constructively with the Indian Government. I agree with the noble Lord—I am sure I speak for all noble Lords on this—that we condemn, without any hesitation, all forms of terrorism. Any targeting of a community because of its religious rights or beliefs is totally against the norms of any functioning democracy.
Lord Thomas of Gresford (LD) [V]
Is the Minister aware that hundreds of applications for habeas corpus have been lodged in the High Court of Jammu and Kashmir over a 15-month period, arising out of the arbitrary detention without trial of thousands of people —including, as we have heard, political and community leaders—under the public safety Act? The court rules specify a 14-day time limit from lodging an application to the hearing. They have not even been listed, let alone dealt with. This is especially urgent since the shocking wave of arrests on 28 October. Will Her Majesty’s Government join the Jammu and Kashmir High Court Bar Association in its strenuous protests to the Indian authorities against these breaches of the United Nations human rights convention?
Lord Ahmad of Wimbledon (Con)
My Lords, the United Kingdom Government are clear. We have a constructive and strong relationship with India which allows us to raise candidly and privately issues of human rights abuses, wherever they may occur, or human rights concerns we may have. As I have said, any allegation of human rights abuses must be investigated thoroughly, promptly and transparently. We make that point to the Indian authorities.
Baroness Tonge (Non-Afl) [V]
My Lords, will the Minister explain why we immediately supported sanctions against Russia when it annexed the Crimea, even though 97% of the people of Crimea regarded themselves as Russian and had supported Russia in its annexation, yet no action has been taken since India’s revocation of Jammu and Kashmir’s special status? It has imposed total lockdown on the majority Muslim population and thousands, as we have heard, have been taken prisoner and many tortured. Can the Minister please explain why we behaved differently?
Lord Ahmad of Wimbledon (Con)
The issue was raised by the noble Baroness herself; one is a revocation of a constitutional item and the other is an annexation of a territory. They are two very different legal positions. We continue to raise the situation in Indian-administered Kashmir with the Indian authorities.
Lord Ranger (Con)
The Minister will agree that India is the largest working democracy in the world. The rights of her 1.3 billion citizens are protected in the constitution regardless of race, religion or gender—I repeat, gender. India also has the world’s most diverse population, living side by side in perfect harmony for centuries. The rights of all are protected through the constitution, including those of over 200 million Muslims. The same is reflected in Jammu and Kashmir; the province benefits from all rights under the Indian constitution.
Lord Ahmad of Wimbledon (Con)
My Lords, we of course support Indian democracy. My noble friend is right to raise the constitution of India, which protects the rights and freedoms of all communities.
Lord Singh of Wimbledon (CB) [V]
My Lords, Britain’s partitioning of India on the fallacy of irreconcilable religious differences promoted active hostility between Pakistan and India, particularly in Jammu and Kashmir. Independent reports confirm a significant increase in human rights abuse since the Indian army takeover of the disputed region. Does the Minister agree that Britain has a moral responsibility to work for a greater measure of secular autonomy for the Hindu, Muslim and Sikh populations of one of the most beautiful places in the world?
Lord Ahmad of Wimbledon (Con)
I agree that Kashmir is one of the most beautiful places in the world. We continue to raise issues of concern with the Indian authorities, and indeed the Pakistani authorities, on ensuring rights and freedom for all.
Baroness Thornhill (LD) [V]
It is quite clear from the Minister’s words that both sides are not sitting down and resolving their issues, and nor is our Government’s raising of issues with the Indian Government working. There has been a demonstrable escalation in atrocities since the lockdown and split last year. It is clear that UN resolutions are being ignored with impunity. What do the Government believe has to happen before the international community responds, or is the UN to be ignored and regarded as a crocodile with rubber teeth?
Lord Ahmad of Wimbledon (Con)
My Lords, the Government are seeing progress. As I have already indicated, we are seeing some positive movements on easing the lockdown and the release of detainees in Indian-administered Kashmir, and continue to do so. We have a continuing, strong, progressive and constructive dialogue with the Indian Government which allows us to have very candid and frank exchanges on issues of concern. We raise these regularly and will continue to do so.
The Lord Speaker (Lord Fowler)
My Lords, the time allowed for this Question has elapsed.
Home Secretary: Allegations of Bullying
(4 years, 1 month ago)
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Lord Tyler
To ask Her Majesty’s Government when they expect to publish the report of their investigation into allegations of bullying of officials by the Home Secretary.
The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, the Government take complaints relating to the Ministerial Code seriously. The Prime Minister asked the Cabinet Office to establish the facts in line with the code. To protect the interests of all involved, the Government do not comment on the specifics of this kind of ongoing process. The Prime Minister will make any decision on the matter public once the process has concluded.
Lord Tyler (LD) [V]
My Lords, justice delayed is justice denied. Surely for civil servants in the Home Office, past and present, this long delay of eight months is intolerable. In accord with natural justice, can the Minister now confirm that no one with a personal or political interest will have had any involvement whatever in the independent investigation into the behaviour of the Home Secretary, the report or the timing of its publication, and that that will clearly rule out any involvement by the Prime Minister?
Lord True (Con)
My Lords, I can certainly confirm that the process is independent, but I can only repeat that, to protect the interests of all involved, the Government do not comment on the specifics of this kind of ongoing process. I repeat that the Prime Minister will make any decision on the matter public once the process has concluded.
Lord Young of Cookham (Con)
My Lords, the last inquiry into the conduct of a Cabinet Minister in 2017 took one month. This has taken eight months so far, although at the beginning, Michael Gove said:
“It is vital that this investigation is concluded as quickly as possible.”
Does my noble friend agree that it is fair to neither the complainers nor the Home Secretary for this matter to last so long? Can he also confirm that the separate case being brought against the Home Office by Sir Philip Rutnam for constructive dismissal is not responsible for this delay as that case is not to be heard until September of next year?
Lord True (Con)
My Lords, I am sorry to disappoint my noble friend so far as the timing is concerned. However, it is not possible to comment on an ongoing process. What I can say in relation to the other matter he has raised is that he will know that they are separate legal proceedings and that, unfortunately, I cannot comment on ongoing legal proceedings either.
Lord Stirrup (CB)
My Lords, given the difference in their respective roles, it is not at all unusual for tensions to arise from time to time between Ministers and officials. Indeed, this is healthy if kept within reasonable bounds. Can the Minister assure the House that, whatever the outcome of the current case, the Government will foster between Ministers and officials a culture of robust debate carried out with courtesy and respect on both sides? Does he agree that such a culture is not advanced by the airing of differences in the media?
Lord True (Con)
My Lords, I agree with much of what the noble and gallant Lord has said, in particular that all civil servants must feel free to give independent and open advice, and that Ministers should respect all those who give such advice.
Baroness Quin (Lab) [V]
My Lords, is it not the case that the Prime Minister has undermined this process by declaring his full confidence in the Home Secretary from the outset? Is it also not the case that the Prime Minister has form, as we saw with the Russia report, with delaying politically inconvenient reports? How can this process be independent if the Prime Minister is the final arbiter?
Lord True (Con)
The process is independent. The Prime Minister asked the Cabinet Office to establish the facts, in line with the Ministerial Code, and the Independent Adviser on Ministers’ Interests, Sir Alex Allan, has a role through providing further independent advice to the Prime Minister. So far as the process is concerned, I regret that I must repeat that I cannot comment on that while it is continuing.
Lord Wallace of Saltaire (LD) [V]
My Lords, the noble Lord, Lord Young, in response to a previous answer from the Minister, said that the code is an honour code, implying that it is up to the Minister concerned to take responsibility and to resign in the case of a serious breach. Last month, the Cabinet Secretary said to a Commons committee that the Prime Minister is the ultimate arbiter. That seems deeply inappropriate in the current conditions. Does the Minister not think that there is merit in the First Division Association proposal that an independent arbiter, with status outside government, should be the final arbiter in these cases?
Lord True (Con)
My Lords, I stated just now that there is an Independent Adviser on Ministers’ Interests, and that is Sir Alex Allan, who has a role. I have also studied the Cabinet Secretary’s evidence to PACAC on 22 October. He said what I have said, which is that, in the interests of all those involved in the process,
“We are not giving a running commentary on the process.”
That is a quotation from the Cabinet Secretary and I agree with him.
Baroness Hayter of Kentish Town (Lab)
The Minister keeps saying that this is an ongoing process. The review was completed eight months ago. I do not know whether the Prime Minister is a very slow reader or whether, as Laura Kuenssberg has said, this has simply been parked. If it is the latter, can we take it out of the underground garage, please?
Lord True (Con)
My Lords, I have nothing further to add to the replies I gave earlier about the ongoing process.
Lord Flight (Con) [V]
What sort of behaviour is sufficiently aggressive to be described by the Government as bullying?
Lord True (Con)
My Lords, the Government take bullying very seriously. In 2018, the Civil Service undertook a review of the arrangements for tackling harassment and misconduct within the service. The Ministerial Code is clear that
“harassing, bullying or other inappropriate or discriminating behaviour is not consistent with the Ministerial Code and will not be tolerated.”
That is the position of the Government.
Lord Browne of Ladyton (Lab) [V]
My Lords, no wonder trust in the Government is plummeting. In 2019, the Prime Minister updated the Ministerial Code and in the foreword he wrote:
“There must be no bullying and no harassment. The precious principles of public life enshrined in this document—integrity, objectivity, accountability, transparency, honesty and leadership in the public interest—must be honoured at all times.”
There are no qualifications; there should be transparency at all times. Those are his own words. Can the Minister explain in this case how those precious principles can be honoured in the absence of the publication of this report?
Lord True (Con)
My Lords, I refer again to what the Cabinet Secretary said about the process. On bullying, I underline again what I said earlier. The Civil Service helps those who wish to make complaints. In 2019, we ran a cross-departmental “speak up” campaign to encourage individuals to come forward and report poor behaviours. A further campaign is proposed for this year.
Lord Campbell of Pittenweem (LD)
My Lords, is not the irresistible inference both from the delay and from the answers that the Minister has given that the Government have something to hide? What is it?
Lord Mackenzie of Framwellgate (Non-Afl) [V]
My Lords, one of the main deterrents to reporting workplace bullying is the fear of retribution by the perpetrator. One way of facilitating the reporting of such incidents is through an independent hotline outwith the normal line management structure of the organisation. Having just attended the excellent parliamentary webinar course on Valuing Everyone, in which an independent hotline is paramount, can the Minister say whether the great departments of state provide such independent whistleblowing hotlines?
Lord True (Con)
My Lords, the noble Lord has made an important point. As I have indicated to the House, full assistance is provided to those who make complaints. There is also a facility to make complaints without the disclosure of names. I agree with what the noble Lord has about the Valuing Everyone training, and I confirm to the House that all Cabinet Ministers, including the Prime Minister, have either taken Parliament’s important Valuing Everyone training or have made arrangements to do so.
The Lord Speaker (Lord Fowler)
My Lords, the time allowed for this Question has elapsed and we have dealt with all the supplementary questions.
Terrestrial and Freshwater Protected Sites
(4 years, 1 month ago)
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Lord Teverson
To ask Her Majesty’s Government, further to A Green Future: Our 25 Year Plan to Improve the Environment, published on 11 January 2018, what plans they have to bring forward the 2042 target date for the restoration of 75 per cent of terrestrial and freshwater protected sites to a favourable condition.
Lord Teverson (LD)
My Lords, in declaring my interest as chair of the Cornwall and Isles of Scilly Local Nature Partnership, I ask the Question standing in my name on the Order Paper.
The Minister of State, Department for the Environment, Food and Rural Affairs and Foreign, Commonwealth and Development Office (Lord Goldsmith of Richmond Park) (Con) [V]
My Lords, the Environment Bill requires us to set at least one target in each of the four priority areas, including biodiversity. We will bring these targets forward by 31 October 2022. Our recent policy paper, Environment Bill—Environmental Targets, outlines our initial thinking on objectives for targets, which we will develop over the coming months, including on the condition of protected sites. Before committing to specific targets, we will gather further evidence, including by carrying out a public consultation.
Lord Teverson (LD)
My Lords, I thank the Minister for his Answer, and I recognise his great work on environmental concerns. But does he not agree with me that it is almost inexplicable that the appetite in an environment plan is so little as to have only three-quarters of sites of scientific interest ready and up to standard within 22 years? Is that not utterly lamentable, given the current biodiversity crisis, not just globally but in this country?
Lord Goldsmith of Richmond Park (Con) [V]
The noble Lord asks whether we will bring the target forward. The Environment Bill framework requires us to set targets by October 2022 for a minimum of 15 years, so a target set in 2022 would run until at least 2037. One of the targets we propose is on the condition of protected sites. Any targets, when agreed, would be set out in law through an SI by October. A goal of 75% is ambitious. Some cases, such as peat bog restoration, can take many years of hard conservation work before sites even come close to reaching a favourable condition.
Baroness Blackstone (Ind Lab)
My Lords, the Government recently said that nature-based solutions will be central to the negotiations at COP 26. What progress can the Minister report? What emphasis will there be on a global response in which other nations also restore soils and grasslands to act as carbon sinks?
Lord Goldsmith of Richmond Park (Con) [V]
Our nature strategy, which transcends the climate COP and has direct implications on the biodiversity COP being hosted in Kunming shortly before, is three things. The first is that we want more finance for nature. We are taking a lead in this country, having doubled our international climate finance to £11.6 billion. We have committed to spending a big proportion of that new money on nature-based solutions. We want other countries to do similarly and to mobilise private finance. A second area is targets. The Aichi targets are impressive, but they are ignored by pretty much every country. We want to include a means to hold individual countries to account on those targets. Thirdly, we want to tackle the drivers of environmental destruction, such as dodgy land-use subsidies that incentivise environmental destruction and by cleaning up our supply chains. The UK is showing real leadership in both those areas.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, could the Minister confirm whether the Government have co-ordinated their efforts with the devolved Administrations on the strong protection of our land and freshwater environment?
Lord Goldsmith of Richmond Park (Con) [V]
Many issues relating to biodiversity and nature are devolved. However, my department, Defra, is in routine negotiations and discussions with the DAs. In certain areas, we work particularly closely together. For instance, we have a target to plant 30,000 hectares of land a year by 2025. A great deal of that burden will be taken up by our friends in Scotland, so we are liaising closely on that and all issues relating to biodiversity and nature.
Baroness Redfern (Con) [V]
My Lords, the environmental performance report of 2 October shows that more action and investment is needed by several water companies, which are failing to protect. The Environment Agency has requested that all water companies develop, publish and implement specific plans to reduce the incidence of pollution by the end of this year. Will the Government request that additional monitoring or modelling is put in place if they find any data gaps?
Lord Goldsmith of Richmond Park (Con) [V]
Where water companies do not meet our expectations, we will toughen our regulation and push them to improve their performance. This will include the Environment Agency conducting in-depth audits and reviews of water company management systems and new technologies, such as continuous flow monitoring and event duration monitoring. The results of the Environment Agency’s audits and review will help it and us to target enforcement action appropriately.
Baroness Parminter (LD) [V]
My Lords, water pollution is a key cause of the decline in conditions of protected sites. All English rivers are currently failing to meet quality tests for pollution. Given that 40% of water pollution comes from agricultural run-offs, what specifically are the Government doing to get farmers to use fewer chemical inputs?
Lord Goldsmith of Richmond Park (Con) [V]
The principal tool we will use in the coming years is the transfer from the common agricultural policy subsidy system to the environmental land management system. Whereas farmers and landowners have, for decades, been incentivised to convert their land to make it farmable—in many respects grubbing out ecosystems and undermining nature—the new system will make those payments completely conditional on good environmental stewardship. It is probably the biggest bonus that nature and our environment more broadly will have experienced in the last century. Although that is not the only funding mechanism or tool at our disposal, it is undoubtedly the most powerful.
The Earl of Caithness (Con)
My Lords, does my noble friend agree that it is all very well talking about new targets, but we cannot meet our existing targets? Surely enforcement of our existing targets is the thing that matters. As has already been mentioned, the water companies and some bad farmers are not meeting standards and are not being fined. Clearly, the Environment Agency is not up to the standard required to issue fines. Does he further agree that fines on big companies, such as water companies, are a waste of time, as the ultimate payer is us—the user? The directors should get fined.
Lord Goldsmith of Richmond Park (Con) [V]
I certainly agree that the department, the Government and the Environment Agency should be using every tool at their disposal to ensure that the water companies behave responsibly and with environmental care. My colleague in Defra, Rebecca Pow, has established a new working group with the water companies to better understand, in the quickest possible timeframe, what more government can do and what the water companies should do to improve the quality of our water. I just make the point that bringing sites, whether water or land, into favourable conditions is a big challenge and takes time. Many sites were in poor condition when they were designated as protected sites. Some, such as peat bogs, can take decades to be restored to a favourable condition. The same is true for our river systems, which have had years of interference.
Lord Berkeley of Knighton (CB) [V]
My Lords, I apologise to the noble Lord for returning once again to the question of polluted Welsh water running into English rivers. The farming rules for water in England have no counterpart in Wales. In his Written Answer to my Question on 27 October, the noble Lord said that his department had not been in touch with Wales and he cited devolution as the reason. I put it to him, respectfully, that we should cut through bureaucracy in the cause of common sense.
Lord Goldsmith of Richmond Park (Con) [V]
The noble Lord makes an extremely good point. I am afraid I am not in a position to update him on the letter I provided most recently. However, I will take his message back to the department with a view to making progress and, as he said, cutting through the red tape and bureaucracy.
Baroness Jones of Whitchurch (Lab)
My Lords, what hope do we have of being able to deliver what is an unacceptably distant and unambitious target, when we do not yet have a comprehensive baseline of natural capital assets against which we can measure progress? When can we expect to see those baselines, so that we know that progress is happening?
Lord Goldsmith of Richmond Park (Con) [V]
A number of pieces of work will help us to better understand the economics of biodiversity. One, as the noble Baroness knows, is the Dasgupta review, which we commissioned some time ago and is due to be produced very soon. She is right that we also need a more comprehensive audit or inventory of our natural capital in order to understand best how to introduce policies tailored to improving biodiversity. That work is ongoing. It is an enormous undertaking, and my department has been in discussions with the Treasury about working together to ensure that we are able and resourced to fill the gaps.
Baroness Scott of Needham Market (LD) [V]
My Lords, by any measure, biodiversity in this country is now falling, at least in part because protected nature areas tend to be in small pockets that lack the necessary food webs and resilience for proper biodiversity. Can the Minister assure us that the zoning proposals in the planning White Paper will not make this situation worse?
Lord Goldsmith of Richmond Park (Con) [V]
I can give that assurance. Our planning reforms are intended to speed up decisions that can and should be sped up. We are determined to maintain and improve on the high standards we have set for our environment. We recognise that our biodiversity has been in sharp decline for decades; this transcends any one Government. We have put the levers and funding in place to begin the painful but necessary process of reversing those trends.
The Lord Speaker (Lord Fowler)
My Lords, the time allowed for this Question has elapsed.
Tax Avoidance: Base Erosion and Profit Shifting
Lord Harries of Pentregarth
To ask Her Majesty’s Government what steps they are taking in their discussions relating to the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting 2.0 Project to prioritise a fairer settlement for those less economically developed countries who lose income as a result of tax avoidance by multinational corporations.
Baroness Penn (Con)
My Lords, the UK remains committed to the OECD’s base erosion and profit shifting 2.0 project. We robustly support the discussions being taken forward in the OECD’s inclusive framework group. That includes more than 100 jurisdictions and ensures that less economically developed countries have an equal say in developing international solutions. The UK continues to champion international initiatives that build capacity in developing countries.
Lord Harries of Pentregarth (CB) [V]
I thank the Minister for her answer. As she will know, low-income countries lose more of their income than do middle-income ones—some 9% as opposed to 3%—as a result of profit shifting by multinational companies. In the light of this, will Her Majesty’s Government prioritise the needs of low-income countries with a view to finding a process that will help them better than those presently on offer? I note that the Tax Justice Network is equipped and ready to take on this task if commissioned to do so.
Baroness Penn (Con)
The UK is committed to BEPS 2.0 being an inclusive process. Capacity building and technical assistance remain key priorities for the UK as they empower developing countries to draw on more of their own resources as key enablers of the sustainable development goals. This includes a £47 million package from the UK to support developing countries’ tax and public finance systems, including the OECD’s work on international tax standards to tackle evasion and avoidance.
The Lord Bishop of Winchester [V]
My Lords, I underline what the noble and right reverend Lord, Lord Harries, has brought into focus. The loss of corporate tax—about 3% from high-income economies compared with 9% for low-income ones—further exacerbates the impact of coronavirus on trade and tourism. For example, sub-Saharan Africa currently faces its first recession in 25 years, with up to 14 million people driven into extreme poverty. Can the Minister assure the House that Her Majesty’s Government will urgently offer the OECD technical support in the form of revenue analysis along with support for legislative and policy measures so that countries that wish to implement unilateral tax reforms will have the wherewithal and advice to do so in the best way?
Baroness Penn (Con)
My Lords, I can make that commitment. By their very nature, these proposals will benefit low-income countries by expanding their tax rights and reducing the incentive to shift profits away from such jurisdictions. As I outlined in my previous answer, the Government are also committed to putting resources behind capacity building to ensure that low-income countries can also benefit from these measures.
Lord Leigh of Hurley (Con)
My Lords, I welcome this extremely important Question. We have discussed pillar 1 before in this Chamber. My noble friend is aware of my views that the digital services tax is not working. The pillar 2 blueprint was published a few weeks ago. Although it is complex, it has four concrete proposals to ensure that international companies pay the minimum level of tax. One of these, the subject to tax rule, looks the most effective, as it encourages withholding tax. Can the Minister assure the House that the Government will support this?
Baroness Penn (Con)
My Lords, I assure my noble friend that pillar 1 remains the UK’s number one focus, partly so that we can achieve a multilateral agreement to replace the digital services tax, which was intended to be only temporary. We also recognise that a global solution will need to include outputs on pillar 2. We are working to ensure that these proposals, including the one referred to by my noble friend, are balanced and appropriately targeted, and have the support of all those involved in the negotiations.
Lord Sikka (Lab)
My Lords, I draw attention to my entry in the register of interests: I am an unpaid senior adviser to the Tax Justice Network. The OECD has released aggregate country-by-country data from 26 countries including the US, China, Japan, France and India. This suggests that there is considerable international consensus around transparency. The UK has blocked the OECD from releasing its aggregate data. It would be helpful to know why. Furthermore, the analysis of the OECD’s data shows that Bermuda, a British Overseas Territory, is responsible for $10.9 billion of tax avoidance and evasion. This is particularly hitting low-income countries. Why do the UK Government continue to indulge these fiddle factories?
Baroness Penn (Con)
I am not aware of the particular issue that the noble Lord raises, but I will look into it and write to him. The UK is committed to progress on this initiative, which we started back in 2013 when we hosted the G20.
Baroness Sheehan (LD)
My Lords, the UN Conference on Trade and Development estimates that developing countries lose up to $200 billion every year in fiscal revenues due to a lack of in-country tax take. Why does CDC, the UK’s FDI, regularly use tax havens, which results in less money for health and education, the undermining of good governance and the consolidation of conditions in which corruption can flourish?
Baroness Penn (Con)
I do not recognise the picture that the noble Baroness painted. The UK stands behind the international action being undertaken through the OECD and the progress being made in tackling tax avoidance and evasion. Since 2010 the UK has invested more than £2 billion extra in HMRC to tackle evasion. This has brought dividends in narrowing the tax gap, which is at a near record low.
Lord Kirkhope of Harrogate (Con) [V]
My Lords, I suggest that there is a lack of consensus, especially relating to the new proposed OECD framework. In view of that, what progress has been made on action 14—the peer review process, which ends in 2021—to improve dispute resolution between jurisdictions?
Baroness Penn (Con)
My noble friend is right. These negotiations are complicated, and they involve more than 100 jurisdictions. Although it is difficult, I welcome the progress that we manage to make. My noble friend is also right about action 14: the peer review process is under way. More than 45 jurisdictions have been reviewed so far and around 990 recommendations issued as a result of that process.
Lord Collins of Highbury (Lab)
The noble Lord, Lord Kirkhope, is right: there is no consensus. When we in this country condemn companies that do not pay tax—we even have the digital tax—everyone is supportive, but developing countries are a different kettle of fish. We must win the argument for ensuring that the “taxing country” principle applies to developing countries. Will the Government make sure that supportive measures are taken not only within the OECD but within the United Nations to ensure that developing countries get their fair share of tax?
Baroness Penn (Con)
The noble Lord is right that this is not only an issue for developed countries but is essential for developing countries and their tax take. The UK believes that the OECD should be the primary standard-setting body for international tax standards, but we are absolutely committed to ensuring that the voices of developing countries continue to be central to those discussions. This is why we have been keen to build on the progress the OECD has made in integrating the interests of developing countries. The inclusive framework has over 100 non-OECD member states and 66 from less economically developed countries, to ensure that those voices are front and centre of these discussions.
Baroness Altmann (Con)
My Lords, can the Minister comment on the progress of any of the 15 actions that are aiming to tackle tax avoidance and improve international tax rule coherence, and to ensure that profits are taxed where economic activity and value creation occur? Are the Government focusing on any specific areas, and has the pandemic had an impact on global co-operation in this area?
Baroness Penn (Con)
I am pleased to tell my noble friend that progress is still being made on these actions, despite the global pandemic. On 12 October, the OECD published its Reports on the Pillar One and Pillar Two Blueprints, regarding the new work going forward. The UK is working with the OECD to support multilateral implementation, having supported and implemented all the key components itself. The OECD published a progress report this year on actions taken.
The Lord Speaker (Lord Fowler)
My Lords, the time allowed for this Question has elapsed.
Nagorno-Karabakh: Genocide Emergency Alert
(4 years, 1 month ago)
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Baroness Cox
To ask Her Majesty’s Government, further to the genocide emergency alert issued by Genocide Watch about the situation in the Nagorno-Karabakh region, what assessment they have made of their obligations as a signatory to the 1948 Convention on the Prevention and Punishment of the Crime of Genocide.
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Baroness Sugg) (Con) [V]
My Lords, as a party to convention on the crime of genocide, the UK is fully committed to the prevention and punishment of genocide as appropriate under the convention. We remain deeply concerned about the impact on civilians of the conflict in the Nagorno-Karabakh region and continue to call for urgent de-escalation and a return to negotiations.
Baroness Cox (CB) [V]
My Lords, I thank the Minister. For weeks, Turkey and Azerbaijan were preparing to commit genocide, and Azerbaijan continues to target civilian settlements, including a maternity hospital, with heavy weapons, cluster bombs and drones. According to Genocide Watch’s 10 stages of the genocidal process, Azerbaijan has already reached stage 9, extermination, and stage 10, denial. Will Her Majesty’s Government fulfil their duty to protect and make urgent representations to the UN Security Council to impose an embargo on the sales of arms to Azerbaijan and demand that Azerbaijan immediately stops all offensive attacks?
Baroness Sugg (Con) [V]
My Lords, we remain deeply concerned about the conflict, regret the lack of progress towards a peaceful settlement and, of course, condemn any targeting of civilians. There is an OSCE arms embargo in place related to the Nagorno-Karabakh conflict and we believe that that is sufficient to ensure that the international community is not inadvertently party to attacks on civilians from either side. We will continue to make urgent representations to stop all offensive attacks, both directly to the parties and through the OSCE and the UN Security Council.
Lord Clark of Windermere (Lab) [V]
My Lords, this is one of the frozen conflicts at the edge of Europe. The difficulty is that it could grow out of control as a number of other powers, such as Russia, Turkey, Iran and the rest, are interested in the south Caucasus. Will the Government show a little more activity in this respect and use their influence to ensure that the troublesome individuals and players in the field are reined in somewhat?
Baroness Sugg (Con) [V]
My Lords, I agree with the noble Lord that this is a deeply complex and historic conflict and that it presents a risk to regional stability. We are absolutely trying to avoid any instability within the region. The UK is taking an active role. We are not co-chairs of the Minsk Group, but we fully support it, and we are working with our international partners bilaterally and multilaterally. We have regular contact with the Foreign Ministers of both countries and continue to urge the de-escalation of this conflict. We know that there will not be a military solution, and we need to see both parties return to the negotiating table. The UK will continue to press for that.
Lord Addington (LD)
My Lords, does the Minister agree that we have to look at this in the round, bearing in mind that there is a long history of distrust and a search for revenge in both parties? As the noble Baroness, Lady Cox, said, Genocide Watch gives Armenia a rating of eight and 10, so it is not without some blame or concern. Could the Minsk Group be kicked into life? Could the Government make sure that the US, this week or next week, takes this problem seriously and make sure that there is some activity there? At the least we need observation on the ground of what is going on, because knowing that if you commit crimes you pay a price might be a way of reining people in.
Baroness Sugg (Con) [V]
I thank the noble Lord for his question. I agree that we must see both sides come to the table and that both sides need to compromise. We fully support the Minsk Group, which has been working hard to make progress. We have seen meetings in Moscow, Paris and Washington but, sadly, despite these efforts there has not been a sustained ceasefire. However, significant efforts will continue and we will continue to support the co-chairs in their work to bring about a sustainable peace.
Lord Pickles (Con) [V]
My Lords, the present Turkish Government are very sensitive to allegations of an Armenian genocide 100 years ago. Does this not underline the need for Turkey, a valued member of NATO, to be unambiguous in its dealings with the current conflict, not only by ensuring that arms are not supplied to those involved in the murder of women and children but by showing in the clearest possible way that it is urging the parties to seek peace? What discussions has my noble friend had with the Turkish Government?
Baroness Sugg (Con) [V]
My Lords, we agree with my noble friend that Turkey needs to be part of the solution. The Prime Minister discussed the situation in Nagorno-Karabakh with President Erdoğan on 28 September. We have had ongoing conversations with Turkey. Most recently our Foreign Secretary spoke to Turkey’s Foreign Minister. Turkey is a key NATO ally and sits on the front line of some of the most difficult and serious challenges we face. We encourage all external actors not to escalate the situation and to become involved in bringing about a peaceful solution.
Lord Alton of Liverpool (CB)
My Lords, the noble Baroness has reminded us that we are signatories to the 1948 convention on the crime of genocide that places a duty on all its signatories to prevent, protect and punish. My noble friend Lady Cox reminded us that a maternity hospital has been bombed in Nagorno-Karabakh by Azeri forces. That is a war crime. What action are we taking to ensure that those responsible for war crimes are held to account? Important though it is to bring people back around the table, it must surely be a central objective of Her Majesty’s Government that those who are responsible for war crimes and genocide are appropriately held to account.
Baroness Sugg (Con) [V]
My Lords, the UK is fully committed to the principle that there must be no impunity for the most serious international crimes. We continue to voice our support for this principle and continue to support the work of International Criminal Court and the international tribunals to tackle impunity for these crimes. All allegations of war crimes or other atrocities must be investigated, prosecuted and, if appropriate, punished. We completely condemn any attack on civilians.
The Lord Bishop of St Albans [V]
Will the Minister comment on whether Her Majesty’s Government believe that the criteria used to recognise Kosovo and the principle of internal self-determination which protects minority rights equally applies to the Armenians and Nagorno-Karabakh and on whether recognition might, as in Kosovo, prevent the possible ethnic cleansing of Armenians, which has historically characterised territorial border conflicts in that part of the Caucasus?
Baroness Sugg (Con) [V]
My Lords, we support the Minsk principles which ensure that there is an interim status for Nagorno-Karabakh and provide guarantees for security and self-governance. However, ultimately, future determination of the final legal status of Nagorno-Karabakh will need to be done through a legally binding expression of will.
Lord Collins of Highbury (Lab)
My Lords, despite my initial concerns about the role of the US in the Minsk process, I am pleased about what has been attempted in recent weeks—certainly the brokering of the ceasefires which, as the noble Baroness mentioned, have sadly so far failed. The international community has a responsibility to promote and facilitate peace. As the noble Lord, Lord Pickles, said, we cannot ignore the role which outside actors are playing. Will the Minister tell us a bit more about what we are doing within NATO diplomatically to ensure that our concerns about Turkey’s actions are properly and adequately conveyed?
Baroness Sugg (Con) [V]
My Lords, I agree with the noble Lord that we have a responsibility to promote and facilitate peace. That is what we are trying to do in this conflict. I also agree that the US is playing an important role. I mentioned the talks that are happening in Washington and the strong statements from the both the heads of state and the co-chairs of the Minsk Group.
NATO does not have a direct role in the conflict, but the Secretary-General has expressed concern over the escalation of hostilities. NATO is calling for all sides to cease fighting immediately and to find a way towards a peaceful resolution. We strongly support that stance.
Lord Taylor of Goss Moor (LD) [V]
The Minister has just said that NATO does not have a role in the conflict. That is certainly true, as things stand, but clearly the position in the Caucasus could easily escalate, particularly given Turkey’s involvement. Can the Minister be a little more forthcoming about the activity that the Government are undertaking, in particular working to try to change Turkey’s position and to get it involved in seeking peace?
Baroness Sugg (Con) [V]
My Lords, I mentioned that we are having regular conversations with Turkey at all levels to assist it in playing a constructive role in bringing about an end to this conflict. Of course, we are aware of its strong partnerships and military relations in the region but it is important that it plays a role in bringing both sides to the table and encouraging negotiation.
Baroness Eaton (Con) [V]
My Lords, the escalation of conflict is exacerbated by Azerbaijan’s constant use of hostile propaganda. This is not conducive to effective peace negotiations. Will the Minister support Genocide Watch’s call for world leaders to condemn such hate speech and promote an end to hostilities and the implementation of a new ceasefire?
Baroness Sugg (Con) [V]
My Lords, we fully support a new ceasefire—that is indeed what we are calling for. As I said, we regret that the ceasefire conversations have not brought about a sustained ceasefire, but we continue to encourage both parties to start a ceasefire.
On hate speech, the UK works to combat intolerance and hate globally and to promote tolerance and respect. I join my noble friend in her condemnation of hate speech.
Lord Green of Deddington (CB) [V]
My Lords, the noble Baroness mentioned civilians. Is the Minister aware of reports of the use of phosphorus by Azerbaijan in attacking woodlands in Karabakh? This is extremely dangerous for civilians as not only is it toxic but it would also ignite the very woodlands to which they have been forced to flee by Azerbaijani shelling of towns. Can the noble Baroness ascertain whether these reports are true? If they are, what actions might the Government take?
Baroness Sugg (Con) [V]
My Lords, we have seen a number of reports highlighting some terrible incidents affecting civilians. We will continue to monitor that carefully. Over the weekend, we announced new UK aid support, which is directly targeted to help thousands of people who have been affected by the conflict. That support includes urgent medical supplies, food and safer shelters. It is a £1 million aid package in response to an appeal through the International Committee of the Red Cross.
Baroness Goudie (Lab) [V]
My Lords, I welcome the Government’s assistance for aid. Almost a month ago Canada halted arms sales to Azerbaijan’s backer and ally, Turkey, in the Nagorno-Karabakh conflict. Will the UK do likewise?
Baroness Sugg (Con) [V]
My Lords, we continue to monitor developments in the region closely and consider all export applications thoroughly against a strict risk assessment framework. We keep all licences under careful review. The UK complies with the OSCE arms embargo relating to the Nagorno-Karabakh region. This is considered as part of our export licensing process.
Lord McColl of Dulwich (Con) [V]
My Lords, reliable reports suggest that Azerbaijan, supported by Turkey, continues to deploy illegal weapons against civilian settlements in breach of international humanitarian law and Geneva conventions. Will Her Majesty’s Government produce an urgent plan of protection, economic support and development for Nagorno-Karabakh?
Baroness Sugg (Con) [V]
My Lords, we will continue to do our utmost to end violations of international human rights law and, where appropriate, international humanitarian law. We are working to prevent the escalation of conflict and to help alleviate the suffering of those who are affected. I mentioned the new aid package to which the UK has contributed. We do not believe that there is a military solution. We think the best thing for the people of the region is for both parties to put aside any preconceived judgments and come to the negotiating table to bring about a peaceful settlement.
Baroness D'Souza (CB) [V]
My Lords, the UK’s obligations are clear and binding—to prevent and suppress actions of genocide. Will Her Majesty’s Government refer the matter to the appropriate judicial authority in the UK or request a competent body of the UN to mandate the International Criminal Court to initiate investigations?
Baroness Sugg (Con) [V]
My Lords, we will continue to support the work of the International Criminal Court and international tribunals to tackle any war crimes that have been committed. We are looking carefully at Genocide Watch’s report and will continue to work with all our international partners to ensure that anybody who commits war crimes or other atrocities is properly investigated and prosecuted and, if appropriate, punished.
The Deputy Speaker (Lord Lexden) (Con)
My Lords, all supplementary questions have now been asked.
United Kingdom Internal Market Bill
Monday 2nd November 2020
(4 years, 1 month ago)
Lords ChamberRead Full debate United Kingdom Internal Market Act 2020 View all United Kingdom Internal Market Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 135-IV Revised fourth marshalled list for Committee - (2 Nov 2020)
The Deputy Chairman of Committees (Lord Lexden) (Con)
My Lords, hybrid proceedings will now resume. Some Members are here in the Chamber respecting social distancing, others are participating remotely, but all Members will be treated equally. If the capacity of the Chamber is exceeded, I will immediately adjourn the House.
I will call Members to speak in the order listed in the annexe to today’s list. Members are not permitted to intervene spontaneously. The Chair calls each speaker. Interventions during speeches or “before the noble Lord sits down” are not permitted.
During the debate on each group I invite Members, including Members in the Chamber, to email the clerk if they wish to speak after the Minister. I will call Members to speak in order of request and will call the Minister to reply each time. The groupings are binding and it will not be possible to degroup an amendment for separate debate. A Member intending to press an amendment already debated to a Division should have given notice in the debate. Leave should be given to withdraw amendments. When putting the question, I will collect voices in the Chamber only. If a Member taking part remotely intends to trigger a Division, they should make this clear when speaking on the group. We will now begin.
Clause 25: Other exceptions from section 22
Amendment 107
Lord Callanan
“(d) in relation to any part of the United Kingdom, the profession of patent attorney or trade mark attorney.”Member’s explanatory statement
This amendment would add patent attorney and trade mark attorney to the list of legal professions the regulation of which is excluded from Clause 22.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, Amendments 107 and 108 in my name aim to clarify the scope and application of the professional qualification clauses of the Bill. Amendment 107 adds patent attorneys and trademark attorneys to the list of legal professions excluded from the application of the automatic recognition principle in Clause 22. As well as work related to trademarks and patents, trademark and patent attorneys may carry out broader regulated legal activities which require an understanding of the underpinning legal system in the part of the UK in which they practise. Accordingly, we are bringing them into line with the other legal professions to ensure that they are not caught by the automatic recognition provisions of the Bill. These exclusions ensure that access to these professions is not affected in any way by the recognition provisions of the Bill. Part 3 will not affect how these professions are regulated, nor will it change what activities trademark and patent attorneys are able to perform.
Amendment 107A has been tabled by the noble Baroness, Lady Bowles, in response to this government amendment and seeks to probe the effects of the amendment in respect of authorised reserved legal activities under the Legal Services Act 2007. In respect of this amendment, I reassure the noble Baroness, Lady Bowles, that nothing in the recognition provisions of the Bill, or in the government amendment, changes how reserved legal activities are authorised under the Legal Services Act 2007, and her amendment is therefore unnecessary.
Amendment 108 is a technical amendment to provide clarity on the type of qualifications and experience requirements to which Clause 22 applies. It ensures that where qualification requirements are attached to specific activities, those requirements are disapplied by automatic recognition only if they apply to activities that are essential to the practice of the profession in question—in other words, if they amount to a barrier to access to the profession as a whole. This will ensure that Clause 22 does not apply to qualifications or experience requirements for activities which are not essential to the practice of the profession, such as optional service activities which professionals may choose to offer.
I recommend that government Amendments 107 and 108 be accepted, as they provide clarity on the scope and application of automatic recognition principles. I regret, however, that I am unable to support Amendment 107A, for the reasons I gave earlier. I hope that the noble Baroness will feel able not to press her amendment. I beg to move.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I am a retired patent attorney, which is what made me curious about Amendment 107. I guess that is an interest of some kind, though no longer pecuniary.
In this group I have tabled Amendment 107A, which is intended to clarify what has become a confused situation. It can accurately cover all the legal professions named in Clause 25, although the confusion relates only to patent and trademark attorneys. Essentially, it says—as I think the Minister agreed—that there is no change to the status quo under the Legal Services Act 2007, which was the Government’s intention all along.
The background to this is that patent and trademark attorneys may be in the unique situation of being regulated and qualified on a UK-wide basis, while, through their sectoral professional qualifications, also engaging in four specific English and Welsh reserved legal activities, no matter where in the four nations of the UK they qualified, reside or practise. They do this as patent attorneys or trademark attorneys, not as lawyers.
The purpose of that unusual provision is, broadly, to enable conduct of litigation for all in the specialist England and Wales Patents Court, and for associated matters such as deeds and oaths to be dealt with. That unique construct does not fit within the definition of Clauses 22 and 23 for the professions when they are identified as patent attorneys or trademark attorneys because you cannot work it out so that there is a relevant part and the other part. Noble Lords are welcome to try—it takes quite a few pieces of paper. The point is that it is the same for all patent and trademark attorneys, wherever they are.
However, somewhere the niggling thought arose that perhaps it was confusing, or that the mutual recognition would apply notwithstanding that Clause 22 did not apply and would somehow extend the enjoyed England and Wales reserved activities to Scotland or Northern Ireland courts, deeds or oaths. Amendment 107 has, therefore, been proposed. It has the effect of defining patent and trademark attorneys as a legal profession in Clause 25, thereby putting them into Clauses 23 and 22 and simultaneously taking them out again. This hokey-cokey amendment was meant to stop confusion. It has, however, also created its own confusion, perhaps best illustrated in an explanation from the Ministry of Justice that said:
“If trademark and patent attorneys were not excluded from the UKIM bill, then one of your practitioners authorised to conduct litigation in Northern Ireland, for example, could potentially argue that under the automatic recognition principle IPReg must also allow them to conduct litigation in England and Wales without meeting the normal IPReg authorisation requirements for doing so”.
However, that does not fit the present circumstances that I have just explained. The patent or trademark attorney in Northern Ireland is qualified to conduct litigation in England and Wales but, actually, not to conduct litigation in Northern Ireland—and that is not the only wrong explanation that has been offered. Indeed, a few moments ago, the Minister referred to attorneys being qualified in respect of the part of the UK in which they practise. There is no such provision for patent and trademark attorneys. They just have that extra bit of add-on, no matter where they practise, which relates to being able to access the England and Wales Patents Court. That is quite fundamental, because that is where you would see appeals from the comptroller and so on.
I believe that a true analysis of the facts ends up as I have said, that these particular professions were not in the original construct, but some people might have been confused. Now they are defined as in and out again but, unfortunately, this leads to other confusions, suggesting divisions in the profession that do not exist but which have just been replicated in the words of the Minister. If the Minister and an MoJ official can get it wrong, who else might? A wrongful accusation, no matter that it can be refuted, is still damaging. My amendment clarifies that the status quo is maintained. It neither adds nor subtracts anything, other than giving clarity—something to point to on the same page as the confusing hokey-cokey.
Baroness Neville-Rolfe (Con)
My Lords, I support the noble Baroness, Lady Bowles, in probing the effect of these two government amendments. As a well-known supporter of a well-functioning IP profession, right across the United Kingdom, I have to say that I am still confused. It seems to me that, in the UK single market, the rights of these various attorneys should be fully reciprocal. Can my noble friend confirm that that is the intention? Will he further kindly reflect on whether it is the effect and, if they are not reciprocal, whether that is justified? Indeed, is there any read-across to the problems that we have encountered on the lack of reciprocal rights for EU and UK attorneys? We have discussed this elsewhere. I know that the department has had a rethink, but are we quite there?
The Deputy Chairman of Committees (Lord Lexden) (Con)
My Lords, the next speaker on the list, the noble Lord, Lord Liddle, has withdrawn. I call the noble Lord, Lord Smith of Finsbury.
Lord Smith of Finsbury (Non-Afl) [V]
My Lords, first, I declare an interest as the chairman of the Intellectual Property Regulation Board—IPReg—which regulates all patent and trademark attorneys. It is fair to say that, when the Government’s amendment first appeared, there was considerable alarm among the profession as to what exactly the impact would be of including patent and trademark attorneys in the list in Clause 25. There had, sadly, been no prior consultation with the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys or, indeed, IPReg.
Since the publication of the amendment, the Government have assured us that there is no intention to change the status quo. I hope that the Minister will be able to give us clear confirmation this afternoon, on the record, that this is indeed the case. There are two things to say. First, intellectual property, its protection and the facilitation of its creation are crucial for our nation’s economy. IP will be fundamental to our economic recovery in the years ahead and we should do nothing to damage it. Secondly, patent and trademark attorneys are not just any other lawyers. Many start off with a scientific background and skill set. Their legal training is bespoke and rigorous, and they are, rightly, regulated separately from the general mass of solicitors.
Lord Clement-Jones (LD) [V]
My Lords, I declare a possible interest as a solicitor qualified in England and Wales and I share all previous speakers’ support for IP professionals, who ensure that we have the necessary intellectual property protection in the UK. I strongly support my noble friend Lady Bowles’s Amendment 107A and share her confusion, not to say bafflement, at Amendment 107. She has drawn attention to the obscurity of the drafting. Why are patent and trademark attorneys included and then excluded?
My noble friend has been, if anything, very kind to the drafters of the government amendment. Not only is it obscure but, as we have heard from the noble Lord, Lord Smith, there seems to have been no proper consultation with the professional bodies and regulators such as CIPA, CITMA and IPReg before it was tabled. This is all compounded by the use by both officials and the Minister of the term “automatic recognition” in communication with my noble friend, when we should be talking about qualifications.
Why has automatic recognition, from which exemption is needed, been introduced? As an interloper on this Bill, perhaps I can ask the most fundamentally naive question: why do we need not just Clauses 22, 23 and 25 but Part 3 in the first place? Are these the emperor’s new clothes? Even the Explanatory Note is rather obscure in its rationale, saying:
“There is currently no overarching system or consistent approach for the recognition of professional qualifications between the nations making up the UK internal market. Therefore, if professional divergence increases across the UK, professionals could have greater limitations on their ability to practise across the UK than exists currently.”
What professional divergence is threatened or envisaged? There is the continuing need for professionals covered in this part to be suitably qualified, but why do we need a new piece of legislation simply to preserve the status quo? I am sure the Minister has the answer at his fingertips.
Lord Naseby (Con)
My Lords, it is a little disappointing that, in a Bill that is vital for the future of our country, there seems to have been some misunderstanding; somehow or other the key role of patent and trademark attorneys has been misunderstood. They are vital to the future of our country because, as it happens, we are quite good at producing ingenious new products, processes and systems of manufacture that are patentable. Equally, we are good at marketing products that require trademarks. Here is an area where we really are at the forefront of Europe’s activity—and, many would say, the world’s—so this is crucial, and we need to be clear that it is going to operate properly without any hiccups.
In my judgment, we need to defend some of our trademarks in particular. When we are marketing on our own outside the EU, I believe that we will get challenges. I have worked overseas and seen it happen there, and I do not see why it might well not happen here in the UK. As we move forward on that challenges dimension, I recall that, as I think one or two of my colleagues know, I worked in south Asia for two years. When I was in India, there was a system of mutual recognition for trademarks in certain categories of products. I wonder whether that is an element of the new deal we have done with Japan.
On my final point, I declare an interest in that I have a son, a lawyer, working in the Cayman Islands—in other words, the Overseas Territories. Given the confusion that we have had today, I am not entirely clear whether in the Overseas Territories a qualified patent lawyer or trademark attorney, who is a UK citizen qualified in the law and in whatever elements are needed for such attorneys, is able to operate although they are not actually in a part of the UK.
Lord Falconer of Thoroton (Lab)
My Lords, intellectual property lawyers, patent agents and attorneys are incredibly important for the future. I thoroughly endorse the remarks made by the noble Baronesses, Lady Bowles and Lady Neville-Rolfe, and my noble friend Lord Smith of Finsbury.
Honestly, confidence in this Bill was weak to start with. That mess-up just then on patent attorneys was appalling, and it made me look at the rest of Part 3. Could the Minister first of all identify what the problem is that Part 3 is dealing with? We had a clue between 11.30 pm and 11.45 pm on Wednesday evening when the noble Baroness, Lady Scott of Bybrook, who sadly is not in her place, said the following:
“The purpose of the professional qualification provisions in the internal market Bill is to ensure that professionals can, in most cases, access their profession in all parts of the UK, by ensuring that there is an overarching system for recognition.”—[Official Report, 28/10/20; col. 375.]
Clause 22 says that where you are qualified in one place, you can be qualified in another, while Clause 25 says that Clause 22(2) does not apply to existing provisions. Let us be clear what is happening here: the Government are saying that we are not making any change to the existing position in relation to professional qualifications, and as far as I am aware—and this is nothing to do with the EU—there is absolutely no problem about the current position. The effect of Clause 25(3) is that these provisions do not apply to any change in the future. Am I right about that? They are making no change for the past but they are bringing in these provisions in relation to the future. Why is that, when there is no problem about the past or the future? The Government are causing problems everywhere with this. I ask them to explain to the House and the wider public why on earth they are doing it. They have messed up the one area that we have looked at so far. Why should anyone have any confidence in this Bill?
On a separate point, I refer the Minister to what the noble Lord, Lord Dunlop—on the government side—said on day one in relation to this matter:
“The timetable for the Bill appears to be predicated on the end of the transition period on 31 December this year, but what is the real risk of regulatory divergence between then and the completion of the common frameworks process in 2021? The House is aware that the European Union (Withdrawal) Act 2018 already confers on Ministers so-called Section 12 powers to freeze devolved competence in relation to EU retained law.”—[Official Report, 26/10/20; col. 88.]
So, if there is any problem about this, it can be dealt with by the Government’s Section 12 powers. That applies not just to this but to wider issues.
Why are the Government bringing forward such an obviously unthought-out Bill that is doing damage to what—and I say this with respect to the noble Lord, Lord Naseby—even the noble Lord, Lord Naseby, thinks is a mess-up, and he is a supporter of the Government’s Bill? Why on earth are they messing everything up like this? Could they please give an answer to what the noble Lord, Lord Dunlop, said on day one? Is he right? If so, the urgency goes.
Lord Callanan (Con)
I thank all noble Lords who have spoken in this short debate on this important subject. I shall start by replying directly to the noble and learned Lord, Lord Falconer, and the noble Lord, Lord Clement-Jones, who spoke about Part 3 and why we felt the need to bring these proposals forward. The Bill is intended to ensure that divergence in professional regulation between the four nations of the UK does not increase barriers for professionals living and working in different parts of the UK. As our economy continues to develop and new sectors emerge, it is possible that new regulated professions will be created and there may be changes to existing qualification requirements that could make it more difficult to access the profession in another part of the UK. These new professions may well be crucial to the UK’s economic future. As in other areas, we do not want barriers to trade across the UK in these sectors. Internal market provisions will apply where part of the UK regulates a new profession, access to which is limited to those holding certain professional qualifications or experience. The provisions will also apply to existing professions where there are changes to the requirements for the qualifications or experience needed in order to access the profession concerned. Currently, while the recognition of professional qualifications between the four nations can and does occur, there is no overarching framework that ensures that it does. The Bill creates such an overarching framework to guarantee that recognition of qualifications between the four nations will be possible and barriers will be minimised.
I am happy to give the noble Lord, Lord Smith, and my noble friend Lady Neville-Rolfe the specific assurance they asked for: nothing in the recognition provisions of the Bill, including the exclusion, affects the current situation. IPReg will continue to be able to decide whether and how trademark and patent attorneys should be allowed to carry out the regulated legal activities that it is designated to regulate in all the different parts of the UK.
The government amendment aims to bring patent and trademark attorneys in line with other legal professions and to place them outside the scope of the recognition provisions of Clause 22 of the Bill. Legal professionals have been excluded from the scope of the provisions on the recognition of professional qualifications in acknowledgment of the different legal systems that exist in the UK. This will ensure that the regulation of and access to these professions, including trademark and patent attorneys, are not affected in any way by the mutual recognition provisions of the Bill and will be completely unaffected. That is why we need Amendments 107 and 108.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
I have received requests to speak after the Minister from the noble and learned Lord, Lord Falconer of Thoroton, and the noble Lord, Lord Fox.
Lord Falconer of Thoroton (Lab)
The noble Lord, Lord Callanan, referred to the idea of new professions being invented. If this happened, there would be a professional body that would need government recognition in some form. Could he give us an example, perhaps, of a new profession emerging without a professional body in relation to which there is a substantial risk? If there is no such example or evidence, it is incredibly unconvincing. The second and separate example he gave was an existing profession giving rise to a particular requirement that would create a barrier to entry in one part of the United Kingdom for another. Could he give an example of when that has happened in the past?
Lord Callanan (Con)
By the very nature of it being a new profession or qualification, it is quite hard for me to give examples of what might happen in the future. There are all sorts of new technologies; even in the noble and learned Lord’s legal profession, there may be new technologies, ideas and proposals that will come forward. There is the whole world of artificial intelligence or gene editing—there is a massive range of new and potential professional areas, bodies and qualifications that may come forward. That is the point: we want the current situation in many of these professions to be unaffected, but, in the case of new professions, it is entirely possible that the individual nations of the UK might seek to regulate them differently, and we want no new barriers to trade to emerge.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
I have also received a request from the noble Lord, Lord Purvis of Tweed, but I first call the noble Lord, Lord Fox.
Lord Fox (LD)
My Lords, with all due respect to the Minister, I am sure he understands how unsatisfactory that answer was. My noble friend Lord Thomas of Gresford talked about the gobbledegook of future-proofing, and this is gobbledegook. First, could the Minister tell your Lordships’ House what past examples lead the Government today to this conclusion? Secondly, why is there a problem with bringing any future issues to the Government and your Lordships’ House bespoke in the event that the Minister proves correct and something turns up? To seek to produce a Bill that covers all of the unknown unknowns that are going to happen in the history of time seems overambitious.
Lord Callanan (Con)
I think we are just going to have to differ on this one. We do not want to be returning to the House to create unnecessary difficulties and disagreements in the future; we want to ensure that, before any of these difficulties arise, we have put in place, as in the rest of the Bill, a framework that covers the whole of the United Kingdom to regulate how we will manage and control these issues in the future. That is all we are seeking to do. I understand the points that noble Lords are making. There are differently regulated professions in some parts of the UK already; we accept that and that the status quo is there, but we think that, in future, these things are best regulated on a UK-wide basis, and we want no new barriers to trade to emerge.
Lord Purvis of Tweed (LD)
My Lords, this has nothing to do with powers repatriated from the European Union; it has everything to do with our internal United Kingdom approach. When was the last time that a professional body regulated by law was established where the Government considered there to be major barriers across the United Kingdom?
Lord Callanan (Con)
The noble Lord will be well aware that there is European directive on this subject, and mutual recognition of professional qualifications, so, even in the EU law space, it is accepted that the nations of the EU have different ways of recognising different professional qualifications. I commend Amendments 107 and 108 to the House.
Lord Callanan
“(1A) Provision that limits the ability referred to in subsection (1)(a) to individuals with certain qualifications or experience falls within section 22(1) only if the activities affected by the provision are, in a significant number of cases, essential to the practice of the profession in question.” Member’s explanatory statement
This amendment would provide that provision imposing qualification requirements on particular professional activities falls within Clause 22 only if the activities are, in a significant number of cases, essential to the practice of the profession in question.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
We now come to the group beginning with Amendment 110. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in the debate.
Clause 28: Functions of the CMA under Part 4: general provisions
Amendment 110
Baroness Neville-Rolfe
“Office for the Internal Market
“(1) An Office for the Internal Market (“OIM”), which will report to the Department for Business, Energy and Industrial Strategy, is established.(2) The functions of the OIM are as follows—(a) monitoring the health of the internal market, and(b) advising and reporting on proposals and regulations, and their actual and potential impact on the internal market.”Member’s explanatory statement
This amendment seeks to probe why the OIM is established within the CMA and instead attaches it to BEIS.
Baroness Neville-Rolfe (Con)
My Lords, I rise to move Amendment 110 in my name and that of my noble friend Lady Noakes. My noble friend the Minister has been kind enough to write to me following the debate on where the new office for the internal market should sit. However, I remain to be convinced that the Competition and Markets Authority is its appropriate home. For this reason, I have tabled an amendment attaching it to BEIS. To make that effective, I am also supporting the noble Baroness, Lady Bowles of Berkhamsted, in opposing Clauses 28 and 29.
I will put it simply and bluntly: no case has been made for locating the new office in the CMA, except, I suppose, that it is already an independent agency and the department has some involvement in the appointment of its well-paid top brass. However, the CMA is generally highly sceptical of business, especially the bigger businesses that operate across the UK, which need to flourish if the economy is to recover. That is my past personal experience with various different hats on.
We need an office—call it what you will—that can do two things: it needs to be able to monitor objectively and to advise sensibly on difficult and developing internal border issues. These are highly politically charged, as we can see from experience during Covid. Therefore, we need an office that reports directly to BEIS and, arguably, we need a Minister for the Single Market, in the same way that we had a commissioner in Brussels when we were an EU member. Actually, I prefer the notion of a single market to that of an internal market. Most of us, including the devolved Administrations, had a great deal of time for the single market when we operated within it. Indeed, I devoted some of my career to advancing it because of its benefits to consumers, manufacturers, services, other businesses and, of course, GDP.
I am sure the Minister would agree that not everything done in Brussels is wrong, and I believe we need an in-house and a political dimension. Therefore, for me, the right model for this office is the Intellectual Property Office, which has a chair and a board from outside but also a strong CEO reporting to a BEIS Minister and advising on both policy and enforcement as well as negotiating internationally and across the UK. If BEIS, for some reason, cannot do all of those things in an in-house office, the monitoring role could go to the ONS, which is well regarded in statistical matters. However, above all, the office must be subject to ministerial direction. Recent experience with Ofqual, PHE and even the CMA itself does not persuade me that the approach in this Bill is right. It is not too late to make a change.
I note that Amendment 155 in the name of the noble Baroness, Lady Hayter, has been added to this group. I have a great deal of respect for the noble Baroness and worked with her successfully on consumer legislation in the past. However, I am not convinced that a consumer duty makes sense here, certainly not without balancing provisions on business and the economy. Business stands to lose so much from this new legislation already and from the inappropriate appointment of the CMA as the office of the internal market, and this is at a time when business is more and more adversely affected by the never-ending Covid nightmare. I think we should reflect further, but, for now, I beg to move.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I have given notice of my intention to oppose Clauses 29, 30 and 41 standing part. This is part of a full set of not stand part notices that signals concerns, in principle and to specifics, throughout Part 4 and Schedule 3. I will also probe what has been left unsaid about what the CMA or the OIM will do in total regarding the internal market. I thank the noble Baroness, Lady Neville-Rolfe, for supporting my opposition to the clauses standing part. We have some common concerns, but we are not entirely in the same place. I will be interested to hear her response to some of the points I will make as the debate develops.
There are three parts to my concern. First, as I said at Second Reading, it seems odd to use the powerful investigatory might of the CMA—or a lookalike OIM—whose information-gathering powers, with accompanying enforcement and penalties for non-compliance, bear down on individuals and companies, but where the main purpose, from weighing up the clauses’ wording, is to advise administrations about their own and one another’s regulation, and not anything the companies themselves have caused. This is extraordinary.
Secondly, there are aspects in the Bill that relate to business activity. However, this is not articulated, except that businesses are presumably among those who could make a proposal to the CMA for it to undertake a review under Clause 31. I am left asking: what else is happening that has not been said? Thirdly, there is the matter of making the CMA or the OIM properly representative of the four nations.
Overall, this seems an authoritarian, unexplained and unfinished state of affairs. The use of the CMA is a hangover from when Mrs May envisaged a corresponding body to the European Commission for all competition and state aid matters. State aid considerations have now dropped away to WTO-type considerations of distortive and harmful subsidies that will not be looked at by anyone; the Trade Remedies Authority might have to respond on incoming international complaints, but the domestic side is bare. That still leaves the market access principles to be enforced somewhere.
The Government’s response to the internal market consultation says that the expansion of the CMA’s remit will not position it as an enforcer. In a letter to my noble friend Lord Purvis after last Monday’s debate, the Minister confirmed that the OIM will provide expertise in scenarios where the economic impacts of particular regulations lead to disagreement between one or more administration, and that the non-binding assessments will ensure a technical underpinning to otherwise political discussions. Under the heading:
“On the Office for the Internal Market, disputes and governance”,
the letter to my noble friend Lord Purvis says:
“The Bill does not introduce new enforcement bodies, but instead relies on enforcement of regulatory compliance provisions in existing goods regulation to ensure that enforcement of regulatory compliance takes account of the opportunities offered by the market access principles of mutual recognition and non-discrimination”.
Does that mean that the CMA or the OIM will take account of the opportunities offered by market access principles? Does the CMA enforce the regulatory compliance provisions in existing goods regulation?
The impact assessment also mentions businesses and stakeholders. Page 29 says that stakeholders can “raise complaints” on internal market matters. This could arise by way of Clause 31 and seeking a review. However, the word “complaints” smacks of adjudication. It would be helpful if the Minister could explain whether that will be the case. Is it related to the mentioned regulatory compliance? How will that work?
Baroness Noakes (Con)
My Lords, I have added my name to my noble friend Lady Neville-Rolfe’s amendment. Like her, I am concerned that the CMA has been chosen as the home for the office for the internal market with very little substantive discussion and certainly no proper consultation. The White Paper the Government consulted on in the summer did not even mention the CMA, and the best the Government could report in their September policy response was that
“a few respondents suggested that the UK Internal Market functions would be a natural fit with the CMA”.
When I say that I do not believe the CMA is the right home for the internal market functions, I hope that will not be taken as a criticism of the CMA. It has done good work over the years, building on that of its predecessor bodies, and its work is respected here and abroad. However, it is not a body that has won universal acclaim. The time it takes on some of its market studies and the lack of impact of some of its findings are often cited against it.
I have three main grounds for seeking a different solution, of which my noble friend’s amendment is one constructive suggestion. First, the CMA’s existing functions are adjacent to the issues that will arise in the UK’s internal market, but they are by no means coterminous. The CMA is fundamentally about competition impacts, whether through mergers and acquisitions or market behaviour. It is also about the protection of consumers. The UK’s internal market is about trade and the avoidance of unnecessary barriers to trade. These are quite different things. The danger is that the CMA could move from being a focused competition and consumer organisation to one that is more diffuse and less targeted. Many organisations have lost their way when they have sought to expand their footprint and have ended up as a jack of all trades but master of none. We cannot afford to take that risk.
While it is planned for there to be a separate panel for the office for the internal market within the CMA, it is inevitable that the functions of the office, and the resources to deliver them, will be intermingled with the CMA’s other functions. It is also clear from the Bill that it is the CMA, and not the office for the internal market itself, which will carry responsibility for the various functions set out in the Bill. We run a very serious risk of the office for the internal market disappearing into the CMA’s back room.
My second reason is that the CMA really has too much on its plate at the moment to contemplate adding such an important new area of responsibility as oversight of the UK’s internal market. There are aspects of its current workings that are not beyond criticism, as I have already mentioned. Importantly, it is about to take on a number of additional activities as we finally exit the EU at the end of the year. If anyone doubts the extent of these additional responsibilities, there are 50 pages of draft guidance on these new activities which the CMA is currently consulting on. These competition functions have already led to a very significant increase in the CMA’s resources and I believe that it was expected that overall staff numbers would increase by 40% as a result. Against that background, it would be crazy to add on significant additional responsibilities. There is only so much change that any organisation can safely accommodate in a given period.
A final reason for wanting to see the office for the internal market set up outside the CMA is to ensure that it has a real presence in our internal market as a respected source of impartial data, analysis and advice. These seem to be the things that the Government want, as set out in this Bill, but setting it up as a mere panel of a much larger, differently focused quango cannot be the right way to achieve that.
Lord Palmer of Childs Hill (LD) [V]
My Lords, my purpose in speaking today is to support Amendment 111, which I have signed, and the detailed comments made by my noble friend Lady Bowles. Amendment 111 aims to clarify that the role of the CMA and the office for the internal market is not the resolution of disputes. We already have common frameworks; we do not need a topdown resolver of disputes.
Last week, the Minister said clearly that the office for the internal market is to provide “monitoring, advice and reports”. He said that it will
“have no direct role in dispute resolution”—[Official Report, 26/0/20; col. 70.]
which will be discussed by the Joint Ministerial Committee. There is no reference to a dispute resolution in the Bill. I hope that, for clarity, the Government will accept Amendment 111, which states clearly that the CMA and, thus the new office for the internal market,
“must not engage in dispute resolution”.
The important role of dispute resolution can realistically be achieved only by discussions and compromises between the nation states of the UK. The amendment seeks to make clear what the OIM can and cannot do. In responding to this debate, will the Minister clarify these powers, or lack of them? Clarification, along with dealing with complaints and inconsistencies, is what is needed. That is what your Lordships’ House is set up for and does so well. The various explanatory documents only confuse even further and imply some resolution powers for the CMA and OIM.
Amendment 111, which puts the CMA and its plethora of civil servants back in the box, is necessary if the Bill is to be approved. The Bill is a mistake; the noble and learned Lord, Lord Falconer, summed it up when he said that it was “unthought-out”. I support the amendment.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
The noble Lord, Lord Liddle, has withdrawn, so I call the noble Lord, Lord Naseby.
Lord Naseby (Con)
My Lords, when I first read through the Bill, I had some reservations about the CMA, not least because of the number of its investigations that have not exactly gone smoothly, as my noble friend Lady Noakes referred to. As all noble Lords are aware, it arose from its antecedent, the old Monopolies and Mergers Commission. I voiced some of those reservations at Second Reading. I then had another look at the OIM and could not for the life of me understand why it did not have its own status. How could it be right for it to be almost subservient to the CMA? I could immediately see a clash of interests. As has just been said, its role is to monitor, advise and report. That may well clash with the basic element of the CMA. While this amendment may not be exactly right, there is a strong case for it.
I will give an example. I have recently been approached by some outside people because they know that I take an interest in the credit lending market, principally credit unions. It is a difficult market because there is the FCA, which does a good job on the whole, but there is also the ombudsman. People who are in difficulty with credit are prone to appeal to the ombudsman for better treatment, as it goes beyond the normal provisions under which the FCA works. That created a real problem for the genuine lenders—not the fly-by-night operators—because of a clash of interests.
I would not expect my noble friend on the Front Bench to respond in any detail today, but the OIM has to have its own status. It should not be in a position where it is embarrassed by the CMA going against what the OIM thinks is appropriate in any situation.
Baroness Hayter of Kentish Town (Lab)
My Lords, the noble Baroness, Lady Bowles, referred to a letter to the noble Lord, Lord Purvis, following an earlier discussion. I have not received a copy of that. Could all the letters sent following these debates be circulated to all Members of the Committee?
Baroness Hayter of Kentish Town (Lab)
I think all speakers in these debates ought to get them. Unless, of course, it is a very private letter to the noble Lord, Lord Purvis—in which case we will leave that between the two of them—all noble Lords should see all the letters that arise from these debates.
When I started thinking about this group, I thought that there were two divergent views, but they are not as divergent as I thought. It looked as if some amendments wanted the OIM, which is an observatory rather than an office, to be almost part of BEIS, with little independence. Our view is to the contrary. Amendment 113 in my name, which is obviously probing, signals that the CMA should not be advising the department but using its powers to intervene as necessary. That did not mean that it should not send messages to the Secretary of State, as the noble Lord, Lord Tyrie, did when, as its chair, he sought more powers for the CMA to intervene. He wanted a proper consumer duty adding to it. The amendment does not say that it should not advise the department but makes the point that it should not be subservient to it.
Lord Callanan (Con)
My Lords, I thank everyone who has participated in this group. I will seek to take forward the suggestion of the noble Baroness, Lady Hayter, that letters be copied around—I have another batch on my desk to approve once we have finished this debate, many of which, I am sure, are to my Liberal Democrat colleagues. I will ensure that they are circulated to all the protagonists. They are not particularly secret; they just help to clarify and explain the Government’s role and answer the many questions that we have been asked. I hope that is helpful.
I will start with Amendment 110, which seeks to replace Clause 28 with a new clause on the establishment of the Office for the Internal Market. As noble Lords will know, this Bill will create an Office for the Internal Market within the Competition and Markets Authority to carry out a set of independent advisory, monitoring and reporting functions to support the effective operation of the UK internal market. The proposed new clause seeks to create a new and separate public body that reports to the BEIS Secretary of State. The effect would be not to establish the Office for the Internal Market within the Competition and Markets Authority.
Let me say in response to my noble friends Lady Neville-Rolfe and Lord Naseby and the noble Baroness, Lady Hayter, that the Government did consider a wide range of delivery options for the advisory, monitoring and reporting functions of the UK internal market, as set out in the Bill. We concluded that the Competition and Markets Authority is best suited to house the OIM to perform these functions. The CMA is an independent non-ministerial department that currently operates at arm’s length from the Government. It is sponsored by BEIS and Her Majesty’s Treasury and—to answer the question posed by my noble friend Lady Neville-Rolfe—Ministers will be responsible to Parliament in reporting on the work of the CMA and the Office for the Internal Market, even though they operate at arm’s length.
The Competition and Markets Authority has built up a wealth of expertise and experience that makes it a natural fit to take on these additional functions. It has a global reputation for promoting competition for the benefit of consumers and for ensuring that markets work well for consumers, businesses and the wider economy. It will also build on the CMA’s existing technical and economic expertise, which will now support further development of the UK internal market.
I should also explain that it is government policy that new arm’s-length public bodies should be only set up as a last resort and when consideration of all other delivery options has been exhausted. Other delivery options that should be considered include utilising existing bodies in order to deliver any new functions. New public bodies should be created only if there is a clear need for the state to provide the function or service through a public body and if there is no viable alternative—effectively establishing new public bodies as a very last resort. For the reasons that I have set out, we are not able to agree with this amendment. I hope that my noble friend Lady Neville-Rolfe will feel able to withdraw it.
Regarding Clause 28 stand part, this clause defines regulatory provisions on which the CMA, through the OIM, will monitor and provide reports and advice. The purpose is to set out the areas where the OIM will perform functions under the Bill, in order to ensure certainty and transparency for Administrations, businesses and the general public in connection with the effective operation of the UK internal market. Regulatory provisions are within scope if they set requirements for the purposes of the mutual recognition and non-discrimination principles of the Bill for the sale of goods and the equivalent for services. Moreover, regulatory provisions are within scope if they apply to one or more nations but not the whole of the United Kingdom. Clause 28 as it stands forms an integral part of the provisions for the OIM to carry out its independent, advisory and reporting duties in respect of the UK internal market. For these reasons, therefore, I am unable to accept the proposal that Clause 28 should not stand part of the Bill.
On Clause 29 stand part, removing Clause 29 would remove the Competition and Markets Authority’s objective when exercising its functions as the Office for the Internal Market. This clause designates the CMA, in its capacity as the OIM, as having a specific role in the operation of the UK internal market. It is additionally important to note that this clause establishes the statutory objectives of the CMA in its capacity as the OIM. This clause will ensure that the CMA in its OIM role is able to operate effectively as the monitoring body for the internal market, and will ensure there is no confusion between the pre-existing powers of the CMA and those newly conferred upon it as the OIM. Distinct objectives will prevent any operationally problematic blurring of functions. Clause 29 as it stands forms an integral part of the provisions for the OIM, and therefore we are unable to leave it out of the Bill.
Moving on to Clause 41 stand part, removing this clause would leave out vital definitional provisions. This clause provides key definitions for the purposes of this part of the Bill. This includes a definition of the Competition and Markets Authority itself and sets out how widely the operation of the internal market in the United Kingdom should be understood. This clause also defines “Relevant competence” in Part 4 as meaning both reserved and devolved competence so that executive and legislative competence in each territory is included. Clause 41 as it stands forms an integral part of the provisions for the CMA in its capacity as the Office for the Internal Market: it ensures legal clarity and certainty on technical terms used throughout this part. For all those reasons, therefore, I am unable to accept the removal of this clause.
Amendment 111 would require the CMA to not engage in any form of dispute resolution while fulfilling its responsibilities as outlined in Part 4. This addresses the points made by the noble Lord, Lord Palmer. In cases of disagreement between one or more Administrations, the OIM, within the CMA, could be called upon to provide a non-binding report to support intergovernmental discussion. An assessment of economic impacts will ensure a technical underpinning to an otherwise political discussion.
Ultimately, the OIM only supports the resolution of disputes among the Administrations politically, and it does not adjudicate. The Government believe that building upon existing intergovernmental arrangements is the best approach to resolving any potential disputes, and this includes mechanisms such as common frameworks and intergovernmental relations, according to a clear and agreed process. The OIM will have its role in disputes between individuals and businesses, but businesses can request that the OIM consider disputes as part of its regular reporting. It is under no obligation to do so, nor will it have the authority to adjudicate on the specific issues.
Amendment 113 would prevent the necessary flow of information from the Competition and Markets Authority to the Secretary of State as the policy’s sponsor. The clause in question allows the CMA to alert the Government when it thinks adjustments may be needed to the way it fulfils its statutory functions, or it wishes to raise issues of particular concern. This is in line with precedent for similar public bodies and mirrors provisions in the existing legislation underpinning the CMA. Removing this provision would hamper the necessary communication between the Government and the CMA across all the other provisions in Part 4. For that reason, we are unable to accept the amendment.
Amendment 155 would make it an explicit statutory duty of the CMA, under its existing duties within the Enterprise and Regulatory Reform Act 2013, to protect and promote the interests of consumers in respect of the internal market. The clause in question establishes the statutory objective of the Competition and Markets Authority in its capacity as the OIM. It will ensure that the office is able to operate effectively as the monitoring body for the internal market and that there is no confusion between the pre-existing powers of the CMA and those newly conferred upon it. Distinct objectives will prevent any operationally problematic blurring of functions. The OIM will operate for the benefit of all those with an interest in a smoothly functioning internal market, be they regulators, businesses, professionals, the four legislatures or consumers. Explicitly narrowing its focus to consumers would, in our view, be to the detriment of all the other stakeholders I have listed. Therefore, I am unable to accept the amendment.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
I have received a request to speak after the Minister from the noble Lord, Lord Fox.
Lord Fox (LD)
My Lords, I am grateful for the Minister’s response. In her speech, the noble Baroness, Lady Bowles, asked some very specific questions, particularly in the stand part bit of her speech. I listened hard but I could not hear any answers to them, so perhaps the Minister could review her speech and write a letter, promptly, making sure that I and the noble Baroness, Lady Hayter, get a copy.
Lord Callanan (Con)
I see the request has the enthusiastic endorsement of the noble Lord, Lord Foulkes. Therefore, as his biggest fan in the House, I am obliged to follow the idea put forward. I will of course write to the noble Lord, Lord Fox, on that.
Baroness Neville-Rolfe (Con)
My Lords, this has been a good debate on an important group of amendments. We are not all agreed, but most of us are doubtful about the decision to allocate the office for the internal market to the CMA in the way the Bill proposes. I favour an office with ministerial leadership—there is a parallel with the EU’s single market commissioner, which has worked well in many ways.
The noble Baroness, Lady Bowles, made an expert and very strong case from a different perspective. She rightly pointed to the huge powers and penalties involved in giving this role to the CMA, and explained useful background as to why it ended up in the CMA, linked to an earlier time when state aid rules were going to be part of the portfolio. She also highlighted a concern about how the arrangements will work for the devolved Administrations, which the noble Lord, Lord Palmer of Childs Hill, developed in more detail and which was referred to by the noble Baroness, Lady Hayter.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
We now come to the group beginning with Amendment 114. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in debate.
Clause 30: Office for the Internal Market panel and task groups
Amendment 114
“(3) Before authorising a task group under subsection (1), the CMA must consult the Joint Ministerial Committee on European Negotiations.”
Lord Mackay of Clashfern (Con) [V]
My Lords, the United Kingdom Parliament has a legislative competence to regulate the United Kingdom internal market, but the devolved Administrations have a fundamental interest also. In my view, it is wise to give them a voice in the way it is exercised. This group of amendments is entirely concerned with that. I am assuming that the structures in the Bill are kept as they are, as—as with the last set of amendments—fundamental changes would affect the effect of the amendments I am proposing.
Amendment 114, which I am moving, relates to the task force set up to examine an aspect of the internal market. I am saying that the devolved Administrations should be consulted on that through the Joint Ministerial Committee. Amendment 141 relates to the submission of CMA reports. It is important that this report from the authority looking into it should go to the Joint Ministerial Committee, which has responsibility for the common frameworks. That can include the Ministers from all the devolved Administrations, as well as the UK Minister, and it is extremely important that the report should go to that committee. Admittedly it goes to Parliament, and the members of course are Members of the Parliaments, but the committee as a whole should have the responsibility of having the report given to it.
The third amendment is Amendment 171. The joint committee is a committee which I think—or I understand —functions well; I hope my noble friend the Minister will comment on that when he replies. But, however well it functions, there is the possibility of disagreement. It is absolutely important that when a Minister of the UK Government uses powers to make statutory instruments and applies to Parliament for them, that should be a matter of thorough consultation with the Joint Ministerial Committee. It should come at a time when the formulation is not complete—in other words, at a time when a committee of this sort would be able to discuss the shape of the statutory instrument that would be laid before Parliament. This is a very good way of involving the devolved Administrations in the nitty-gritty, as it were, of the work that will flow from the Bill when it becomes law.
No matter how good a committee is, there is always a possibility of disagreement; I have tried to deal with that. A number of suggestions were made earlier in these debates about how disagreement should be resolved. In my view, the best way of doing it is by putting it to the United Kingdom Parliament, where all the devolved nations are represented constitutionally. If that is to be done, it is essential that it should be by full debate in both Houses of Parliament before a decision is taken. This is preferable to any kind of majority rule, or anything of that sort. It is important that Parliament, including those Members from the devolved Administration countries, has a responsibility in this matter. I think this is the way it should be resolved, and that is my suggestion.
I thoroughly believe that this proposal is fundamental to the smooth working of the internal market Bill in the future. There is always the possibility of misunderstanding unless there is a full discussion of the proposal quite early on. That is part of what I have in mind. I beg to move Amendment 114.
Lord Purvis of Tweed (LD)
My Lords, it is a pleasure to follow the noble and learned Lord, and to agree with the thrust of his comments. This is the last, relatively small, group on the general concept of the consultation, before we move specifically on to what we would expect to see of the OIM’s relationship with the devolved Administrations. It is important, I think, because of Amendment 171 in the name of the noble and learned Lord. The Government’s ability to make considerable changes, through regulation, to any part of this legislation—which could have far-reaching implications for the devolved Administrations—without any requirement for consulting is worrying.
We can look at what is currently under way with regard to consultation. I reflected on the Minister’s previous response to the noble and learned Lord, Lord Falconer of Thoroton, and my noble friend on the regulation of professional services and consultation. I ask the question because the consultation on The Recognition of Professional Qualifications and Regulation of Professions: Call for Evidence, which closed on 23 October—so a very recent closure—was a call for evidence to ask for views on whether there should be a UK-wide system of regulation for professional services. On page 15, under “Future considerations” in the section on the internal market, it says:
“determine whether or not there would be merit in having a UK-wide, cross-sectoral strategy for the regulation of professions (potentially underpinned by regulatory principles).”
But in this Bill we are debating it, because the Government did not wait until the closure of that consultation process before bringing legislation forward and say that this is now absolutely necessary, whereas the consultation by the business department, which closed on 23 October, simply requested people’s views.
I would be grateful if the Government would publish the responses to that consultation and update the House on the consultations on the White Paper which had been requested. I understand that the Government indicated that they would publish those consultations by 9 October, so an update on the status of that would be helpful. The Government’s ability to make regulations without consulting the devolved Administrations, under the last schedule of the Bill, does require consultation. I very much support the thrust of the noble and learned Lord’s amendments.
Turning to Amendments 114 and 141, I note that the Government’s proposal, relating to the CMA and the OIM, in this Bill is that before an appointment to the CMA board, as a chair of an OIM panel, or as a member of a panel, there must be a consultation with the devolved Administrations—so far, so good. But there is no requirement for the CMA then to consult on the establishment of a task group or a panel, so I wonder what the Government’s thinking is on that. The Government will consult the devolved Administrations on an appointment to a panel, but then there is no requirement for that panel to consult before it starts its work.
On the point that the noble Baroness, Lady Neville-Rolfe, recognised in the previous group, some of the work of the OIM in these areas will touch on very sensitive issues, with regard to the devolved powers or the decisions. Given that under this legislation there will be the ability to disapply devolved legislation—legislation in the competence of any of the home nations—there being no requirement to consult before that work commences is highly problematic. The legislation goes further to say that the CMA, after a request, “may” provide a report on proposals by one of the Governments for legislation within the UK; but, of course, if it may, it may not. If it does not consult after a request has been made by one of the nations—one of the Governments—in the UK, there is no ability to know the reasons for the CMA’s decision. The necessity now for the CMA to consult is important, given that a request can be made to report on a specific proposed regulatory provision, without the requirement to consult the body proposing to make that regulatory provision, which is quite extraordinary in my view.
We do not even know, at the very least, what process the CMA would follow in the establishment of a task group to investigate a proposed regulatory provision; nor will that devolved Administration necessarily know the basis on which the task group will investigate. These are basic principles that the noble Lord is correct to highlight.
The Deputy Chairman of Committees (Lord Lexden) (Con)
The noble Lord, Lord Liddle, has withdrawn so I call the noble Baroness, Lady Humphreys.
Baroness Humphreys (LD) [V]
My Lords, I thank the noble and learned Lord, Lord Mackey of Clashfern, for tabling the amendments in this group.
In what is becoming an extremely welcome defence of the devolved Administrations and their devolution settlements in debates on this Bill, these amendments point the way to involving a forum that already exists when discussing and agreeing to regulations under the Bill: the Joint Ministerial Committee on EU Negotiations. The amendments would require the Competition and Markets Authority to consult the JMC on EU negotiations; they would also ensure that regulations are brought before the committee and discussed by it before being laid before Parliament.
The amendments are entirely sensible. The JMC on EU Negotiations appears to be the ideal vehicle for such oversight and deliberations. The amendments also open up the opportunity to discuss the way in which the JMC operates, to examine whether it is fit for purpose and to envisage its future role. Of course, the Joint Ministerial Committee on European Negotiations is a sub-committee of the Joint Ministerial Committee—a committee made up of Ministers from all four national Governments. On looking at the memorandum of understanding that underpins the JMC’s operations, it seems an ideal candidate for this oversight role. It is worth examining its wording. According to the memorandum, the JMC should provide
“central co-ordination of the overall relationship”
between the UK and the devolved nations and, among other things,
“consider devolved matters if it is beneficial to discuss their respective treatment in the different parts of the United Kingdom”
and
“consider disputes between the administrations.”
It seems an ideal candidate indeed, as I am sure we all would agree. This is exactly the sort of forum that we need, not just to have oversight of regulations brought forward by the CMA but to consider all issues arising from the relationship between the four nations. But the reality is slightly different. The JMC has the potential to be a forum to guide devolution issues and resolve them, but the committee itself seems to operate on an almost ad hoc basis.
My noble friend has already pointed out the difficulties with the Joint Ministerial Committee (Plenary), which is supposed to meet at least once every year. Like him, I look forward to hearing when the Prime Minister will be willing to chair another of its meetings. The Joint Ministerial Committee on EU Negotiations, to which these amendments refer, was initially expected to meet monthly. It did so until February 2017 but then ceased to operate for eight months, and its meetings have been held on an irregular basis since then. It met five times in 2019 and, I believe, has met three times so far in 2020. I would be delighted if the Minister could prove me wrong and tell me that it has met more often.
Despite the obvious drawbacks in the way that the JMC and its sub-committees operate, I am extremely grateful to the noble and learned Lord for tabling these amendments, because they point a way forward. The JMC and its sub-committees, actual and potential, could have a vital role to play in resolving issues that arise in and around the operation of the UK internal market, but first we need to resolve the long-standing issues surrounding its constitution. The frequency of meetings and the question of who controls the agenda, for example, all have to be placed on a statutory footing. The JMC and its sub-committees, operating efficiently, regularly and fairly, have the potential to allay the fears of the devolved Administrations and allow for the consensual and co-operative government they seek. I support these amendments.
Lord Naseby (Con)
My Lords, when I read the Bill and the amendments to it that have been tabled, I asked myself, “Why?” Of course, my noble and learned friend Lord Mackay is a very experienced attorney and parliamentarian, but the whole purpose of the CMA is to be independent of government. It is not there to be dictated to because one of the devolved Administrations does not like the look of what the task group is going to be doing. That would be absolutely wrong. The whole basis of the CMA and OIM is that they are independent of government. They publish their results, monitor properly and advise, but the amendment would seem to put in another tier of management, like Europe in reverse. That is very wrong, and it would find no favour with me at all.
Lord Morris of Aberavon (Lab) [V]
My Lords, I support Amendment 114, moved by the noble and learned Lord, Lord Mackay. It is right that we take the opportunity to look at the role and relationship of the Competition and Markets Authority and its relation to the Joint Ministerial Committee.
The single market is important to all of us. Perhaps I may give a practical example of smooth working, which is so essential. In the words of the noble and learned Lord, Lord Mackay, smooth working will ensure that our products are able to be sold in one part of the country and in any other. Nothing would distort that more than if access to the markets were limited. All my family are sheep farmers. They sell their products, produced in Wales—ram lambs, lambs and ewes—in markets in Carlisle and Exeter on a modest scale. It is important for them to ensure that they have easy access to all markets. That is the kind of practical example that we look at in the functioning of our future relationships.
The Duke of Montrose (Con) [V]
My Lords, I support my noble and learned friend Lord Mackay of Clashfern on this group of amendments, particularly Amendment 114. Having the correct dispute resolution mechanism is extremely important. If the Government can find a better one than what has been suggested, I would be interested in the Minister giving us a clue as to what it might be.
The Government have found that the Scottish Administration object to the Bill, particularly the internal market element. My noble and learned friend has drawn on many years of legal and parliamentary experience in trying to find a way for the devolved Administrations to have a forum for formal comment on the arrangements for reinforcing the single market and any SIs.
The Joint Ministerial Council on EU Negotiations has already received wide acceptance in its role of setting up the conditions for negotiating market frameworks. I declare my family interest, which is in a livestock farm in Scotland and in the Scottish agricultural industry. As the noble and learned Lord, Lord Morris, pointed out, the industry as a whole in Wales and Northern Ireland is desperate to see a properly functioning single market across the UK, let alone within the EU. It finds the framework concept so far very reassuring, but it appears that the Scottish Government are looking for more.
I have a reason to declare an interest of another kind in this whole process, in that the dukedom that I represent in your Lordships’ House derives from the role that my six-times-great-grandfather played in promoting the negotiations for the Act of Union. This of course was a desire to get a single UK market at that time, as there were so many areas where Scotland had previously had no way of gaining benefit. The settlement that they agreed left Scotland with much lesser constitutional powers than currently exist; none the less, they were determined that certain characteristics of Scottish life should remain, and they do so to this day. Therefore, I have always watched these developments with care.
Several of your Lordships were here when we debated the Scotland Bill, sometimes quite late into the night. At that time, it seemed incredible that all the items necessary for the administration of the UK could be defined in a schedule, with Scotland having jurisdiction over everything else. We were assured that this was not a worry, because Westminster always retained the final say. Noble Lords—my noble friend the Minister is probably conscious of it too—may remember, during the progress of the Scotland Bill in 1998, a slightly bad-tempered evening in Committee, which was asked to begin sitting at 6 pm and spent some time on the future relationship between Westminster and the new Administration. I was never quite sure if this was a formally prepared answer, but when trying to bring the argument to a head, Lord Sewel uttered the familiar words:
“Clause 27 makes it clear that the devolution of legislative competence to the Scottish parliament does not affect the ability of Westminster to legislate for Scotland even in relation to devolved matters … However, as happened in Northern Ireland earlier in the century, we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish parliament. If problems do arise the solution is for the Scottish executive and the United Kingdom Government to resolve the matter through political dialogue. That is what differences between mature parliaments and Executives will be concerned with.”—[Official Report, 21/7/98; col. 791.]
This is where we find ourselves today. Any formal reiteration of this power always recognises the full content of this text, but the element that receives much more exposure—to the point where people begin to think that it is the only part of the legislation—is the need for legislative consent Motions whenever uncertainty arises. The encouragement to progress to political dialogue is most certainly relevant to where we are at the present time. In the present circumstances, it would not be ideal for the Government simply to implement UK legislation. Perhaps the Minister can tell the House what stage discussions with the Scottish Government have reached? It seems to me that these amendments are suggesting a form in which the Government’s proposals can be formally conveyed, with a chance that the final positions of both sides can be opened for scrutiny.
Lord Fox (LD)
My Lords, I am grateful for the quality of this relatively short debate on a really important issue. In his speech, the noble and learned Lord, Lord Morris, emphasised the need to avoid a threat to the devolution settlement. When the noble and learned Lord, Lord Mackay of Clashfern, stirs, and tables amendments, it is important for us all to listen. Clearly, he is very concerned about the route that this Bill is taking, as is the noble Duke, the Duke of Montrose, who articulated strong reasons for a consultative and consensus approach to regulating the internal market of the United Kingdom. I am also grateful to him for bringing up again the Act of Union, because this is a live treaty; it still exists and reflects on the issue which we are discussing. We should always remember that.
The noble and learned Lord, Lord Mackay, talked about the need for the devolved authorities, or the Joint Ministerial Committee, to be involved in the nitty-gritty of the market. My noble friend Lord Purvis of Tweed set out the dangers and the discontinuities within the current state of the Bill that make that process impossible. Therefore, it is important for the Minister to explain how this will work, because there are so many missing pieces in a jigsaw puzzle which, frankly, still does not have a picture, and which make it very difficult for us to understand what the Government are seeking to achieve and why.
My noble friend Lord Purvis asked many questions and he raised the issue of triggering disputes. The issue of when a dispute is triggered is central, as is the one which has surfaced in many different debates: the mechanism for resolving disputes. The noble and learned Lord, Lord Mackay of Clashfern, suggested one way; perhaps the Minister can comment on that.
My noble friend Lady Humphreys and other noble Lords have pointed out that the JMC, and its variety of committees, seem to have stalled, not because of any lack of faith from the devolved authorities but because of the Prime Minister not convening a meeting of the Joint Ministerial Committee (Plenary). Can the Minister explain the delay and say when the next meeting will occur? My noble friend Lord Purvis also raised the important question of structure. Where does this all fit in with the JMC’s current operations?
It is the Government who have sought to drag the CMA out of its current area of reserved issues and focus it on devolved issues. I say to the noble Lord, Lord Naseby, that it is not this amendment, but the Government, that have decided to do that. They are pulling the Office for the Internal Market into an as yet undefined dispute role. It is very clear, as the noble and learned Lord, Lord Mackay, set out, that if advice and reports are being submitted, then the JMC must be party to the same information that the UK Government are getting. It is also clear that we have no real idea of the Government’s intention for the operation of this Bill.
Lord Falconer of Thoroton (Lab)
These are important amendments that reveal yet another problem in the Bill. First, they deal with the role of the CMA, which under this Bill is intended to monitor and give advice on the working of the internal market. As I understand the way that Section 30 envisages that the CMA will operate, it will authorise an Office for the Internal Market task group to set up groups to look at particular issues. The amendment tabled by the noble and learned Lord, Lord Mackay of Clashfern, seeks to ensure that, before such a task force is set up, there is confidence that the appointment of the task force, the terms of the task force and what it is doing have broad buy-in from all the relevant parts of the United Kingdom. Can the Minister explain how, without the amendment tabled by the noble and learned Lord, Lord Mackay of Clashfern, this was currently going to be achieved?
For example, the CMA’s parent department is the business department, which is a UK government department. The CMA has a number of board members and panel members; how many of them at the moment have experience of Scottish, Welsh or Northern Irish business issues? As the Bill makes clear, the CMA will be appointing a task force where there is a difference between one part of the United Kingdom and another regarding regulatory or statutory requirements. On what basis do the Government envisage these task groups being appointed and set up? Is there any objection to adopting the noble and learned Lord’s suggestion of how to ensure that you get all the other parts of the country involved, as opposed to only BEIS or the CMA? If not, can the Minister put forward an alternative suggestion?
The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, it gives me great pleasure to seek to reply to this extremely interesting debate. I agree with the noble and learned Lord that this is an extremely important area to consider. There were times in the speech of my noble friend the Duke of Montrose when I reflected that I was probably the 14th Mr True in the context of this discussion. I pay tribute to his ancestors for their long service to the Crown and the country of Scotland. It is true that the Act of Union is still of fundamental importance.
I am extremely grateful, as always, to my noble and learned friend Lord Mackay of Clashfern. Everybody who spoke recognised the good, unionist motivation to seek conciliation and collaboration which lay behind his amendments. I think that was shared by even my noble friend Lord Naseby. Often in debate we are asked to measure quantity and quality; although my noble friend was alone until now in saying that these amendments were perhaps not right for the Bill, I welcome his support.
Turning to the speech and proposals from my noble and learned friend, his Amendments 114, 141 and 171 seek to place obligations on the Joint Ministerial Committee on EU Negotiations—my noble and learned friend suggests this should be the core body—to be consulted on a number of considerations relating to the operation of the internal market.
I have been asked about the work of intergovernmental operations. The JMC (EN), which is the subject of these amendments, is a sub-committee chaired by my right honourable friend the Chancellor of the Duchy of Lancaster. It meets at regular intervals to facilitate political engagement between the UK Government and the devolved Administrations on the outcome of the UK’s exit from the EU, of which this Bill is one consequence. In total, since 2016, it has met 25 times, including the meeting that took place on 3 September 2020. The JMC system provides central co-ordination for the IGR machinery. I will come back to that later.
Before I address the amendments individually, I stress that the Government agree that the internal market should be underpinned by an effective system of governance and consultation between the four Administrations of the United Kingdom. However, we argue that the Joint Ministerial Committee on EU Negotiations is not the most appropriate or effective intergovernmental structure to engage on such technical considerations. As I mentioned, it was established in 2016 and has been valuable since then; it involves Ministers from each Administration.
I say with all respect to the noble Lord, Lord Purvis of Tweed, that there is no antithesis in regretting—as I hope he does—the decision of the Scottish Administration to withdraw from internal market discussions last March, as I referred to in a recent speech in your Lordships’ House, while seeking to continue co-operative work in the broad area of intergovernmental relations and through the common frameworks process. I will return shortly to the points on that made by the noble and learned Lord, Lord Falconer. The United Kingdom Government seek co-operation and understanding between the different Administrations. We want effective governance and consultation.
Through the review of intergovernmental relations, which is going on at the moment, as your Lordships are aware, we are working together with the devolved Administrations to revise and update the existing JMC system. Good progress is being made and we look forward to reporting on our finalised governance and parliamentary reporting structures in due course. As such, it would be counterproductive to pre-empt the conclusion of the review of intergovernmental machinery and place these obligations on the existing Joint Ministerial Committee, which would perhaps not be the most appropriate forum.
The noble and learned Lord, Lord Falconer, asked how disputes relating to the internal market should be resolved. Where disagreements relate to the internal market impacts of specific regulations that fall under a common framework policy area, it is anticipated that they will be considered through the dispute resolution mechanisms for individual common frameworks. The Government remain committed to resolving issues, including those relating to the UK internal market, at the lowest possible level. Most conversations on the UK internal market should therefore take place at departmental level to consider the impact on the UK internal market of individual policies at the technical level. This will be done through increased and improved engagement across all UK government departments and their devolved Administration counterparts. The proposal for reforming the formal process for avoiding and resolving intergovernmental disputes was jointly drafted by officials from all Administrations and endorsed by Ministers.
The UK Government are committed to the principle of dispute avoidance, as all Administrations continue to work closely behind the scenes to resolve issues through constructive dialogue, rather than detailed procedure. In the past, differences rarely escalated into disputes—in only four instances, I am informed. We can therefore expect the principle of dispute avoidance to remain central to managing disputes in the future.
My noble and learned friend suggested a specific function for the JMC (EN) on these issues. Amendment 114 requires that the committee be consulted prior to a task group of the Competition and Markets Authority being set up. We have already written into the Bill, in paragraph 2(3) of Schedule 3, that the Secretary of State will consult devolved Administrations prior to the appointment of panel members to the office for the internal market. The noble Lord, Lord Purvis of Tweed, referred to this. He said that it is just appointing the panel members but, in appointing members to a panel, it stands to reason that the devolved Administrations, being consulted, will be aware of the purpose for which that panel is being created.
In addition, we need to think carefully before compromising the independence of the CMA. The CMA is an independent non-ministerial department with a global reputation, as my noble friend Lord Callanan argued on an earlier group. Ministers have no day-to-day involvement in its operations. So that the advice and outcomes of the OIM’s work is trusted, its advice and future panels must be seen as impartial. There can be no suggestion of political interference, at any point. The involvement of a political engagement forum would therefore not be appropriate, in our judgment.
Amendment 141 then requires that all periodic reports by the office for the internal market on the operation of the UK internal market are laid before the JMC (EN). Subject to Clause 31(7) and Clause 34(3)— which the noble and learned Lord, Lord Falconer, pointed out, are governed by Clause 30(1)—the OIM will lay reports to the UK Parliament and each of the devolved legislatures. It will be for the relevant Administrations and legislatures, which receive the reports, to determine the most appropriate course of action, rather than a committee such as the JMC (EN).
Finally, Amendment 171 places an obligation on UK Ministers to bring regulations proposed under powers in the Bill to the JMC (EN). It suggests that, in the absence of agreement, UK Ministers would be obliged to lay reasons for the failure to agree before both Houses of Parliament and to table a Motion for a debate on the proposed regulations and the disagreement. I understand why my noble and learned friend is searching us on this point, but this mechanism is likely to introduce considerable delay in the implementation of policy to protect the internal market. Such a process would not facilitate timely discussions, given the frequency of such JMC (EN) meetings, and could undermine Parliament’s responsibility to legislate for the internal market as a whole.
I do not normally like to go with technical objections to amendments, but this amendment, as well as creating a new procedure for all powers across the Bill, would change the way regulations are made for Northern Ireland. It would require all the devolved Administrations to consent to regulations for Northern Ireland. Even if my noble and learned friend were minded to go forward on this route, and I hope he is not, we would have to respect the particular regulating arrangements for Northern Ireland in the Bill.
In summary, I hope noble Lords agree that, although these matters are important—I do not resile from the importance of the considerations raised and I will reflect on the debate—there are clear limitations to using the JMC (EN) in this capacity, particularly for measures relating to the office for the internal market, where there are already provisions in place to report directly to the Senedd, Holyrood and Stormont. With this in mind, I ask that this amendment be withdrawn.
The Deputy Chairman of Committees (Lord Lexden) (Con)
I have received requests to speak after the Minister from the noble Lords, Lord Fox and Lord Purvis of Tweed. I call the noble Lord, Lord Fox, first.
Lord Fox (LD)
I appreciate the Minister’s reply on the important points put forward. Whether the amendments of the noble and learned Lord, Lord Mackay, are adopted or there is some other form of regulating the relationship between the UK Government and the devolved authorities, does the Minister agree that there can be a smooth-running internal market only if there is trust between the UK Government and the devolved authorities? Could the Minister say what the Government’s assessment is of the effect on that trust of publishing the Bill?
Lord True (Con)
My Lords, I strongly agree on the principle of trust between all parties in a negotiation. It is not always there in every negotiation, but this is more than a negotiation; it is a relationship. It is a life together, which we all wish to carry forward as the four nations and peoples of these islands. Standing at this Dispatch Box, I have sought to assure the House of the Government’s total commitment to proceeding with trust and respect. That has to come from every Government and institution in the United Kingdom. I go no further than that. I do not believe that seeking to set out a common approach to the management of the UK internal market in the UK Parliament, to which all four nations of this kingdom send representatives, should in any way undermine trust.
Lord Purvis of Tweed (LD)
My Lords, can the Minister confirm that the discussions of the intergovernmental review, the conclusions of which we are asked to await, will specifically cover the operation of internal market legislation? Until now, as the Minister knows, legislative consent has been denied by both Wales and Scotland. The Minister repeated today that he regretted that the devolved Administration of Scotland has walked away from single market considerations. Will the intergovernmental fora that were referred to specifically cover the internal market?
Secondly, in their joint letter to my noble friend Lord Fox, the noble Lord, Lord Stevenson, and me, the Minister and the noble Lord, Lord Callanan, stated that the office for the internal market will have a role in providing independent advice in the dispute resolution process. With regard to the devolved Administrations in the intergovernmental fora, has it been confirmed that the OIM will have a role in dispute resolution?
Lord True (Con)
My Lords, I believe I heard my noble friend Lord Callanan addressing this point in the previous group and that there was talk of a letter. I may have misheard but, if such a letter were proposed, I would not want to interpose my rather excessively considerable body between my noble friend’s pen and your Lordships’ House. But I take the point. If it is not covered in the response that my noble friend Lord Callanan has promised, I will address it. I am not pleading for an institutional parsing of the text in my comments, but I repeat that we are jointly exploring a number of options to strengthen the impartiality of the intergovernmental dispute resolution process. We hope it can be carried forward successfully.
Lord Mackay of Clashfern (Con) [V]
My Lords, I am grateful for the general support for my proposal to require co-operation between the devolved Administrations and the UK Parliament. I am sorry that my good friend, my noble friend Lord Naseby, does not care for it. I am not sure why that is, because I do not think that what I am proposing would damage in any way the independence of those seeking to set up a task force. All I am concerned about is that the task force should be familiar with the various areas of the United Kingdom that will be affected by the dispute in question. However, I have to be thankful for the support of your Lordships for the general principles that I am trying to further.
I am using the JMC (EN) because I understand that, at the moment, it is the body that is running the common frameworks policy. I want to make it absolutely clear that I am strongly supportive of the common frameworks policy and of bringing together in that connection various important matters. The system seems to work well. I am happy to use any organisation that the Government come out with for continuing that work with a degree of friendship.
I indicated in my speech at Second Reading that although the Scottish Government had stood apart from the situation in a formal way, they were apparently encouraging support for trying to resolve the main problems of the internal market in the common frameworks policy. As far as I can make out, that is the position. Needless to say, I got that information from the Scottish Government. It is a description of our situation which shows a certain degree of separation and co-operation at the same time; I very much welcome that co-operation.
The general point of who will eventually run this is a matter that I cannot anticipate. Therefore, when I use the JMC (EN) in my amendments, I am simply using what I understand is the present situation. The Government may well be able to produce a better system and, if they do so, I will be glad of that. In the meantime, I think that there is general acceptance of the view that the devolved Administrations need to be closely involved. After all, in Scotland at least there is a very strong interest in this, because something like 60% of its exports go to the rest of the United Kingdom. An internal market that functions properly and fairly is very much in Scottish interests, and I certainly would like to do everything I can to promote that.
In the light of the very good response I have had from my noble friend Lord True, I am happy to withdraw my amendment.
The Deputy Chairman of Committees (Lord Lexden) (Con)
We now come to the group beginning with the question that Clause 30 stand part of the Bill. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in the group to a Division should make that clear in the debate.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, for the general reasons that I elaborated in the earlier group, I do not consider the CMA to be the right body, or the OIM the right structure, so in this group I give notice that Clause 30 and Schedule 3 should not stand part of the Bill. Clause 30 is about the setting up of task groups in the OIM and Schedule 3 contains more OIM detail.
Perhaps I may correct a small misspeak in the previous group. I referenced accidentally Clauses 29 and 30 instead of Clauses 28 and 29. I also pointed out then that this is part of a wider aim that Part 4 and Schedule 3 should not stand part, but as the Minister will know, it is not possible to put all of that in one amendment and debate it—we have to go through it clause by clause. However, I do not need to be reminded that removing one clause would leave the rest of them standing in a slightly awkward way. My solution is that we should get rid of them all.
I have also put forward Amendment 116 to probe how an independent OIM would look. It covers broadly the themes or principles that keep recurring as we move through the Bill and which need to be picked up, even when forced into the CMA straitjacket. I also heard what the Minister said about not creating new bodies. I recognise that there is a money aspect to this, but the point is that we need something that is better than the current proposals.
The first paragraph of Amendment 116 mentions having an MoU between the Administrations about the market access principles, and then the OIM being set up to assist in oversight. The message is simple: these matters should be consensual, and a consensually agreed body should be representing the four nations, rather than an imposed one that could potentially pay only lip service to the devolved authorities, or that does not necessarily have the right range of knowledge and abilities.
Proposed subsection (2)(a) envisages transparency, other than for commercially confidential information; maybe there could be some confidentiality for the Administrations in some instances too, but there should be a presumption of transparency, because how else are consumers or anyone else to know whether their views have been properly taken into consideration? Proposed subsection (2)(b) states that the board must include nominations from all of the devolved authorities and from the regions of England. I accept that the regions suggestion is as yet unstructured, but the principle I seek to convey is that it is no good just having the view from Westminster, it needs to be more “on the ground”, which is the enormous benefit of devolution.
The proposed third subsection says:
“Any task or investigatory group within the OIM must have a minimum of five persons drawn from all four nations of the United Kingdom.”
I have not tied the structure to the CMA-type panels, because I do not see that they are needed. However, whatever investigatory teams are used, there should be national diversity, not just cosmetically and not because it is political, but because there are genuinely different sets of knowledge and perspectives. The “minimum of three” task force of the CMA structure is clearly too few.
The proposed final subsection refers to the original CMA, not the OIM, and states that when in the ordinary course of its business the CMA conducts an investigation that requires consideration of the internal market, it shall also appoint balanced inquiry panels from all four nations. This could be in mergers, for example. I note that this part of my amendment contains thoughts that are somewhat similar to Amendment 153 tabled by the noble Baroness, Lady Hayter, which we will get to on Wednesday.
That is my vision of the starting principles for the OIM and how the Government’s construct could also be improved. I do not understand why the Government have given it copy-and-paste structures that derive from those that the CMA has for its investigations, and I question whether that is appropriate. This also underlies the clause should not stand part notices both in this group and generally.
Baroness Randerson (LD) [V]
My Lords, I will speak to the amendments in this group to which I have added my name: Amendments 117 and 118, and Amendments 120 to 124. The noble and learned Lord, Lord Thomas of Cwmgiedd, and the noble Baroness, Lady Finlay of Llandaff, have also signed these amendments, which have been put forward with the agreement of the Welsh Government.
Clauses 28 to 40 of this Bill establish a new Office for the Internal Market, within the CMA, as other noble Lords have already noted. The OIM will have reporting, monitoring and advisory functions and information-gathering powers; it will monitor the health of the internal market and provide advice on the economic impact of proposals and regulations, including their impact on trade, investment and competition. It will publish reports available to stakeholders and devolved Administrations. The problem is that all this is to be provided within the existing structure of the CMA, which is a body established and designed to work within the UK Government structure.
These amendments relate to the status, role and membership of the CMA, which was established in 2013 as a non-ministerial government department, accountable to Parliament via its sponsor department, which at the moment is BEIS. Although the CMA works at arm’s length from the Government, BEIS gives it a strategic steer that outlines the Government’s strategic priorities. The Secretary of State appoints, or removes, the chair and board of the CMA, and it produces an annual report for the Secretary of State. It is the CMA which represents the UK Government abroad on relevant issues.
The CMA was designed to deal with purely reserved matters, whereas the Office for the Internal Market is designed to have functions in relation to the devolved Administrations as well. The OIM is therefore a mismatched limb, grafted on to the CMA. For instance, Schedule 3 includes measures to establish an OIM panel and task groups. The Secretary of State must simply consult the devolved Administrations before these appointments. That is inadequate, as it provides no guarantees of agreement from the devolved Administrations before appointments are made and no guarantees of balanced representation.
These amendments seek to address these problems and to be fully respectful of devolution, including requiring the Secretary of State to get the consent of the devolved Administrations to appointments, although with the provision that they must respond within one month so they cannot unreasonably hold up the work of the OIM. Importantly, these amendments would also adjust the structure and relationship of the CMA so that it will no longer be a purely UK Government and parliamentary vehicle. The DAs would each be able to appoint and remove a CMA board member, subject to the usual five-year term and the CMA’s annual plan and annual report would be laid before the devolved legislatures as well as Parliament. Thus the parent organisation, the CMA, is structured to ensure that its offshoot, the Office for the Internal Market, works genuinely for all parts of the UK.
I spoke in an earlier debate about the hybrid role of UK Ministers, who are expected by this Bill to operate at one moment as English Ministers, acting in the specific interests of England, then to switch hats into their UK role and act as impartial arbiters between the interests of the four nations. This Bill requires a similar constitutional contortion from the CMA in relation to its baby, the Office for the Internal Market. There is a reason why the referees in Saturday’s rugby internationals did not come from either of the nations represented on the field—and we all know that. You cannot guarantee an even-handed approach unless you have the structures in place to ensure that, and it has to be built into and throughout the appointments of the organisation, into its remit and reporting processes.
Lord Thomas of Cwmgiedd (CB) [V]
As the noble Baroness, Lady Randerson, has very carefully explained the purpose of these amendments, I can be much briefer than I had intended.
The amendments are directed at the CMA and the Office for the Internal Market as set out in the Bill, but the principles behind these amendments would apply to any different structure that emerged, as the noble Baroness, Lady Bowles of Berkhamsted, envisaged. It seems to me that the critical point for this House to consider is that whatever structure is established must command the confidence of all the nations of the United Kingdom. Secondly, it is obvious that there will have to be a body that exercises independent powers and makes judgments that may go against one part of the United Kingdom or another part of it.
Thus, it is important to ensure, as these amendments seek to do, that the appointments both to the Competition and Markets Authority and to the office for the internal market take into account the change in the CMA’s role and cater for the new role of the OIM—assuming that these roles will be given to them when the Bill emerges from Parliament.
It seems to me that there is one useful analogy to make. Because the CMA has certain quasi-judicial and independent functions, it must be set up in such a way that those who are affected by its decisions know that those appointed to it have their confidence. They must also have a proper knowledge of the different constituent parts of the UK. When this House enacted the Constitutional Reform Act in 2005, a statutory provision was included that there had to be judges from Scotland and Northern Ireland; Wales was dealt with as part of England, and I will say nothing about that today. But recent experience of devolution legislation has shown how important it is for a body such as the Supreme Court—and for this body—to have representatives who know and understand the position in each of the constituent nations.
I need not elaborate on the detail of how this provision will work. I stress that the body must comprise those who understand the different nations of the UK and are able to provide it with confidence in its decision-making. It must address the point to which the noble Baroness, Lady Randerson, referred—namely that, more and more, Ministers are seen not simply as UK Ministers but as Ministers of England.
Lord Palmer of Childs Hill (LD) [V]
My Lords, I speak in support of Amendments 116, 127 and 130, to which I have added my name. I agree with the arguments put forward by my noble friend Lady Bowles, who put it much better than I can.
The aim of the amendments is to seek to bring some clarity to the office for the internal market. Gosh, it needs some clarity. I am unsure that we even require this quango. If it stays in the Bill, then please let us flesh out how it could work. Does the Minister accept that, if the office for the internal market remains, there is still much ambiguity in this Bill? It is not even constructive ambiguity; it is ambiguity pure and simple. Can he explain it?
Amendment 116 seeks to add a clause which should be the bed-rock of the Bill. There has to be an understanding agreed between the Secretary of State, Welsh and Scottish Ministers and the Northern Ireland department in order to make the internal market work, be transparent and involve all the devolved authorities.
Amendments 127 and 130 underline the need for transparency and representation. I hope the Minister can accept that the amendments seek to clarify and flesh out what the Bill means in respect of the office of the internal market and to get rid of any ambiguity. Amendments 116, 127 and 130 seek to do that.
Baroness Finlay of Llandaff (CB) [V]
My Lords, as other noble Lords have explained, the aim of these amendments is to ensure that not only is the office for the internal market appropriately constituted and organised so that it is accountable to all four democratically elected legislatures of the United Kingdom but also that the Competitions and Markets Authority—if this is to be the home of the new office—should be reconstituted to reflect the fact that its functions no longer relate exclusively to reserved matters.
I say “if” the office for the internal market is to sit within the Competitions and Markets Authority. Other noble Lords have already addressed that issue thoroughly and made clear that it is neither necessary nor desirable. The more radical attempts by the noble Baroness, Lady Bowles, and the noble Lord, Lord Stevenson, to establish the office for the internal market as a truly independent and unattached new body are far more logical and would ensure the proper functioning of the office. The noble Baroness, Lady Bowles of Berkhamsted, explained this very clearly. Their proposal has great merit. We will all be interested to hear the Minister’s arguments as to why a truly independent office is deemed undesirable.
Ministers keep claiming that passing the Bill is extremely urgent. If it is that urgent, perhaps he could explain why it would not be possible to initially brigade the office for the internal market under the CMA as an interim measure until it can be established by statute. After all, that is what seems to be happening with the Trade Remedies Authority. If I am correctly informed, the Government found it easy enough to establish a new body—the Trade and Agriculture Commission—as an independent statutory body.
If there are compelling arguments supporting the current proposal then it is imperative that the CMA can demonstrate that it really can command the trust of the devolved Governments and legislatures. If the Minister cannot give us those arguments during this debate, can he write to us specifying the justification? Nothing in these amendments suggests that it would be impossible for the CMA or for the OIM to function should a future devolved Government simply not want to engage.
The right of appointment of a board member to the Competitions and Markets Authority is important, but the board could function without one or more of these members. In the case of the OIM panel—where the devolved authorities would have to be fully engaged in appointments—if consent is not forthcoming within one month then the Secretary of State could proceed without their consent as long as he made a statement as to why proceeding without consent was desirable. That seems to strike an appropriate balance between ensuring the operability of the new arrangements and ensuring that the devolved institutions have confidence in a body that will have such significance for the future integrity of devolution.
Lord Wigley (PC) [V]
My Lords, I am delighted to follow the noble Baroness, Lady Finlay of Llandaff. As she has made so many of the points that I intended to address, I shall not repeat them and I shall curtail my comments accordingly. I agree with the telling arguments made by the noble Baroness, Lady Randerson, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I shall also limit my remarks because of the diabolical communications between Wales and Westminster this afternoon. Noble Lords may see this as an ironic reflection on the amendments that we have just been addressing.
I oppose Clause 30 standing part of the Bill and support Amendment 117, to which I have added my name and to which the noble and learned Lord, Lord Thomas, has spoken. Like the noble and learned Lord, I shall desist from being drawn into the argument that Wales has so often been treated as part of England; that is for another day.
In the earlier debate on Amendment 110, the noble Baroness, Lady Bowles, said that the CMA should be equally available to all four nations. During the debate on the last group of amendments, the noble and learned Lord, Lord Mackay of Clashfern, argued that the devolved Governments should have a voice. This is why I have added my name to Amendment 117.
The Bill is reinventing the CMA as a hybrid body with the OIM—very different from the widely respected body that has hitherto existed. The CMA has to be restructured accordingly.
The Bill is bringing the CMA into a highly controversial area, as it will be dragged into polarised arguments between the Governments of the four nations. Several noble Lords have already raised doubts about whether it is in any way appropriate that the CMA should be used in this way. If the CMA is going to act as an adviser to the Government, it has surely to be an adviser to all four national Governments within the UK. It has to be equally responsive to all four Governments and not beholden unto one Government more than the other three.
It is in that context that I support the amendment requiring there to be a nominee of each of the devolved Governments on the CMA board. Unless this is delivered, the CMA will be seen as the referee and as a body beholden unto one of the teams between which it potentially has to adjudicate. This will inevitably lead to conflict, and it is to give the devolved Governments greater confidence in the CMA that Amendment 117 proposes having a nominee of the devolved Governments within its structure. Having rejected earlier amendments to amend the statutory functions to avoid these dangers, the very least the Government can do is accept Amendment 117, or alternatively bring forward on Report an amendment to achieve a similar purpose. I urge the Minister for once to take a sympathetic approach to this constructive amendment.
Lord Hain (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Wigley, and all previous speakers in the debate. I wish to speak especially in support of Amendments 117, 118, 125 and 131. As Amendment 131 is in the next group, I shall not speak in that debate as I am listed to do.
These amendments concern the future governance of the Competition and Markets Authority—the CMA—and the creation within it of an office for the internal market, or OIM, under the Bill. These amendments seek to ensure that appointments to these bodies are representative of the four constituent legislatures of the UK and that, in overseeing the internal market within the UK, the OIM does not effectively act as an arm of the UK Government and therefore of only one nation, England.
These proposals are important because they are part of the emerging architecture of what Robert Shrimsley of the Financial Times has called the “one-legged economic strategy” of No. 10, namely the “levelling-up” of the UK regions and nations, which appears to mean allowing No. 10 to subsidise favoured industries without any willingness to partner with either the devolved Administrations or, for that matter, regional and local government, such as mayors. In July, the Financial Times quoted an individual close to these discussions as saying:
“The current plan is an odd combination of reserving state aid [for control from London] but then agreeing to a free-for-all. They just want to be able to bung money at things and do not want UK internal market legislation cutting across that.”
The Bill therefore seeks to create a UK-wide, or at least a Great Britain-wide, regime for market access overseen by the new office for the internal market within the CMA that undermines the current devolutionary settlements, certainly for Scotland and Wales and potentially for Northern Ireland, depending on the outcome of the UK trade negotiations.
The provisions of the Bill to curtail the scope of EU state aid rules that could potentially apply through Article 10 of the Northern Ireland protocol, which the Prime Minister agreed to last year, reflect objections by No. 10 to possible “reach back” into the UK by these EU rules. The Government now seek to give the Westminster Government legal powers to control UK state aid, which will potentially replace the estimated £2 billion average annual European Union structural funds previously distributed to the UK’s devolved nations and regions. Just as the Government are resistant to demands by the EU for a level playing field between the UK and the EU, neither do they apparently wish to see the UK’s internal market subsidy regime between England, Scotland and Wales, and possibly in the event of no deal even Northern Ireland, overseen by an independent UK regulator.
The reason why Scotland and Wales in particular are so unhappy about the Bill is that the arrangements proposed are seen by them as undermining the very principles of devolution. This is because the Bill not only curtails devolved competence in specific ways, for example, by making state aid a matter reserved to Westminster, but will ironically also cut much more deeply into areas of devolved competences to regulate economic activity in relation to goods and services than did the previous EU rules. This is because areas of permissible exemptions from similar EU internal market rules, including public health, environmental protection and the protection and promotion of local heritage, do not appear to be exempt from the proposed UK internal market rules. The Bill also gives the Westminster Government new spending powers in devolved areas with no obligations to consult the devolved Administrations.
The previous Conservative Government of Theresa May envisaged that post-Brexit there would be a new legally enforceable regime for state aid under the CMA. However, the arrangement now envisaged for the office for the internal market is that all appointments to its board and the panel of task force members will, like those currently at the CMA, which is a non-ministerial department of the UK Government, be made by Ministers at Westminster and that the role of the new office will be purely advisory.
Amendments 117 and 118 would give each of the devolved Administrations the power to appoint a member of the CMA board itself and would also ensure that the consent of the devolved Administrations is obtained for appointments of the chair and members of the office for the internal market panel. The Bill as it stands provides only for consultation with, as opposed to consent from, the devolved Administrations in relation to such appointments. Amendment 125 would require the CMA to lay its annual plan, proposals for its plan and its annual report before each of the devolved legislatures. Amendment 131—I accept that it is in the next group—contains similar provisions related the involvement of the devolved Administrations in appointments to the OIM and would strengthen the independence and enforcement powers of the OIM so that it would not be effectively an agent of the Crown.
In addition to crucial aspects relating to undermining devolution in the UK, there is an additional disturbing element to what the Government are trying to achieve here. As pointed out by the Institute for Government, under the Bill as it stands the office for the internal market will have very limited powers. Its reports may be useful in gathering relevant information about how the internal market functions, but there is no obligation on any of the Governments to act on them.
In the Conservative manifesto of 2017 there was a promise to use the returning £2 billion average annual EU structural fund money to set up a UK shared prosperity fund. The March 2020 Budget said that the fund would be realigned to match domestic priorities. The Government have yet to publish a consultation on this fund, but the Welsh Government have already made clear that they are strongly opposed to the idea of the fund being administered from Westminster.
The devolved Administrations have vocally expressed their opposition to the proposals relating to the Bill’s blueprint for the future UK economy, which they say was drawn up with no consultation or respect for divergence between the nations. Nicola Sturgeon has pronounced it “an assault on devolution” and the Welsh Government called it
“an attack on democracy and an affront to the people of Wales”.
I have previously argued that the rarely convened Joint Ministerial Committee, which was created to allow the UK Government and the devolved regions to discuss issues relevant to devolution and consider any disputes between the Administrations, should adopt a modified form of the EU system of qualified majority voting so that the Westminster Government would need the support of at least one of the other three nations for a measure to go forward. Such a measure is supported by the Welsh Government, but not—unsurprisingly maybe—by the chair of the committee, Michael Gove.
The Covid crisis has emboldened the UK’s devolved Administrations to make decisions that significantly diverge from those in Downing Street, and they are thought by many to have shown greater surety in their handling of the pandemic than has Westminster. Far from rewarding them for their competence, however, the Government are exploiting Brexit as an opportunity to impose an autocracy on Great Britain, and potentially on Northern Ireland as well, in respect of these internal market rules.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, it is a great pleasure to follow the noble Baroness, Lady Finlay, and the noble Lords, Lord Wigley and Lord Hain. I agree with much of what they have said. The noble Baroness was particularly clear in setting out the issues that arise with this group. I have attached my name to, and will speak to, Amendments 119 and 126, in the name of the noble Baroness, Lady Hayter of Kentish Town, who I thank for originating them.
They share the purpose of many amendments in this group: to ensure that the devolved nations have a voice in the operation of the internal market—the market that will govern much of what they can regulate and what protections they can provide to their peoples, as the Committee discussed last week in the group starting with Amendment 15.
As the noble Baroness, Lady Hayter, has not yet spoken, I will briefly address the detail. I interpret Amendment 119 as something of a back-up to Amendment 118, which would ensure that the Government have to obtain the consent of devolved Administrations before appointing the chair and members of the CMA’s office for the internal market panel. Amendment 119 says “seek consent”. I prefer Amendment 118, but it is important that at this stage we offer a range of amendments to the Government.
Amendment 126 refers to the membership of the OIM panel, saying that it should include representatives from each of the four nations of the United Kingdom. The purpose of these two amendments, as in so many of the amendments in this group, is—to adapt the well-known phrase— to ensure that there is no regulation, or deregulation, without representation or democracy.
In briefly making the case for these amendments, I go back to the first group debated today, which, as your Lordships will recall, related to professional qualifications. I quote the words of the noble Lord, Lord Callanan, in that debate:
“There is the whole world of artificial intelligence or gene editing—there is a massive range of new and potential professional areas, bodies and qualifications that may come forward … in the case of new professions, it is entirely possible that the individual nations of the UK might seek to regulate them differently, and we want no new barriers to trade to emerge”.
In that one short statement, the Minister managed to sum up the disturbing intention of the Government to centralise in Westminster decision-making on extremely important areas of public policy that are currently devolved; the reasons for the objections to this Bill held by many, particularly those concerned with defending the devolution settlements; and the case for these amendments. Even if the protections that the still relatively new institutions of the nations have been able to create for their peoples stay in place, they will not be able to react to social, economic or technological changes, or strengthen existing protections.
To go back to the single-use plastics example that was discussed extensively under Amendment 15, if the Welsh Government want to provide extra protections for their people and environment from these deeply damaging products, they can rush to get measures under the wire now, before the internal market replaces the single one. For what happens after that, I cannot think of better examples than those provided by the noble Lord, Lord Callanan—gene editing and artificial intelligence, where different regulations might be applied by the devolved Administrations in their areas of competence. That would include areas ranging from agriculture to education, from food safety to transport. We need to ensure that the devolved Administrations can keep control.
Baroness Noakes (Con)
My Lords, I listened carefully to noble Lords who spoke before me. The devolved Administrations are failing to recognise that both the CMA and the office for the internal market are fundamentally UK-wide bodies working on UK-wide issues. They are not bodies where territorial interests will be played out. The devolved nations are part of the United Kingdom, which exists and is not just a federation of four independent nations. There are clear United Kingdom functions, which is why we have UK Ministers looking out for the interests of the whole United Kingdom. We should not regard the UK as somehow morphing into an equivalence with England, which the noble Lord, Lord Hain, came close to saying, even if he did not actually say it, when he spoke earlier.
Furthermore, these significant independent public bodies should not be seen as having nominees or representatives on them: it is important that you get the best people to contribute to the functions given to these bodies by statute. Those people will require qualifications and experience. It does not matter where they come from: the most important thing is to get the right quality of individual on those bodies to carry out their functions. Any sense that those individuals become the possessions of devolved Administrations could take them into political alignment, which would have a very negative influence on the effective operation of the independent bodies.
Schedule 3 already requires consultation with the devolved Administrations over the appointment of the chair and panel of the office for the internal market. That is the normal formulation. I do not think that there is a precedent for what is proposed, for example, in Amendment 117: direct appointments by devolved Administrations to independent UK-wide bodies. That would take us in a direction that could undermine the independence and coherence of those bodies. I hope that noble Lords will not pursue their amendments.
Lord Empey (UUP) [V]
My Lords, as the noble Lord, Lord Hain, has said, much of the debate on this group has coincided with the next group and Amendment 131, and with what I was going to say on that group, so I will not exercise my right to speak then.
The word “confidence” has been used consistently, and it is the one thing currently missing. We do not have the support of any of the devolved Administrations for these measures, and it worries me that if we follow the same pattern in future, areas of conflict will arise, because there is no consensus on what we are trying to do. I take the point made by my noble friend Lady Noakes that this is a UK-wide body and you cannot expect the United Kingdom Government to be held to ransom by any of the devolved Administrations. I would not wish to see that.
Equally, however, we have, in our haphazard way—I have drawn the attention of the House to this before—provided devolutionary powers to these regions. As I said last week, we have a collision between the powers of the devolved institutions and what we are now trying to create. It makes sense, therefore—whichever way the Minister intends it in practice—to ensure that the devolved regions feel confident that they have someone at the table, in this new body, who understands their local circumstances and will speak up on their behalf, as well as exercising the UK-wide powers.
I must say that as far as my own region is concerned, while the Government will not allow the truth to pass their lips, from both the economic and state-aid points of view Northern Ireland is left in the European Union. We will be operating on EU state-aid rules and operating an EU regulatory regime. While we are all on the same page today, over time there will be differences. I do not believe, nor I do see any evidence, that Whitehall fully understands that. If we want proof of that, we were told a year ago to tear up any pieces of paper we were given and throw them in the bin; on 1 July we were provided with £25 million to ensure that our traders could deal with the paperwork and the administrative burden that they were going to be confronted with; and by 29 August that had risen to £355 million.
It is perfectly clear that there is a border in the Irish Sea, there are differences and the regime that businesses in Northern Ireland will have to operate under could well be very different over time, so having representation on this body is the minimum that we wish to achieve. I do not want to see a veto—I do not want to see a body that is crippled by disagreement—but people have to be realistic: if you give powers to the devolved Administrations then you cannot be surprised if they take offence when Whitehall says, “We know best and we will do things that you don’t agree with”.
I would say that we have created our own problems. I would like to see in response to some of these probing amendments the Minister address the point about how we get buy-in if we do not have broadly-based representation on the body that understands the different social, legal and economic contexts, particularly when one part of our United Kingdom is left under EU regulations and state-aid rules. I look forward to what the Minister has to say in that regard because we want to succeed. We have to move forward coherently and with restored confidence, because I have never seen it at a lower ebb than it is today. It would be so much better if the JMC were functioning as it was originally intended and if it were a forum where we could jointly work together on solving our problems. What we have achieved at the moment is a stand-off with the devolved Administrations, none of which support this legislation.
Lord Hope of Craighead (CB) [V]
My Lords, it is a pleasure to follow the noble Lord, Lord Empey. I support Amendments 117 and 125, to which four noble Lords with a special interest in Wales have put their names. I should like to add a Scottish point of view when I say that the amendments that they propose have everything to commend them, and the arguments that they put forward are ones that I entirely endorse and support.
The key point underlying both these amendments was expressed by the noble Baroness, Lady Bowles of Berkhamsted, when she said that these matters should be consensual and the body taking the decision should represent all four nations. Whatever the structure of that body, and indeed whichever body we are talking about—the options are before us in these various amendments—it has to command the confidence of all four nations.
Lord Cormack (Con)
My Lords, I also offer my support to these two amendments. It is a privilege to be able to follow two such wise speakers as the noble and learned Lord, Lord Hope of Craighead, and my noble friend Lord Empey. Implicit in their speeches was a recognition of the fact that the United Kingdom is on the verge of becoming the broken kingdom. The Government underestimate at their own potential peril just what dangers surround us. I beg my noble friend who will wind up this debate—for whom I have a genuine regard, as I have said many times before—to take seriously the points made by the noble Lord, Lord Empey, the noble and learned Lord, Lord Hope of Craighead, and the noble Lord, Lord, Hain, all of whom, coming from different parts of the United Kingdom, speak with a tone of real concern and sorrow because they passionately believe in the UK, as do I, and they know it is in peril.
We have to be extremely careful. I will speak for a moment or two longer than I would otherwise have done. I too, like the noble Lords, Lord Empey and Lord Hain, will not trouble the House in the next series of amendments because they rather overlap with these, and in many ways I would have liked them to have been grouped together so, like both noble Lords, I will speak as if they are.
My noble friend Lady Noakes was right to talk about our dealing with the United Kingdom. However, we have had 20 years or more of devolution and in the case of Northern Ireland considerably longer, although much more fractured from time to time. Therefore, we cannot behave as though ours were the only elected legislative body—of course, we in your Lordships’ House are in a unique position. We cannot behave as if there were just one Parliament; some of us may wish that there were but there is not. Therefore, to neglect what has been built up over the last 20 years would be sheer folly. We have to have a proper regard for the Scottish Parliament, the Welsh Senedd and the Northern Ireland Assembly, and to make sure that in this new world where the United Kingdom is no longer part of the European Union, we pull together, work together, recognise what each constituent part brings to the United Kingdom and strive to ensure that it remains the United Kingdom.
I deeply regret the fact that we are rushing pell-mell towards 31 December. The crisis that has engulfed the United Kingdom over the last seven or eight months, unique and grave as it is, ought to have made the Prime Minister and his Government realise that there would have been real merit not in trying to undo Brexit—that has happened—but in trying to get the very best possible relationship and, therefore, taking more time. I deeply regret that, but, as they say, we are where we are. It is therefore tremendously important—utterly vital—that we go into the new year as a united kingdom, each nation complementing the other and, as a collective country, moving forward.
We have seen over the last few months, with the way devolution has operated in Scotland, Wales and Northern Ireland, that the constituent parts of the kingdom have behaved differently with regard to Covid. I am not making any value judgment, but I would say that we have made our fair share of mistakes in this part of the United Kingdom. We have made some sweeping judgments, which we will be debating on Wednesday, and, in many things, other constituent parts of the United Kingdom have behaved perhaps a little more wisely than we have.
One point that has cropped up time after time in this very interesting debate is that we must command confidence. The prime duty of the United Kingdom Government here at Westminster is to command that confidence. I urge my noble friend the Minister to ensure that the bodies we are talking about tonight are able to command that confidence—that the office for the internal market does not become an office where dissension rules the day but where all the constituent members, from the constituent parts of our country, can recognise that they are complementary one to another, each with a contribution to make. It is therefore important that all four constituent parts are represented within this office by people in whom we can all trust. The noble and learned Lord, Lord Thomas of Cwmgiedd, said that we really did have to be able to trust each other. He made a number of very valid points which I hope my noble friend the Minister will take on board.
I do not want to sound too much of a Jeremiah, but I have never felt more worried for the future of our country than as we enter 2021—for its continued existence as a united kingdom, for its prosperity, and for our ability to come out of this crisis in a way that gives us a new and bright future.
The Government must practice a degree of humility as they realise that they have not had all the answers right in these last few months. If they are to get them more right in the next few months, they must not behave as though they have a monopoly of wisdom— they have not.
Lord Judd (Lab) [V]
My Lords, it is always interesting to hear the reflections of the noble Lord, Lord Cormack, and I have a tremendous amount of sympathy with a great deal of what he said. However, I think he must come to understand—if I may put it this bluntly—that we have moved on and we are perhaps at a stage now where the future strength of our four nations working together will have to be rooted in an understanding of their separate identities and democratic systems, which complement our own.
I happen to believe that the road we should be exploring far more often is that of a federal United Kingdom. I hope that does not hurt the noble Lord; I feel that that is how our people can become strongly united in the way forward. In some ways, the determination to leave the European community has made this more urgent and important than ever. Our success as four nations depends upon our mutual co-operation and our recognition of interdependence.
Our debate this afternoon has been on a theme to which we have returned several times during the passage of this Bill, and it is crucial. We must have a situation in which the peoples of Scotland, Wales, Northern Ireland and England feel a sense of ownership in what is being done, and a genuine sense that it is being done on their behalf rather than being dependent on a dominating lead from England, and finding ways of talking to them to try to meet their needs in the best way possible.
We simply have to make sure that there is common ownership of what is being done. That is why the amendment by my noble and respected friend Lady Hayter is so important and I am so glad to see it—although I am slightly intrigued by the groupings as I think it is closer to the perhaps more detailed Amendment 131 tabled by my noble friend Lord Stevenson. As we go forward, I am sure that we will fail if there is any feeling that there is not common ownership and agreement about the things that are being done. This will take time and effort because, as has already been said, it is not just an administrative matter but a trust-building matter. These amendments are desperately important, and I hope that the Government will take them seriously.
Baroness Altmann (Con) [V]
My Lords, it is a pleasure to follow the noble Lord, Lord Judd, and so many other noble Lords. I support the thrust of this group of amendments, particularly those in the name of the noble Baroness, Lady Bowles, who explained her reasoning with such clarity. I also support the aims of the wholly reasonable amendments in the names of the noble Baroness, Lady Hayter, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I particularly support Amendments 116, 117, 121, 128 and 129, echoing the calls for specific representation of all the devolved Administrations in the operations of the office for the internal market. I also support the aims of amendments like Amendment 118, which call for the devolved Administrations to be properly involved in both the OIM and the CMA.
I hope that, when responding to this group, my noble friend the Minister can accept the intention of these amendments and return on Report with proposals to help dispel the impression that the establishment, as currently proposed, of this office for the internal market represents a power grab by the English Parliament, which shows wholly insufficient respect for, and inclusivity of, the Parliaments of each devolved nation in the United Kingdom. As the noble Lords, Lord Empey and Lord Hain, my noble friend Lord Cormack, the noble and learned Lord, Lord Hope, and the noble Baroness, Lady Randerson, rightly say, surely, representation of each devolved Administration is the minimum that is required to reassure each nation that its own particular interests will be taken into account by a representative with local understanding.
I also agree with other noble Lords that the CMA seems an inappropriate home for this new office for the internal market. Of course, I understand and support the aim expressed by my noble friend the Minister in earlier groups to avoid establishing more arm’s-length bodies if there is a viable alternative to use. However, the CMA does not seem to be a viable alternative for this purpose: it is an organisation sponsored by two government departments, BEIS and the Treasury, and it aims to promote competition for the benefit of consumers, which is primarily concerned with large businesses, competition issues, mergers and oligopolistic power. It does not have experience in monitoring an internal market across all four of our nations, particularly with the interests of so many small firms in each sector being at stake. Therefore, I believe that the office for the internal market does not really belong in the CMA, and, whether or not it is there, it absolutely must have representation from all four nations of our United Kingdom.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, it is a pleasure to follow the noble Baroness, Lady Altmann, and other noble Lords in this very robust but genuine and philosophical debate about the role of the CMA and the office for the internal market. The general thrust of the debate has been that there needs to be a degree of independence in this body but also that it should embrace the devolved legislatures as well as that within Westminster and Whitehall. As the noble Lord, Lord Judd, said, to protect identities and recognise and acknowledge democracies that Westminster and Whitehall put in place with the devolved settlements, it is important that they are recognised. The best way to do that is through membership on an equal basis on the CMA and office for the internal market panels.
Like the noble Lord, Lord Hain, I was intending to address Amendment 131, which is now in the next group, because I agree totally with its sentiments, as well as Amendments 117, 118 and 119 in this group. It is interesting that, in its recent report, the Lords Constitution Committee states:
“The Government should explain why the Competition and Markets Authority is the right body to have oversight of the monitoring of the UK internal market”.
Perhaps the noble Lord will provide reasoning for that —I hope he does—because none of the noble Lords who have spoken this evening, apart from the noble Baroness, Lady Noakes, have seen any merit in this organisation doing the job that will be required if this legislation is implemented.
The Lords Constitution Committee also states:
“The Government should seek to make the Office of the Internal Market more clearly accountable to the different legislatures in the UK.”
If you want their buy-in—and, as the noble Lord, Lord Empey, has said, there is no buy-in in Scotland, Wales or Northern Ireland—it is going to be an uphill struggle for the Government to achieve that.
In looking at various aspects of this over the last few days, there is no doubt that members should be appointed by all four Executives on an equal rather than proportionate basis, with substantial stakeholder input from the business sector. It should have a dispute resolution capability and sufficient powers of enforcement. Its remit should include measuring additional costs of GB goods to Northern Ireland and the source of the extra cost. Coincidentally, this issue has already been referred to in this debate by the noble Lord, Lord Empey, and an information session was given by the Government to Northern Ireland businesses today, which said that there will be 30 million customs declarations on an annual basis between GB and Northern Ireland. That is the extent of the issue and the extent, for some of us, of the problem and the work required.
There is no doubt that the resources and information necessary to monitor the impact of the UK internal market as it relates to the implementation of the protocol could be covered in Amendment 131, in the name of the noble Lord, Lord Stevenson of Balmacara. I also highlight the capacity to be informed by relevant stakeholders and business and consumer groups. There is a view in the wider business and academic worlds that the Competition and Markets Authority is not a natural fit, as it deals with private, not government, business. The proximity of the CMA to BEIS would always leave it open to accusations of political influence, even though it is a non-ministerial department with strategic influence given by BEIS.
In summary, it is important that that overarching authority should be—here I go further than other noble Lords, perhaps—independent of all political and governmental influence. However, there is no doubt that the work, influence and devolution settlements need to be recognised and, as such, representatives from the devolved structures need to be on the overarching body for it to work and bring some sense to this organisation. I am happy to support Amendments 117, 118 and 119.
Lord Purvis of Tweed (LD)
My Lords, this is a characteristically interesting and deep group, and it is a pleasure to follow the noble Baroness. Having listened to and thought through all the contributions, I start by asking the Minister a question. Did the CMA respond to the Government’s consultation on their White Paper? If so, will the Government publish that response? Over the years, the CMA, as an independent body, has responded to many consultations on government proposals. What was its response to this? We know, as the Minister has indicated in answers to previous groups, that the Bill was, to put it most kindly, drafted within a constrained period; others may say that it was rushed. It seems there are concerns that the Government have found the CMA to be the appropriate body for a function to identify problems which the Government themselves have not indicated exist yet. It is all to do with future problems.
I will start by reflecting on the very good point made by the noble Baroness, Lady Noakes, who is frequently wrong in these debates. Her points are excellent, but when she shows the working of her arguments, we often come to a different conclusion. I have struggled to find a recent example of a UK body, operating on UK reserved matters, which has a direct role on devolved Administrations and Parliaments for areas within their competencies. Maybe the Minister can indicate where that has been the case. If that is not common practice, then we are in new territory. The closest that I can think of would be the operation of certain UK regulators that, by virtue of the decisions they can make within the reserved functions, could have an impact on devolved ones. We addressed that in the Scotland Act 2016, under which there are, for example, new requirements, which did not exist previously, for Ofgem and Ofcom to lay their reports to the Scottish Parliament. Interestingly, both Ofgem and Ofcom have a statutory duty under that Act to appear before a Scottish Parliament committee. This is part of an advance recognition that the decisions that they can make in regulating a UK market will have an impact.
In response to the noble Baroness, the role that the Government seek for the CMA is now markedly different, because the CMA is not just a UK body operating under explicitly UK issues of competition and regulatory functions. It will now report on non-UK-wide policy proposals made by the UK Parliament for England only, for Wales only or for Scotland only. That is a very different way for that body to operate; it was not the policy intent when it was formed in 2013. It is worth considering in detail, because it is a deviation from the policy intent in its parent legislation.
The CMA is also, fundamentally, about private enterprises in the market and the protection of consumer interests, but it will now have new responsibilities to report directly on decisions made by one Parliament, within its legislative competencies, which do not have private enterprise relationships or consumer interests at their heart. This goes back to the debate about what legitimate aims are. We are moving from a single market which had a wider scope of legitimate aims—environmental policies for example—to a more restrictive one. However, the decisions that will be made for England, Wales or Scotland alone will be within their existing devolved competencies or, indeed, their new ones. It goes far beyond what we have at the moment.
Baroness Hayter of Kentish Town (Lab)
My Lords, I rather regret that, early on in this debate, the noble Baroness, Lady Randerson, mentioned rugby. I would have thought that this was not the weekend for her to do it, but I am sure that it cheered up others in the House.
It is hard to add much to the case so clearly set out by earlier speakers, and I thank the noble Baroness, Lady Bennett, for covering the amendments in our names, so I do not need to go through them. I will just say that, yet again, the Bill bears testimony to the haste in which it was cobbled together. Perhaps even more serious was the lack of consultation and joint working with the devolved Administrations. How else was it possible to think it appropriate to give the OIM to a non-ministerial government department, accountable only to the UK Parliament through its sponsor department, BEIS, without a thought to the interests, the responsibility, the competences or the rights of the devolved authorities?
As the noble and learned Lord, Lord Thomas of Cwmgiedd, said, whatever structure we end up with must surely have the confidence of all four nations. Indeed, he said that the appointees should have the experience and the expertise of the four constituent nations. That point was emphasised by the noble Lord, Lord Empey, who said that, particularly in the case of Northern Ireland, which will be working in a different regime from the others, it was absolutely essential to build in the requirement that someone with that expertise and knowledge was involved in the governance of this organisation.
Without these amendments, it would simply be the Secretary of State who had the power to appoint the chair and members of the CMA’s board and of its panel—the latter, of course, as we have heard, is responsible for operational and casework decisions. More than that, BEIS is a UK department, which gives the CMA a non-binding strategic “steer”, as the noble Baroness, Lady Randerson, reminded us. Therefore, one Government of the four gives the CMA a steer with that Government’s strategic priorities, to which it is expected to have regard. Placing the OIM in the CMA to monitor the health of the internal market—apart from all the issues about whether it has any expertise to do so—including its impact on intra-UK trade, investment and competition, but with no voice from the other three parts of the UK, appears, at its kindest, forgetful, but at worst, deliberate.
Lord Callanan (Con)
I thank all noble Lords who have spoken in the debate so far. At the risk of agreeing with the noble Baroness, Lady Hayter, I can say I have been listening very carefully to what everyone has had to say in this debate. We take these matters extremely seriously.
Let me respond directly to the question from the noble Lord, Lord Purvis. No: the CMA did not respond formally to the consultation when we issued it, but as you would expect, there has been extensive, official-level discussion on the design and development of the OIM proposal with the CMA.
Before addressing the individual amendments, I shall set out why Clause 30 and Schedule 3 should stand part of the Bill. I have set out the purpose of the office in previous groupings, and noble Lords will be delighted to hear I will not repeat that here.
The purpose of Clause 30 is to introduce the office for the internal market panel and task groups and allow those task groups to carry out all the functions set out in Part 4 of the Bill on behalf of the Competition and Markets Authority. This will ensure that the CMA, through the OIM, can carry out a set of independent, advisory, monitoring and reporting functions to support the development and effective operation of the UK internal market on an ongoing basis. Building on existing governance arrangements, it allows the CMA to authorise the task groups to do anything that the CMA can do under Part 4. This would include delivering specific pieces of reporting, such as annual health of the market reviews or requested monitoring on the intra-UK trade impacts of specific regulations.
To fulfil those independent functions, Schedule 3 sets out the constitution of OIM task groups, to which functions of the CMA may be delegated by virtue of Clause 30. Schedule 3 also provides for the establishment of a panel from whose members such groups may be selected. In performing its role, the OIM will have the ability to gather market intelligence from UK businesses, professionals and consumers to develop its evidence base. The effect of removing Schedule 3 would be that no public body undertook those independent advisory, monitoring, and reporting functions to support the smooth running of the UK internal market. The Government believe that this outcome would be detrimental to the future health of the internal market and to the benefit of every region and nation of the UK. Thus, it is crucial both Clause 30 and Schedule 3 stand part of this Bill.
Amendment 116 would insert a new clause seeking to ensure that the creation of the OIM was subject to a memorandum of understanding being agreed between the Secretary of State and Ministers in the devolved Administrations. It also seeks to set out how the OIM should handle and use information that it requires to fulfil its functions. It proposes that the office for the internal market panel and task group members should include nominees from the English regions and devolved Administrations. It also proposes who should be members of any internal market work undertaken by the CMA if it undertakes such work separately from the OIM. I will respond to these latter points later, as they are referenced within other amendments.
The Government have considered a wide range of delivery options for the advisory, monitoring and reporting functions for the UK internal market as set out in the Bill. We have concluded that the CMA is best suited to house the OIM to perform these functions. This option was strongly supported by a wide range of stakeholders during the White Paper consultation earlier this year.
The Government have sought to work closely with the devolved Administrations. For example, I would like to say how much the engagement with the Welsh Government to date on this Bill has been appreciated. I believe these conversations have helped enormously to ensure that the purpose and effect of the OIM is understood. The Government are committed to continuing to engage constructively with the devolved Administrations on the establishment of the OIM and how it operates in future in fulfilling its functions as set out. In recognition of the keen interest of the devolved Administrations in the operation of the UK internal market, these appointments will be made following consultation with Ministers from all three devolved Administrations. This will ensure that the panel comprises members who all represent the interests of stakeholders in all parts of the UK. For the reasons I have set out, I am not able to accept the amendment by the noble Baroness, Lady Bowles.
I turn to Amendments 117, 121, 122, 123 and 124. Amendment 117 would allow each devolved Administration to appoint a CMA board member, with Amendments 121 through to 124 setting the terms and conditions of those appointments. The CMA is an independent non-ministerial department with a global reputation for promoting competition for the benefit of consumers and ensuring that markets work for consumers, businesses and the economy. Ministers have no day-to-day involvement in its operations. It is for these reasons that the CMA is a natural choice to take on the functions of the OIM.
The noble Baroness, Lady Randerson, asked how it is that the CMA deals with reserved matters but the OIM can address devolved issues. The statutory objective of the OIM in Clause 29 is designed precisely to draw a distinction with the current CMA objective and functions. This is wholly compatible with operating effectively and independently in relation to devolved matters, with a difference in focus on devolved and reserved matters respectively.
So that the advice and outcomes of the CMA’s work and the members undertaking such work are trusted and continue to be seen as impartial, it is clearly important that board members and the appointments process are seen to be trusted. As my noble friend Lady Noakes said, board members must be seen as capable of overseeing the promotion of competition throughout the entire United Kingdom, rather than as a representative of any one individual nation. It would therefore be inappropriate to risk politicising the CMA’s board by accepting this amendment.
Having different routes to the appointment, resignation and removal of CMA board members would be at odds with the UK-wide remit of the CMA and would have the effect of creating two categories of member. I recognise the keen interest of the devolved Administrations in the appointment process for the CMA board given that the proposed OIM panel chair will, by extension, become a CMA board member. We have stressed during engagement and written into the Bill that devolved Administration Ministers will be consulted on appointments ahead of the OIM becoming operational.
Amendments 118, 119 and 120 propose devolved Administration consent mechanisms for appointing the chair and panel members of the OIM. The first two of these amendments would require the Secretary of State to seek the consent of the devolved Administrations before appointing the OIM’s chair and panel members. As it stands, the Secretary of State appoints the CMA board chair and will appoint the OIM panel members and chair with full and mandatory consultation of the devolved Administrations. The priority will be ensuring that each appointment is on the basis of the relevant range of expertise and, crucially, is someone who can serve the interests of the whole of the United Kingdom.
During this consultation and the appointment process, the Secretary of State will aim to work closely with the devolved Administrations to ensure that their interests and comments are taken fully into account before decisions are made on who should be appointed. These amendments, on the other hand, would encourage a narrowing of expertise and risk the effective establishment of the panel. Consent would give each Administration a veto, which could delay and politicise appointments, which would undermine the OIM from the outset. For those reasons, I cannot accept these amendments.
Amendment 125 would require CMA’s proposed and finalised annual plan and annual report to be laid before each Parliament of the devolved Administrations. I assure noble Lords that the Government share the concern of the noble and learned Lord, Lord Thomas, that adequate opportunities for debate and scrutiny of the CMA’s annual report and other documents exist for the devolved legislatures. The Enterprise and Regulatory Reform Act 2013 requires arrangements to be made to lay the annual plan and report to Parliament; in practice, they are also laid before each devolved legislature. I assure noble Lords that this will continue in future. Should this reassurance be insufficient, the CMA’s annual plan and report are made public, allowing each legislature to scrutinise and debate them if it sees fit. In the light of those reassurances and reasons, I hope that noble Lords will not move their amendments.
Amendments 126, 128 and 129, and subsections (2)(b) and (4) of the new clause proposed by Amendment 116, would require either the OIM panel or task groups to have representatives from each of the four nations of the United Kingdom. This amendment could lead to members of the relevant task groups placing regional or political interests ahead of the CMA’s UK-wide mandate. This would harm the OIM’s ability to monitor the internal market effectively. All panel members chosen to be on each task group should represent the UK as a whole when undertaking reporting for the OIM. For that reason, I am unable to accept these amendments.
Amendment 127 would increase the mandated size of an OIM panel group from three members to five. Having consulted the CMA carefully on this and other points, the Government are confident that three members are sufficient to provide the range of expertise necessary to undertake the work of a task group. Since the panel may need to be able to form multiple task groups at a given time, increasing above this number would reduce the resilience of the panel as a whole and create additional unnecessary expense. For this reason, I hope the noble Lord will not press his amendment.
The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
I have received one request to speak after the Minister, from the noble Lord, Lord Purvis of Tweed.
Lord Purvis of Tweed (LD)
My Lords, I apologise for detaining the Committee; I know I spoke at length on this group. Can the Minister clarify something that he said at the outset? I heard him say that responses to the consultation supported the Government’s proposals for the CMA having this role, but I have the White Paper and the consultation in front of me. No one asked; the Government did not ask. The CMA is not mentioned at all, as I think the noble Baroness, Lady Noakes, indicated. In fact, questions 3 and 4 do not refer to the CMA, and in the entire section the CMA is not mentioned. To resolve this, would the Government publish the consultation responses before Report, or can the Minister clarify in his remarks that he may have inadvertently misled the Committee?
Lord Callanan (Con)
I will certainly check that, and of course I will respond to the noble Lord if that proves incorrect. We obviously proposed the creation of the office for the internal market in the White Paper and said that we were interested in views—the noble Lord, Lord Purvis, shakes his head but I think we did. I will clarify that for the noble Lord in writing, in one of the many letters that I will be sending him. I definitely remember having discussions at the time of the White Paper with many noble Lords whom I spoke to during the consultation. We certainly discussed at the time how the creation of a new body would best monitor the function and effectiveness of the UK internal market process in the context of the White Paper, but I will certainly clarify that for the noble Lord in writing.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, we have had an extensive and thoughtful debate, and I thank all noble Lords who have taken part. I thank my noble friends Lord Palmer and Lord Purvis for supporting my amendments, and indeed others who have mentioned them; one who springs to mind is the noble Baroness, Lady Altmann. As ever, the major constitutional issue has taken pride of place over technical issues. I am sure that noble Lords have realised that I am rather interested in the technical issues too, but we will end up having to come to grips with them, so I will not reiterate now.
To comment on some of what has been said—I cannot do justice to all speakers—my noble friend Lord Palmer said that there needed to be much more clarity to the OIM, and that we needed to resolve the ambiguity of its structure, flesh out how it works and find out what it meant in real terms. I think that is also the basis for a lot of other thoughts, whether they are technical or to do with devolution. What comes out loud and clear is whether all parts of the UK will feel that they have voice or ownership. My noble friend Lady Randerson led with the proposals that others have also spoken on and which have the support of the Welsh Government. It is all about having a structure that is workable for everybody and not part of something working inside the UK Government.
The Minister says that the CMA is independent. I accept that to a large extent that may be true, but there is still the problem that its strategy can be directed or steered by BEIS. That is just not the way to give the devolved Administrations confidence when, as has been outlined, the hybrid role of UK Ministers leaves us in the rather unsatisfactory situation of the same person trying to arbitrate. It is like the referee in the rugby match that my noble friend Lady Randerson referenced. Indeed, the noble Lord, Lord Wigley, said that basically the referee cannot be the manager of one of the teams—which rather seems to be the situation that we have here.
Some very valid points were made by the noble and learned Lord, Lord Thomas of Cwmgiedd, who said that judges had to be drawn from the different parts of the United Kingdom who understood everything vis-à-vis their specialist knowledge. I would not hold myself out at the level of a judge. I am not bad when it comes to negotiating things internationally, but I am English and would never hold myself out as being able to represent the positions of the devolved Administrations. I know that there are known unknowns that I do not know, and that is the situation we have to recognise. Whatever the integrity of the people on the CMA, you just do not know that the background is there unless they are drawn from a diverse field. I am very much one of those people who says that you cannot have sectoral interests, but this is different. I do not consider that devolution is political in that sense—we are all trying to get on together.
The noble Baroness, Lady Finlay, made a very interesting point when she suggested that it could perhaps be an interim measure because it has all been brought together very quickly. The noble Lord, Lord Hain, investigated the governance of the CMA and came up with many of the same conclusions as others. The noble Baroness, Lady Bennett, echoed that it is all about a voice for the legislatures and how to keep devolution alive.
As I said, I share with the noble Baroness, Lady Noakes, the view that the CMA is meant to be a UK-wide body and that nominees are not always the best people, but what is good enough for judges is, I think, good enough for the OIM. Yes, perhaps you always have to compromise, but my compromise comes down on the side of voice and ownership; otherwise, the body will never be trusted, as the noble Lord, Lord Empey, said. You have to have the confidence of knowing that people are properly at the table. I acknowledge that we have had rather haphazard devolution but, just because we have left the EU, that cannot be solved with “Whitehall knows best” and by taking back things that properly have been devolved.
The noble and learned Lord, Lord Hope, supported consensual Motions and said that consultation is not a guarantee. The noble Lord, Lord Cormack, warned us of the danger of a broken United Kingdom, emphasising again that there was a need for more time to be taken and for more confidence. The noble Lord, Lord Judd, had a good point in suggesting that we need a federal UK. That would perhaps make things easier, but we are not able to resolve that now—so, as he said, it comes back to understanding separate identities and to ownership.
The noble Baroness, Lady Altmann, supported some of my amendments and wanted the proper involvement of all parties. She also felt that the CMA was the wrong home, and really was not a viable place or a viable alternative to constructing a new body, because of the strategic involvement of BEIS and HMT, and because of it not being sensitive to matters of small businesses and diversity.
The noble Baroness, Lady Ritchie, was I think the first to bring forward the same points about needing a degree of independence and embracing the devolved legislatures, and also the fact that the Constitution Committee had also asked, “Why the CMA?” This was echoed by the views of my noble friend Lord Purvis. I agree with him; I could not find the flagging up of the CMA. It may be that one respondent said “a body such as the CMA”, but I did not see any consultation on it being the CMA or whether it was appropriate. The noble Baroness, Lady Ritchie, and other noble Lords also pointed out that the CMA is used to dealing with private business and enterprise and has a BEIS strategic influence.
I cannot begin to summarise what was said by my noble friend Lord Purvis, but the fact is that the CMA is left trying to analyse hypothetical benefits. It is true that we do not really know how this is all going to work out. If noble Lords follow the logic of my noble friend’s argument, they will find that he concluded by asking what incentive there was for this body to be used by the devolved Administrations. It is not intended to stir up wars between the devolved parts of the UK and the centre, but my view is that, by its set-up, it is likely to stoke rather than resolve concerns.
As I said before, the noble Lord does not like looking to the EU for examples, but it is a bit like when the Commission comes out with a proposal. It always wants to harmonise everything to make it easier and then the member states, notably the UK, get stuck in. You then get down to the nitty-gritty and you solve it. At the moment, we have this sort of overview coming from the Government that gives the devolved Administrations no room to manoeuvre—yet, when they get down to the nitty-gritty in the common frameworks, what happens? You can reach a conclusion.
Baroness Bloomfield of Hinton Waldrist (Con)
Perhaps the noble Baroness cannot feel the mood of the Committee, which is that she should now withdraw her opposition.
Baroness Bowles of Berkhamsted (LD) [V]
I am sorry; I had basically come to a close anyway. There is much more that needs to be done. I do not think this is politicising; I think it is respecting devolution.
The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
Does the Minister wish to add anything?
Lord Callanan (Con)
Not if the noble Baroness has withdrawn her opposition.
The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
We now come to the group beginning with Amendment 115. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear during the debate.
Amendment 115
“Office for the Internal Market: establishment as a body corporate
(1) Within the period of six months beginning on the day on which section 30 comes into force, the Secretary of State must by regulations establish the Office for the Internal Market (“the OIM”) as a body corporate.(2) Regulations under subsection (1) may amend or modify any enactment including this Act for the purposes of requiring or authorising the OIM to do anything required or authorised to be done by the CMA under this Part.(3) Schedule (Office for the Internal Market) contains further provision about the OIM once it has been established as a body corporate.(4) Regulations under this section are subject to the affirmative resolution procedure.”
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I move Amendment 115 and speak to Amendment 131. They need to be taken together. We have covered a lot of ground in the last couple of groups, so I will be brief. We have looked at the role, functions and operational mechanisms of the Bill’s proposed office for the internal market and have also covered what happens if and when things go wrong.
The emerging view—although it is not shared by the Minister—is that the Bill has not got this right. Amendments 115 and 131 which, as I said, need to be considered together, take us in a new direction. I take the feeling of the Committee that we are talking about an independent body, which has to be a UK body. As was rightly said by the noble Baroness, Lady Noakes, being a UK body does not mean that it also part of the individuals it is supervising.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, the noble Lords, Lord Hain, Lord Cormack and Lord Empey, have all withdrawn their names from this debate, so I call the next speaker, the noble Baroness, Lady Bowles of Berkhamsted.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I listened with interest to the noble Lord, Lord Stevenson. The separate grouping of these amendments has put an additional focus on some of the intent.
I see the merit in taking time to get it a bit more right and use regulations for the detail, but it seems to me that the moment to legislate is still when there has been agreement between the four nations, rather than in a fixed time period. I am not sure that I condone such a wide ability to amend any Act—could the Act or Acts not perhaps be named?—although I acknowledge that the purpose is limited. However, those are details; I accept the principle and direction the noble Lord is suggesting.
Concerning the new schedule in Amendment 131, I still question the ratio of six Secretary of State appointments to one each for the devolved Administrations, especially in the absence of introducing a regional element for England. Quite controversially, the new schedule also creates powers for the OIM to deal with distortive or harmful subsidies and subsidy races.
Such a provision is the elephant in the room if it is not done at some stage. Third countries could launch trade remedies complaints against the UK if they were affected by distortive or harmful subsidies. From that perspective, it is of great benefit to have a body that is seen to be independent overseeing those matters, rather than being at the political level of government, which is where it seems to be held at the moment. It is the opposite side of, but with the same logic as, the Trade Remedies Authority needing to be seen to be independent. However, regarding the four nations, the scope of intervention would be wider than would interest third countries, unless there is some corresponding agreement with third countries or the EU.
I am not actually sure how it would all work out. As yet, because I have concerns about the CMA—although I accept that looking at subsidies might be something it is better adjusted to do—it will be a little while before I could slip in this enormous power without resolving all the other issues that remain, including powers, unless the noble Lord is suggesting that this is all that the OIM can do. Anyway, I think that there are some good things and some bad things in there, and it is interesting food for thought.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
I call the noble Baroness, Lady Jones of Moulsecoomb.
Baroness Jones of Moulsecoomb (GP) [V]
My Lords, the Government are certainly getting a lot of advice during the passage of this Bill. As the noble Lord, Lord Cormack, said, they really ought to know that they do not have all the answers. So I do hope that the Minister listens.
The amendments in this group follow perfectly the Government’s announcement that they are putting the trade commission on a statutory footing. If the Government want to run an internal market, surely it is right to create a fully functioning governance body for that purpose. Merely tagging on a few functions to the Competition and Markets Authority shows a weakness of purpose and a lack of understanding of exactly how everything should run. Giving the new office for the internal market the power to investigate distortive and harmful subsidies could have a powerful impact on wiping out the implicit and explicit subsidies for fossil fuels, particularly unconventional oil and gas fracking. These implicit and explicit subsidies include a streamlined planning process and no requirement for the company to make a bond, unlike the landfill industry, equating to the government underwriting of the clean-up of fossil fuel sites in the event of corporate bankruptcy. So once again taxpayers would pay to clean up other people’s mess.
Just to be clear, the journalist at Drill Or Drop? suggests that the OIM can comment on controversial issues such as fracking, which, as we all know, is a dangerous, polluting, expensive, intrusive and—in view of our global need to limit our carbon emissions—unnecessary process. The OIM could give advice contrary to the devolved Administrations’ decisions. Can the Minister tell me if that is true?
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
I apologise to the Committee and very personally to the noble Lord, Lord Judd, whom I omitted to call before the noble Baroness, Lady Jones. So I call the noble Lord now.
Lord Judd (Lab) [V]
Thank you. My Lords, I will be brief. I just want to say how much I commend the amendments from my noble friend Lord Stevenson. He is setting out principles which are very important, rather than just the general purpose, and for that we should be grateful. I would also like to put on record that I am glad that he has taken, on previous amendments, the point that what we must be aiming for in all this is a situation in which there is a sense of shared ownership and the shared involvement of all the parts of the United Kingdom.
Baroness McIntosh of Pickering (Con) [V]
My Lords, I am grateful to the noble Lord, Lord Stevenson, for introducing these two amendments and giving us the opportunity to probe the very heart of the functioning of the OIM in terms of its independence. Can my noble friend the Minister say how the Government will ensure that this body will be independent? My noble friend will be aware of my concerns and those of others that the Government have got into the habit recently of creating such public corporate bodies and then trying to direct how they operate. Recent examples are, as the noble Baroness Jones of Moulsecoomb, just alluded to, the Trade and Agriculture Commission, which falls within the Department for International Trade, which basically does not provide any resources to those who serve on the commission and, even more recently, the Office for Environmental Protection which, apparently, is to be appointed by and subsumed within Defra. So that is my main concern here, and there is much to commend in Amendment 115 as to how the body corporate is to be set up.
Furthermore, the noble Lord, Lord Stevenson, asks in subsection 2(2) of Amendment 131 for consultation with the devolved Administrations. I would prefer it if went further, as the noble Baroness, Lady Hayter, requested: consent for such appointments should be sought from the devolved Administrations. Presumably, if the Government were to adopt the terms of this amendment, it would be the OIM that would ensure the level playing field, which I imagine is the Government’s intention. However, if it was not the OIM, can the Minister explain which body would, as in subsection 3(2),
“rule that any distortive or harmful subsidies are illegal and should be repaid”,
and, as in subsection 3(4),
“recommend to the Secretary of State changes to the test for a harmful subsidy, the scope of exemptions, and time limits on approvals”?
There should be a body to ensure levelling-up, not just of the regions but between the four nations. I hope that the Government are taking a consistent approach here, in their position on the European Union and their position on state aid between the four nations of the United Kingdom internal market. It would not behove the Government to be seen to be parti pris on their position on competition and state aid in this regard.
I share the concerns expressed by the noble Lord, Lord Purvis, and others, in the previous debate, regarding responses not always being published. I am having great difficulty, and perhaps the Minister can point me in the right direction, but rather than a summary of the responses, it would be enormously helpful if the Government published the responses to the consultation regarding this amendment in full, and preferably before the next stage of the Bill. That would enable us to form our own view of who said what in response to the consultation.
With those few remarks, I would like to put the key questions to the Minister: how do the Government intend to ensure the independence of the OIM, and how do they intend to carry the devolved Administrations with them in this regard?
Lord Fox (LD)
My Lords, so far there have been four groups of amendments dealing with the CMA and the OIM, and three different Ministers fielding. That perhaps summarises the fragmented nature of this Bill and the unjoined-up nature of what we are seeking to achieve. In those four groups, and this group, amendments have sought, in a sense, to correct and improve this Bill, but there is no point, because this Bill is beyond that stage. Other speakers have sought to probe and get information from the Government, and there has been no point to that either, because the Government have not answered questions. Despite extremely well directed, forensic analysis and questioning, the Government have ducked, dived and shrugged.
In addition to supporting the request made by the noble Baroness, Lady McIntosh of Pickering, for the consultation to be published, I would like this Minister, who is before us for the first time in this debate, to answer the questions on this group, and to undertake, on behalf of the other Ministers, to answer all the questions that the last four groups have presented, because they are all extremely important to understanding what on earth the Government intend to do.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I appreciate the comments made in the debate and I appreciate that these amendments seek to correct, improve and debate the issue. Indeed, that is the role of this Committee. Given that, I take issue with the last point made by the noble Lord, Lord Fox.
Amendments 115 and 131 would bring in fundamental changes to the statutory basis for the Office for the Internal Market. They propose making the office a separate, standalone public body, thereby removing its Crown status. The noble Lord, Lord Stevenson of Balmacara, suggested that the new OIM should use Ofcom or the National Audit Office as a model. This would fundamentally change the nature of the OIM. It would change its funding model and would ask it to operate like a regulator, although it is not intended to act as one.
It has already been explained that the Government have concluded that the CMA is best suited to house the Office for the Internal Market to perform these functions, and the reasons were set out in the Government’s consultation response. I will again emphasise the key points. The CMA has built up a wealth of expertise and experience that makes it a natural fit to take on these additional functions. It has a global reputation for promoting competition for the benefit of consumers and for ensuring that markets work well for consumers, businesses and the economy. We will come on to discuss the concerns of the noble Baroness, Lady Hayter, about the interests of consumers being reflected in the OIM.
The Office for the Internal Market will build on the CMA’s existing technical and economic expertise which will now support the further development of the UK internal market. My noble friend Lady McIntosh asked how we can guarantee the independence of the OIM and ensure that we carry the devolved nations with us. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. It will not be an enforcement body and it will not be able to override the decisions of any of the Administrations. As noble Lords will know, the Government are continuing their engagement with the devolved Administrations as the functions are developed further.
In the last group, the noble Lord, Lord Purvis, asked what the incentives are for the devolved Administrations to use the OIM. All of the devolved Administrations have an interest in the smooth functioning of the internal market and the development of effective regulation to support it. The Government are confident that all the Administrations and legislatures will value the expertise and advice of the OIM and the authority of the evidence base that it will build up.
The noble Baroness, Lady Jones, asked whether the OIM will give advice on the decisions made by the devolved authorities. I assure the noble Baroness that the non-binding advice of the OIM will provide a complementary and expert resource to help facilitate better regulation and, should it be requested, this will include regulation developed by the devolved Administrations as well as by the UK Government. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. As I have said, it will not be an enforcement body and it will not be able to override the decisions of any of the Administrations.
An earlier grouping addressed the involvement of the devolved Administrations in the panel membership of the office. I will therefore say briefly that the direct devolved Administration appointments to the panel of the OIM would risk its effective and independent operation. Appointments to the body will be made by open and fair competition and the chair through the robust procedures of the Public Appointments Commission and the Cabinet Office, which operates across the jurisdictions of all of the devolved Administrations.
I turn to UK subsidy control. Clause 50 reserves to the UK the exclusive ability to legislate for a UK subsidy control regime in the future. It is an issue of national economic importance as it is essential to supporting the smooth functioning of the UK’s internal market. We will debate the detail of subsidy control reservation in a later grouping, but I will cover it briefly now. On 9 September, the Government published a statement regarding the future of subsidy control. In that statement, we committed to publishing guidance on the international commitments that will apply to the UK on 1 January 2021, before the end of the year. This will cover World Trade Organization rules on subsidies and any commitments we have made in free trade agreements.
We also set out our intention to publish a consultation in the coming months on whether we should go further than our WTO and international commitments. This will include consulting on whether any further legislation should be put in place. The amendment would create uncertainty and fundamentally undermine the future consultation which will be the mechanism through which decisions regarding future regulations for UK subsidy controls will be made.
In addition, it should be noted that the function of the office for the internal market will be to provide non-binding technical advice, monitoring and reporting on the health of the internal market. It is not the Government’s intention to give it a range of enforcement and regulatory powers, which the proposed new schedule would do in respect of UK subsidy control.
My noble friend Lord True said on an earlier group of amendments said that, in line with GDPR, not all respondents had consented to sharing their views, so publishing only a subset of the consultation would not offer an accurate enough reflection.
For the reasons set out now and earlier, I am not able to accept this amendment. I hope that the noble Lord will therefore withdraw it.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, I have had no request to speak after the Minister, so I call the noble Lord, Lord Stevenson of Balmacara.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I thank those who have spoken in support of the amendments, particularly the noble Baroness, Lady Bowles, who accepted the principles despite having doubts about some of the factual points, and the noble Baroness, Lady McIntosh, for covering a lot of ground and raising questions that will need to be addressed by Ministers. In fact, I do not think that they were addressed in the response this evening. I thank my noble friend Lord Judd for bouncing back after having been ignored and making some very good points about why it is important to seek principles as we go through the Bill, because they are sadly lacking at the moment. The legislation seems a formulaic response, almost an early policy draft of what one might do if one were to regulate an internal market. It does not smack of having had a lot of discussion and debate or even wider consultation. The Government do not seem to have in mind a process whereby they can arrive at a solution to the problem of how we get shared ownership and trust into a system which is broadly voluntary in its basis without it looking as though it is a top-down, heavy-handed approach. There may be political advantages in that in the short term, but in the long term it is not the way to go.
This was a probing amendment to which we heard some responses, but there are still one or two to come. I am left with the feeling that, whatever we call the body and wherever we locate it, if it is capable only of providing non-binding advice and has no powers, it leaves the question of who will police the whole system. What happens, for instance, if the devolved Administration in Scotland decide they want to do something in particular in relation to whisky, chicken or flour—and we now know an awful lot about flour adulteration? Who will police that? Will it be BEIS? If so, can the Government really say, hand on heart, that the right way to approach what is effectively a devolution issue is through a top-down, UK Government-organised structure? I wonder. I beg leave to withdraw the amendment.
“UK SHARED PROSPERITY COMMISSION1_(1) A body corporate called the UK Shared Prosperity Commission is established.(2) The UK Shared Prosperity Commission is not to be regarded—(a) as the servant or agent of the Crown, or(b) as enjoying any status, immunity or privilege of the Crown. (3) The UK Shared Prosperity Commission’s property is not to be regarded—(a) as the property of the Crown, or(b) as property held on behalf of the Crown.Membership
2_(1) The UK Shared Prosperity Commission is to consist of—(a) a Chair and five members appointed by the Secretary of State,(b) a member appointed by the Scottish Ministers,(c) a member appointed by the Welsh Ministers,(d) a member appointed by the Department for the Economy in Northern Ireland.(2) Before appointing a chair and member under sub-paragraph (2)(1)(a) the Secretary of State must consult the Scottish Ministers, the Welsh Ministers, and the Department for the Economy in Northern Ireland.(3) Before a chair can be appointed under sub-paragraph (2)(1)(a), the appointment must be confirmed by the Treasury Select Committee or a committee of either House whose remit covers the Treasury.Funding
3__ The Treasury must pay to the UK Shared Prosperity Commission such sums as the Her Majesty’s Government considers appropriate for the purpose of enabling the UK Shared Prosperity Commission to perform its functions.Powers
4_(1) The UK Shared Prosperity Commission may distribute sums from the Treasury across the four nations and regions of the United Kingdom following an assessment of relative need.(2) The UK Shared Prosperity Commission may conduct an assessment of relative need across the four nations and regions of the United Kingdom.(3) The UK Shared Prosperity Commission may do anything which appears to it to be necessary or expedient for the purpose of, or in connection with, the performance of its duties in sub-paragraphs 5(1) and 5(2).Accounts and audit
5__ The UK Shared Prosperity Commission must—(a) keep proper accounts and proper records in relation to them, and(b) prepare a statement of accounts in respect of each financial year.Annual report
6_(1) The UK Shared Prosperity Commission must prepare a report on the performance of its functions during each financial year.(2) The report must include the statement of accounts in respect of that year.(3) The report must be prepared as soon as reasonably practicable after the end of the financial year to which it relates.(4) The UK Shared Prosperity Commission must send the report to the Secretary of State.(5) The Secretary of State must lay the report before Parliament.Public records
7__ In subparagraph 2 of the Table in paragraph 3 of Schedule 1 to the Public Records Act 1958 (definition of public records), at the appropriate place insert—“UK Shared Prosperity Commission.” Investigation by the Parliamentary Commissioner
8__ In Schedule 2 to the Parliamentary Commissioner Act 1967 (departments subject to investigation), at the appropriate place insert—“UK Shared Prosperity Commission.”House of Commons disqualification
9__ In Part 2 of Schedule 1 to the House of Commons Disqualification Act 1975 (bodies of which all members are disqualified), at the appropriate place insert “UK Shared Prosperity Commission.”Northern Ireland Assembly disqualification
10__ In Part 2 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (bodies of which all members are disqualified), at the appropriate place insert—“UK Shared Prosperity Commission”Freedom of information
11__ In Part 6 of Schedule 1 to the Freedom of Information Act 2000 (other public bodies and offices: general), at the appropriate place insert—“UK Shared Prosperity Commission.”Public sector equality duty
12__ In Part 1 of Schedule 19 to the Equality Act 2010 (public authorities: general), in the group of entries under the heading “Industry, business, finance etc”, at the appropriate place insert—“UK Shared Prosperity Commission.””
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I will also speak to Amendments 167 and 168, which are also in my name. I am grateful to other Members for contributing to this group. The group is about another of the black holes that we are discovering in the Bill. This one is about state aid or, as we must learn to call it, subsidy—or, as the Government would have us call it, “the UK shared prosperity fund”, although details about that are incredibly difficult to find.
State aid matters. It particularly matters if people think money is being stolen from them and used for other purposes. The Government have quite a lot to do to try to explain where they are going with this state aid issue, the timescale and how they intend to make progress in bridging the gap between people’s expectations and where they currently are.
We currently get an awful lot of money through state aid; it is certainly money that would be felt if it were not there. It is hard to get a complete picture of it; the best figures that I have been able to find come from the Institute for Government, which suggests that about £20.7 billion is currently available through state aid in two main forms, the European Regional Development Fund and the European structural funds. The regional development fund focuses on physical development—physical capital, as it were—while the ESF, the structural funds, are about employment and young people and are probably best described as human capital. The combination is a significant quantum of money, held by people who I think regard it as not being money provided directly by the UK Government, although of course money technically circulates around and presumably was originally from taxation in the first place.
Two significant points come from that. First, the headline funding from the EU at the moment is matchable. We currently think that about 40% is added on top of the just over £10 billion—£10.6 billion, I believe—that is available directly from Europe to the UK agencies that spend it, so that gives us the figure of about £20 billion when it is matched with local authority and central government funding and from the lottery.
An issue that is hidden, or at least more opaque, in terms of how state aid is organised is the way in which it seems to come in response to different requirements. For instance, the long-standing convention is that there is a regional bias based on deprivation, which takes into account the broader picture across the whole of Europe. In the UK, there are only two counties currently in the most deprived areas—or most in-need areas, I think they are described as—which are west Wales and Cornwall and the Scilly Isles. However, there were recently rumours that, had we stayed in the EU, which we are not, four more might have been put into that higher-needs category. That leaves the question: will the Government continue that process? Will they also think in terms of how individual parts of the country are treated in relation to that?
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
My Lords, I apologise; I should have reminded noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate and anyone wishing to press this or anything else in this group to a Division should make that clear in debate.
Lord Thomas of Cwmgiedd (CB) [V]
I am very grateful to the noble Lord, Lord Stevenson of Balmacara, for explaining the place of this in the Bill and for his proposal to try and make something of the provision. As it stands, it seems wholly separate from the other provisions of this Bill. It should not be there, and it is profoundly undemocratic. Its only connection with the rest of the Bill is that it seems part of an attack on the scheme of devolution. I therefore seek to argue that Clause 48 should not, in its current form, stand part of the Bill.
The Bill is concerned with the internal market; it is not concerned with the allocation of government powers to spend money between the devolved Governments and the United Kingdom or English Government. It authorises the UK Government, as it stands, to spend funds in devolved areas—education, roads—and, giving Clause 48 (1)(a) and (b) their ordinary meaning, almost any aspect of government spending, including hospitals.
Therefore, I have a question for the Minister: why is this in the Bill? How is it going to work? Let me put forward some ideas as to why it may be there. First, the Government might, as the noble Lord, Lord Stevenson of Balmacara, has suggested, have the noble aim of investing additional resources into the devolved nations and the other regions of England. If that were the case, they might be doing the work alongside the Governments of the devolved nations and doing it as the English Government in their capacity as the UK Government. If so, why do they need these powers? They have done city deals and dealt with expenditure of this kind without specific statutory versions. If that is the noble aim of this Bill, it seems unnecessary.
There may be a different aim, which again has been foreshadowed by the noble Lord, Lord Stevenson: that the UK Government see themselves as taking over the role of the EU Commission, steering the use of such funding. If the Commission did it, so the argument goes, why should not the UK Government? In other words, it is an example of this Government doing something the EU has done rather well, but which they will never give it credit for. If that is the Government’s aim, it is fair to point out that the European legislation provided for the European Commission to set overall very high-level objectives for funding, and then to negotiate with the devolved Governments of Wales and Scotland as to how these objectives should be reflected in the programmes the devolved Governments designed. The European Commission, at the end of the day, had the veto, but it negotiated with the elected authorities in Wales, Scotland and Northern Ireland, rather than bypassing them in the way the Bill would enable it to.
There may be a third aim, which is that the United Kingdom Government, the Government of England, know far better how to direct spending and cannot trust the Scottish, Welsh and Northern Ireland Governments to spend wisely. Nor, if that is their reason, can they trust the people of Wales, Scotland or Northern Ireland to choose the Government they want, as that entails the choice between different manifestos regarding the way in which money is to be spent on areas of devolved competence.
As it stands, the clause strikes at that democratic choice and the devolution schemes. It will enable the UK Government to spend funds in ways that the UK/English Government think best, but which the people of Wales, for example, may have rejected. That is not democracy. In effect, it would give legislative underpinning to the now discredited principle that the Government in Westminster know best and the people of Wales, Scotland and Northern Ireland, which have Governments with devolved competences, are not to be trusted to spend money wisely in areas of devolved competence.
In short, I can see no justification for these powers which is compatible with the commitment to the integrity of the devolution schemes. Last week, Ministers were asked repeatedly to confirm whether they supported the devolved institutions’ powers to tailor their policies and spending needs to the wishes of the people of the devolved nations. I understand that no such assurances were given. If Ministers wish to overturn the devolution settlements, let them say so. Let them show that the devolution schemes do not work and, in the light of recent experience, that we would all be better off in the devolved nations if only the UK Government could take spending decisions on matters that have been devolved, in place of the Governments in Cardiff, Edinburgh and Belfast.
As it stands, therefore, the clause should not be in the Bill. If there are constraints on how this is to operate, they should be set out in the Bill, or a proposal of the kind made by the noble Lord, Lord Stevenson of Balmacara, should be put in its place.
Lord Bruce of Bennachie (LD) [V]
The Bill appears to invite a clutch of ironic metaphors. In moving the Bill at Second Reading in the House of Commons, the Prime Minister drew inspiration from Adam Smith’s invisible hand but, by contrast, the Bill delivers a clunking great fist, and the Prime Minister’s oven-ready deal is at best not even half baked. The Government assert that substantial powers are coming to the devolved Administrations and, on the surface, that is true. However, the lack of reference to common frameworks, which we have debated, and the subordination of the proposed office of the internal market, on which previous amendments have focused, to the Competition and Markets Authority, all points to a centralising agenda. The state aid and financial powers clauses of the Bill—which, as the noble and learned Lord, Lord Thomas, said, do not appear relevant to the Bill’s stated purpose of regulating the internal market—raise serious questions, providing sweeping powers for the UK Government to intervene directly on a wide range of policy areas without even consulting the devolved Administrations, let alone securing consent and agreement.
At a time when relations between the UK Government and the devolved Administrations are at rock bottom, and with elections for the Scottish Parliament and the Welsh Senedd only six months away, this is absurdly provocative and, frankly, foolhardy. Following the shambolic communication of the emerging lockdown in England over the weekend, confusion reigns today over furlough provision in Scotland. On the one hand, the furlough extension is UK-wide, which is welcome. On the other, it appears that if Scotland goes into lockdown at a later date, comparable support to that being provided in England is not assured. Scottish Conservative leader, Douglas Ross MP, is at odds with the Government over this. It raises the question of whether the Government are trying to force Scotland into a similar lockdown at the same time as England, not because the measures currently being applied north of the border are not working—it is too early to judge that—but just to secure funding for any lockdown. That is not the way to promote trust or make rational, balanced and objective decisions.
Baroness Finlay of Llandaff (CB) [V]
My Lords, it is a pleasure to follow the noble Lord, Lord Bruce of Bennachie, and my noble and learned friend Lord Thomas of Cwmgiedd, who has explained, from a constitutional perspective, why Clause 48 has very little to commend it. I will illustrate why the powers that Ministers want to take for themselves might, in practical terms, be dangerous and damaging.
Under the last Labour Government, the Labour-led National Assembly chose to go in a different direction on education, which was one of the ways in which the late Rhodri Morgan put clear water between his Government, reflecting the unique circumstances of Wales, and the Government in London. The Welsh Government eschewed moves to establish foundation schools, academies and free schools. They have maintained the central role of local authorities in funding and supporting all schools, arguing, not least in rural areas, that an unplanned proliferation of schools would damage the viability of all educational establishments. They have vigorously championed comprehensive education. Whether or not you support this approach, the current Welsh Government have a mandate for it, supported by Plaid Cymru, meaning that more than two-thirds of Members of the Senedd back this policy.
Were the powers in Clause 48 to be granted, the UK Government could choose to fund free schools across Wales. This would positively undermine the policies backed by a majority of the Members of the Senedd and, more relevant still, a majority of the electorate. Even if the funding for such an initiative was genuinely additional to the block grant—I ask the Minister to give an unequivocal guarantee that that would be the case—such an intervention, even though it would give extra money, would undermine the Welsh Government’s education policy. A free school in an area such as Denbighshire could easily dramatically impact on the viability of local maintained schools. This does not seem right.
The cleanest way of dealing with and preventing this threat would be to remove the clause from the Bill. Nevertheless, for my part, I would be prepared to support alternative approaches. At the heart of this is the question of the so-called shared prosperity fund, which I am afraid some in the devolved nations suspect is a way of reallocating the funds that should come their way, especially to west Wales, to benefit the prosperity of England. The proposal of the noble Lord, Lord Stevenson, to establish a shared prosperity commission would dispel such suspicions by allocating replacement funds on the basis of need, not politics. However, as my noble and learned friend Lord Thomas explained, the onus really is on the Minister to give an explanation, which has been lacking to date, of why these powers are needed now when they have never been needed before.
Lord Hope of Craighead (CB) [V]
My Lords, I join the previous three speakers in giving notice of my intention to oppose the question that Clause 48 should stand part of the Bill. The grounds for my opposition to Clause 48 are based on paragraph 4(1) of Part 3 of Schedule 5 to the Scotland Act 1998. This is, after all, a devolution issue. That paragraph provides:
“This Schedule does not reserve giving financial assistance to commercial activities for the purpose of promoting or sustaining economic development or employment.”
In other words, it is within devolved competence for Scottish Ministers to provide financial assistance for these purposes. The same is true, I understand, of Welsh Ministers and in Northern Ireland.
The geographical reach of this provision is indicated by the fact that it applies to the whole of the UK. The power being sought would seem to cut across the powers of the devolved Administrations to provide this assistance in accordance with their own policies and order of preferences, although I appreciate that it extends over a wider field of activities. Providing assistance for reasons not at one with those policies and preferences would cut across the devolution settlements and for that reason be regrettable. I was very impressed by the example which the noble Baroness, Lady Finlay of Llandaff, gave of how it could interfere with preferences felt in Wales, and no doubt examples could be found in the other devolved Administrations.
More importantly, I, like others, am looking for further information about how this clause is intended to operate. As the noble Lord, Lord Stevenson of Balmacara, asked, what is the plan? Is it the intention that there should be consultation with the devolved Administrations before this power is exercised? If so, what weight will be given to any concerns that they may have? There is no attempt that I can see in the Bill to repeal the paragraph of Schedule 5 to the Scotland Act 1998 to which I referred, so presumably that power is to survive along with the power being given by this clause. To what extent, with regard to purpose and the amount of money involved, is this intended to reproduce within the UK what until now has been forthcoming from the EU? Can we expect the same amount of benefit to be spread among the nations as we have received hitherto? Will the ability of the devolved Administrations to use the powers reserved to them by the provision I quoted be limited in any way when this clause is brought into effect? If so, is that the intention? How are the funds which may be made available to be divided up between the nations? Can we be given any clarity on that point?
I hope that the Minister can shed more light on how this power is intended to operate, but at the moment, from what we have seen so far, it seems to cut across the devolution settlement and to be highly objectionable on that ground.
Baroness Boycott (CB) [V]
My Lords, I tabled Amendment 166, which would amend Clause 48. I thank the noble Baronesses, Lady Jones and Lady Hayman, and the noble Lord, Lord Whitty, for supporting it. As ever, it is a great pleasure to follow the noble and learned Lord, Lord Hope of Craighead.
Clause 48 gives powers to Ministers to provide financial assistance across the UK for a number of purposes, including all economic development and provision of infrastructure. My amendment would set out on the face of the Bill that any financial assistance to be provided must be consistent with the achievement of any applicable climate and environmental goals and targets. As we all now know, we are in the midst of a climate and nature emergency. These powers to provide assistance would be subject to almost no restrictions. The recently published Global Biodiversity Outlook 5 report from the UN highlighted how we have failed to halt environmental decline over the last 10 years, and the 2020 progress report by the Committee on Climate Change says that clear investment priorities to help support economic recovery and the transition to a low-carbon economy are now essential. We need to ensure that financial assistance helps, not hinders, this progress.
My concern is that, if we do not have this amendment, the Government could risk supporting projects, companies or industries that threaten in some way or another to undermine the progress towards meeting our environmental and climate goals. Providing financial assistance for projects that are not consistent with our climate and environmental goals could have major environmental impacts, for instance on roadbuilding, transport and housebuilding. It is also really important that the goals and targets include countries’ respective own targets on net zero—for instance, new targets set under the Environment Bill such as the Welsh recycling targets, which are extremely good.
This is an opportunity to support a progressive domestic climate and environmental policy in all parts of the UK, which is tremendously important ahead of COP 26; Amendment 166 could help achieve this. Indeed, if we do not have an amendment such as this when we turn up in Glasgow this time next year, we could be in a very embarrassing situation. What assurances can the Minister give that these powers will be exercised in a manner that is consistent and compatible with any climate and environmental goals and targets applicable in the relevant parts or part of the UK?
Baroness Jones of Moulsecoomb (GP) [V]
My Lords, it is a real pleasure to support Amendment 166 from the noble Baroness, Lady Boycott, which I have signed along with the noble Lord, Lord Whitty, and the noble Baroness, Lady Hayman. I also, of course, support Amendment 169, tabled by my noble friend Lady Bennett of Manor Castle. These amendments are important because they come back to the crucial question of what the market is for: does the market exist to serve us or do we exist to serve the market?
The noble Baroness, Lady Boycott, used the word “progressive”. We need a progressive agenda. We have to harness and tame the market to make sure that it protects our natural world. The market does not care, and would rather see a woodland turned into logs than exist as a habitat for thousands of species, a sink for carbon, a filter for water, a protector of soils, or the hundreds of other ecosystem services that it provides. In truth, we should be seeing amendments like Amendments 166 and 169 in every single Bill that the Government bring to your Lordships’ House. Their absence is a dereliction of duty by Ministers, not only because we have made promises about the environment, but because we make things worse for everybody when we do not do these things. It is not just about making the market worse; it is society that suffers.
It is a year to the day since the Government announced that the Treasury would conduct a net-zero carbon review following the passage into law of the 2050 net-zero target. This review is still nowhere to be seen. Can the Minister please tell the Committee what has happened to the review, whether it is still happening and, if so, when it will be published?
Lord Whitty (Lab) [V]
My Lords, when the debate on this group of amendments started, it seemed that it would be another round of Westminster versus the devolved Administrations, which is a major theme of the group. Nevertheless, there are other issues.
I added my name to Amendment 166, which the noble Baroness, Lady Boycott, spoke to so ably just now. I also support Amendment 169 in the name of the noble Baroness, Lady Bennett, in principle. Both amendments would correct a glaring omission: the absence of any reference to environmental outcomes in either the Bill and the Government’s earlier statements on a shared prosperity fund or my noble friend Lord Stevenson’s otherwise admirable attempt to set up a shared prosperity commission to administer the framework of financial aid across the four countries of the UK.
In effect, the shared prosperity fund concept is a sort of replacement for the EU’s structural funds and regional funds—probably other funding too—which have hitherto been provided back to the UK by the European Union, largely to level up economic and social well-being and performance across Europe. In principle, I like the concept of such a fund or a commission, which may well be a better home for the administration of that framework than the office for the internal market within the CMA, but I must confess to your Lordships that I do not like the term. I racked my brains as to why. I think that it is somehow a bit redolent of the euphemistic terminology of the Soviet era or, perhaps even more worryingly, of imperial Japanese militarily dominated eastern Asia during the time of the co-prosperity zone in the 1930s and during the war. Neither of those historical examples were ever cited by Brexiteers as preferable to the supposed centralisation by Brussels. If that rings alarm bells for me, no wonder it does for the devolved Administrations. Whatever we do, can we perhaps set up a body such as the one proposed by my noble friend Lord Stevenson, but find a better title?
More substantively, if the UK is to distribute aid to business and others to replace and improve on the benefits of the money that we previously received from the EU—which, quite rightly, disproportionately benefited the devolved nations of the UK and deprived areas in England—we need some objective criteria, constraints and rules surrounding that allocation. We also need an institution along the lines proposed by my noble friend Lord Stevenson. His amendment lists a lot of economic and social criteria that such an award of funds would have to take into account, but there are no environmental criteria.
As Amendment 166 in the name of the noble Baroness, Lady Boycott, indicates, the biggest crisis facing us all is the climate emergency. Our international obligations under the Paris Agreement and national commitments under the budget of the Committee on Climate Change surely mean that future state aid of any sort must advance progress on mitigation of and adaptation to climate change, and certainly not lead to effects that undermine our carbon and greenhouse gas targets or make worse the outcome of our industrial system. To that degree, it needs to be an improvement on the operation of some EU funding to sectors and projects that even I, as a passionate pro-European, recognise were not always done well in the EU—that is, some projects, particularly in eastern Europe, undoubtedly damaged the environmental prospects for Europe as a whole, particularly by favouring the substantial further use of fossil fuels.
It is therefore important that any such criteria are written into the terms of the proposed shared prosperity fund, and the commission must reflect those environmental aims. Indeed, any proposition for state aid subsidy, preferred public sector procurement treatment or clearance for planning permission, whether by the UK Government, a devolved Administration, local government or a quango, needs to have attached to it a clear environmental assessment of the impact on the climate, particularly regarding greenhouse gas emissions.
The noble Baroness, Lady Bennett, takes it further than the carbon figures to cover other environmental dimensions, particularly the protection and enhancement of the natural world. Some of what she refers to may be more difficult to measure than greenhouse gas effects, but in reality, if subsidised projects lead to a deterioration in biodiversity and habitats, as did some European projects under the common agricultural policy, that is a contribution to environmental degradation and in many instances leads directly to increases in carbon, methane and other greenhouse gas effects. We should adopt the concepts in these two amendments before we move any further towards something like the shared prosperity system proposed by the Government.
The negative effects of some government subsidy need to be discouraged by the criteria, but positive investment—in renewable energy and other carbon-saving outcomes, for example—needs to be sustained through this system and written into it. The noble and learned Lord, Lord Thomas, was right to say that Clause 48 in its present form should be deleted, but if we are to provide a substitute it has to be an improvement, and an improvement on my noble friend’s amendment—it has to be greener.
Baroness Hayman of Ullock (Lab)
My Lords, I speak in support of Amendment 166, in the name of the noble Baroness, Lady Boycott. It is an honour to follow her, along with the noble Baroness, Lady Jones, and my noble friend Lord Whitty. I also support Amendment 167, in the name of my noble friend Lord Stevenson of Balmacara, and its inclusion of the impact of climate change—particularly flooding. That is an issue close to my heart, living as I do near Cockermouth in Cumbria, which has suffered such devastating flooding over the past 10 years.
As we heard today, and in last week’s debate, Part 6 does not rule out working through the devolved Administrations, but—and this needs repeating—sets no requirements to do so, and enables Ministers to spend money directly in otherwise devolved policy areas.
Right across the world it has been recognised that we have to combat global warming and restore biodiversity. It has been agreed that the next round of European structural funds will have tackling climate change and addressing the just transition as a major theme. In May of last year, Parliament recognised, on the Floor of the other place, that we are in a climate and environment emergency. Last week, in his response to Amendment 52, the Minister said that
“the protection of the environment and tackling climate change are vitally important, and something that the Government are, of course, already committed to.”—[Official Report, 28/10/20; col. 339.]
If the Government are serious about achieving this aim, they need to ensure that where direct financial assistance is given it is consistent with these climate and environmental goals. We need to commit to environmentally sustainable, transparent legislation and policies, and apply them to any future trade deals and relationships, if we are to have any hope of tackling climate change. Whatever the formal future relationship between the UK, its constituent nations and the EU, it is vital that we maintain close environmental co-operation and do not risk undermining it through poorly thought-out legislation. As the noble Baroness, Lady Boycott, explained, Amendment 166 could avoid funding being provided for projects that are not compatible with climate and environmental targets and could undermine these goals.
Funding to support the environment needs to be secure as we leave the EU, because we will lose access to so much. I will give a couple of examples that have not yet been mentioned. The EU LIFE programme for environment and climate action has €3.4 billion to support, among other policies, the special conservation areas in the Natura network. The EU maritime and fisheries fund is a €6.4 billion programme, more than a quarter of which supports projects protecting marine environments, developing sustainable fisheries, and supporting the scientific and data-collection aspects of fisheries management. The concept of sustainability involves operating in a way that takes full account of an organisation’s impacts on the planet, its people and its future. That includes how Government operate and the decisions they take. Amendment 166 will help us to secure this for the future.
Baroness Humphreys (LD) [V]
My Lords, I oppose the Question that Clause 48 stand part of the Bill. I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, for introducing this part of the debate so clearly. We have heard assurance after assurance from Ministers that the Bill does nothing to take powers away from the devolved Parliaments, but the inclusion of Clause 48 certainly belies their assertions.
This clause, were it to stand, would mean that powers would be returned from the EU to the UK Government to spend on areas such as economic development, infrastructure, sport and education, and will therefore give Whitehall the powers to fund projects to replace EU funding programmes in areas that are devolved to the Welsh Government. But these powers are wider than those in the EU funding programme. The EU structural funds have never funded health, housing or education, and the inclusion of this clause on financial assistance has given cause for concern. It gives rise to a number of questions, to which I hope the Minister will respond.
Our building regulations, and fire and energy safety standards are different in Wales. If the UK Government choose to fund our housing associations to build more social housing, which regulations and standards would apply? As the noble Baroness, Lady Finlay, has said, there are no academies or free schools in Wales; the Welsh Government have rejected their implementation. Clause 48 would allow the UK Government to fund education projects in Wales. Does this mean that the UK Government would march in, with no consultation, and build these schools in Wales?
The intention of the UK Government to implement the M4 relief road scheme is provocative, to say the least. It is an issue the Senedd has examined and debated in detail. It made the decision to reject the scheme on the grounds of cost and impact on the environment, and to develop plans for another route. It is an arrogance that the UK Government feel they can overthrow its decision.
The UK Government fail to understand that they have no mandate to operate in these areas in Wales. In this House, we are expected to honour the manifesto commitments made by the Government in a general election and not to vote against them. In Wales, at the last Assembly elections, the people of Wales gave the Welsh Government a mandate based on their manifesto commitments. What right do the UK Government have to act against the expressed wishes of the people of Wales? For years, we have been clamouring in Wales for the UK Government to invest in projects that they have responsibility for—in our railways and the development of tidal energy, for example. I suggest that that would be a good starting point.
Wales has been eligible for £375 million a year from EU funds for almost 20 years. The management of these schemes has always been shared between the EU and the Welsh Government. The guidelines and parameters have always been clear, and the principles of co-operation and consensus have always been evident.
Now that EU funding is coming to an end, we need clarity on its replacement. The time has come for this Minister to give this House details of the proposed replacement through the shared prosperity fund. Up until now, the UK Government have failed to explain how that fund would operate and what role the devolved Governments would have in spending decisions made under it. Will the Minister do that today?
Many speakers, from all four nations of the UK, have spoken against this Bill’s attempts to undermine our devolution settlements. At Second Reading and in debates on this and other amendments, we have heard the same calls. I hope that the Minister and, through her, the Government, are beginning to understand that, after 20 years, the devolution genie cannot be put back in the bottle. I know that to this Prime Minister and his Government a bullish determination to win at all costs is important, but we have to find ways of working with and not against each other and to find solutions to our problems together. Clause 48 is a perfect example of the Government attempting to grab the devolution genie and force it, feet first, back into the bottle. Sadly, such an attitude does nothing but provide further ammunition to those who would favour the break-up of the United Kingdom.
Lord Dunlop (Con) [V]
My Lords, it is a pleasure to follow the noble Baroness, Lady Humphreys, and to participate in the debate on Clause 48 and the financial assistance power in the Bill. I want to offer a further Scottish perspective.
I welcome the intent of Clause 48. The UK Government should be able to invest in all parts of the UK on initiatives that support and strengthen the union. I also recognise the anxiety that, if such an ability did not exist, the danger is that the UK dimension in devolved nations would become squeezed out or diminished as a relevant part of the lives of people for whom Scotland is home. So, as ever, the question with the Bill is, for me, not about its aims but about the best way in which to achieve them.
Let us not forget that, as the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Bruce, pointed out, the UK Government already invest in areas which, strictly speaking, fall within areas of devolved competence. For example, in government I was a very active proponent of the UK Government investing in both a comprehensive network of city and growth deals across Scotland and Scottish cultural assets important to our shared British heritage. The then Chancellor, George Osborne, was persuaded to open the Treasury’s cheque book and the Scottish Government were persuaded to come on board and invest alongside.
Today, the UK Government are investing £1.5 billion in UK city and growth deals in Scotland, with the Scottish Government co-investing a similar amount. The wide range of Scottish cultural institutions supported by UK Government cash includes the Glasgow School of Art, the Burrell Collection, V&A Dundee and a new Edinburgh concert hall. Of course, the UK Government do not get the credit they deserve for these investments, but in my view that is because there has been a tendency to “fund and forget”, just as successive Governments have over the years slipped into a habit of “devolve and forget”.
Clause 48 is a widely drawn power. It has caught many, including the devolved Administrations, by surprise. The internal market White Paper said that the Government would
“consider which spending powers it needs to enhance the UK internal market”.
However, the power in the Bill permits a potentially broader incursion into areas of devolved competence, including, as we have heard, health, housing, education, prisons and sport, and certainly beyond what is strictly necessary to support the internal market. The Government have provided very little detail on how they intend the power to be used. Like others, I hope that my noble friend, when she responds, will fill in some of the missing detail.
It may be that what the Government have in mind is, as the noble Lord, Lord Stevenson, and others have surmised, to replicate, through the UK shared prosperity fund and other initiatives, the range of EU funds that will disappear at the end of the transition period—funds in which the devolved Administrations are of course involved now in deciding how resources are allocated in their areas. The lack of clarity is problematic because the scope for misunderstandings becomes greater. Uncertainty creates a breeding ground for suspicions and scare stories, with predictable but no less unhelpful, consequences.
A month ago, the UK Government announced the union connectivity review to be chaired by Sir Peter Hendy, the chair of Network Rail. In my view, this is an excellent initiative to bring communities across the UK closer together and to support the levelling-up agenda. It is just the sort of initiative the UK Government should be promoting and leading. In response, the Scottish Government have refused to co-operate and taken away their ball. Their response is profoundly unhelpful and not, I would suggest, an example of how to look after the best interests of people in Scotland, so I very much hope the Scottish Government will reconsider their stance. However, while I do not condone in any way the behaviour of the Scottish Government, I cannot help but wonder if their unco-operative approach to the Hendy review might have been avoided if the Government had adopted a more consultative and collaborative approach to the financial assistance power in this Bill.
In fleshing out how the power will be exercised in practice, I hope that Ministers will be guided by three important considerations, which, if addressed properly, will help to ensure that this financial assistance power does not inadvertently destabilise devolution itself. First, on additionality—and here I apologise for getting a bit technical—the block grant allocations for the devolved nations are worked out by reference to a population share of any change to Whitehall departments’ expenditure limits adjusted by a comparability factor, depending on the extent to which a policy area is or is not devolved. So, for example, the comparability factor for education and justice is 100%, for health it is 99.4% and for transport it is 91%. If the power in the Bill is not to undermine the existing funding arrangements, the financial assistance provided by it should be additional to the normal block grant allocations. Can my noble friend explain what effect directly spending more at a UK level in areas of devolved competence will have on the block grant comparability factors, and thus for the devolved Administrations’ budgets?
Secondly, on financial accountability, a core purpose of the Scotland Act 2016, and the fiscal framework that accompanied it, was to make the Scottish Government more financially accountable by making them responsible for raising a significant proportion of the money they spend. The Scottish Government should rightly be held accountable by people in Scotland for the policy choices they make—good and bad. Therefore, the wide scope of the Clause 48 power really does matter and should matter to the Government, too. It should most certainly matter to the Treasury, which will have to fund it. If democratic accountability in Scotland is to flourish in the years ahead, it is important that the allocation of responsibilities between the UK and Scottish Governments is clear and better understood. I suggest to Ministers that, in exercising the financial assistance power in the Bill, they will need to take care not to blur the lines of accountability in a way that lets the Scottish Government off the hook.
Thirdly, on co-operation, if the power in the Bill is to be fully effective, it will be important for the UK Government to work in partnership, not conflict, with the devolved Administrations and representatives of local communities throughout the devolved nations. It would be a retrograde step indeed if Ministers sought to substitute local priorities with the priorities of the centre, uninformed by local views. In my experience, the maxim “The man in Whitehall knows best” is never a popular one, and certainly will not cut much ice in Scotland.
There is one very good practical reason for involving the devolved Administrations in how the power is exercised: many of the delivery mechanisms are ultimately in their hands, from the planning system through to the agencies that have the responsibility for managing and improving, for example, local transport networks. Therefore, I would commend to your Lordships the Constitution Committee’s report on the Bill, which concluded that:
“to ensure practical cooperation around the use of the power, the Bill should be amended to include a requirement that ministers, in exercising their power to spend directly in devolved areas, consult with the relevant devolved administration.”
I want to make a broader point. In a week’s time, we will complete Committee Stage. I sense that the mood of the House is to make changes to the internal market aspects of the Bill, not in order to frustrate it, but in a genuinely constructive bid to advance its aims in a way sensitive to devolution. I suspect the votes will be there at Report to make those changes. Ideally, I hope that, prior to Report, the Government Front Bench will play an active and willing role in working with all parts of the House to improve the Bill. But if Ministers in this House do not have the latitude to respond substantively to suggested improvements, I would ask the Government to consider when the Bill returns to the Commons this simple point: the health of our union is, and always should be, a constitutional issue to be carried forward on a cross-party basis.
As we heard earlier from my noble friend Lord Cormack, in 2021 the union may face some very choppy waters. It will be important that, as we navigate those choppy waters, the Unionist parties in Parliament are able, on this issue at least, to present a united front. For that reason, I hope the Government will think long and hard before overturning in the Commons, on the back of Conservative votes alone, any sensible changes to bring about a better reconciliation within the Bill of the twin aims of UK free trade and respect for devolution. After all, just because you can do something does not mean you should.
Lord German (LD)
It is a pleasure to follow the noble Lord, Lord Dunlop, and to echo many of the points he has just made, caution being one of them and care for the union another. I want to illustrate some of his points in what I have to say. I must declare my interest: I am Welsh and I live in a recipient area of huge amounts of European funding.
This part of the Bill is definitely a bolt-on: it has nothing to do with the operation of the internal market or with the four countries being able to trade freely together. This is about the replacement money for the EU funds—how it will be spent and by whom. Fortunately, I asked a question of the Minister in this very Chamber a few months ago about the European money that came to Wales. I was given a guarantee, which I am hopeful the Minister will repeat today, that the people of Wales will get, pound for pound, what the European funds gave them. That was the guarantee given in this Chamber by the Minister. If he wants to check, I can refer him to the relevant Hansard. The point I am making is this. It was not a question of the receipt of the money: I am pleased to bank the £2.2 billion that the European funds have given to the people of Mid and West Wales—that is two million people—over the last six years, but I am worried about how that money will be spent and what effects it will have. Effectively, this part of the Bill puts the cart before the horse. We have to agree a whole set of rules which cross devolved boundaries in ways we can only guess at, and nowhere are we given clear answers to fundamental questions about upholding and respecting the devolution settlements in the UK.
The implication in this part of the Bill is that it will have no impact on the functioning of the Barnett formula or on additionality, referred to by the noble Lord, Lord Dunlop. However, that is only an implication. Will the Minister give us today the answer to that fundamental question: will it have no impact on the normal functioning of the Barnett formula?
There has been no problem thus far with the UK Government seeking to spend money in Wales, in collaboration with the Welsh Government. Long may it continue, and I will encourage the Government. However, the key word is collaboration. Now, we are being asked to approve a law so broadly drawn that it will have a coach-and-horses effect on the powers of devolved Governments. I have to say to the Government that if it is not done collaboratively, spend does not necessarily mean approval. Approval will not automatically be given when the legal framework is in the hands of the devolved Governments. Factors such as planning approval, environmental impact assessments and curriculum development legislation all have a bearing here.
The Explanatory Memorandum implies that the UK Government will determine what moneys are available and how they are spent. The Welsh Government have had major control over the design and implementation of EU structural funds spent in Wales. For a few years, I had that responsibility in the Welsh Government. It is different, of course, for the smaller cross-EU programmes such as Erasmus and Lifelong Learning, which includes Comenius for school exchanges. These programmes were centrally designed but nevertheless locally administered.
Baroness McIntosh of Pickering (Con) [V]
My Lords, it is a pleasure to follow the noble Lord, Lord German. I would like to build on some of his questions, particularly the question of who administers the funds, especially in relation to regions and local authorities in England.
I am grateful to the noble Lord, Lord Stevenson, for his Amendment 132 and for the chance to debate Clause 48 stand part. The noble Lords, Lord German and Lord Stevenson, and a number of others, asked about the situation going forward in respect of the Barnett formula. Is it the Government’s intention that that will remain in place, or is it the implication of this part of the Bill that the formula will be replaced by a new shared prosperity fund on the criteria that we are currently debating here?
My main concern as someone living in England, albeit of Scottish descent, is about the shared prosperity fund. Who will administer it and to whom will applications be made? How will a balance be reached between rural and urban areas? I declare an interest as a former MP in North Yorkshire for 18 years. I was delighted by the announcement in February this year that £6 million of funding has been allocated for a rural connectivity project in North Yorkshire with the specific task of helping to unlock the rural economy’s potential. It will be to the benefit of farmers and rural communities to support superfast mobile connectivity and rural broadband generally.
Looking at Clause 48(2) as it currently stands, however, rural broadband or broadband and mobile connectivity simply do not appear. Does that mean that, whichever nation or local authority or region you live in, once this shared prosperity fund comes into effect, these funds will disappear? Funds that have only just been allocated this year, presumably, under the existing European Regional Development Fund, will run their course. Is my understanding correct that the omission in the Bill of connectivity—either rural or urban, in whichever nation or region we happen to live in—means that it has been dropped from the shared prosperity fund? I will be interested to know and understand why, in particular, infrastructure has been limited in Clause 48(2) to,
“water, electricity, gas, telecommunications, sewerage or other services (for example, the provision of heat) … railway facilities (including rolling stock), roads or other transport facilities”.
It goes on over the page. I am severely disappointed—I am sure that others living in rural areas will feel the same way—that rural connectivity is being overlooked. It is not acceptable in this day and age that special provision is not being made for rural areas. The 5% who are the hardest to reach are being overlooked. I understand that the Scottish Government have given very generously to rural businesses in this regard, to their benefit and that of English customers who are buying from them.
I want to repeat a question posed by a number of other noble Lords: what is happening with regard to match funding? Will it continue to be required as it was under the ERDF and the European structural funds? How will economic development be administered? Is it going to be the case that local authorities such as North Yorkshire, Ryedale District Council, Hambleton District Council, Harrogate District Council or York City Council will have to go cap in hand to the Government? At this stage, it will be interesting to have more flesh on the bones of Clause 48. Who will determine what the balance is to be in applications from rural and from urban areas?
On the much-vaunted policy of the levelling-up agenda set out so effectively in the Government’s manifesto and to which they promised to commit themselves during the life of this Parliament, and which I entirely support, what role will the shared prosperity fund have in levelling up the regions and local authorities?
I want to end on this note. The noble Lord, Lord Stevenson, referred to the ERDF and structural funds having regard to levels of deprivation. It is not generally understood that rural areas have pockets of deprivation that are every bit as bad as those which are generally better known and recognised in urban areas. With these few remarks, I look forward to the answers from my noble friend.
Baroness Randerson (LD) [V]
My Lords, this is a very important group of amendments because they deal with another recentralising measure in this Bill; that is, powers for the UK Government to spend money on wholly devolved areas of competence. Let us remember that power without spending power is hollow. At the least, this is a petty pot-shot at the devolved Administrations, while at the worst, it will lead to a direct conflict of policies and a huge waste of taxpayers’ money.
Let me give a hypothetical example on environmental spending. You could have the Welsh Government subsidising wind farms and the UK Government paying to close them down. Before anyone scoffs at that idea, in relatively recent years the Conservatives in Wales have campaigned against wind farms. In the best case scenario, it will lead to disjointed rather than joined-up policymaking.
The list of specified policy areas goes well beyond the usual devolved areas, so this is clearly a naked power grab. However, all of this is unnecessary because the UK Government can and do spend money on the devolved areas, but they do so in partnership with the devolved Administrations. City deals are a prime example of this successful approach. In these deals, the UK Government will set out pretty stiff conditions for additional funding. They do not simply hand over the cash. If we take the example of higher education, universities in Wales and Scotland receive funding from UK research funds, and here I declare an interest as chancellor of the University of Cardiff.
If the Government feel that they are not getting full recognition for their funding, they should take a leaf out of the EU’s book and put a badge on it. As the noble Lord, Lord Dunlop, said in his truly excellent speech, they should not just fund and forget. In 2012 in the Wales Office, we recognised that the Welsh Government did not have enough capital funding for the significant infrastructure improvements that were needed if Wales was to compete economically. We gave the devolved Administration additional borrowing powers and we worked with the Welsh Government to agree a shared programme of funding for, for instance, the South Wales Metro. We worked with the grain of their views, but we still set the framework. Now I hear that the UK Government are threatening to build the M4 relief road, which the Welsh Government and local people have rejected.
Looking back to the days prior to devolution in Wales, there used to be huge rows about the smallest details of how social and economic support from the EU should be spent. Often, rather foolish decisions would be made by central Government, which were basically too remote from the areas concerned. The proposals in this Bill threaten a return to that centralised, counterproductive approach.
Lord Judd (Lab) [V]
My Lords, I shall not now speak to the group starting with Amendment 134, in the name of the noble Baroness, Lady McIntosh of Pickering. As this debate went forward, I came to realise that I can perfectly adequately cover what I want to say in that context in this group.
At several points in this evening’s debate, I have been struck by the measured and telling way in which the noble and learned Lord, Lord Thomas, has said that he believes that the Bill is undemocratic. It is certainly undemocratic in the arrangements for the even distribution of resources. I do not want to become a Jeremiah; I would rather leave that role to the noble Lord, Lord Cormack. However, as someone who is half-Scottish and half-Welsh and closely identifies with both families, who has northern Irish blood, and whose wife has Welsh blood, I see disturbing trouble ahead unless we get the spirit of what we are doing right.
The key to that is to recognise that what happens in the future must belong to the people of Northern Ireland, Wales, Scotland and England. Even in the context of this debate, in an excellent speech, the noble Lord, Lord Dunlop, referred to partnership. I am not sure that partnership is an adequate description; it must be a completely common approach, in which all parties are on an equal footing.
We are rather good in this House—no less than anywhere else—at talking with utter conviction about the priorities that must be faced in political and social policy, and then failing to make consensus on the detailed policy before us. My noble friend Lady Hayman of Ullock made that point about the environment very well indeed.
If the Bill is basically undemocratic, Amendment 167 in the name of my noble friend Lord Stevenson, is highly relevant. I am very glad that he has brought into it one of the big preoccupations of this House and the other place: poverty and child poverty. He has made it central to what we are doing.
I also commend the noble Baroness, Lady Boycott, for bringing up the environment and climate change so seriously. Climate change is going to dwarf everything else that we are dealing with as it moves forward. We must not only speak about it and make dealing with it an aspiration; we have to make it central to everything that we do in mainstream policy and legislation. If this is not mainstream legislation, then I do not know what is. Therefore, it is crucial that climate change comes on board as well.
I was very glad to see the amendment in the name of the noble Baroness, Lady Bennett of Manor Castle, because obviously we want policies in the interests of the people in all four parts of the United Kingdom: Scotland, Wales, Northern Ireland and England. We want long-term policies which are sustainable and tackle climate change and the nature emergency. We have a major nature emergency at the moment, not least in the sphere of biodiversity. We need all those things, and I am glad to see that amendment there to keep our eye on the ball and our feet on the ground as we move forward, not just with a constitutional arrangement but with an arrangement that will be viable because it really belongs to all the people of the United Kingdom and deals with crucial issues that will make all our tactical politics seem pretty trifling by comparison.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I thank those who assisted me in getting the chance to speak after the accidental omission of my name from the original list. It is a pleasure to follow the noble Lord, Lord Judd, and welcome his front and centring of the climate emergency and nature crisis. I thank the noble Lord for his expression of support for Amendment 169 in my name. I also thank the noble Lord, Lord Whitty, for his expression of support.
Before I get to that, I wish to briefly speak in support of Amendments 132, 167 and 168 in the name of the noble Lord, Lord Stevenson of Balmacara. It is notable that in the EU there are rules about the funds allocated for the alleviation of poverty and inequality—something that has been entirely lacking from UK practice and procedure, under which the Government have been able to direct money for electoral advantage without rules or oversight. The Americans have a word for that, “pork-barrelling”, and the practice is as unattractive as the metaphor.
I share the concerns expressed by other noble Lords speaking in this group about devolution issues, which other amendments seek to address, but as I have addressed those in other speeches I now speak chiefly to Amendment 169. It seeks to ensure that those who receive financial assistance, provided under the provisions of the internal market, can receive it only if a climate and nature emergency impact statement is undertaken first. This would ensure public money is granted only to development consistent with net climate, nature and environmental targets.
Amendment 169, and my argument for it, build on the comments of my noble friend Lady Jones of Moulsecoomb on the previous group, who reflected on the damage done by massive and continuing fossil fuel subsidies. As others have noted, my amendment has much in common with Amendment 166 in the name of the noble Baroness, Lady Boycott, to which my noble friend has already spoken, but my amendment extends further, calling for a detailed mechanism for each project, rather than the overview included in Amendment 166.
I must remind the Committee, as the noble Baroness, Lady Boycott, did, that the UK is the chair of the COP 26 climate talks. We have a responsibility to be the world leader the Government often proclaim they want to be. Green finance is an issue of great interest to a wide range of international bodies and commercial organisations. All new and continuing financial schemes, whatever their sources, have to be green, given the urgency of our climate emergency and nature crisis.
I note that on 25 June, the Committee on Climate Change made a progress report to Parliament, although we are yet to hear the Government’s response. The report showed how far our current policies are from meeting our existing commitments and the future, larger commitments we must surely make to live up to our enhanced ambition, beyond that of Paris 2015—something we have recently seen China taking a clear global leadership role in.
I refer to an Answer I received today from the noble Lord, Lord Callanan, to a Written Question on the green homes fund. I asked whether the programme would be extended and the funding enhanced. In his Answer, the noble Lord helpfully told me that £65 billion of investment will be needed for housing retrofit across the 2020s—£65 billion in nine years versus £2 billion of current funding. We clearly need to see some of the funding covered by this Bill directed towards this area, not nature-destroying, planet-trashing options.
Since the Government are very keen to look at league tables for education, we might look at two published in the last fortnight on the environment. One showed per capita contribution to plastic waste production. In this, we are, unfortunately, world-leading. We are second behind the United States on this plastic-choked planet—a huge and terrible responsibility. We have to use regulatory tools and funding to promote ways of cutting back on this. Secondly, the European Environment Agency reported that the UK has the third-greatest proportion of marine and land areas in bad conservation status; we are close behind Belgium and Denmark. More than 70% of our habitats
“exhibit overwhelmingly bad conservation status.”
Again, we must not only make sure we do not fund further damage but, as a matter of extreme urgency, direct funding in ways that start to repair the centuries of damage that has been turbocharged by our economic structure in recent decades.
These are not abstract, environmental, “nice to have” issues. They are about human survival. I ask your Lordships to think about the people of Nicaragua and Honduras seeking shelter and safety. To quote an NBC headline:
“Eta forecast to make landfall as a Category 4 hurricane, a rare occurrence in November.”
If noble Lords think that is an odd name for a hurricane, we are using the Greek alphabet now, because the normal alphabet has been exhausted this year.
The Committee might think about the people living now in low-lying areas around the world, including in the UK—we had a reference to flooding earlier. There have been reports from the Arctic of the failure of sea ice to form by the end of last month. That month broke the record for the lowest extent of sea ice in October. Its extent was more than 1.5 million square miles less than the 1980s average. That is an area larger than India, if noble Lords can envisage that.
Lord Purvis of Tweed (LD)
My Lords, I will focus on whether Clause 48 should stand part, as my noble friends have done on this group. In so doing, I shall comment on the contributions. I agree with my noble friend Lady Randerson, who said that the contribution of the noble Lord, Lord Dunlop, was very important. I hope that the Government Front Bench was listening very carefully to that contribution. I see the Minister nodding, and that is very positive.
I looked again at the Explanatory Notes for Clause 48. It is quite telling that the Government are seeking financial assistance powers. I wondered for whom. The Explanatory Notes state that the power to provide financial assistance enables
“the UK Government to provide funding to local authorities, sectoral organisations, community groups, educational institutions and other bodies and persons in order to support and promote these policy areas across the UK.”
It is very telling that there is no mention of the devolved Administrations. It is fairly obvious that the Government’s intention is to have powers which effectively go over the devolved competencies of the nations, because in many respects the areas that had European structural funds are within the devolved competences. As the noble Lord, Lord Dunlop, and others indicated, there is no mention in the Bill of concurrent or shared expenditure, or of supporting joint policy initiatives. This is against the thrust of what we have had over the past 20 years with devolution.
This is not purely about devolution, because this affects developments within England too, such as growth deals and city partnerships. This expenditure will go beyond the structures that have already been agreed, and in many respects all those aspects have been included in the multiannual financial frameworks of the European structural funds. So it right to ask: what is the purpose of this? If this is the mechanism through which the shared prosperity fund will be delivered, why is there no reference to the shared prosperity fund? Why is the scope of the legislation far beyond what the Government said in their 2019 manifesto about a national skills fund? Why is there no reference to the delivery mechanisms that the Government have indicated should be in place for the shared prosperity fund? Or does the legislation seek to go beyond the shared prosperity fund? There is no statement in the Explanatory Note and there is no framework in the legislation for how that expenditure will be committed.
The sums are huge, as was mentioned by the noble Lord, Lord Stevenson, who I am glad introduced this group. I rely on the House of Commons briefing paper from September this year to give the figures. In 2018, public and private sector organisations in the UK received £5.9 billion from the EU, through various channels. On top of that, we received £4.4 billion for UK projects on infrastructure, some supporting the growth of employment, from the European Investment Bank. That is included within this clause of the legislation, but we know that UK support from the European Investment Bank will no longer be available, so what is the source of this expenditure to support infrastructure investment? How will infrastructure investment from loans or grants be delivered?
As the noble Lord, Lord Dunlop, and other noble Lords have said, to date, most expenditure has been allocated to member states and then managed through our devolved Administrations, regional partnerships or local authorities. Until this point, 76% of all European investment has been allocated, first, to the member state to manage—and then it has gone through our existing frameworks. If there is to be a new system to deliver that level of expenditure, separate from our existing delivery and accountability mechanisms, the Government need to say so.
Until now, in the multiannual financial framework 2014-20, the UK partnership agreement gave granular detail—it is a 373-page document—for all projects and where they are, with a chapter for UK-wide expenditure, and chapters for England, Wales, Scotland, Northern Ireland and Gibraltar. Interestingly, Gibraltar is included in this, but there is no reference in the scope of the legislation to providing financial assistance to Gibraltar, so the poor Gibraltarians have been completely dropped off the ability to support.
In their manifesto, the Government said about the shared prosperity fund:
“We will consult widely on the design of the fund, including with the devolved administrations, local authorities, businesses and public bodies.”
It was to be finalised after the comprehensive spending review. That has been delayed, for understandable reasons, but can the Minister state when the conclusion of the design of the fund will be published? If the shared prosperity fund is to be in place from April 2021, as the Government said in their 2019 manifesto, it leaves little time for our public bodies, which will be managing it, to operate. If it is not the intention of the Government for our public bodies to administer it, what central government structures will be in place to administer this fund? Why does this legislation have some areas that go beyond what the Conservative manifesto said, which was that it would be spent on skills?
Secondly, as was referenced by the noble Lord, Lord Dunlop, how do the intended powers of this legislation impact on the statement of funding policy? The statement of funding policy is the core document on financial relationships. It has population proportions expenditure and comparability factors, and it is applied to all spending and spending rounds. How does this power interact with the statement of funding policy? Will it be over the top of regional strategies? How will it be accounted for in the recipient public bodies? If it is to go to local authorities, how will it impact their accounting? If it goes directly to local authorities, how will it go to those areas?
I close with a tangible example. We heard references from colleagues from Wales and across England. I live in the Scottish Borders which, using the NUTS2 areas, has the lowest GVA per head in the United Kingdom, at 59.3% of the UK average. Outer London has 67.9% of the UK average. Under the Government’s current proposals, an area such as the Scottish Borders will not be eligible for this kind of support. Will the Government ensure that this funding is aligned to not only devolved but local authority strategies? Will it be aligned with the state aid maps? This separate approach will be beneficial for our country only if it is consistent with and supports our existing policies and strategies, at a local, regional and national level.
Baroness Penn (Con)
My Lords, this Government are determined to deliver on the commitments upon which they were elected: levelling up the whole United Kingdom, delivering prosperity for all citizens and strengthening the ties that bind our union together. Part 6 of the Bill helps to achieve this. This power to provide financial assistance will enable spending in the areas of infrastructure, economic development, culture and sport. It will also support educational and training activities, and exchanges within the UK and internationally. Previously, as noble Lords have noted, much of this was done at the EU level.
I reassure the noble Lord, Lord Bruce, the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Finlay, among others, that over the course of discussion and debate on this Bill, throughout Parliament and beyond, the Government have repeated our intention to work with the devolved Administrations. This power, in addition to existing powers, will allow the UK Government to complement and strengthen the support given to citizens in Scotland, Northern Ireland and Wales, without taking away devolved Administrations’ responsibilities.
As noble Lords have noted, the response to Covid has shown how the UK Government, alongside important co-operation with the devolved Administrations, can save jobs and support communities. This could only have been delivered strategically and at that scale by the UK Government. This power will ensure that we can invest UK taxpayers’ money nationwide on UK priorities as we leave the transition period, as well as supporting people and businesses across the UK to recover from Covid.
The UK Government are uniquely positioned to level up across every part of the UK, ensuring that the entire country can feel the benefit of increased trade, improved business conditions and a truly global economy. The power to provide financial assistance will facilitate this. Noble Lords will know that these aims support the Government’s manifesto commitments to strengthen the union, level up the country and match the current levels of EU structural funding in each nation through a UK-wide replacement programme—the UK shared prosperity fund. That is why I commend this clause to stand part of the Bill.
I will now discuss Amendments 167, 168 and 132. Collectively, they seek to remove the power to provide financial assistance in Part 6 of the Bill and replace it with provisions for the operation of a UK shared prosperity commission, detailed in a proposed new schedule. Let me begin by emphasising that the power to provide financial assistance in Part 6 would operate UK-wide to support a variety of purposes. This includes economic development but is not limited to it. It is therefore wider than any single fund or organisation. I say this in response to the question of the noble Lord, Lord Purvis, about the purposes of the power.
The effect of these amendments would be that the Bill would not confer on the UK Government the power to provide financial assistance UK-wide for infrastructure, economic development, culture or sport, or to support educational and training activities and exchanges within the UK and internationally. Although the UK Government have some existing powers to spend across the whole UK, the power we are taking now creates a unified power that operates consistently UK-wide, to deliver investment more flexibly, dynamically and in partnership with the devolved Administrations and other partners. Part 6 will make sure that the UK Government are well positioned to deliver investments following the end of the transition period, and to meet their commitment to replace EU structural funds.
I understand that the noble Lord, Lord Stevenson, tabled his amendment to probe the Government’s plans on this and I hope to be able to provide some answers. On the level of funding, the Government committed in their manifesto to maintaining, as I already said, at a minimum the existing levels of investment across all four nations from the EU structural funds. The noble Lord is correct that this was based not on Barnett but on an EU formula. In future, the UK can ensure that funding reflects the needs of the UK, not the 27 other member states, as this work is taken forwards. He is also correct that there are a number of ways in which this funding could be done but, if I may reassure noble Lords about the purpose of the funding, the Government have been clear on their aim: to tackle inequality and deprivation, and level up across the United Kingdom.
On timing, the noble Lord, Lord Stevenson, is right that to prioritise the response to Covid-19 and focus on supporting jobs, the multi-year spending review has been postponed. But he is also correct that we have some time, as EU funds are still being provided. Our aim is to ensure a smooth transition from current EU structural funds to the UK shared prosperity fund.
The Deputy Chairman of Committees (Baroness Morris of Bolton) (Con)
My Lords, I have received one request to speak after the Minister, so I now call the noble Lord, Lord Bruce of Bennachie.
Lord Bruce of Bennachie (LD) [V]
Does the Minister not agree that shared prosperity requires an attitude of sharing—in other words, for the Government to talk with, not at, the devolved Administrations? Are they listening to Douglas Ross, the Conservative leader in Scotland, who says that the Government are completely failing to promote the benefits of the union to the people of Scotland and, indeed, that their attitude is alienating people? Will the Government recognise that, whatever the commitment behind what they are trying to do, the approach is counterproductive and deeply damaging?
Baroness Penn (Con)
My Lords, all I can say to the noble Lord is that the attitude and approach of this Government is one where we intend to work in partnership both with the devolved Administrations and with local communities to ensure that these new powers are used to the best effect and that the UK’s shared prosperity fund supports citizens across the United Kingdom.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I thank all those who have contributed to this wide-ranging debate, which was conducted throughout at a very high level indeed with respect to the very important issues that we had in front of us. I am grateful to the Minister for her quick-fire response. She covered a lot of ground; I will have to read Hansard carefully to be sure that I picked up all her points.
I have three responses to make. First, I do not think she was convincing in her defence of why the new powers contained in Clause 48 are required. The noble and learned Lords, Lord Thomas and Lord Hope, among others, were incredulous about the reasons for them and put their case very well. I do not think she was able to be as convincing on that as perhaps she hoped to be.
However, the Minister was very positive in response to the questions that a number of us asked about the replacement for the current level of EU funds, saying that the level of funding will be a minimum to match, it will be based on need and will tackle inequality and level up spending for these issues around the UK, and there will be time for a smooth transition. She stressed the collaborative approach that will be taken, but I will want to come back to that. She also left a few serious concerns about how exactly the process would go.
I think she will want to look again at the words of the noble Lord, Lord Dunlop, who spoke with great power; he made a number of points about additionality, accountability and co-operation as the necessary building blocks for any process which involves the insertion of UK Government-led funding in areas which have previously been done on a co-operative basis—bottom up rather than top down. Part of that was also raised by the noble Lord, Lord Bruce of Bennachie, who asked the Minister to recognise the differences that have arisen over time.
I shall leave with her two points. At this stage in the process when it is not certain how things will develop—even if the total amount of money and other things being said around funding are convincing—lack of information and engagement will breed distrust and suspicion. The Government need to think very hard about what approach they will take on a consultative and other basis, or else they will bring instability with them as they move forward.
Secondly, the case made by a number of people who spoke—not just those concerned about the direct impact on devolution but those concerned about other matters to do with climate change—has not been properly answered. There will not be any real return for the Government on this if they think that devolution will be assisted by what looks like a power grab without collateral arrangements being put in place. These funds need to be administered locally and planned co-operatively. At the end of the day, as one person said in the debate, the levers that are used to fund the people who are going to see the money will be local. If the Government do not get that right at the beginning, the rest will not work. However, we will read carefully in Hansard what was said. It has been a good debate on all sides. I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Baroness Morris of Bolton) (Con)
My Lords, we come to the group beginning with Amendment 134. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate, and that anyone wishing to press this or anything else in this group to a Division should make that clear during debate.
Clause 31: Monitoring and reporting on the operation of the UK internal market
Amendment 134
Member’s explanatory statement
This amendment deletes the phrase “from time to time” from Clause 31(1).
Baroness McIntosh of Pickering (Con) [V]
My Lords, it gives me great pleasure to move this amendment and speak to the others in my name. I thank the noble Baroness, Lady Bowles, for her support; I think she is going to speak at some stage on the clause stand part debate. I take this opportunity to thank once again the Law Society of Scotland for its briefing and its assistance in drafting these amendments.
Amendment 134 would delete the phrase “from time to time” from Clause 31(1). The reason for this is simply to state that reviews should take place on a more structured and regular basis than simply from time to time. I would like to press the Minister on what the intended timeframe for a review is within the terms of Clause 31.
Amendment 135 is on a similar theme. It looks to set out the significance of a matter that the CMA would review under the terms of Clause 31, and to press the Minister to say that surely it must be intended that the CMA conducts reviews into important and significant matters only. Is that the Government’s intention? Currently Clause 31(1) provides the CMA with an extensive power to conduct reviews. In my view that should be used only in accordance with clear rules that will ensure that only important issues are reviewed. The purpose of the amendment is to press my noble friend and the Government on what would instigate such a review and be deemed a sufficiently important and significant matter for this purpose.
Amendment 137 looks at the purpose of a proposal that should be made only, as I state here, by the Secretary of State or others that I have set out. The purpose is to ensure that only the Government and the devolved Administrations can make a proposal to the CMA to conduct a review. The reason for that is that the Bill currently provides that the CMA can receive and consider any proposals for undertaking a review, so in fact anyone can refer a matter to the CMA. Surely it must be intended that there is some qualification relating to this to exclude vexatious or frivolous referrals that might be deemed to be wasting the time of the CMA or others involved. The purpose of this probing amendment is to restrict the capacity to make referrals to the Government and the devolved Administrations, and to ask my noble friend if that is indeed the Government’s intention.
Amendment 144 looks at Clause 32, taking out “part” and replacing it with “or the entirety of”, thereby ensuring that the Secretary of State can request advice on a report for the whole UK, not simply a part of the UK. That is simply to note that the Secretary of State may request the CMA to provide a report for any part of the UK under Clause 32(11)(d), but not apparently for the whole of the UK. It is my intention to resolve that anomaly and clarify whether my understanding is correct.
Amendment 146 would delete Clause 35(4), which states:
“A duty of the Secretary of State to make a statement to Parliament is to be discharged by laying a copy of the statement before each House of Parliament.”
Is it not the case that such duties should be discharged in person directly to Parliament by making an Oral Statement rather than by laying a copy of the Statement before each House? Or do the Government intend to use that procedure and this is just the phrase that they have used? My amendment seeks to probe this.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I am pleased to speak in this group on my own amendments. I recognise that the noble Baroness, Lady McIntosh, has picked out some relevant points, including probing what I call the business aspect in Clause 31.
I have already rehearsed many of the arguments relating to my stand part notices, so I shall only speak briefly. The question of whether the OIM is set up to provide independent technical advice regarding business disputes with one another or with national authorities, becoming a first-round settlement process—or not, as it chooses—is all left too vague. Some not entirely technical criteria are intimately involved. I cite again my concern as to whether the OIM is the right body or structure and whether the powers exercisable over people and businesses in Clauses 38 to 40 are justified and proportionate to the reporting requirements in Clauses 31 to 34, which largely relate to the activities of Administrations.
My Amendment 145 would delete Clause 33(2), which states:
“A relevant national authority may not request a report from the CMA ... unless the authority has considered whether any other person or body is qualified to provide an independent report on the matter.”
What is meant by “qualified”? I could not find a definition in the Bill other than that in respect of professional qualifications in Part 3, which I do not think applies here. I understand and accept the subsection if the reference is to another statutory body, but the present wording seems to relate, for example, to advisory firms. I might have all kinds of views about that and how the Government seem to use advisory firms too much already, but I am concerned that such private reports would be less transparent.
However, perhaps there is a case for saying that it is more appropriate for an Administration to pay for that research and advice than foist the cost on to businesses, which is what this provision does. Can the Minister advise me of the intention of Clause 33(2)? Does it mean statutory bodies or private bodies?
Finally, Clause 37 requires the CMA to prepare and publish general advice and information about how it expects to approach the exercise of its functions. At present, how the CMA will use its powers is left solely to its own discretion, without guidance or safeguards in the Bill, but I think it is necessary to have guidance about when enforcement and fines are appropriate. For example, they are not appropriate when there is no reasonable suspicion of wrongdoing or contravention of market principles by the person or body from whom information is sought.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
The noble Baroness, Lady Neville-Rolfe, has withdrawn, so I now call the noble and learned Lord, Lord Thomas of Cwmgiedd.
Lord Thomas of Cwmgiedd (CB) [V]
I can be very brief in speaking to Amendments 151 and 152, which stand in my name. They relate to matters that were discussed earlier. The first deals with the need to insert into the Bill provisions to ensure that the Competition and Markets Authority—if indeed it is to be the body that plays a central role in the Bill—consults the devolved Administrations in relation to its policy for enforcement.
The second amendment deals with penalties. The Minister has a regulating power and the amendment proposes that the penalties are made with the consent of the devolved Governments. That is obviously in line with what I hope will be the approach of the Government —that is, to work with the devolved Administrations. The reasons were set out earlier and I need not repeat them.
Baroness Randerson (LD) [V]
My Lords, like the noble and learned Lord, Lord Thomas, I will be very brief. I have added my name to his amendments, which simply reiterate the need for the CMA to consult the devolved Administrations, as well as the Secretary of State, and to obtain consent. They emphasise the importance of respecting devolution. I say to the Government that small things count. They guarantee good and fair government. It is important that the Government take note of the tone of the debates this evening and pay that respect to devolution in the terms in which the CMA operates in the future.
Baroness Finlay of Llandaff (CB) [V]
My Lords, these amendments are part and parcel of the approach that my noble and learned friend Lord Thomas and I, and indeed the Welsh Government, have advocated. It seems essential to ensure that the office for the internal market is genuinely independent and accountable, on a basis of equality, to institutions in all four parts of the UK.
I want to take this opportunity to seek clarification on some of the powers that the Government propose to give the office. I understand that it would be able to compel persons to provide information and impose financial penalties on those who do not. I can see why these powers are necessary for the Competition and Markets Authority when it investigates matters of anti-competitive practices which possibly violate the criminal law. However, can the Minister please explain why the powers are necessary in the very different circumstances of providing independent advice on the potential internal market implications of measures proposed by a Government?
More specifically, one point in particular needs clarification. It is my understanding that devolved Ministers could not be compelled to provide such information, as, like UK Ministers, they are covered by Crown immunity. However, I am informed that such immunity does not extend to the devolved legislatures, meaning that the Senedd Commission could be compelled to provide information and fined if it did not. This seems wholly unacceptable, and I seek clarification.
The Duke of Montrose (Con) [V]
My Lords, I am pleased to be able to contribute to this stage of the debate, and to offer my support to my noble friend Lady McIntosh of Pickering, and particularly to her Amendment 134. Just recently we have heard much discussion, even by the noble Baroness, Lady Bowles, about the suitability of the CMA for this role. But there is no doubt that we need a body, and what we are discussing are the functions it would need to perform. I have sight of the briefing provided by the Law Society of Scotland, which supported some of these amendments, and it has been pretty forensic in striving to ensure, in particular, that this Bill contains enough representation and consultation.
I also support Amendment 135; it seems to me very appropriate that the CMA should have powers to decide what is a matter of importance, because the general idea that anybody could ask it to produce a report is a recipe for overenthusiastic demand from all sorts of people.
Moving on to Amendment 146, Clause 35 deals with who gets to receive the reports that the CMA produces, before, during or after measures that are being introduced, and who will present that report. Subsection (4) excuses the Secretary of State from being the one who gives the report in person. Surely most of the reports will actually be initiated by the devolved Administrations, and reports on the initiative of Secretary of State will be far fewer, so why should the Secretary of State be excused from speaking to the report that he has asked for?
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
The noble Lord, Lord Naseby, has withdrawn, so I now call the noble Lord, Lord Razzall.
Lord Razzall (LD)
My Lords, I will be brief, unlike many earlier speakers in this Committee, who clearly were revelling in being freed from the tyranny of two, three and four-minute speeches. As the evening goes on, I think we come back to the discipline of being brief.
As to whether Clauses 31 to 37 should not stand part of the Bill, the arguments have been well rehearsed earlier and at Second Reading, but I shall reiterate why they seem appropriate here. Why are we rushing to legislate at this stage in this area? Why are we not working with all four Governments to arrive at agreements and to legislate when necessary? As noble Lords who followed this will be aware, the process of managing the United Kingdom internal market through common frameworks has not yet been exhausted. I do not accept the argument of the noble Lord, Lord True, at Second Reading, that the list that has been dealt with by the common frameworks is not exhaustive. Those discussions can continue to take place.
Why are we not continuing to work with the four Governments and to legislate when needed? Why do we not establish a properly independent body representing all four nations in due course, and then legislate? I support the deletion of all those clauses; they should not stand part of the Bill.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
The noble Lord, Lord Judd, has withdrawn, so I now call the noble Baroness, Lady Hayter of Kentish Town.
Baroness Hayter of Kentish Town (Lab)
My Lords, we have said it before, so I will repeat only briefly: these amendments would never have been needed had the legislation been drafted in consultation and agreement with the devolved authorities. Instead, the legislation, as we have heard, reads like a complete desire to run everything from the centre, as if devolution never happened, and that the UK Government would simply decide and tell the others what they are to do. For example, as we have heard, it gives the CMA a cross-UK role with regard to the internal market but leaves the CMA, which currently has no devolved accountability, with the power to set penalties above the IM without any devolved authority consent.
I keep asking the same question: do the Government just forget about the other three Governments? As I have already said to the Minister tonight, we need the Government to respond to the thrust of these amendments positively and make it clear that they respect and want a proper role for the devolved authorities. The noble Baroness, Lady Randerson, said that little things matter. These are quite little requests, but they certainly matter.
Lord Callanan (Con)
I thank noble Lords who have taken part. They have asked for a lot of information on the various clauses and whether they should stand part, and I will provide it.
I start with Clauses 31 to 37 and why they should stand part. As we have discussed previously, Part 4 of the Bill creates the office for the internal market within the CMA, charged with carrying out a set of independent advisory, monitoring and reporting functions to support the effective operation of the UK internal market. Clause 31 defines a regulatory provision for the purposes of the CMA’s UK internal market reporting, advisory and monitoring functions, as well as stating which of these provisions are within scope. The purpose is to establish that the CMA may undertake monitoring reviews on an ad hoc basis, either of its own volition or at the request of other parties, including the UK Government and the devolved Administrations and legislatures. This monitoring will focus on cross-border competition, investment and trade, as well as access to goods and services.
There are two categories of monitoring and reporting that the CMA must undertake. The first is an annual health of the market assessment that will set out trends and developments in the internal market, including levels of integration across different sectors and nations. The second is a review of the impact of the measures in Parts 1 to 3 of the Bill, dealing with the internal market system itself, to be published at least every five years. Both types of report will be published and laid before both Houses and all the devolved legislatures.
Clause 32 sets out the provision for the CMA to advise on a regulatory proposal prior to it being passed or made in law. If an Administration in one part of the UK wishes to do so, it may request non-binding advice from the CMA on an approach to regulation it or any other person proposes to make in the relevant part of the UK. This is on a voluntary basis but will help support effective policy development. The advice, or report, from the CMA will examine the potential economic impact of the proposal on areas such as competition and trade distortions, the impact on prices and the choice and quality of goods and services for consumers. To ensure transparency, all advice will be published and shared with all four Administrations.
Clause 33 details the CMA’s reporting procedure on regulatory provisions already been passed or made in law. The request may be made by one or more Administrations and must concern a regulatory provision applying to its part of the UK and within its legislative competence. Similarly, to ensure transparency, the CMA will publish the report soon after it is provided to the requesting Administration. The noble Baroness, Lady Bowles, asked about this clause. The clause sets out that it is for the national authority seeking the report from the OIM to consider and determine whether another body could provide advice. This is not a technical term and is simply intended to make it clear that the OIM is not intended to displace other bodies that might in theory provide more relevant advice on the same matter and, in doing so, make the best possible use of public funds.
Clause 34 sets out the reporting procedure that the CMA will undertake for regulatory provisions that are already enacted in any part of the United Kingdom and are considered to have actual or anticipated detrimental impacts on the internal market. The CMA may produce reports upon the request of a Minister in the UK Government or a Minister in any devolved Administration. The CMA must provide copies to all other Administrations in other parts of the United Kingdom, laying the report before each House of Parliament and all devolved legislatures, as well as making it public.
Clause 35 sets out the process that the CMA, the UK Government and the devolved Administrations must follow once a report has been produced by the CMA and laid before the legislatures under Clause 32. The process requires the Minister in the Administration responsible for implementing the regulatory provision that was the subject of the report, and the Minister in the Administration who requested the report, to make a Written Statement in their relevant legislature. This supports effective parliamentary oversight, as well as prompting legislatures to determine the most appropriate subsequent course of action.
Clause 36 allows the CMA the discretion to exclude particular categories of information from its reporting on impacts on the internal market. The discretion to exclude some categories is not novel or contentious, and is used by public and private organisations to protect commercial and private information about an organisation or a person. This discretion is necessary in specific circumstances to provide assurances for business and individuals’ interests.
Clause 37 requires the CMA to publish general advice, information and guidance about how it expects to approach the exercise of its monitoring, advisory and reporting functions under Clauses 31 to 34. This mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK.
I turn to Amendment 134, which seeks to delete the phrase “from time to time” from Clause 31(1), which deals with the CMA’s ability to produce ad hoc reports on matters it considers relevant to the effective operation of the UK’s internal market. The Government agree that it is essential for the CMA to undertake reviews and report on matters it considers relevant to the effective operation of the internal market. However, the Government believe that it is also important that, as an independent body, the CMA should not be under pressure to frequently produce ad hoc reports, which is what removing this phrase “from time to time” would imply. As Clause 31(5) and (6) make clear, the office for the internal market will produce regular reports on the health of the internal market; it will therefore be well placed to make the right judgment on the need for the production of other reports.
Amendments 135 and 137 would require the CMA to conduct reviews only into what are called “important” matters, and that only the UK Government and devolved Administrations may request a review from the CMA. The Government appreciate the intention of these amendments, which is to ensure that the CMA is not overburdened by expectations in relation to reviews. However, the CMA is experienced in the matter of reviews and should not have its work impeded due to debates as to what constitutes a “matter of importance”. Furthermore, it is important that all stakeholders with an interest in the internal market should be able to request that the CMA undertake a review. This in turn will help to maintain stakeholder confidence in the independence of the OIM from the UK Government and the devolved Administrations.
Amendment 144 seeks to amend Clause 32 by inserting the word “entirety” to ensure that the Secretary of State can request advice and a report from the CMA on matters relating to the whole of the UK, not just a part of it. The current wording of Clause 32 aims to capture that reporting made possible by the clause is limited only to devolved regulatory competence. In the case of the Secretary of State, this would mean England-only legislation by the UK Government would be in scope of Clause 32. The effect of the amendment would be to extend the scope of Clause 32 to capture powers being exercised for the whole of the UK by the UK Government. To support the effective operation of the internal market, the office will need to focus its reporting and monitoring on areas of regulatory divergence across the UK. If regulatory measures apply UK-wide, the same risks to the functioning of the internal market will not feature. It is therefore vital to narrow the focus of the reporting in question to regulation that covers only a proportion of the UK and could pose an issue to the functioning of the market.
I turn to Amendment 145. The purpose of Clause 33 is to enable the CMA to produce reports on the impact of regulatory provisions which have already been passed or made into law. This procedure is voluntary and can be requested by an Administration, solely or jointly, in all parts of the United Kingdom, in relation to a regulatory provision applying to the relevant part of the UK and within its legislative competence. The Government understand the concerns around transparency, but the aim of subsection (2) is to ensure that the requesting Administration consider whether any other person or body is also qualified to provide an independent report on the matter before a request to the CMA is made. It is important to consider whether any work done by another person or organisation would put the CMA in a better position to provide advice to an Administration and for this to be taken into account and considered before a request to the CMA. This is a pragmatic and wholly sensible approach and ensures that the CMA’s resources are best directed at requests for advice, monitoring and reporting where it has the relevant expertise.
Amendment 146 advocates for the removal of subsection (4) within Clause 35. This clause requires the national authority responsible for implementing the regulatory measure that was the subject of the CMA’s report to then make a written statement in the relevant legislature. This amendment would remove the obligation of laying a copy of a written statement before each House of the UK Parliament. This would clearly result in inconsistency between the UK Government and devolved Administrations in accountability to their respective legislatures. We believe that this change would result in a democratic deficit and the loss of accountability towards both Houses of this Parliament.
Amendments 147 and 148 would require the CMA to consult stakeholders before preparing advice and information about how it expects to approach the exercise of its functions and revising or withdrawing any advice or guidance. Clause 37 mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK. As a matter of good practice and maintaining effective working relationships with a range of stakeholders, the CMA already undertakes extensive consultations with stakeholders in respect of its existing statutory duties before publishing advice and information. The CMA will be maintaining this approach in respect of the advice, information and guidance it publishes under Clause 37. In light of this reassurance, and to safeguard the independence of the CMA, the Government do not think it is necessary to compel the CMA to do this, as proposed by the amendment.
Amendment 151 seeks to amend Clause 39 to explicitly require the CMA to consult the UK Government, the devolved Administrations and other relevant persons in preparing or revising its statement of policy in relation to the enforcement of its information-gathering powers. Clause 39 allows the Competition and Markets Authority to take actions in response to non-compliance with the information requests described in Clause 38. To ensure that its penalties regime is fully considered and proportionate, the CMA will be required, as it already is now under its existing statutory functions in relation to the Enterprise and Regulatory Reform Act 2013, to consult other parties as it sees fit when developing or revising its approach. I can assure noble Lords that, in practice, the UK Government and the devolved Administrations would always be consulted as a duty on the CMA as it stands in the Bill. The noble Baroness, Lady Finlay, asked about compelling devolved Administration Ministers to give information. We can give DAs information notices, but they cannot, of course, receive any penalties for non-compliance.
Baroness McIntosh of Pickering (Con) [V]
My Lords, I am grateful to all those noble Lords who have contributed to the debate. I did rather enjoy my noble friend’s description of not wishing to overburden the CMA with expectations; I do not think that that is quite the case as yet. As the noble Baronesses, Lady Hayter, Lady Randerson and Lady Finlay, and the noble and learned Lord, Lord, Lord Thomas of Cwmgiedd, have said, we are seeking to ensure that the devolved Administrations are consulted, that consent is sought and that they are respected. That was the main thrust of the argument.
I am disappointed that my noble friend does not find common cause with my amendments. I am very grateful in particular to my noble friend the Duke of Montrose for highlighting the fact that, as he recognised, which is most pertinent, most of the reports will in fact emerge from the devolved Administrations. That is why it is bizarre that the Secretary of State can be excused from speaking to these reports from them so that Parliament itself, along with the devolved Administrations, would be made aware of his arguments and reasons for either accepting or rejecting the reports.
My noble friend’s response begs a question which it will be interesting to explore at subsequent stages. If the Government are not prepared to accept a de minimis rule on what the status of referrals and the reports to be made by the CMA would be, that begs a question about how we define the distortion of the market. I spent six happy months in the European Commission looking at how competition was being distorted in the context of the single market, which we have just left, and what defined a distortion of the market. I shall seek to develop that argument at a later opportunity. For the moment, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
We come now to the group beginning with Amendment 136. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in the group to a Division should make that clear in the debate.
Amendment 136
Baroness Hayter of Kentish Town (Lab)
My Lords, I shall speak also to the other amendments in this group that are tabled in my name. I would have thought that it is clear by now, in particular to those noble Lords who have sat through all three days of our debates in Committee, that I think it is really important that, as we look at how the internal market is working, we need to include consideration of how it impacts on consumers.
For example, the first of these amendments would ensure that where the CMA reviews the effective operation of the market, it would measure how well it was serving consumers. Similarly, in Amendment 139, its annual report should include the impact of the internal market on consumers. In Amendment 142 it should look at the prices, quality of goods and services, and choice for consumers, in addition to the volume of trade between the four parts of the union.
We do not want trade to go rocketing up if it simply means monopolies are growing and choice diminishing, nor simply a rush of goods of shoddy quality, or services that offer no standards and no redress. These amendments do not mean the consumer impact trumps everything else, but that it must be considered in the mix in any report so that decision-makers have the full picture at all times.
Incidentally, the wording in Amendment 142 is a straight lift from Clause 32(4)(c), so it is not particularly innovative, nor surprising to the drafters. It is just saying that if you look at how the internal market is working it must not be just by volumes of trade; it must take into account the various aspects of how a consumer would measure whether the market was serving their needs. I beg to move.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I do not need to say a lot in this group because I have already made it clear that I consider transparency an important part of consumer protection and the way to find out whether consumer interests have been looked after. My Amendment 138 to Clause 31 relates to the provision where any person may request a report, which the CMA can then choose to undertake. My amendment would take away the optionality of publishing the report and says that it must be published.
The Minister said in connection with Administrations that such transparency may prevent forthright exchanges. In this location, it is not advice about regulation that comes under other clauses. This is a general case and if it is reporting—for example, opining on what is or is not a subsidy, discrimination or any of the other matters on which it could be consulted—then the opinions form a body of information that should be publicly available. I would concede safeguards, but they are there anyway in Clause 36 about reports under Part 4. However, I think that the wording should reflect the presumption of publication.
The noble Baroness, Lady Hayter, has also tabled amendments about consumer protection. While I have been a bit picky at times or uncertain whether it is the right thing to qualify the internal market with reference to any sector, what she said about consumer protection having to be in the mix is right. Certainly, Amendments 139, 140 and 142 are in the right places to establish that point.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
My Lords, the noble Baronesses, Lady Noakes, Lady Jones and Lady Neville-Rolfe, and the noble Lord, Lord Palmer, have all withdrawn so I now call the Minister, the noble Baroness, Lady Bloomfield of Hinton Waldrist.
Baroness Bloomfield of Hinton Waldrist (Con)
I start by trying to reassure the noble Baroness, Lady Hayter, that we do not wish to see monopolies increasing and choice and quality declining either.
Amendments 136, 139, 140 and 142 aim to give the monitoring and reporting obligations of the office for the internal market a specific focus on the interests of consumers. Clause 31 enables the office for the internal market within the Competition and Markets Authority to operate general and periodic reporting and monitoring to assess the effective operation of the UK internal market and Parts 1 and 3 of the Bill, including how it operates for consumers. These amendments would limit this function to assessing the operation of the market as it affects consumers.
The role of the office for the internal market is to monitor the health of the UK internal market, including specific regulations, sectors and nations. Moving to a narrower definition of the assessment criteria of Clause 31, from the outset, would hinder its effectiveness in fully delivering this function.
To appreciate this, it is worth setting out the breadth of the areas of monitoring that are in scope. They include emerging trends and developments in the UK internal market, cross-border competition, the nature and level of trade between different parts of the UK and access to goods, services and trade. Monitoring may be undertaken independently by the CMA or upon request by other parties such as the UK Government and the devolved Administrations. Proposals can be submitted to review specific sectors relating to the UK internal market.
In doing its work, the office for the internal market will naturally be able to gather information from consumers, businesses and public bodies. Clause 32(4) also specifies that its advice and reporting can involve consideration of the impact of new regulatory proposals on the pricing, quality and choice of goods and on services for consumers. The interests of consumers are therefore an important concern which is already laid out for the office for the internal market when undertaking its monitoring and reporting functions. So, I can assure your Lordships that it will take into account consumer interests in undertaking its wide monitoring and reporting functions and there is no need for a specific reference to this in Clause 31.
Amendment 138 aims to impose an additional requirement in Clause 31 that reporting on reviews which the CMA undertakes of its own initiative or following a request under subsection (1) on matters relevant to the effective working of the UK internal market must be published. Clause 31(4) already requires that all reports the Competition and Markets Authority produces on matters in subsection (1) be published. Clause 32(10), Clause 33(6)(b) and Clause 34(10) also require publication of the reports on the operation of the UK internal market referred to in those clauses as soon as reasonably practicable. In light of this reasoning, I trust that the noble Baroness, Lady Hayter, will be assured that the amendments are unnecessary and that the amendment moved should be withdrawn. We are already doing a lot of background thinking on consumer protections; it is not a closed issue.
Baroness Hayter of Kentish Town (Lab)
I thank the Minister for that reply and particularly for her last few words about ongoing consideration. If these debates feed into that consideration, we will not all have stayed up late for nothing.
I also thank the noble Baroness, Lady Bowles, for her support. I have not looked at the exact wording or at whether what the Minister said is right, but what the noble Baroness said about transparency is important. Because it is very difficult for individual consumers to take up these big questions, transparency is really important for their advocates—that is, consumer representatives—who are often very underrepresented on all these committees. Transparency is particularly important for those who, from the outside, are trying to ask questions about choice, redress, standards, quality and so on. I hope that those who are thinking about that issue will hear some of the arguments we have made. If they influence the sort of questions that are posed, we will put one little tick there, but the proof of the pudding will be in the eating. Will this be better for consumers when we have the market going? For the moment, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
We now come to the group consisting of Amendment 143. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate and anyone wishing to press this amendment to a Division should make that clear in debate.
Amendment 143
“Advice on proposal to make regulations applying Part 1, 2 or 3
(1) Where the CMA is given notice of proposed regulations in accordance with section (Legislation to which market access principles apply)(5), (Services: application of sections 18 to 20)(9) or (Application of Part 3)(3), the CMA must give advice, or make a report, to the Secretary of State with respect to the proposed regulations.(2) The advice or report must (among other things) consider the potential effects on the matters specified in subsection (3)—(a) of any regulatory provision that any relevant national authority has proposed or might reasonably be expected to propose and that would be affected by the making of the proposed regulations, and(b) of the application of Part 1, 2 or 3 of this Act by virtue of the proposed regulations.(3) The matters mentioned in subsection (2) are—(a) the effective operation of the internal market in the United Kingdom, including—(i) indirect or cumulative effects,(ii) distortion of competition or trade, and(iii) impacts on prices, the quality of goods and services or choice for consumers,(b) the following in each part of the United Kingdom—(i) the health and safety of humans, animals and plants,(ii) standards of environmental protection, and(iii) any other aim that any regulatory provision mentioned in subsection (2)(a) would seek to promote. (4) Where the CMA gives advice, or makes a report, to the Secretary of State under this section—(a) it must at the same time send a copy of the advice or report to the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland;(b) it must publish the advice or report in such manner as it considers appropriate.”Member’s explanatory statement
This amendment requires the CMA to provide advice or a report to the Secretary of State when notified of proposed regulations applying Part 1, 2 or 3 of the Bill and it specifies matters that the advice or report must consider.
Baroness Finlay of Llandaff (CB) [V]
My Lords, Amendment 143 is to some extent a coda to our recent discussions on the role of the office for the internal market and to the amendments I moved last week, which were intended to underscore the primacy of the common frameworks process. They would ensure that the market access principles are triggered only when it proved impossible by consensus for the four Governments to agree a common framework. The triggering would be by bringing forward regulations using the affirmative procedure.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
My Lords, the noble and learned Lord, Lord Morris of Aberavon, has withdrawn, so I call Lord Fox.
Lord Fox (LD)
My Lords, my name is on this amendment, and I am pleased to support it and to follow the very clear explanation that we have just heard.
I speak briefly to subsections (3) and (4) of the proposed new clause. The former calls for the report to deal with
“indirect or cumulative effects … distortion of competition or trade”
and, as I am sure that the noble Baroness, Lady Hayter, would be pleased to hear were she still here
“impacts on prices, the quality of goods and services or choice for consumers”
then moves on to consider
“the health and safety of humans, animals and plants … standards of environmental protection”
and other issues that have come forward.
This is another way of trying to do many of the same things that have come through the variety of amendments that your Lordships have heard over the course of the last three days in Committee. All the Ministers have all talked about level playing fields, and the purpose of this legislation is to create a level playing field. We all subscribe to that. The purpose of subsection (4) is to create an informational level playing field, to ensure that all the Governments are receiving the same information and create some transparency so that the outside world—indeed, the companies involved and the people involved—also receives that information.
I am sure that the Minister will stand up in a few minutes and give us very good reasons why this amendment should be withdrawn, but before he does, can he undertake to ensure that the level playing field applies not only to the commercial and trading issues, but also to the information that all the players receive when these decisions are being taken?
Lord Stevenson of Balmacara (Lab) [V]
My Lords, it will be interesting to hear how the Minister responds to this request, which has been well described as a bit of a coda. On the other hand, it also contains teeth, which would be there to be used, if someone wished to. It is important to get this right and understand, if it is rejected, why it is. I look forward to that.
Ministers know that we on the Labour side think that the common frameworks are at the centre of the managed divergence that we want to see and allow to happen across the devolved Administrations. It is important that the process continues and that is at the centre of the Bill, because it is not at the moment; it is hardly mentioned, except in passing. If that is the case, we look for some additional reassurance from the Minister that the powers that might be available to the Government, when they feel the common frameworks are not working, are not used too early or vicariously just to show the devolved Administrations who is in charge. As we were reminded by the noble Lord, Lord Dunlop, on day one, the Government already have powers to deal with any default they feel is present in the common frameworks. The questions raised by this amendment are important, and I look forward to hearing the Minister’s response.
Lord Callanan (Con)
I thank those hardy souls who have stayed for this brief debate. Amendment 143, tabled by the noble Baroness, Lady Finlay, is concerned with a proposed role for the CMA in the laying of regulations on the application of the market access principles. It builds on the earlier Amendments 6, 78 and 104, which concerned the scope within which the UK market access principles proposed in the Bill will apply. I understand that the noble Baroness has tabled this amendment on behalf of the Welsh Government, and I thank the Welsh Government for their positive engagement on the Bill so far. The UK Government look forward to continued and constructive future engagement with them on more aspects of these proposals.
Before I turn to the detail of this amendment, I note the previous discussion on similar amendments also tabled by the noble Baroness, Lady Finlay, which would have narrowed the scope of the market access principles. As I set out then, those amendments would, in combination, prevent the market access principles from applying in time, at the end of the transition period. Earlier, I set out that the lengthy process the amendments put in place before the principles can apply, including the need to exhaust the framework discussions first, would mean a considerable delay in securing business certainty that trade can continue unhindered within the UK’s internal market. Amendment 143 would add an additional layer of bureaucracy to that process.
In our view, it would also problematically risk bringing the CMA into potentially contentious decision-making and mean its role was weighted towards supporting the Secretary of State over the devolved Administration counterparts. This contrasts sharply with our vision for this, which is to ensure that the OIM’s expert reporting is available to all four administrations equally. Above all, however, the advice provided by the OIM will be economic in nature. Its panel will have expertise across intra-UK trade, regulatory impacts on business and competition effects, which is one reason why the Government chose to establish it within the CMA. We had that debate earlier.
The office for the internal market will not be equipped, therefore, to opine on matters related to animal welfare or environmental protection. To lay this obligation on the OIM would bring a significant risk of duplication of the remit of other public bodies, which would cause considerable confusion for the many stakeholders in this field. For these reasons, and the uncertainty and confusion that this and other related amendments would generate for businesses and citizens, the Government regretfully cannot support them, and I hope the noble Baroness is able to withdraw.
Baroness Finlay of Llandaff (CB) [V]
My Lords, I am grateful to the Minister for recognising the staying power of some noble Lords, because we have had three days of this debate. I am most grateful to the noble Lord, Lord Fox, for going through some of the aspects of this amendment in more detail and clearly pointing out that its aim is to establish a level playing field, at every level. There has to be a level playing field, because it is the only way in which the four nations will eventually be able to work together properly.
I echo the words of the noble Lord, Lord Stevenson, and I am grateful to him for stating that there is a need to have common frameworks at the centre of the Bill. This is something to which we will return on Report, because the Bill, as it is written, does not make this clear at all. In the way it is written at the moment, it looks as if the common frameworks are almost disposable. We need to come back to that.
I am glad that the Government recognise the involvement and commitment of the Welsh Government to have positive discussions, and I know that from the Wales end that that is true. They want to engage and come to a good solution. They want business certainty just as much as anyone else; they want less bureaucracy just as much as anybody else, but they need to know there will be a level playing field and fairness at the end of the day. That is why the common frameworks were so attractive, and why people have worked so hard towards them and are committed to carrying on working towards them.
Having said that and knowing that we need to have further discussions on this and that we will return to this on Report, I beg leave to withdraw the amendment.