Wednesday 9th December 2020
(3 years, 11 months ago)
Lords ChamberUnited Kingdom Internal Market Act 2020 View all United Kingdom Internal Market Act 2020 Debates Read Hansard Text Amendment Paper: HL Bill 156-I Marshalled list for consideration of Commons reasons and amendments - (8 Dec 2020)
14:18 - Division conducted remotely on Motion A1 (as an amendment to Motion A) - Ayes: 320 / Noes: 215 - Motion A1 (as an amendment to Motion A) agreed.
14:53 - Division conducted remotely on Motion B1 (as an amendment to Motion B) - Ayes: 295 / Noes: 250 - Motion B1 (as an amendment to Motion B) agreed.
16:39 - Division conducted remotely on Motion K1 (as an amendment to Motion K) - Ayes: 305 / Noes: 236 - Motion K1 (as an amendment to Motion K) agreed.
17:42 - Division conducted remotely on Motion L2 (as an amendment to Motion L) - Ayes: 313 / Noes: 236 - Motion L2 (as an amendment to Motion L) agreed.
The Minister of State, Cabinet Office (Lord True) (Con)
My Lords, I think I was on mute for a minute there.
Lord True (Con)
The noble Lord, Lord Adonis, says, “Keep it up,” which I know is a sentiment widely shared.
Noble Lords have been clear throughout this debate on the UKIM Bill about their support for the common frameworks programme. I and the Government concur with those sentiments, and I reiterate the Government’s continued commitment to this programme. I am pleased to update your Lordships’ House that common frameworks are developing well, with three common frameworks currently undergoing scrutiny, including in this House’s committee chaired by the noble Baroness, Lady Andrews—and I pay tribute to the work of that committee.
Out of 33 active frameworks that we have assessed are needed, we expect 30 to be agreed by the end of 2020, mostly on a provisional basis, pending scrutiny by Parliament and the devolved legislatures. The common frameworks programme embodies the value of strong intergovernmental relations. The UK Government and the devolved Administrations are working together, on a voluntary basis, in support of cohesive policy-making and the maintenance of high standards in respect of the specific needs of each part of the United Kingdom. While recognising this positive collaboration, we also need to acknowledge that the common frameworks were always intended to cover only a specific set of issues where powers are returning from the EU. Common frameworks support the functioning of the internal market but cannot by themselves ensure regulatory coherence across the whole UK internal market—the key objective of this Bill.
As the Government have noted previously, we regret that the Scottish Government walked away from the joint internal market workstream in spring 2019. Detailed engagement has been ongoing with the Welsh Government and Northern Ireland Executive on this Bill, and the door remains open to the Scottish Government to join similar discussions. The strength of common frameworks lies in the fact that they provide a forum for discussion and collaboration, with a clear process in defined, but limited, areas of economic activity.
I thank the noble and learned Lord, Lord Hope, for his thoughtful participation in these debates and his considered amendments to the Bill, which he has now partly revised. I welcome also the willingness of the noble and learned Lord to continue engaging in discussions on his amendment with my officials, and those discussions may continue. I also thank noble Lords opposite for their own positive and practical engagement on these matters. Discussions are not exhausted on this topic.
On the amendment before us, I have cautioned your Lordships’ House before, regarding the previous amendments of the noble and learned Lord, Lord Hope, that this would lead to the automatic disapplication of the market access principles, creating a very broad exclusions regime, with the attendant risk of legal uncertainty for businesses and consumers over whether or not market access principles apply. It is the Government’s view that these revised amendments carry similar risks, both in terms of the breadth of the exclusions regime created and in terms of uncertainty. As to the latter, there is no safeguard against different Administrations attempting to implement different interpretations of an agreement into law, potentially leaving the courts in the unenviable position of adjudicating on these different interpretations. That would potentially invite the courts into the common frameworks process, which is inherently undesirable. Any such litigation would create great uncertainty for businesses. This is clearly not in keeping with the need to provide certainty and a stable trading environment for citizens across our United Kingdom.
Moreover, Amendments 1B and 1C prevent the introduction by a UK Government Minister of any new regulations in any area where discussions under the common frameworks process are ongoing. This could mean Ministers would be unable to act, even if there were an urgent need to do so.
Furthermore, the common frameworks programme was established in 2017 to manage the powers returning from the EU in devolved policy areas. In line with its voluntary nature, the programme has not been put into legislation, although I recognise that it is alluded to, in very high-level terms, in Schedule 3 to the European Union (Withdrawal) Act.
While it is a key objective of common frameworks to agree consistent regulatory standards, in practice there may be cases where divergent approaches could be agreed through a common framework. If this were to occur, and if any such divergence were to fall within the scope of the market access principles, we should be in no doubt that the market access principles set out in the United Kingdom Internal Market Bill would apply. That means that even if divergence is agreed in a particular case, it would not prevent businesses from other parts of the United Kingdom being able to sell their products into the relevant place. This would ensure that barriers to trade are not erected through the introduction of divergent policy.
We must also bear in mind that common frameworks are jointly owned by the devolved Administrations. Any proposal to legislate them into this Bill would need to take into account their involvement in the programme. While we have carefully reflected on the arguments made in both Houses, I respectfully suggest that the approach put forward in these amendments brings significant drawbacks to the Government’s ability to provide businesses with the certainty they need to operate across the United Kingdom.
I and colleagues across government look forward to discussing further with our partners in the devolved Administrations and devolved legislatures to consider how we can capitalise on the ways of working agreed through common frameworks. We are also working towards concluding a joint review of intergovernmental relations with the devolved Administrations. These future intergovernmental structures will create a system that secures strategic co-operation and proactive discussions on shared areas of interest, including on common frameworks. The aim of any reform will be to establish an adaptable and effective system of governance that facilitates building long-term trust between the Governments.
We are, of course, open to considering how to put these areas of co-operation on a sustainable footing for the longer term, complementing the IGR review and the market access principles to the benefit of citizens and businesses. I beg to move.
Motion A1 (as an amendment to Motion A)
Baroness Hayter of Kentish Town (Lab)
My Lords, the noble Lord, Lord Callanan, who is not in his place, will recall how the notion of common frameworks evolved. When we were doing the first EU withdrawal Bill, it became clear that some of the powers returning from Brussels clearly fell within devolved competences. It was therefore widely understood that, to facilitate trade throughout the UK—as otherwise the rules affecting trade could vary across internal borders—a coming together of the four authorities would be needed to balance the desire for, and attraction of, diversity on some issues with a UK-wide approach to help consumers buy and manufacturers trade throughout the UK.
From the start, it was agreed that such frameworks would be established where needed—this is from the communiqué of October 2017—to
“enable the functioning of the UK internal market, while acknowledging policy divergence”
and that they would
“respect the devolution settlements … based on established conventions … including that the competence of the devolved institutions will not normally be adjusted without their consent”.
That was how they started. At that point, a list of 24 such topics was identified and, with a lot of good faith and hard work—as the Minister has acknowledged—the initial three Governments, along with Northern Ireland officials, set to work developing frameworks to enable that UK-wide market to flourish while recognising where devolved authorities might want variations for whatever reason. The basis was, to quote again from that document signed by the Government, to
“maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory”.
Until this Bill arrived, everyone thought the system was working well and would accomplish the aims set for it. This should have been something for the Government to celebrate, as they have today, and build on. In fact, it has never been necessary for the Government to use their powers to freeze any devolved authority’s power—a provision set into the EU withdrawal Act, as the Minister has acknowledged.
While this Bill was anticipated, the expectation was that it would help build a new, in some ways unique, internal market across our four nations, which have different cultural, linguistic, agricultural, geographical and industrial histories and realities. Above all, our nations have different democratic governance structures from when we ceded rule-making to the EU in 1973. We thought the Bill would respect the devolution realities while helping to ensure the UK market could prosper for the sake of business, consumers, workers, our agriculture and the environment. As we now know, in addition to throwing the quite unnecessary Part 5 grenade into the Bill, the Government pulled the pin on another grenade by writing into the Bill market access rules which trumped, rather than solidified, the common frameworks programme, which is an approach built on consensus rather than top-down diktat.
The noble and learned Lord, Lord Hope, is not a revolutionary. He is not trying to rewrite the Bill. He is seeking—rather like the Minister himself through the Government’s welcome amendments on regulation-making, for which we will give thanks when we come to them later—to start the process on the basis of consent across the four devolved authorities, and, where that is not possible, leaving it to the UK Parliament, rightly, to legislate. We support a union, and therefore we support Parliament’s right at that point to have its proper role. But we start with consent, and then move to Parliament. What we do not support is starting here in Parliament and government, rather than with the four-party common frameworks. So, we welcome the noble and learned Lord’s upending of the procedure, starting with common frameworks and, where or if those do not work, using the market access approach of the Bill in areas obviously otherwise within devolved competencies.
I think we would all warn the Government to be very careful about clawing back decisions from our now quite long-established devolved settlements. I find today’s vote in the Senedd, by 36 to 15, to deny legislative consent to this Bill extraordinarily regrettable. It is an important Bill; it is not a small one. That was denied because of the message sent to Wales and the other devolveds by the rejection in the Commons last night of this approach. So we need a backstop for any failure to agree, but we fail to understand that what should be a backstop has become the starting gun.
The amendments in the name of the noble and learned Lord, Lord Hope, build on the devolution settlements and would support and strengthen the union, as well as creating what we all want: a successful, growing internal market, which is in the interest of all our citizens. We are right, as my noble friend Lord Adonis said, to ask the Government very genuinely to think again about the mechanisms—because that is what we are discussing—to achieve what I think we all want.
The noble and learned Lord, Lord Hope, said that if there was a will on the Government’s part to make the common frameworks system work, a solution could be found. Along with the noble Lord, Lord Fox, we concur with that view, and we welcome the Minister’s saying that “discussions are not exhausted”—I think I have his words right. Whether we do that by recognising the framework system in some way, extending the freeze provisions when they expire or pausing market access for a period of time while the four Governments talk—as mentioned by my noble friend Lord Adonis—there is surely a way forward. But I believe we need this amendment to get the Government to continue to discuss, so that we can get that way forward. That is why we will support the noble and learned Lord, Lord Hope, when he calls for a vote shortly.
Lord True (Con)
My Lords, I am grateful to all those who have contributed to this short debate and for the general tone of the interventions made. I was of course intrigued by the noble Lord, Lord Adonis, who emerged as a tribune of the people in this august senatorial assembly with his powerful oratory—a latter-day Gaius Gracchus, who said that your Lordships should reject everything sent to us by another place as a constructive contribution to law-making. I would respectfully give to the noble Lord, and indeed to any others who may share his views, the advice I would give to an overweight gentleman like myself: rejecting some of what is set before you, whether it is legislation or food, may well be desirable from time to time, but to reject everything is not conducive to the health of the legislature or of an individual. I hope that rather “Radical Jack” approach will not carry too much weight on the Opposition Benches.
I preferred the broader tone of the debate, which, as I heard it, actually reflected this Government’s resolve and the resolve of the parties represented in this place, at least—I cannot speak for down the Corridor: that all of us are committed to the security and future of this great union, to the common frameworks process and, as part of that, to hopefully developing further the next stage of inter-governmental relations, as I have explained to the House during the course of this Bill.
This Bill, however, works in tandem with the common frameworks programme by providing a broad safety net and additional protections to maintain the status quo of seamless intra-UK trade across all sectors of the economy, and there ought to be agreement on that in your Lordships’ House. It will ensure maximum certainty for businesses and investors, both domestic and overseas. I agree with what my noble friend Lord Naseby said from his perspective and experience in business. I am sure all noble Lords at heart support that objective and understand the need for a coherent internal market.
Lord Callanan
That this House do not insist on its Amendments 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 30, 31, 32, 33 and 56 to which the Commons have disagreed for their Reasons 8A, 10A and 15A, but do propose the following amendments in lieu—
Commons Reasons
“Duty to review the use of Part 2 amendment powers
(1) In this section “the Part 2 amendment powers” are the powers conferred by sections 17(2) and 20(7) (powers to amend certain provisions of Part 2).
(2) The Secretary of State must, during the permitted period—
(a) carry out a review of any use that has been made of the Part 2 amendment powers,
(b) prepare a report of the review, and
(c) lay a copy of the report before Parliament.
(3) In carrying out the review the Secretary of State must—
(a) consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland,
(b) consider any relevant reports made, or advice given, by the Competition and Markets Authority under Part 4, and
(c) assess the impact and effectiveness of any changes made under the Part 2 amendment powers.
(4) The permitted period is the period beginning with the third anniversary of the passing of this Act and ending with the fifth anniversary.
(5) If either of the Part 2 amendment powers has not been used by the time the review is carried out, this section has effect—
(a) as if the report required by subsection (2), so far as relating to that power, is a report containing—
(i) a statement to the effect that the power has not been used since it came into force, and
(ii) such other information relating to that statement as the Secretary of State considers it appropriate to give, and
(b) as if the requirements of subsection (3) did not apply in relation to that power.”
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, this group covers the exclusions to the market access principles and delegated powers-.
I turn first to Amendment 8L and other consequential amendments relating to the exclusions from the market access principles. These amendments, to which the other place have already disagreed, would replace the current Clause 10 with an expansive list of aims, which could be used to justify creating trade barriers for goods in the United Kingdom. The exclusions approach, as originally drafted, achieves a careful balance. It sits within the fundamental framework of the market access principles which protect the UK’s highly integrated internal market, but allows the Government to remove very targeted and specific policy areas from scope so that they continue to operate for the particular conditions where they are needed under the bespoke constraints relevant to those circumstances. This targeted approach provides certainty to businesses while ensuring that important or high-risk policy areas, such as chemicals, pesticides or sanitary and phytosanitary measures, can operate effectively.
However, the protections and benefits of the internal market proposals would quickly begin to fade with an expansive list of exclusions for part 1. This would allow unnecessary trade barriers and unjustifiable costs to businesses and consumers. The Government’s view is that a targeted list of exclusions in the Bill, combined with how the principles of mutual recognition and non-discrimination interact, is the best way in which to allow each part of the United Kingdom to meet its respective goals while avoiding unnecessary damage to the UK’s internal market.
The noble Lord’s amendment would not achieve that balance. Although the new list of exclusions that he has presented is slightly changed from his earlier amendment, the list remains very wide. It captures almost all kinds of public policy objectives, and only requires a new regulation “to make a contribution” to any of the aims in the list. This means that almost any regulation proposed by the UK Government or the devolved Administrations in future could be excluded from the scope of the market access principles. The Government reject the idea that a large list of exclusions is needed to preserve standards. The UK Government share with the devolved Administrations commitments to maintaining our existing high standards, whether environmental protection, animal welfare or consumer standards. We will continue to work together on these as a united kingdom as we leave the transition period. We should not forget that the Bill’s design will continue to allow all Governments to innovate, so that new ideas can emerge—as they did with plastic bag charges, for instance—to build better and higher standards for us all, including in the many social policy areas that the noble Lord clearly is concerned about.
I turn to the amendments relating to delegated powers, which underpin the realisation of these market access principles and make sure that they continue to function as effectively as possible. Noble Lords will be aware that the Government’s view remains that these key delegated powers are necessary. My colleague, Minister Scully, successfully argued in the other place that the amendments to remove these powers should be rejected. These powers will ensure that the system continues to evolve, facilitating frictionless trade across the United Kingdom. This will be necessary to react to developments in technology and regulation that cannot be foreseen at present. They also allow the Government to respond rapidly to business and wider stakeholder feedback—for example, to amend the list of exclusions, if implementation shows the need for adjustment.
It is important to note that any of these powers would require an affirmative procedure statutory instrument to be made in Parliament. This will ensure that there is full transparency on any changes and that MPs from all parts of the UK can scrutinise and vote on any changes. Furthermore, these powers are now supplemented by the comprehensive and reasonable package of amendments that we have proposed. This includes new amendments tabled ahead of this debate, giving more certainty on the role of the devolved Administrations in developing changes. I thank the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson, for their constructive engagement on this matter.
We have listened to your Lordships’ House carefully. Indeed, at Report, we removed the power for the Secretary of State to amend the list of statutory requirements which are in scope of the mutual recognition principle for goods. In this case, having looked again after hearing from your Lordships, we changed our position, having assessed that the removal of the power will not substantially undermine the operation and flexibility of the internal market system.
We have also retabled the Government’s amendment from Report, removing the main affirmative power in relation to the exclusions to part 2. When the other place disagreed with this House’s amendment, removing the main affirmative power and the draft affirmative power, both parts of that power were restored to the Bill. I am happy to make the change that I proposed in my amendment at Report once again. We have also proposed new amendments that give an enhanced role to devolved Administrations in relation to these powers, building on the model proposed by the noble Baroness, Lady Hayter, at Report and ensuring that agreement across all Administrations to the use of the power is achieved whenever possible. The Secretary of State will be required to seek the consent of the devolved Administrations prior to any use of this power. If consent is not provided within one month, the Secretary of State will be able to proceed without that consent but must publish a statement setting out the reasons for proceeding in this way. As this adapts the model that your Lordships previously supported, I hardly need to stress the merits of this approach, which ensures that the devolved Administrations have a say but not a veto. I am hopeful that this time noble Lords will support it. The noble Baroness, Lady Hayter, is nodding; we are in a good place on this one.
Thanks to government amendments introduced at Report that are retabled today, the impact and effectiveness of any use of these powers will be subject to review within five years. A report setting out the conclusions of that review must then be laid before Parliament. I hope this offers comfort to this House that we are taking seriously the concerns that have been raised, and we are working to address them constructively. The uses of the powers to make delegated legislation contained in parts 1 and 2 of the Bill will be scrutinised, not only when they are being laid before Parliament, but also in a more holistic way, after a suitable period has elapsed. This review will again give an opportunity for the devolved Administrations to provide their views.
I briefly address the power to issue guidance, to which we have deliberately taken a more distinct approach. Clause 12 explains that the Secretary of State may issue explanatory guidance on the practical operation of the market access principles for goods. It is not a power to make or amend legislation and, therefore, it differs from other delegated powers in part 1 of the Bill. As part of this process, we will, of course, engage with all the relevant stakeholders, because we are committed to helping regulators and traders to understand the principles and make the best possible use of them. This includes the devolved Administrations, and we are including a legislative commitment to consult them before issuing, amending or withdrawing that guidance. Guidance will not change the rules themselves, so a requirement to seek the consent of devolved Administrations, as proposed for other powers, is not needed.
I urge your Lordships to support all the amendments to these powers, which I hope noble Lords will agree represent a reasonable approach. Crucially, they also enable the internal market system to remain up to date while ensuring the highest degree of scrutiny and accountability. I beg to move.
Motion B1 (as an amendment to Motion B)
Lord Fox (LD)
My Lords, like the noble Lord, Lord Stevenson, I will take the amendments in the opposite order to the Minister, if the House is happy with that.
The delegated powers issue has almost become a ritual in your Lordships’ House. A Bill is published and in it are many very draconian powers, which seek to change almost everything the Bill can do at the will of the Minister. There is then a report from the DPRRC which condemns it, and then there is a debate and we start to move towards a more reasonable situation. I hope, perhaps, that we can learn from this and maybe cut out a few of the steps, so that we can get to the reasonable situation. The Government have given considerable ground on this, and for that we should all be accepting and reasonable and, I suppose, grateful, although perhaps gratitude is the wrong word.
With respect to Clause 12, I think we will all be watching quite closely to see how those powers are exercised, because advice can come in many forms and we will be seeking to observe that.
The characterisation that these delegated powers are required in order for the Government to react and act with speed has been absolutely confounded by the way in which the Covid crisis has been addressed by the Government. There has been very rapid legislation and very rapid reaction. Looking forward, we have got to a better place than we were in when we started. I still do not think that we would call it perfect, but we have taken a long time to get there.
My reading of the amendment proposed by the noble Lord, Lord Stevenson, is that it is the return of Amendment 21, or at least most of it. Listening to his very reasonable presentation of the amendment and having listened to the debates on Report, I am somewhat surprised that the Government continue to dig their heels in. I can understand that the list in subsection (2) of the proposed new clause might have raised some concerns, and it can of course be subject to negotiation, but as the list now stands—with environmental standards and protection; animal welfare; consumer standards, including digital; employment rights and protections; the health and life of humans, animals or plants; the protection of public health; or equality entitlements—it seems that the Government could not possibly object to it, so I am surprised. The Minister has set out his concerns about an ordered market, but it is very clear that any market that did not observe these things would not be one that we wanted anyway.
With that response, I suggest that we will be supporting the noble Lord, Lord Stevenson, when this Motion is put to a vote. We hope that the Government will be able to have discussions with the noble Lord and others, so that next time they can come back with something much closer to what we have seen today.
Lord Callanan (Con)
I thank both noble Lords for a good, albeit brief, debate. To summarise, earlier I expressed my concerns about Amendment 8L and the expansive list of exclusions from the market access principles that it introduces. The list that we have included has been carefully drafted to strike what is, in our view, a measured balance. It protects the ability of the devolved Administrations and the UK Government to deliver policy, while avoiding harmful or costly barriers to trade within the UK internal market. The Bill does nothing to stop all nations working together to achieve mutual goals and build on our shared high standards.
On the delegated powers in the Bill, it is not proportionate to remove the Government’s ability to ensure that the list of exclusions and legitimate aims remains appropriate. The Government have already set out a comprehensive package of changes to the delegated powers in the Bill, including for the removal of certain powers and for reviews and reporting to Parliament, and new amendments on the role of the devolved Administrations. This provides for effective transparency and scrutiny of the remaining powers.
We believe that there is a reasonable middle ground here. Many noble Lords tabled and supported amendments to alter, but not remove, the powers in the Bill. We agree with those colleagues. These powers are necessary, and we believe that the changes we have proposed should address their concerns. I therefore hope that noble Lords will be able to support the Government’s approach to reinstating these powers in the Bill.
Lord True (Con)
My Lords, it seems that I am muted again, but I will find my way to the right spot. I turn now to Part 5 of the Bill. These clauses, as your Lordships may be aware, have been the subject of much debate here and in the other place.
Noble Lords will have seen that the Government announced yesterday that they have reached agreement, in principle, on all of the issues in the UK-EU withdrawal agreement Joint Committee. The Government have been clear throughout that they are committed to implementing the withdrawal agreement and the Northern Ireland protocol. We said that when the Bill was introduced to Parliament and have done so at every stage of its passage. We are also clear that, as a responsible Government, we could not allow the economic integrity of the United Kingdom’s internal market to be compromised inadvertently by unintended consequences of the protocol. That is why, through clauses in this Bill, we have sought limited and reasonable steps to create a legal safety net by taking powers in reserve whereby Ministers could guarantee the integrity of our United Kingdom and ensure that the Government are always able to deliver on their commitments to the people of Northern Ireland.
We sought these measures to guard against the possibility of not reaching agreement with the EU in the Joint Committee. As we have now reached agreement with the EU, I am pleased to say that the clauses which provided for the safety net are no longer needed and the Government are content for them to be removed from the Bill. I refer to Clauses 44, 45 and 47.
Lord True (Con)
However, as I said in Committee, the clauses that provide for the safety net are not the only ones that make up this part of the Bill. It is vital that the other clauses are passed so that we can deliver on our commitments to the people of Northern Ireland. The protocol is clear that Northern Ireland is part of the UK customs territory, while our manifesto is clear that we would maintain and strengthen the integrity and smooth operation of our internal market. Clause 42 delivers on that commitment by ensuring that all authorities must have special regard to the following fundamental matters when exercising functions that relate to the implementation of the protocol on the movement of goods within the United Kingdom.
The first is the need to maintain the integral place of Northern Ireland in the United Kingdom’s internal market. The second is the need to respect Northern Ireland’s place as a part of the United Kingdom’s customs territory, while the third is the need to facilitate the flow of goods between Great Britain and Northern Ireland. The clause is also entirely in line with the protocol. Indeed, Article 4 states
“Northern Ireland is part of the customs territory of the United Kingdom.”
Article 6 goes on to state
“Nothing in this Protocol shall prevent the United Kingdom from ensuring unfettered market access for goods moving from Northern Ireland to other parts of the United Kingdom’s internal market.”
In the recitals it states that the application of the protocol
“should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland”.
This clause delivers on the commitments made in the Government’s manifesto, in the Command Paper published by the Government in May on the implementation of the protocol and on the protocol itself. These are not controversial aims, and indeed some were surprised that your Lordships feel differently.
Let me be clear that as there was some confusion about this in Committee, this clause is not dependent on any other in the Bill. There is no infection or so-called contamination here; it is merely about a Government fulfilling their commitment to the people of Northern Ireland. Indeed, the fact that the Government are seeking to ensure that the clause remains in the Bill, while Clauses 44, 45 and 47 are removed, proves the point. This clause does not provide for or allow for a breach in any way of the withdrawal agreement and is entirely in keeping with the protocol.
I turn now to Clause 43. As I have said, and as noble Lords will know, the Government have committed to providing unfettered access for Northern Ireland’s businesses on multiple occasions. Clause 43 gives effect to that commitment by prohibiting the introduction of new checks and controls on Northern Ireland goods, with some very limited exceptions. This is in keeping with what the Government have said constantly and with what was promised in our manifesto. That commitment is critically important to the businesses and people of Northern Ireland. By including Clause 43 in the Bill, we will protect the vast majority of the £8.1 billion-worth of goods sales from Northern Ireland to Great Britain, and guarantee Northern Ireland’s place in the United Kingdom’s internal market. I hope all of us can now agree on the importance of providing unfettered access for Northern Ireland goods to the rest of the United Kingdom. This clause delivers on that.
As with Clause 42, this clause is not dependent on any other in the Bill. I of course recognise that Clause 43(3)(b) refers to Clause 47, but that is only part of spelling out that it in fact allows checks where applicable international obligations require them. That subsection is being removed. This clause does not provide for or allow for a breach in any way of the withdrawal agreement and it is entirely in keeping with the protocol.
Given the broad support there is for unfettered access, the Government’s repeated commitments to legislate for unfettered access—including in the New Decade, New Approach Deal to restore the Executive, our May Command Paper on our approach to implementing the protocol and the manifesto that brought this Government to office in the last election—and given how important it is to protect access for Northern Ireland businesses to their most important market, it would be hugely disappointing for them and for business certainty in Northern Ireland if noble Lords were to remove these subsections unduly.
I turn to Clause 46. Under state aid rules, notification is the process through which EU member states inform the Commission about state aid or potential state aid. This process will continue to apply to the United Kingdom from 1 January 2021, but in relation only to the limited circumstances where Article 10 of the Northern Ireland protocol applies. This clause simply establishes a statutory requirement that no one besides the Secretary of State may notify the European Commission of state aid or potential state aid. It codifies existing practice in legislation and would not be considered novel or controversial to the Commission, as it is unlikely to accept notification from anyone other than authorised persons.
Motion C1 (as an amendment to Motion C)
Lord True (Con)
My Lords, I am not a lawyer, as I am frequently reminded in your Lordships’ House, but I am a historian by vocation and occasional practice, and I know that history is the study of cause and effect. I have heard one version of a proto-history just put to us by the noble and learned Lord, Lord Falconer; there are many other versions which no doubt could and will be put—indeed, some have been put in this debate. The thing to do now is to move forward. Once all the documents are revealed, no doubt people will be able to say what had an effect on what. We are here today to make a judgment on carrying draft legislation, a Bill, forward.
I, too, welcome prodigal sons, and indeed prodigal daughters, if I may say so. The noble and learned Lord was kind enough to say that the Government had graciously changed their position. I heard less comment in the debate—although the noble Lord, Lord Dodds, and the noble Baroness, Lady Hoey, referred to it—about the change of mind, if I may use the phrase, by your Lordships. I hope it is forthcoming on Clauses 42, 43 and 46. I welcome that change of mind. I do not believe that unfettered access should have been called into doubt in your Lordships’ House, and I heard no one speak against that principle, although the noble Lord, Lord Newby, appeared at one moment to exult in the idea that it might not exist. I welcome and am grateful for what I hope will be the change of mind on those other clauses, and I hope that the noble and learned Lord, Lord Judge, will be able to confirm that.
I thank all those who have contributed to the debate. I must say to the noble Lord, Lord Adonis, although I do not want to pick him out particularly, that I do not think that, whoever he or she may be, personal vilification of the Prime Minister is a conducive or beneficial way to broaden consensus in debate in your Lordships’ House. I counsel the noble Lord that vilification of the current Prime Minister will not particularly persuade me to listen to his arguments.
As I said in my opening speech—I thank noble Lords for their comments on the facts of it, not the speech —the Government will not be opposing the removal of Clauses 44, 45 and 47. I can confirm to the noble and learned Lord that new Clause 45 is in accordance with the rule of law. However, as I have argued, the remaining clauses in the Bill are vital to the Government delivering on their commitments to the people of Northern Ireland.
I must say to the noble Baroness, Lady Hoey, that I will be repeating a Statement tomorrow, and I will obviously answer questions on that matter. I am sorry, but I do not make the rules and customs of the usual channels in this place, but I understand her feeling, and no doubt she will examine that Statement tomorrow. I do not think I am telling anybody anything that they do not know when I say that, unfortunately, that Statement will be repeated relatively late tomorrow.
The clauses which I hope your Lordships will allow to return seek to protect Northern Ireland’s place in the UK’s customs territory and internal market, and that is something, as the noble Lord, Lord Dodds, recited, that not only this Government and the Northern Ireland Executive but the EU absolutely committed to—unfettered access, so please let us see that back in the Bill.
Whatever the rights and wrongs of the history, I hope that the reality of the day is that people in different parts of this House will be able to have some satisfaction in where we have reached at this point. I always agree that, in life, negotiation is desirable. As I said in my opening remarks, Clauses 42, 43 and 46 have now been sent to us twice by the democratically elected House, and on those I urge your Lordships, if the Question is put, not to vote them out again. I beg to move.
Lord Judge (CB)
I do not think there is anything I could usefully add; I think we should get on.
(i) is necessary for the purpose of dealing with a threat to food or feed safety in Great Britain.”
Lord Callanan
That this House do not insist on its Amendments 50, 57 and 61 to which the Commons have disagreed for their Reasons 50A and 57A, but do propose Amendment 50B in lieu—
Commons Reasons
“40A Duty to review arrangements for carrying out Part 4 functions
(1) The Secretary of State must, within the permitted period—
(a) carry out a review of the appropriateness, for the purpose of securing the most effective and efficient performance of the Part 4 functions, of—
(i) the provision made by section 30(1) and the amendments made by Schedule 3, and
(ii) any arrangements made under or in connection with that provision and those amendments;
(b) prepare a report of the review (see subsection (4) for specific requirements relating to the report), and
(c) lay a copy of the report before Parliament, the Scottish Parliament, Senedd Cymru and the Northern Ireland Assembly.
(2) The review must, among other things, assess—
(a) the way in which Part 4 functions have been carried out by the CMA through Office for the Internal Market task groups authorised under section 30(1), and
(b) any advantages or disadvantages of continuing with—
(i) the provision made by section 30 and the amendments made by Schedule 3, and
(ii) the arrangements made under or in connection with that provision or those amendments,
as compared with other possible ways of providing for the Part 4 functions to be carried out (including possible arrangements not involving the CMA).
(3) In carrying out the review the Secretary of State must consult the other relevant national authorities.
(4) Before finalising the report required by subsection (1)(b) the Secretary of State must—
(a) send a draft of the proposed report to each of the other relevant national authorities, inviting the authority to make representations as to the content of the proposed report within a period specified by the Secretary of State, and
(b) consider any representations duly made in response to that invitation and determine whether to alter the report in the light of that consideration.
(5) The Secretary of State need not consult the devolved authorities further if the draft is altered as mentioned in subsection (4)(b) (but is free to do so if the Secretary of State thinks fit).
(6) The permitted period for the review is the period beginning with the third anniversary of the day on which section 30 comes into force (or first comes into force to any extent) and ending with the fifth anniversary.
(7) In this section “Part 4 functions” means functions of the CMA under this Part.”
Lord Callanan (Con)
My Lords, I now turn to the amendments on the office for the internal market and the subsidy control grouping.
First, I want to emphasise that Part 4 establishes the office for the internal market within the Competition and Markets Authority, which is, in our view, a natural home for the OIM, given its existing technical expertise that is highly relevant to the operation of the UK internal market. But, as I have set out, the office for the internal market will be independently governed within the CMA, and Schedule 3 sets out a carefully balanced set of governance arrangements which guarantee that independence and ensure a meaningful role for the devolved Administrations through the appointments process to the OIM panel. This gives the devolved Administrations a proper voice, while guaranteeing that the OIM can operate without delay or obstruction if four-nation consensus cannot be reached on appointments.
The Government have listened carefully to the discussions in this House and have acted, tabling a number of pragmatic and constructive amendments throughout Part 4. These make it clear that the OIM will work in the interests of consumers and ensure that it will operate in the interests of all parts of the United Kingdom and on an equal basis towards the four UK Administrations. This is further to the significant change put forward previously, requiring the Secretary of State to seek consent from all Administrations within a one-month timeframe, based on proposals developed originally by the Welsh Government. This change provides yet another enhancement for the devolved Administrations in the appointment process, which, as I have explained, fully reflects the even-handed approach to governance that runs throughout Schedule 3.
I hope your Lordships can appreciate that the Government have listened and moved accordingly. However, I cannot support your Lordships’ Amendments 57 and 61, which go further than this, requiring direct devolved Administration appointments to the CMA board. As already set out here and in the other place, it is the OIM panel that will undertake the work of the OIM. The CMA board is responsible for the operations of the organisation as a whole, which otherwise fall wholly within reserved competence. It is therefore not appropriate for the devolved Administrations to make appointments to the CMA board, as those board members would, in consequence, be involved in a range of reserved matters with no relation to the OIM functions set out in Part 4.
With regard to Amendment 50, your Lordships will be aware that this has invoked a financial privilege claim and has not been agreed to by the other place. Although this of course is sufficient in itself, I will remind your Lordships’ House that there is a consultation forthcoming on this matter of subsidy control. It would be premature and unjustified to agree to confer specific regulatory functions on the OIM in respect of subsidies before the wider details of any legislative UK domestic subsidy control regime—including the appropriate mechanism for oversight and enforcement—have even been developed and brought before Parliament, let alone agreed.
However, I have listened to concerns regarding the decision to have the CMA perform these duties, and I am pleased to announce that the Government have tabled Amendment 50B, which will require the Secretary of State to review, after between three and five years and in close consultation with the devolved Administrations, the appropriateness of, effectiveness of and potential alternatives to the CMA carrying out its Part 4 functions. This will allow Ministers from all Administrations to closely consider the CMA’s performance and the pros and cons of continuing with the CMA as the delivery vehicle for the Part 4 functions. This proposal makes it clear that the Government are committed to ensuring due diligence on the CMA’s new functions and facilitating further scrutiny by all Administrations.
This amendment requires the devolved Administrations to be consulted as the review is carried out—but it goes further, giving the Administrations the right to consider and make representations on the draft report itself, and requiring the Government to fully consider those views. Subsection (5) rules out an unlimited obligation to consider repeated rounds of representations that could block the review, but I want to be clear that the Government will consider all views offered in good faith. I note for the benefit of noble Lords that this final point applies equally to Clause 50—to which I will now turn—which reserves to the UK Parliament the exclusive ability to legislate for a UK-wide subsidy control regime in future.
I was pleased to note in the debate on Report that many noble Lords did in fact recognise the importance of maintaining a consistent approach in what is a nationally significant area of economic policy. In addition, I welcome the devolved Administrations’ support for the principle of a unified approach to subsidy control throughout the United Kingdom. For these reasons, the Government believe it is right that we retain the provisions for the reservation of subsidy control in the Bill.
Now we have left the EU, it is important that we continue to take a coherent approach to the system that governs how public authorities subsidise business across the UK. I reiterate that this reservation is not about sources of funding or who makes decisions on individual subsidies across the UK. This reservation will ensure that any future system we put in place to regulate against the distortive or harmful effects of spending on subsidies then applies to the whole of the UK.
A unified approach to that overall framework will reduce uncertainty for UK businesses and prevent additional costs to supply chains and consumers. As such, continuing our UK-wide approach to subsidy control and confirming it in law remains the best way to ensure that we continue to take a consistent approach to regulating the harmful effects of subsidies across the United Kingdom.
To be clear, all UK public authorities are and will remain responsible for their own spending decisions on subsidies—how much, to whom and for what—within any overall subsidy control regime. This reservation is not seeking to change public authorities’ responsibilities for spending decisions. However, the wider rules which they operate should continue to be consistent across the United Kingdom.
I acknowledge the concerns that some of your Lordships have raised in previous debates regarding the principle of reserving a policy area in advance of the forthcoming consultation the Government have committed to publish. However, this reservation is a necessary step to ensure that, if a legislative regime were introduced, it would apply then to the whole of the UK. Given that this is a national issue, the future subsidy control mechanism should be the responsibility of the UK Parliament to determine.
Lord Callanan (Con)
My Lords, I thank all noble Lords who have contributed to what was another short but powerful debate. I have listened carefully to the points that have been made. I will set out in my closing remarks why I cannot support Amendments 51, 57 and 61 in the name of the noble Baroness, Lady Finlay. Turning first to the OIM, I emphasise that the Government have listened and responded directly to points made in this House. This is reflected in the meaningful changes made throughout Part 4. They include putting beyond doubt that the OIM will work in the interests of consumers, and making it clear that its functions will be available to the benefit of all parts of the UK, and for all Administrations, on an equal basis.
The Government have recognised the need for the devolved Administrations to be closely involved in OIM panel appointments. That is why the proposal for a one-month consent requirement on OIM panel appointments with the devolved Administrations is being introduced, providing them with an enhanced role in the process. This amendment originated with the Welsh Government.
Finally, the Government have tabled an amendment that will require a review and a report between three and five years after the CMA takes on the Part 4 functions. This will examine the way in which the CMA has carried out these functions, and the devolved Administrations will be closely involved throughout. The review and the report will provide the necessary assurances that the operation of the OIM within the CMA will be closely scrutinised, providing enhanced transparency and accountability to all four UK Administrations.
I will reply to the point made by the noble Baroness, Lady Finlay: in seeking to go further than a normal requirement to consult the devolved Administrations on the review of the OIM, the Government have included an additional and explicit requirement to share and allow for representations on the resulting draft report. As I have said, providing that the Government are not required to follow this operation an unlimited number of times is simply intended to prevent a procedural impossibility if no consensus is reached. I am happy to say again that all views offered in good faith will be considered by the Government in preparing their report, as required in the proposed clause. The amendment makes clear that the Government have the option of sharing as many drafts and considering as many rounds of representations as are appropriate and feasible in the circumstances.
I am happy to assure my noble friend Lady Neville-Rolfe that these proposed reviews would assess the pros and cons of the CMA as the delivery vehicle of the OIM, including whether possible arrangements not involving the CMA could carry out the Part 4 functions in the future.
I turn to the knotty issue of subsidy control. The purpose of this reservation is to provide stability and continuity as we move forward in forging a new UK-wide subsidy control regime. This Bill continues the UK-wide approach to subsidy control and confirms this in law. State aid has never been a devolved issue, as I have said on a number of occasions, and this reservation will ensure that we can continue to take a uniform approach to subsidy control across the UK. I reiterate that, in practice, nothing will change for the devolved Administrations. All UK public bodies, including the devolved Administrations and in the areas that the noble Lord, Lord Liddle, highlighted, will still have responsibility for spending decisions on subsidies and should make these in a way that is consistent with the overall approach taken across the United Kingdom.
In the coming months, we intend to publish a consultation on whether we should go further than our World Trade Organization and international commitments, including whether further legislation is necessary. We will take the necessary time to listen closely to the devolved Administrations and design a system that promotes a competitive and dynamic economy throughout the whole of the United Kingdom.
The proposed amendment makes clear that the UK Government are committed to involving the devolved Administrations in the forthcoming development of proposals for a UK-wide subsidy control regime. We recognise the importance of working constructively and co-operatively in this policy area, and it is in all our interests that a new regime works to the benefit of the whole country. That is why the Government cannot agree with Amendments 50C, 51, 57 and 61, so I urge noble Lords to accept Amendments 50B and 51B put forward in my name and reject the others.
Lord Callanan
Moved by
That this House do not insist on its Amendment 51 to which the Commons have disagreed for their Reason 51A, but do propose the following amendment in lieu—
Commons Reason