Northern Ireland Protocol Bill

Baroness Chapman of Darlington Excerpts

Committee stage
Wednesday 2nd November 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, many of us are worried about the powers to regulate, but it is not just about democracy. I have time for the concerns expressed in the email that was just read out—of course I do. I just point out, however, that the situation that we are in that is so objectionable to the noble Lord’s colleague in Northern Ireland came about because of the actions, decisions and agreements made by their elected Government. Sometimes that is how it works, too. The problem that I have with the powers is not just the issues that we have heard expressed extremely well by those far more qualified to do so than I am; it is that we do not know what Ministers intend to do with those powers. There is a circumstance in which the gentleman who wrote the email might find himself doubly aggrieved, because we do not yet know what it is that Ministers will do to resolve the problem that the noble Lord has, or whether the actions of the Government in the future would actually be ones that would satisfy that grievance. That is where I am coming from. It is because there is a lack of clarity, and uncertainty; there is an option to negotiate that is not being taken. I am now repeating myself, and using yet another set of clauses to make exactly the same general points.

I am not going to repeat what has already been said, but I want to make a wider point about the approach to law-making that the Government are getting increasingly fond of. We see some extreme examples of it in this Bill. The noble Lord, Lord Purvis, when he introduced this set of amendments, said that he could not actually be clear about how Clause 14 would be used by the Government, because, in the words of the DPRRC, the memorandum has so little to say about this broadly worded power. Nothing is said about the sort of provision that could be made under it.

Clause 14 tells us—in case we did not know—that overriding parts of the protocol is going to require a whole host of consequential changes elsewhere, and that is what I will talk about this time when we are talking about powers. We have been here before. Noble Lords will remember that as we approached the end of the transition period, departments rushed to make various changes to the operability of retained EU law. In a worryingly high number of cases during that process, as I remember, the Government made mistakes and further, correcting regulations then needed to be brought forward. This exercise is no simpler than that. If anything—because this Bill is highly contentious and because of the wider context—it is even more complicated than that previous exercise.

We need to be mindful of how these things are going to work in practice. If the Government get their Bill, how is this really going to work? Have they actually considered this? Given the difficulties that the Government had with revoking things such as the duty to post reports to the European Commission, how confident can we really be that an as yet unclear policy direction can even be delivered in a way that is in any sense timely and accurate? That really will matter to the correspondent of the noble Lord opposite. What I am saying is, putting aside my dislike for the Bill, this is not a good way for us to be making law or for the Government to put their policy into practice.

Just imagine that this Clause 14 is available to Ministers —and I hope this does not happen, but suppose it did—can we have some kind of indication from the Minister of how long this process is going to take? How many SIs does he think are going to be needed; how will the Government sequence this workload? The lack of planning around some of this in previous endeavours has really caused problems, and we do not want to be in that place again. I still think this is a bad Bill in principle, but I am afraid that its implementation is likely to render it completely unworkable in practice.

[The Advocate-General for Scotland (Lord Stewart of Dirleton) (Con)]

My Lords, I thank all noble Lords who have participated in this debate, which was short because, as the noble Lord, Lord Purvis of Tweed, recognised in introducing it, much of the material has been covered before. Noble Lords will, I hope, forgive me if, brevitatis causa, I do not go over all the arguments already deployed and will accept, that, because they have not been deployed, we understand where they apply in the context of this clause, and will bear them in mind when considering our responses.

Amendment 22, in the name of the noble Lord, Lord Purvis, removes the power in Clause 14(4). Clause 14 prevents those necessarily more broad and conceptual provisions from being relied upon, in the different legal context that will prevail under the Bill, to undermine the legal regime that the Government are putting in place for traders. The power in Clause 14(4) is important because it will allow Ministers to ensure, subject to the appropriate parliamentary scrutiny, that the exclusions made under the Bill are coherent. It may, for example, be necessary to make alternative provision where any other provision of the withdrawal agreement or protocol so far as it applies or relates to those exclusions is excluded. It could also be used to provide clarity as to how the horizontal exclusions referred to in Clause 14(1) interact with other exclusions in domestic law.

The noble Lord, Lord Purvis, and the noble Baroness, Lady Chapman of Darlington, sought examples of how it would work out in practice. I ask the Committee to bear in mind that the position in which we are at present is one of anticipation of what will be required in relation to a dynamic situation.

The powers to make secondary legislation allow us to flesh out the precise technical or administrative details of the new regime. The powers also need to be broad to ensure that the Bill can address issues that will arise in future as EU rules continue to change. The Government submit that the powers are both necessary for the legislation to be operable and have been appropriately limited prior to their implementation. As I said earlier, I do hear the criticism in relation to breadth offered by various noble Lords in the debate today and at other stages.

The noble Lord, Lord Browne of Belmont, made points reminding the Committee of the context in which the Government bring forward this legislation, and I am grateful to him for his qualified support. The points he made were no less powerful for having been made before, in the course of various debates we have had at earlier stages.

The noble Baroness, Lady Chapman of Darlington, from the Opposition Front Bench, refers to the way in which more and more laws appear to be being cast in this fashion, with more and more use of delegated powers. I invite the Committee to consider that, in the case of this Bill, the Government are seeking to legislate in such a vital area, as the noble Lord, Lord Browne of Belmont, reminds us.

The noble Baroness speaking from the Opposition Front Bench posed a number of technical questions. The questions she posed perhaps require an answer in more detail than I am able to give from the Dispatch Box, and perhaps than would be desirable to the whole Committee—but, if she will grant me forbearance, I will write to her.

I have not yet addressed the question of Clause 14 standing part of the Bill. It will support the coherent functioning of the Bill. It is important to ensure clarity in relation to the interaction between excluded provision and any wider provisions in the protocol or withdrawal agreement to which such provision relates. Subsection (1) gives effect to this by confirming that any provision of the protocol or withdrawal agreement is excluded provision to the extent that it would apply in relation to any other excluded provision. Subsections (2) and (3) set out further the kind of ancillary provision that may be excluded.

I discussed subsection (4) in addressing the amendment proposed by the noble Lord, Lord Purvis of Tweed, but I provide further assurance that the Bill seeks to establish a coherent domestic regime and that regulations can be made under it in connection with any provision of the protocol or withdrawal agreement to which this clause relates. The Government’s position is that the clause is important to insulate fully any excluded provision from being subject to obligations arising from other provisions of the protocol and withdrawal agreement.

I think I am following the mood of the Committee by not expressing myself in as much detail as my noble predecessor, my noble friend Lord Ahmad of Wimbledon —or Wimbledon of Ahmad, as he was prepared to style himself earlier—dealt in, but the Committee as a whole will recognise that this provision is tied up with its predecessor.

I hope that, at least at this stage, I have said enough to persuade noble Lords not to press their amendments.

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[Lord Dodds of Duncairn (DUP)]

Well, there are a lot of “ifs” there. If I understand the noble Lord, he is asking, “If there’s an agreement, what should the Government do in terms of getting an endorsement of it?” I presume they would come to both Houses of Parliament and consult with the parties in Northern Ireland. As we learned from the original Brexit negotiations, the Government would be very wise to consult with the parties in Northern Ireland before any final arrangements are entered into.

I have a lot of sympathy with the view expressed by the noble Lord, Lord Hannay, that there is a lot of secrecy around the negotiations. Nobody is quite sure what is going on—technical talks, negotiations or whatever. However, I remember living through one particular week when the UK Government went off to Brussels and then came back again because they had not consulted properly. I would not like to see that happen again, because the whole objective here is to ensure that we can get arrangements which allow the devolved Government to get up and running again, with the support of nationalists and of unionists. So, before we came to any formal vote, I suspect that there would need to be quite considerable discussions and consultations with the parties in Northern Ireland.

[Baroness Chapman of Darlington (Lab)]

I would expect that, too, and I think it is regrettable that we have got to where we are. I was one of those people in the other place who very regularly got up and asked Ministers about Northern Ireland and what the plan was, because there were obviously going to be these issues. There were other solutions; we could have had a customs union or some kind of single market arrangement that would have maybe dealt with this in a slightly different way. I remember talking to one of the noble Lord’s colleagues who said, “Well, we don’t mind what it is as long as we’re all treated the same within the United Kingdom”. Ministers cannot be surprised that we are still having these discussions now.

I want to talk a little bit about this issue of cross-community consent; I am just reflecting on the speech made by my noble friend Lady Ritchie on Monday. It seems clear that the intention of Ministers is to protect the Article 2 rights of individuals, the Article 3 common travel area and the north-south co-operation in Article 11. We have debated the protection of the rights of individuals before, but what we really need is some sort of assurance from the Government that those intentions are reflected throughout the Bill in a consistent and watertight way. So can the Minister confirm that there is no prohibition on the overriding of Article 18 of the protocol, which deals with cross-community consent? We have rightly heard a great deal about this issue, and I would like the Minister to address it to make sure that I have understood it correctly.

[The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Caine) (Con)]

My Lords, I am very grateful, as ever, to the noble Baroness, Lady Ritchie of Downpatrick, for moving Amendment 25. Much to my astonishment, the debate has veered away somewhat from the strict terms of her amendment. However, let me say at the outset, as I have said before, that I very much share the noble Baroness’s frustration at the lack of a sitting and functioning Northern Ireland Executive and Assembly. Of course, one of the motivations behind this legislation is to try to facilitate a situation in which those institutions might be restored. It is sensible that we always go back to why we are doing this and why we are legislating.

I can also sympathise with the intention behind the noble Baroness’s amendment, but the Government’s view is that it is unnecessary. To answer the noble Baroness, Lady Suttie, and I think to some extent the noble Baroness, Lady Chapman of Darlington, the Government have absolutely no intention whatever to use the powers in Clause 15 to alter the operation of the democratic consent mechanism in Article 18.

I appreciate that there are different views on the mechanism itself; they were aired to some extent a few moments ago. They have been debated extensively in this House, and I seem to recall that they even managed to make their way into the debate on the Ministers, elections and petitions of concern Bill at the end of last year and the beginning of this one—so, if my noble friend Lord Dodds of Duncairn will forgive me, I do not really wish to reopen that whole debate again at this late hour of the evening.

To answer the further question from the noble Baroness, the vote in the Assembly will be on Articles 5 to 10 of the protocol.

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[Baroness Chapman of Darlington (Lab)]

Very briefly, I very much welcome these amendments for many of the reasons that have been said. We favour a veterinary agreement with the EU to assist us in resolving some of the issues brought about by the protocol.

I use this opportunity to say that I agree wholeheartedly with what the noble Lord, Lord Purvis, said, but remind Ministers of the amendment on consultation and impact assessments that we tabled at the beginning of this process, which we will come back to and want to see addressed either at the end of this process or at the very beginning of Report, if the Government bring the Bill back. That has not gone away and, much as we have engaged with this Committee process, those asks that we had of the Government remain on the table.

[Lord Caine (Con)]

I am extremely grateful again to the noble Lord, Lord Purvis of Tweed, for proceeding at a canter. To some extent, as he said, we are, to borrow a line from “Wish You Were Here”, going over the same old ground—Pink Floyd, for the uninitiated.

I will address the amendments in the names of the noble Baroness, Lady Ludford, and the noble Lord together. Again, I will try to reassure noble Lords that the Government have engaged very broadly on the issues created by the protocol with groups across business and civic society in Northern Ireland, the rest of the UK and internationally. I remind the Committee of something that I think was raised on Monday: over the summer, in addition to routine engagement the Government held 100 bespoke sessions with more than 250 businesses, business representative organisations and regulators.

Within my department, Northern Ireland Office Ministers held discussions with a wide range of businesses and organisations, including a number of those not actually named in the amendments tabled by the noble Lord and his colleague, such as the Dairy Council, Hospitality Ulster, as mentioned by my noble friend Lord Dodds of Duncairn, the Northern Ireland Grain Trade Association, the Northern Ireland Meat Exporters Association and the Northern Ireland Poultry Federation, either individually or as part of the Northern Ireland Business Brexit Working Group. In fact, the noble Lord might or might not be aware that most Northern Ireland food and drink representative bodies—although not one of those listed in his amendment, Food NI—are members of the Northern Ireland Business Brexit Working Group, with which we engage regularly, as are the Federation of Small Businesses in Northern Ireland, the Northern Ireland Retail Consortium, the Northern Ireland Chamber of Commerce and Industry, and the CBI in Northern Ireland.

Alongside this engagement, we have made visits to a number of individual businesses. I reminded the Committee on Monday about a farm I visited between Newry and Armagh during the summer, where senior representatives of the Ulster Farmers Union were indeed present, and where we discussed a number of issues relating to the operation of the Northern Ireland protocol in respect of the dairy sector. So the Government have already been conducting a detailed programme of engagement to inform the specific design of the regime in Northern Ireland that will be created by this Bill, and I give every assurance that we will continue to do so.

The noble Lord’s amendments would compel Ministers to engage in consultation with specific organisations as set out in the amendment, but as I said, there are many others that we are in discussions with that are not mentioned in those amendments. In many cases, the consultations that would be set out in statute would not necessarily be pertinent or proportionate to the regulations themselves and would lead only to further delays in implementing solutions. For example, I think the Committee would agree that the Northern Ireland Food and Drink Association might not necessarily need to be consulted on VAT applied to domestic energy saving materials.

However, the powers in the Bill might need to be used quickly, and while in normal cases the Government would seek to engage with stakeholder groups, there may be occasions on which the urgency of a situation would make that unnecessary and therefore it should not be compulsory. Given the extent of the consultation we are already carrying out with business organisations and others in Northern Ireland, this amendment would risk tying the Government’s hands behind their back.

Regarding the publication of consultations, it is vital that we be able to have free and frank discussions in confidence with as many groups and organisations as possible, in which they can freely express their views to government, sometimes in forthright terms. I am sure the noble Lord would not want them to be constrained in so doing, but the amendment might well inhibit that. Of course, the outcome of our engagement will be considered and reflected in the final regulations, which the House, as has been mentioned in earlier debates, will have an opportunity to consider and scrutinise under the normal procedures. In our view, we do not need a statutory obligation to do something we are already doing with a far larger number of organisations and bodies than the amendment would have us commit to. In that spirit, I ask the noble Lord to withdraw the amendment.

On the government impact assessment set out in Amendment 74, I understand completely and sympathise with the desire for an assessment of the arrangements under the new regime. I will try to reassure noble Lords that while the Bill does not at present have an impact assessment, the full details of any new regime will be set out in regulations alongside and under the Bill, including the economic impact where appropriate. We do not, however, believe it would be appropriate to mandate by statute that the Government must in all circumstances produce an economic impact assessment before the Bill can be brought into full force. Conducting an impact assessment, while important, is not and never has been a statutory bar to making legislation, and for that reason I invite the noble Lord not to move Amendment 74.

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[Lord Dodds of Duncairn (DUP)]

My Lords, I rise to speak to Amendment 35A in my name on VAT and excise. I do not wish to prolong the debate at this hour. Very briefly, noble Lords will remember back in March when the then Chancellor Rishi Sunak announced measures in the fiscal event—mini-budget, estimate, whatever it was—that there was a zero VAT cut for households installing energy-efficiency measures, which would apply throughout Great Britain, but not to installation in homes in Northern Ireland of materials such as solar panels, insulation or heat pumps.

Consumers in Northern Ireland could not benefit from that VAT cut because of the protocol. Something that was warmly welcomed across the rest of the United Kingdom provoked concern and outrage across the communities in Northern Ireland. Mr Sunak announced that there would be extra money provided by way of Barnett consequentials to make up for it, but, as people with experience of the operation of the Executive know, sometimes the direct tax cut is the most effective and efficient way of getting these things done.

I have tabled this amendment to explore and seek the Government’s reasoning on their approach to the VAT issue. They have not gone down the route that they have in relation to state aid in Clause 12 of excluding Article 10 and annexes 5 and 6 of the protocol. They have not decided to exclude the relevant article of the protocol which applies the VAT rules. Instead, they have adopted the approach of saying there are large areas where we simply disapply that article and we can make provision by regulations in relation to the VAT excise duties and other taxes.

It is more akin to the situation that we find ourselves in with the protocol itself in relation to customs: Northern Ireland is nominally within the UK customs regime, but all the rules of the EU apply. What is the impact of the Government taking this approach in relation to VAT? Why are they not taking the same kind of approach to VAT as they have to state aid? What are the implications? It says clearly in the subsections what steps can be taken in relation to differences in VAT and making sure that the situation that we saw in March may not arise in the future, but what are the implications of not taking out the relevant article in the protocol completely?

[Baroness Chapman of Darlington (Lab)]

I was wondering pretty much the same thing. This is a slightly odd clause, because it says a lot but actually leaves the door open to not doing anything at all. It gives Ministers the right to change

“any other tax (including imposing or varying the incidence of any tax), which they consider appropriate”.

That is fine, but they might not consider anything appropriate and might not do anything.

Subsection (2) says:

“The regulations may, in particular, make any provision”


to bring closer together, or reduce differences between, various taxes in Northern Ireland and Great Britain. I am sure that that is how the Government want to signal their intention, but the Bill does not do that—it leaves it open to Ministers to do nothing at all, or even to create greater variance in the situation. So I was curious about why the Bill says that, rather than saying, “We will make the situation in Northern Ireland the same as it is in the rest of the UK, notwithstanding the various revenue-raising powers that there are in devolved Administrations.”

[Lord Ahmad of Wimbledon (Con)]

My Lords, I am grateful to all noble Lords. Debating the nice light subject of taxation for our last group is exactly what the doctor ordered. But I am extremely grateful for the brevity shown, and I will seek the same in my response.

I will respond to Amendment 33, in the name of the noble Lord, Lord Purvis of Tweed. Clause 17(1) is drafted to enable Ministers to make provision about VAT, excise duty and other taxes in connection with the Northern Ireland protocol when they consider it appropriate. The Bill maintains the current baseline of EU rules in this area. The clause is required to enable the Government to make changes that, for example, lessen or eliminate ensuing tax discrepancies between Northern Ireland and Great Britain, support frictionless trade on the island of Ireland and preserve the essential state function.

As EU tax rules are dynamic, it is impossible to specify every circumstance where the Government may need to take such steps, and it will also not be possible to anticipate the precise nature of those steps for all possible scenarios. However, we have already set out some examples, such as alcohol duty and the tax treatment of energy-saving materials, where Northern Ireland cannot benefit from the same policies as the rest of the UK, despite these policies posing no risk to north-south trade.

The noble Lord asked about Section 54 of the cross-border trade Act—that is my favourite subject. But, in all seriousness, I will write on the specific nature of the question that the noble Lord posed to ensure that he gets a complete answer. Of course, I will share that letter with noble Lords and make sure that it is in the Library.

I turn fleetingly to Amendments 34 and 35 in the name of the noble Baroness, Lady Chapman. We have covered the government position on this before, but I add that we feel that appropriate discretion is a necessity if the Government are able to facilitate consistent VAT, excise and other relevant tax policies between Northern Ireland and Great Britain. It would be inappropriate to leave the people of Northern Ireland unable to benefit from the support available to those elsewhere in the UK.

I turn briefly to Amendment 35A, in the name of the noble Lord, Lord Dodds, which would make Article 8 of, and Annexe 3 to, the Northern Ireland protocol excluded provision. I am sympathetic to the amendment’s intentions. It would disapply relevant EU VAT and excise rules in domestic law, allowing a new VAT and excise regime to be implemented in its place. However, the Government’s view is that a blanket removal of EU VAT and excise rules is not the intention in this area. Instead, the Bill maintains the current baseline of EU rules but introduces Clause 17, in conjunction with Clause 15, to grant Ministers the power to disapply or override any restrictive EU VAT and excise laws that apply in Northern Ireland. I briefly explained why we believe that this is necessary.

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Briefly, I turn to the question of whether Clause 17 stand part of the Bill, which is included in this group of amendments—

[Baroness Chapman of Darlington (Lab)]

I know that it is late and we all want to go home, but the Minister does not have to respond only to the amendments tabled. We are in Committee, and I would appreciate it if he answered my question about the drafting. It leaves a lot of scope, which may not necessarily address the concerns of the noble Lords behind him.

[Lord Ahmad of Wimbledon (Con)]

I think that I have answered that question. I am sure that when the noble Baroness reviews the debate, she will find that I have sought to give a specific reason why the Government have a different approach in this respect. However, if she has further specific questions, I am of course happy to discuss them with her.

In conclusion, as I have said, I have justified Clause 17 to the Committee. In short, it provides Ministers with the ability to ensure that VAT, excise and other relevant policies are aligned across the whole of the UK, including in Northern Ireland. We believe that this clause is imperative in lessening—or indeed eliminating—the unacceptable tax discrepancies that exist between Northern Ireland and Great Britain, and I recommend that it stand part of the Bill.