United Kingdom Internal Market Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 26th October 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, as I said in winding up at Second Reading, the eight hours of speeches broke the Bill down into three areas of serious concern: its illegality, its threat to the union, and its structural contradictions. As the noble Baroness, Lady Hayter, said, even if Part 5 is removed one way or another, there will still be great dangers lurking within the Bill. This amendment focuses squarely on putting the threat to devolution on ice.

The Minister was right when he said that the devolved authorities get new powers through the Bill, but these new powers are heavily constrained—more so than they were before when there was EU flexibility. We have heard some of this debate already. More importantly, both Ministers have omitted to mention that, at the same time, the Government are taking significant powers away. These losses are far more significant than any notional gains. This has already been correctly characterised by the devolved authorities as rolling back the devolution settlements.

The Governments of Wales and Scotland need only look over their respective borders to see how the UK Gossvernment are treating their regions and cities—where there is only piecemeal devolution—to conclude that taking power back to the centre is not an accident; it is a pattern of behaviour. As an aside, this is not a unique pattern of behaviour. My Scottish friends tell me that the Scottish Government are very enthusiastic about centralising power away from their local councils.

Returning to the Bill, we should not worry when it comes to Westminster’s reputation in Scotland. I read in the press that Michael Gove is heading up a new unit to tackle the secessionist movement in Scotland. What could go wrong there? Perhaps a better way of dealing with the unpopularity of Westminster is to deal with the central devolution issue in the Bill.

There are many later amendments concerning parts of the problem with the Bill. This amendment seeks to deal with it all in one go, taking it head on. It is driven by a central principle which we on these Benches share. We do not believe that it is only the UK Government or this Parliament that should dictate how the future internal market should work. It has to be a collaborative effort between Westminster, Edinburgh, Cardiff and Belfast. To achieve this, Parts 1 to 4 of the Bill need to be rewritten by consensus, not imposed, which is why this amendment seeks to halt the progress of Parts 1 to 4 until a joint process has created the future market structure. In essence, it will put on ice the Bill’s implementation until agreement is reached on the operation of the internal market frameworks.

In order to do this, the amendment rewrites the purpose of the Bill. What stays is the promotion of the continued functioning of the internal market for goods, in Part 1, and services, in Part 2. It includes the recognition of professional and other qualifications in the UK—in Part 3—by establishing the UK market access principles, including, as now, the mutual recognition and non-discrimination principles for goods and services. It adds the important rider that those principles have to be agreed in a memorandum by the Secretary of State, the Welsh and Scottish Ministers and a Northern Ireland department. This memorandum would cover how the agreed policy frameworks on the functioning of the internal market in the United Kingdom would operate and any agreed exclusions from market access principles. It would establish a council or councils, comprising representatives of the Secretary of State, the Welsh and Scottish Ministers and a Northern Ireland department to oversee the operation of the agreed policy frameworks and the functioning of the internal market in the United Kingdom. The current Joint Ministerial Council would need to be strengthened to achieve this objective.

The amendment would also establish an agreed dispute resolution mechanism, relating to the internal market of the United Kingdom. It requires the Secretary of State to lay this memorandum before Parliament. In short, this amendment makes the Government do what it should already have done. Amendment 4 requires them to consult and reach agreement with the devolved nations of the United Kingdom. By pausing and putting this on ice, Her Majesty’s Government can then create the consensus that is needed. It can also address the holes in the Bill, including the role of the common frameworks, which will be discussed in much more detail later, and it can put in place a process of dispute resolution. The deliberate absence of detail around dispute resolution can be viewed with great suspicion by those who are so minded. It seems that in the end, the Westminster-based UK Minister will decide disputes if the Bill remains unamended.

Why should the Government agree to this amendment? The first reason is due process. I met the noble Lord, Lord Callanan, on Friday. His key anxiety was about discipline and time in order to get through all this. If he were to accept this amendment, he would, at a stroke, remove large portions of the subsequent debate up to, but not including, Part 5 of this Bill. He would then meet his time objectives. Much more seriously, by accepting this amendment, the Government could step back from a truly appalling act of political vandalism. To say that this Bill drives a coach and horses through devolution is not hyperbole. This cynical approach to the balance of powers established between Westminster and Scotland, Wales and Northern Ireland, is calling down issues that, once started, will not easily be halted. This amendment seeks to avert this disaster, creating a role for the devolved authorities, including the operation of the internal market frameworks, robust dispute resolution, agreed exclusions from market access principles and representation for all four nations on oversight councils. I beg to move.

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I refer to my interests in the register as this is the first time I have had the honour of speaking in Committee. Amendment 4 introduces an expanded purpose for the Bill. The noble Lord, Lord Fox, has explained the rationale for his wide-ranging proposal. I can understand his wish to refer to services at this introductory point in the Bill, given that they comprise over 80% of GDP, and to professional and other qualifications, harmony on which is so important to the UK’s single market.

I accept that the changes to subsections (1) and (2) merit consideration. However, I am very uneasy about the proposed new subsections (3) and (4). I fear that they make this a wrecking clause. They give the devolved Administrations a veto over the way internal market arrangements will work, in addition to the substantial powers and money that they have already been given in the various devolution settlements and EU exit Bills. This is a recipe for the politics of national resentment, chaos and delay, at a time when we need rapid agreement on the new order so that the country can move forward and make the EU exit work, difficult though this may be.

Resources are already massively redistributed out of London and the south-east to other parts of the UK, with Scotland alone having a fiscal deficit of £15 billion—namely, a subsidy from richer England—according to a recent article by David Gauke, who served in the Treasury for seven years. We do not want yet another stand-off at this moment in time with the devolved nations, able to hold things up. There has been quite enough of such delay in the exit negotiation process, now more than four years long, I remind noble Lords.

Where I have more sympathy with the noble Lords, Lord Fox and Lord Purvis of Tweed, is on the fact that we need clarity now, before the Bill takes effect. Perhaps I can explain why by way of analogy.

When I was at Tesco, one of the key reasons for success was a clear understanding of who had responsibility for what and a readiness to accept the rules for the greater good. Procurement was done centrally by buyers, who could work with the supply chain, such as British food producers, understand their needs, strengths and innovations, agree a reasonable deal and ship goods to the stores in line with customer demand. When it came to other areas, such as who to hire as employees and how to schedule their hours, that was locally determined. The key was that everyone knew and accepted the division of labour because it contributed to the success of the whole. There was no council where everyone could waste hour after hour arguing the toss, as appears to be proposed in this amendment.

Let us have clear divisions and let us decide them now, not leave them for a great fight over a memorandum of understanding or yet more devolved government bodies backed up by dispute resolution. That is just an invitation to politically motivated folk to stop the country adjusting to the new norms and getting ahead with economic recovery and international ambition.

The proposals in the Bill are a good start, and, as noble Lords can see, I am uneasy about this particular amendment. I served for nearly three years as the single market Minister in the EU and for years as a British official negotiating in Brussels and Luxembourg, and the truth is that, subject to some minor subsidiarity, internal market rules for goods were set at the EU level in the interests of the efficient functioning of the market. By analogy, rules for the UK single market should be set at the UK level. EU services were less streamlined, but we all recognised that and wanted to bring about improvement, which was one of the main objectives of the UK presidency in 2017, but that never happened. I look forward to hearing from my noble friend the Minister, but I will take a lot of convincing that subsections (3) and (4) make sense.

[Lord Morris of Aberavon (Lab) [V]]

My Lords, I fear I must disagree with the noble Baroness, Lady Neville-Rolfe. I support this amendment. The House will be aware of my approach as a devolutionist, and I will not repeat my general views. However, for my part, the key is subsections (3) and (4) of Amendment 4 on what should be contained in a very necessary and vital memorandum of understanding.

At Second Reading, I raised the divergence in understanding between the Welsh Government and Whitehall. The Welsh Government spelled out that they were losers from the Bill—their powers would be changed. There were two particular differences in understanding between HMG and the Welsh Government. First, they said that the Bill takes powers to spend money over the heads of devolved Ministers on devolved matters; and, secondly, that the Bill amends the Government of Wales Act to add the decision on and operation of state aid policy to the list of reserved powers. In the factual briefing on the Bill, the Government actually claim that they are increasing the powers of the devolved legislatures. Indeed, in the discussion on the previous amendment, the Minister claimed again that new powers were being given to the devolved legislatures. They cannot both be right. A recent meeting of Peers with the Welsh Secretary failed miserably to clarify the position. I now specifically ask for the Government to publish a reply to the Welsh Government’s document on their concerns about the Bill.

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[Lord Callanan (Con)]

The Bill would legislate for subsidy control becoming a reserved matter. We are committed to consulting further with the devolved Administrations before proceeding, if we do, to any further legislation.

[Baroness Neville-Rolfe (Con) [V]]

I have two questions. First, I called for clarity, trying to explain its importance to organisational success, which, frankly, is very relevant. I noticed almost no support for this from the Benches opposite, yet businesses, citizens and professionals will have to manage in the new market, and if the rules are at risk of changing in different ways regularly, that could be a problem. Obviously, sensible consultation and collaboration are needed, but we must be wary of a political veto. Does the Minister agree that this is a problem, or is the noble Lord, Lord Purvis, right?

My second question is whether the noble Baroness, Lady Randerson, is right or I am. At Second Reading, I mentioned with approval the ability of the devolved territories to do their own thing and gave two examples: minimum pricing of alcohol and carrier-bag charges, both of which I supported at the time. The noble Baroness, Lady Randerson, suggested that the powers to do such things will be undermined, and quoted exactly the same examples. Am I right or is she right?

--- Later in debate ---

[Baroness Andrews (Lab) [V]]

My Lords, I can speak more briefly to this amendment than the one I spoke to earlier, because my arguments will be much the same. What attracts me particularly about this amendment is that it once again asks the Government to look at the possibility of putting in the Bill the process whereby the Bill becomes the default position and the common frameworks process has to be exhausted before the market principles kick in. I have said before that I think that this is logical. It helps the Government to achieve their own objectives.

When the Minister replied to the previous debate, it was very welcome to hear him say that he was prepared to give more thought to things he had heard the House say this evening. He seemed to think that this process of exhaustion was somehow going to be rather difficult and messy to achieve. From what we have seen in the Common Frameworks Scrutiny Committee, the dispute resolutions are worked out very clearly and in detail. I do not see a problem with that process at all and I would be happy to talk to the Minister about it. If he is worried about that, we can provide some reassurance and, as we scrutinise it, there may be some things we can do to improve the process. If it is a technical problem, then that is what we are here to solve. If it is a problem in principle, then we need to know; he needs to tell us.

The rest of the amendment is slightly more legislative in structure than the amendments from the noble and learned Lord, Lord Hope of Craighead, but I continue to support it in principle because it flags up the significance of common frameworks and the importance of the need for a fit between the Bill and the common frameworks.

The noble Baroness, Lady Finlay, asked me whether we had come across any areas where there was deadlock or difficulty in securing agreement. In the summaries of the frameworks that we have seen so far, and in the one completed framework, we have not seen anything that would alert us to the fact that there is a continuing problem. The problem that the framework negotiators have is the unsettled nature of European negotiations and the issues posed by this Bill itself. They are bound to be waiting for resolutions of different sorts. The processes that they are establishing are clear, transparent and robust. As I say, they offer a solution in practical terms, as well as, frankly, in ethical and political terms, as far as the Government are concerned.

With that, I simply say that I am pleased to support the amendment in principle. I look forward to the Minister, the noble Lord, Lord Callanan, having another go at some of these very specific questions that I think we have a right to hear some answers to.

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I will speak to Amendment 6. I have already expressed some concerns about delays and problems that could arise in trying to satisfy devolutionary feelings beyond the existing devolution settlements and the withdrawal Act, which have already given many powers to Scotland, Wales and Northern Ireland.

We need always to bear in mind the need for a well-functioning single UK market. That is in the interests of citizens, and of charities and businesses which operate across the borders of Northern Ireland, Scotland, Wales and England. My noble friend Lady Noakes cited some figures which bear repeating. I think she said that 60% of Welsh and Scottish exports and 49% of Northern Ireland exports come to other parts of the UK. Incidentally, I was glad to hear my noble friend the Minister committing the Government to high regulatory standards.

We heard from the noble and learned Lord, Lord Hope, in an impressive speech, and from the Minister in an equally persuasive one, about the role of common frameworks in relation to Amendment 5. I heard what my noble friend the Minister said, but it may be that a brief reference to these common frameworks could make everyone more comfortable with this Bill—I was thinking of an annual report on how they are working and how consultations have progressed. It seems odd, given their importance, that there is no reference to them at all.