United Kingdom Internal Market Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th November 2020 Lords Chamber

[Baroness Jones of Moulsecoomb (GP) [V]]

My Lords, I will be very brief, as the noble Baronesses, Lady McIntosh and Lady Bowles, have explained this group extremely clearly. As the noble Baroness, Lady Bowles, said, these measures just offend me in principle. The Government seem, time and again, to understand big business, and are happy to give very large amounts of money and all sorts of leeway to such businesses and organisations but, at the same time, quite often miss the point on small businesses, which often struggle to survive—particularly during lockdown.

Small businesses can be the creative heart of our society at times—creating jobs for a lot of local people and, indeed, more widely. Will the Minister listen and understand that such intrusive and burdensome measures really do impact on small businesses that are already struggling to survive? I know it is very difficult for the Minister to commit to anything, but surely he is prepared to discuss this sort of issue with noble Lords and perhaps come to some sort of agreement.

[Baroness Neville-Rolfe (Con)]

My Lords, I was glad to see Amendment 149. It is always good to be clear about legal privilege to avoid needless or inappropriate fishing expeditions by regulatory staff, and it matters for in-house counsel as well as for external lawyers. It would be good to be clear on the Government’s intentions.

I also support the sentiment behind Amendments 150 and 156. We need to look after small business, the economic dynamism of which reflects a UK sector that was the envy of everyone when I was the Competitiveness Minister in Brussels. There is much in this Bill that they might fear: rules of which they are unaware; costs, as the noble Baroness, Lady Bowles, suggested, from burdensome requests; big fines; and quasi borders created between the different nations of the UK. I worked with the Federation of Small Businesses on regulation and getting them paid on time, and I try to promote a positive climate for the scale-up of small businesses, rather than a sale to a Silicon Valley, or other, giant after a short run of success. How will the Bill help small businesses, and are there dangers lurking here?

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[Lord Callanan (Con)]

I would be happy to write to the noble Lord but, as I said, the powers to date have functioned effectively and are based on the CMA’s existing powers.

[Baroness Neville-Rolfe (Con)]

I have another couple of points for clarification by my noble friend. First, does legal privilege apply to in-house counsel, provided that they are properly qualified lawyers? I would be happy for the Minister to write to me about that. Secondly, he referred in the debate about small business to Clause 32(4), and helpfully explained that the CMA will advise on regulatory proposals before laws are made, which provides an opportunity for small business interests to be taken into account. However, my concern was also about enforcement of the law, which would bear particularly harshly on small businesses that do not have the same fancy legal departments as others. I am not sure that the clause deals with that but would be delighted if I was wrong.

[Lord Callanan (Con)]

On my noble friend’s first question, she will notice that Clause 38(8) states:

“A notice under subsection (2) or (3) may not require a person … to produce or provide any document or information which the person could not be compelled to produce, or give in evidence, in civil proceedings before the court”.


I hope that that resolves the matter. I will write to her on her second point.

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[Lord Tyrie (Non-Afl)]

Some very interesting points have just been made that bear serious consideration, and the concerns we have just heard are reasoned, particularly on SMEs. At the very least, the Government may wish to offer a review of the CMA’s use of these powers, after an interval, to give us the assurance that they are being proportionately deployed and to see whether they need some amendment. The argument that they were derived from legislation the purpose of which was very different is well taken and might point to further amendment.

Overall, I support the Government in what they are trying to do here, having decided to create the OIM. It is true that the powers are robust, but they will need to be. If the CMA is to be expected to offer timely and high-quality advice, it will need to secure information quickly, without being given the runaround by devolved Administrations or parts of the private sector.

The penalties proposed are a weakness, though. Crown immunity will be in play for the devolved Administrations. I would be interested to know what thought the Government have given to the penalties that can be imposed for non-compliance in those cases. Public censure might help; on the other hand, a devolved Administration standing up to nasty Westminster might win local plaudits, resulting in the opposite effect. A lot of careful thought needs to be put into this issue if these measures are to be made effective. The proposed fines on the private sector are capped at £30,000. I simply do not see that sum troubling a recalcitrant or determined large third party. Has the Minister considered larger fines in certain circumstances?

It might be helpful to make one more general point. The CMA’s existing arrangements for securing compliance and information gathering across all its other functions are manifestly inadequate, as I saw it during my time there. They should not be used as a benchmark. Incidentally, the £30,000 figure comes from the merger regime. Something has to be done. The European Commission recently fined Facebook £1.6 million for not supplying information, while the CMA recently fined Amazon £30,000 over the merger with Deliveroo for not supplying information. That should give some idea of the disparity.

In February 2019, the CMA put proposals to the Government for improvements to information-gathering powers across all its functions. First, it needs to be able to gather information from a much wider range of sources to reflect the increasingly digital nature of the information that it is trying to collect: iCloud, machine-learning algorithms and so on spring to mind. These are not at all easy to capture with existing legislation. Secondly, and even more importantly, subject to safeguards, the CMA needs a general information- gathering power outside the context of a formal investigation. I do not like giving general powers, but I think the CMA now needs this to find out what is really going on in markets and enable it to think through much better than it can at present. It needs to be able to use the full range of tools to best bear down on consumer detriment. It is struggling to do that at present, and increasingly so with the growth of rip-off culture.

When the Minister returns to his department, he will find the proposals, of which I am just touching the surface, have been fully developed by the CMA and are sitting with his officials. Will he agree to take another look at those proposals to see what might usefully be drawn from them? For improving the ones we are discussing today, quite a lot of what is in there is likely to be relevant. Will he agree to report back to the House on what he has found?

I have been following this Bill closely, particularly Part 4, which I have an interest in because of my previous job. Some very important points have been made across the Committee, not least in Monday’s relatively brief debate on Clause 28 about whether the CMA is the appropriate body in the beginning to have responsibly for these functions. Those points are sufficiently important for us to have another look at them on Report. I hope the House will find a way to enable us to do this.

[Baroness Neville-Rolfe (Con)]

My Lords, this Committee is nearing its end, apart from Part 5. I support the noble Baroness, Lady Bowles, in her forensic efforts to probe the purpose of Clauses 38 to 40. I welcome my noble friend Lord Tyrie to today’s debate. Although I do not agree with him on fines or general powers, he makes a very good point about digital information. I am sorry he was not here for the debate on where the OIM sits. As he says, that is something we hope to debate again on Report.

On the plus side, these clauses give a great deal of detail. I usually complain to the Minister that EU exit Bills fail to do just that and leave too much to regulations. On the minus side, these are extremely strong powers of enforcement with very high penalties—for example, fixed fines of up to £30,000 would make many a small company bankrupt. There is no due diligence defence that I can see or provision allowing a reasonable excuse. The CMA can use its own discretion to decide whether a request for information has been complied with and can impose a financial penalty if it thinks there has been obstruction or delay. Such powers are fiercer than those of the police. The Minister will be able to tell us whether the CMA has those powers in relation to competition law and perhaps explain in each case why they are justified in the internal market Bill which, as many have said, is a little different from competition law.

Moreover, we do not know to which regulations these various measures and penalties will apply. Can the Minister kindly take us through some examples of their proposed use? He may have done this elsewhere; if so, I am sorry if I missed that. Perhaps more importantly, could he lay some sample regulations for us to review before Report, as his predecessor did so helpfully on the Bill relating to nuclear issues on EU exit?

I worry that both Houses of Parliament have been distracted by unease with Part 5 of the Bill into agreeing wide-ranging, open-ended and burdensome powers in these clauses and, for the first time, on services, the beating heart of the economies in all four nations of the UK. All this has been relatively lightly scrutinised despite our efforts, and experience shows that some nasty surprises might be in store. I am keen to work with others to minimise those while generally supporting the Bill’s direction of travel.

[Lord Fox (LD)]

My Lords, once again this has been a short but important debate. I congratulate noble Lords on speaking on this. Once again, I find myself in complete agreement with the noble Baroness, Lady Neville-Rolfe, and my noble friend Lady Bowles. It was good to hear from the noble Lord, Lord Tyrie, whose experience is important.

During her speech, my noble friend Lady Bowles sought to characterise the difference between getting information from potential recalcitrants—people who are suspected of or known to have distorted the market—and getting information from people to create a picture of a market. I hope the noble Lord, Lord Tyrie, will not mind me saying that the sort of language used about needing more sanctions and similar issues is coming from the mindset of dealing with recalcitrants. That is where the experience of the CMA has lain to date. There is a real concern that in creating this new role the culture of having to fight to get what you need is transferred into this second activity, and that is not appropriate.

I was interested to hear the point of the noble Lord, Lord Tyrie, about Clause 28 and looking again at the positioning of the OIM and CMA. I would be very keen to hear what he has to say.

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[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

I have had a request to speak from the noble Baroness, Lady Neville-Rolfe.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for his assurance on commencement. He did not answer my specific questions, but I think that the answer in general terms was that the Government have taken the same powers as the CMA has on competition and applied them pro rata. Perhaps I can pick up something that the noble Lord, Lord Stevenson, said earlier. I wonder whether we could look at this line by line to see whether things are or are not all the same; that would be a helpful Committee-type process.

I really got up to ask a question about examples. The Minister helpfully gave an example of a penalty regulation—he said that he might make regulations with penalties under £30,000, perhaps at a lower level for particular things—but I am confused about what kind of regulations are going to be made here. That may be an impossible question to answer but if my noble friend could give us some more examples, perhaps ones that are in draft or have gone out to consultation, it would be incredibly helpful.

[Lord Callanan (Con)]

I referred in my earlier speech to the need to make regulations setting the maximum penalty, which the Secretary of State will do, but I will write to my noble friend if there are any other examples of regulations that we feel we may need to make.

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[Lord Naseby (Con)]

My Lords, the idea behind this new clause has validity, and particularly will after the pandemic, whenever it is over. There is little doubt that some companies will be strong after the pandemic because they happen to be in a particular market, and others will be extremely weak and looking to be rescued somehow. The only problem I have is that the new clause refers to the

“duty to consider the internal market”

when in fact, that is the only market that will apply from 1 January onwards as far as the UK is concerned. So, it is not as though it is one of several markets; it is the only market in my judgment.

The noble Baroness is quite right that in some of the markets, there are already signs that things are happening. In the fintech market, things are undoubtedly moving quickly—for example, in sections such as payments and operations. You only have to read the Financial Times regularly, as I am sure a lot of noble Lords do, to see that things are moving all the time there. Equally, a fair number of our universities have what you might call cradle operations or primary operations, whereby they are looking to develop research that they believe might be marketable. Many are quoted companies; others are not. There is a lot of activity happening.

Although it is undoubtedly true that we want to see both paragraphs (a) and (b) happen, given the original role of the CMA, which emerged from the Monopolies and Mergers Commission, I think it pretty inconceivable that it would not look at these aspects. My noble friend on the Front Bench will be able to clarify that more than I am able to.

If there is not sufficient cover within the current Bill and other parts of the law, I hope my noble friend will look upon the amendment seriously. If that degree of cover already exists, I can understand why, although the issue is worth looking at and talking about, it may not be appropriate to deal with it in a new clause.

[Baroness Neville-Rolfe (Con)]

I rise to speak to Amendment 153 in the name of the noble Baroness, Lady Hayter. This is a new clause relating to mergers that might affect the internal market. She may have a reasonable point that this is a matter of public policy about which we should be concerned. It is odd the way mergers involving an overseas player without a UK business cannot be stopped under merger law—think Cadbury, think ARM, as well as GKN Melrose, which the noble Baroness, Lady Hayter, explained was a particularly heinous example—because there is not the necessary lessening of competition. Although she did not say so, perhaps there is a parallel concern about takeovers important to one of the devolved nations or to a particular R&D base.

However, I do not think this is a big risk, as representations would be made to the CMA and taken into account in consultation and decision-making by the CMA, which is domestically focused and operates across the UK. My concern is that the new clause would be a major change to the way merger law works; I do not think it right to try to change one aspect in this Bill. Therefore, I cannot support this amendment.

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, I support the new clause in the name of the noble Baroness, Lady Hayter of Kentish Town. As she said, it would insert into the CMA’s powers a clear and specific reference to the need, in the new internal market and the regulation of takeovers, to promote research, development and innovation in new and existing industries and enterprises, and to act in the interests of UK public policy.

We already know that the CMA has a number of responsibilities, including protecting consumers from unfair trading practices, investigating mergers between organisations to prevent a reduction in competition and taking enforcement action in relation to anti-competitive practices by businesses and individuals. It will have more burdens as a result of the Internal Market Bill. Put simply, it will be responsible for strengthening business competition and preventing and reducing anti-competitive practices. 

The new clause seeks to nail down the role by referring to promoting research, development and innovation in new and existing enterprises. It would also assist with business development and innovation and in so doing, help to encourage overseas investment with job creation and sustainability—central facets of UK economic policy. It could also help to steady the market.

The Institute for Government has already stated that there is a clear gap in the Government’s plans for how governance of the internal market will function at a political level, and it is not clear how disputes concerning the functioning of the internal market will be managed. It is therefore important that this power be inserted to ensure greater protections where there may be hostile takeovers.

In devolved Northern Ireland, companies are generally small. However, the agri-food sector would sit under the new dispensation via the Northern Ireland protocol. There have been takeovers by companies based in the Republic of Ireland, so how would that fare if there were problems with the competition elements in the internal market Bill? The new clause in the name of the noble Baroness might assist in this regard.

The Institute for Government also notes that the office for the internal market within the CMA has very limited powers and, in many cases, can choose not to exercise them. It is worth noting that it can also request specific documents from any individual, business or public body to support its functions. Although it will be able to impose certain financial penalties, it will not be able to request any information that a business, individual or public authority would not be compelled to reveal in court, hence this new clause, on the need to promote the better operation and improvement of the UK internal market.

I therefore have no hesitation in supporting the new clause. It would promote much-needed research, development and innovation in new and existing industries and enterprises, and pump-prime UK public policy on the economy and finance in particular.

United Kingdom Internal Market Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd November 2020 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I am a retired patent attorney, which is what made me curious about Amendment 107. I guess that is an interest of some kind, though no longer pecuniary.

In this group I have tabled Amendment 107A, which is intended to clarify what has become a confused situation. It can accurately cover all the legal professions named in Clause 25, although the confusion relates only to patent and trademark attorneys. Essentially, it says—as I think the Minister agreed—that there is no change to the status quo under the Legal Services Act 2007, which was the Government’s intention all along.

The background to this is that patent and trademark attorneys may be in the unique situation of being regulated and qualified on a UK-wide basis, while, through their sectoral professional qualifications, also engaging in four specific English and Welsh reserved legal activities, no matter where in the four nations of the UK they qualified, reside or practise. They do this as patent attorneys or trademark attorneys, not as lawyers.

The purpose of that unusual provision is, broadly, to enable conduct of litigation for all in the specialist England and Wales Patents Court, and for associated matters such as deeds and oaths to be dealt with. That unique construct does not fit within the definition of Clauses 22 and 23 for the professions when they are identified as patent attorneys or trademark attorneys because you cannot work it out so that there is a relevant part and the other part. Noble Lords are welcome to try—it takes quite a few pieces of paper. The point is that it is the same for all patent and trademark attorneys, wherever they are.

However, somewhere the niggling thought arose that perhaps it was confusing, or that the mutual recognition would apply notwithstanding that Clause 22 did not apply and would somehow extend the enjoyed England and Wales reserved activities to Scotland or Northern Ireland courts, deeds or oaths. Amendment 107 has, therefore, been proposed. It has the effect of defining patent and trademark attorneys as a legal profession in Clause 25, thereby putting them into Clauses 23 and 22 and simultaneously taking them out again. This hokey-cokey amendment was meant to stop confusion. It has, however, also created its own confusion, perhaps best illustrated in an explanation from the Ministry of Justice that said:

“If trademark and patent attorneys were not excluded from the UKIM bill, then one of your practitioners authorised to conduct litigation in Northern Ireland, for example, could potentially argue that under the automatic recognition principle IPReg must also allow them to conduct litigation in England and Wales without meeting the normal IPReg authorisation requirements for doing so”.


However, that does not fit the present circumstances that I have just explained. The patent or trademark attorney in Northern Ireland is qualified to conduct litigation in England and Wales but, actually, not to conduct litigation in Northern Ireland—and that is not the only wrong explanation that has been offered. Indeed, a few moments ago, the Minister referred to attorneys being qualified in respect of the part of the UK in which they practise. There is no such provision for patent and trademark attorneys. They just have that extra bit of add-on, no matter where they practise, which relates to being able to access the England and Wales Patents Court. That is quite fundamental, because that is where you would see appeals from the comptroller and so on.

I believe that a true analysis of the facts ends up as I have said, that these particular professions were not in the original construct, but some people might have been confused. Now they are defined as in and out again but, unfortunately, this leads to other confusions, suggesting divisions in the profession that do not exist but which have just been replicated in the words of the Minister. If the Minister and an MoJ official can get it wrong, who else might? A wrongful accusation, no matter that it can be refuted, is still damaging. My amendment clarifies that the status quo is maintained. It neither adds nor subtracts anything, other than giving clarity—something to point to on the same page as the confusing hokey-cokey.

[Baroness Neville-Rolfe (Con)]

My Lords, I support the noble Baroness, Lady Bowles, in probing the effect of these two government amendments. As a well-known supporter of a well-functioning IP profession, right across the United Kingdom, I have to say that I am still confused. It seems to me that, in the UK single market, the rights of these various attorneys should be fully reciprocal. Can my noble friend confirm that that is the intention? Will he further kindly reflect on whether it is the effect and, if they are not reciprocal, whether that is justified? Indeed, is there any read-across to the problems that we have encountered on the lack of reciprocal rights for EU and UK attorneys? We have discussed this elsewhere. I know that the department has had a rethink, but are we quite there?

[The Deputy Chairman of Committees (Lord Lexden) (Con)]

My Lords, the next speaker on the list, the noble Lord, Lord Liddle, has withdrawn. I call the noble Lord, Lord Smith of Finsbury.

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Moved by

[Baroness Neville-Rolfe]

110: Clause 28, leave out Clause 28 and insert—
“Office for the Internal Market
“(1) An Office for the Internal Market (“OIM”), which will report to the Department for Business, Energy and Industrial Strategy, is established.(2) The functions of the OIM are as follows—(a) monitoring the health of the internal market, and(b) advising and reporting on proposals and regulations, and their actual and potential impact on the internal market.”Member’s explanatory statement
This amendment seeks to probe why the OIM is established within the CMA and instead attaches it to BEIS.

[Baroness Neville-Rolfe (Con)]

My Lords, I rise to move Amendment 110 in my name and that of my noble friend Lady Noakes. My noble friend the Minister has been kind enough to write to me following the debate on where the new office for the internal market should sit. However, I remain to be convinced that the Competition and Markets Authority is its appropriate home. For this reason, I have tabled an amendment attaching it to BEIS. To make that effective, I am also supporting the noble Baroness, Lady Bowles of Berkhamsted, in opposing Clauses 28 and 29.

I will put it simply and bluntly: no case has been made for locating the new office in the CMA, except, I suppose, that it is already an independent agency and the department has some involvement in the appointment of its well-paid top brass. However, the CMA is generally highly sceptical of business, especially the bigger businesses that operate across the UK, which need to flourish if the economy is to recover. That is my past personal experience with various different hats on.

We need an office—call it what you will—that can do two things: it needs to be able to monitor objectively and to advise sensibly on difficult and developing internal border issues. These are highly politically charged, as we can see from experience during Covid. Therefore, we need an office that reports directly to BEIS and, arguably, we need a Minister for the Single Market, in the same way that we had a commissioner in Brussels when we were an EU member. Actually, I prefer the notion of a single market to that of an internal market. Most of us, including the devolved Administrations, had a great deal of time for the single market when we operated within it. Indeed, I devoted some of my career to advancing it because of its benefits to consumers, manufacturers, services, other businesses and, of course, GDP.

I am sure the Minister would agree that not everything done in Brussels is wrong, and I believe we need an in-house and a political dimension. Therefore, for me, the right model for this office is the Intellectual Property Office, which has a chair and a board from outside but also a strong CEO reporting to a BEIS Minister and advising on both policy and enforcement as well as negotiating internationally and across the UK. If BEIS, for some reason, cannot do all of those things in an in-house office, the monitoring role could go to the ONS, which is well regarded in statistical matters. However, above all, the office must be subject to ministerial direction. Recent experience with Ofqual, PHE and even the CMA itself does not persuade me that the approach in this Bill is right. It is not too late to make a change.

I note that Amendment 155 in the name of the noble Baroness, Lady Hayter, has been added to this group. I have a great deal of respect for the noble Baroness and worked with her successfully on consumer legislation in the past. However, I am not convinced that a consumer duty makes sense here, certainly not without balancing provisions on business and the economy. Business stands to lose so much from this new legislation already and from the inappropriate appointment of the CMA as the office of the internal market, and this is at a time when business is more and more adversely affected by the never-ending Covid nightmare. I think we should reflect further, but, for now, I beg to move.

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I have given notice of my intention to oppose Clauses 29, 30 and 41 standing part. This is part of a full set of not stand part notices that signals concerns, in principle and to specifics, throughout Part 4 and Schedule 3. I will also probe what has been left unsaid about what the CMA or the OIM will do in total regarding the internal market. I thank the noble Baroness, Lady Neville-Rolfe, for supporting my opposition to the clauses standing part. We have some common concerns, but we are not entirely in the same place. I will be interested to hear her response to some of the points I will make as the debate develops.

There are three parts to my concern. First, as I said at Second Reading, it seems odd to use the powerful investigatory might of the CMA—or a lookalike OIM—whose information-gathering powers, with accompanying enforcement and penalties for non-compliance, bear down on individuals and companies, but where the main purpose, from weighing up the clauses’ wording, is to advise administrations about their own and one another’s regulation, and not anything the companies themselves have caused. This is extraordinary.

Secondly, there are aspects in the Bill that relate to business activity. However, this is not articulated, except that businesses are presumably among those who could make a proposal to the CMA for it to undertake a review under Clause 31. I am left asking: what else is happening that has not been said? Thirdly, there is the matter of making the CMA or the OIM properly representative of the four nations.

Overall, this seems an authoritarian, unexplained and unfinished state of affairs. The use of the CMA is a hangover from when Mrs May envisaged a corresponding body to the European Commission for all competition and state aid matters. State aid considerations have now dropped away to WTO-type considerations of distortive and harmful subsidies that will not be looked at by anyone; the Trade Remedies Authority might have to respond on incoming international complaints, but the domestic side is bare. That still leaves the market access principles to be enforced somewhere.

The Government’s response to the internal market consultation says that the expansion of the CMA’s remit will not position it as an enforcer. In a letter to my noble friend Lord Purvis after last Monday’s debate, the Minister confirmed that the OIM will provide expertise in scenarios where the economic impacts of particular regulations lead to disagreement between one or more administration, and that the non-binding assessments will ensure a technical underpinning to otherwise political discussions. Under the heading:

“On the Office for the Internal Market, disputes and governance”,


the letter to my noble friend Lord Purvis says:

“The Bill does not introduce new enforcement bodies, but instead relies on enforcement of regulatory compliance provisions in existing goods regulation to ensure that enforcement of regulatory compliance takes account of the opportunities offered by the market access principles of mutual recognition and non-discrimination”.


Does that mean that the CMA or the OIM will take account of the opportunities offered by market access principles? Does the CMA enforce the regulatory compliance provisions in existing goods regulation?

The impact assessment also mentions businesses and stakeholders. Page 29 says that stakeholders can “raise complaints” on internal market matters. This could arise by way of Clause 31 and seeking a review. However, the word “complaints” smacks of adjudication. It would be helpful if the Minister could explain whether that will be the case. Is it related to the mentioned regulatory compliance? How will that work?

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[Lord Callanan (Con)]

I see the request has the enthusiastic endorsement of the noble Lord, Lord Foulkes. Therefore, as his biggest fan in the House, I am obliged to follow the idea put forward. I will of course write to the noble Lord, Lord Fox, on that.

[Baroness Neville-Rolfe (Con)]

My Lords, this has been a good debate on an important group of amendments. We are not all agreed, but most of us are doubtful about the decision to allocate the office for the internal market to the CMA in the way the Bill proposes. I favour an office with ministerial leadership—there is a parallel with the EU’s single market commissioner, which has worked well in many ways.

The noble Baroness, Lady Bowles, made an expert and very strong case from a different perspective. She rightly pointed to the huge powers and penalties involved in giving this role to the CMA, and explained useful background as to why it ended up in the CMA, linked to an earlier time when state aid rules were going to be part of the portfolio. She also highlighted a concern about how the arrangements will work for the devolved Administrations, which the noble Lord, Lord Palmer of Childs Hill, developed in more detail and which was referred to by the noble Baroness, Lady Hayter.

United Kingdom Internal Market Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 28th October 2020 Lords Chamber

[Baroness McIntosh of Pickering (Con) [V]]

I will speak briefly to several amendments in this group. Regarding Amendment 70, again I raise the question of substantial change, and whether that means a “significant amendment”. I am seeking clarification on the part of the Bill to which this refers.

Amendment 81 would delete “of no effect”, as would Amendment 84. Can the Minister say what that means when replying? It is very unclear. I am again grateful to the Law Society of Scotland for its help in putting forward and drafting these amendments.

In Amendment 92, what is meant by “less attractive”? In my view, to put a service provider at a disadvantage is a serious matter in a Bill such as this. Using a phrase such as “less attractive” as part of the assessment of disadvantage is subjective and lacks clarity. I would be very grateful if, when summing up, the Minister could just clarify what his understanding of “less attractive” is.

I turn to my Amendments 103 and 103A. Amendment 103, which would take out “mainly” and insert “substantially”, is a probing amendment to understand the meaning of “mainly” in connection with the gathering of experience—for example, in relation to Clause 23(7). In my view, Clause (23)(7)(b) requires further definition. How should “mainly” be measured? Will it be by the time spent as a proportion of the whole qualifying experience or by some other measure? How will this experience be recorded and verified?

The same questions arise in regard to that aspect of the experience obtained elsewhere than in the UK. The purpose of my Amendment 103A is to ask whether we are excluding all other experience than that obtained in the UK. I pray in aid my own experience, where I practised law in Brussels in two different situations. Would that experience, and the experience of others as well, qualify for the purposes of the Bill? I am grateful for the opportunity to move these probing amendments and I look forward to the Minister’s clarification of these points.

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

My Lords, I want to speak to this group of amendments for two simple reasons. First, services are incredibly important to the UK and to all four nations within it. As I said on Amendment 4, they are vital to the success of our economy, making up more than 80% of GDP. They range from financial services, mentioned by the noble Baroness, Lady Hayter, which I believe now provide more jobs outside London than in the City, to arts and entertainment of every kind. Invisibles, including legal and accountancy services where we have world-leading expertise, represent more export value than goods.

Secondly, I am mystified by the clauses on services, which are the subject of these amendments. The arrangements seem to work well currently. No doubt some protection is provided by the carryover of EU rules under the withdrawal Acts, which are relatively light touch because attempts to align local rules within the EU on services were also light touch.

We are forcing on to the service industries apparently new rules and new exemptions linked to the principles of mutual recognition and non-discrimination. There could potentially be a whole load of bureaucracy and regulation associated with this activity, which business, the service sector and regulators will need to understand. Lobbyists may try to secure new rules that benefit narrow interests, as they do in Brussels now. Moreover, as someone who takes a morbid and forensic interest in these things, I find the impact assessment—welcome though it is in principle—extremely disappointing. These are usually very helpful to Committee discussions, but the assessment asserts on page 2 that

“the cost savings to businesses, consumers and the wider UK economy would be expected to significantly offset any costs imposed by this legislation, translating into a net benefit to the UK economy.”

The small and micro business assessment on page 37, a section to which I always pay the greatest attention as small business is the lifeblood of this country and key to its dynamism, says:

“Due to a lack of historical need, there is a shortage of data on businesses trading between different parts of the UK. It has therefore not been possible to identify the volume of such businesses who operate across borders, nor the extent to which they benefit because of the hypothetical nature of the future regulatory regimes.”


So we have no evidence to justify the new powers, nor an assessment of their consequences. We almost seem to be creating borders for services where none existed before, which is surely the opposite of what we want.

We need to understand better how this part of the Bill will work, but the material presented so far has stumped me, as a business operator who has worked in various industries across the UK and the world. In that connection, let me ask a simple question on marketing activity, which is not listed in the schedules: would I be permitted to discriminate in favour of a company that was Welsh to help with the marketing of Welsh products or would I have to take time to listen to pitches from English-owned—or, indeed, US or Canadian-owned—companies?

In response to a number of understandable probing amendments in this group, can my noble friend the Minister kindly justify the provisions simply, with some good worked examples relating to significant service sectors, and assuage my fears? I must say, at this point in time, I am confused and therefore concerned.

[The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)]

Both the noble Baroness, Lady Noakes, and the noble Lord, Lord Liddle, have withdrawn from this group so I call the noble Lord, Lord Purvis of Tweed.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, in moving Amendment 82, I shall speak also to Amendments 83 and 85 to 88 in my name.

Clause 20 provides the test for assessing whether a regulatory requirement is indirectly discriminatory in relation to service providers. The indirect discrimination test comprises several elements, including a test for difference of treatment between incoming and local service providers and a test to assess whether the difference in treatment gives rise to an adverse market effect. This group of amendments would provide greater clarity to readers, particularly in relation to differential treatment and adverse market effect. The amendments would break up concepts previously included in Clause 20(4) and deal with the unequal treatment test separately from the adverse market effect test. This revised drafting also allows for clarification of the language.

This change delivers the same policy objectives but with greater clarity. It is supported by consequential amendments throughout Clause 20, including new definitions for local and incoming service providers. The definition of “relevant connection” is also moved into Clause 20 to link it better to the provision. Limb C of that definition is deleted because it is not relevant to indirect discrimination. A consequential amendment to Clause 19 supports this.

In my detailed remarks, I will focus on Amendments 90, 91 and 93 upon which the other amendments are consequential. Amendments 90 and 91 would provide greater clarity and break up concepts that were previously packed into Clause 20(4). They deal with the unequal treatment test separately from the adverse market effect test, and this division also allows for a clarification of the language. These amendments would introduce and define the concept of “relevant disadvantage”, tying it more clearly to the concept of unequal treatment between incoming and local service providers. Importantly, the more clearly laid out test for relevant disadvantage between local and incoming providers makes plain that it does not require all incoming providers to be disadvantaged or all local providers to be advantaged. That was the intended effect of the drafting; this amendment would ensure that it is clear.

Amendment 93 does two things. First, it defines local and incoming service providers—terms used in this group of amendments. Secondly, it copies the definition of “relevant connection” over from Clause 19, linking it more clearly to this provision. Limb C of the direct discrimination provision is deleted because it is not relevant to indirect discrimination.

Amendment 94, which is unrelated to the other amendments in this group, would simply remove a provision that is now no longer necessary. I beg to move.

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

My Lords, I apologise to my noble friend the Minister for speaking on a technical amendment. I support much of the Bill and have limited my contributions accordingly.

However, I want to ask for a fuller explanation of Amendments 90 and 93, which again relate to services. Why do we need to make a distinction between incoming service providers and local service providers? Will that not create uncertainties and its own form of discrimination? Is this an insurance policy, for example against unwise anti-competitive moves by a devolved Administration? Is there any evidence that such an outcome is at all likely, given their well-known attachment to the EU single market? What is the underlying purpose of this approach?

The Minister was not able to answer my question on Amendment 68 about how marketing activity would be treated, or indeed the question from the noble Lord, Lord Purvis, on local language capability. The distinction between incoming service providers and local service providers may be part of the answer. I would welcome some simple examples that make some of this service area easier to understand. If the Minister needs notice of the questions, perhaps he would be kind enough to write to me on these points, as it is late.

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.

--- Later in debate ---

[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.

World Energy Outlook 2020

Baroness Neville-Rolfe Excerpts

Tuesday 20th October 2020 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes a good point; heating decarbonisation will be a crucial part of the race to net zero, and we will be bringing forward a detailed heating decarbonisation strategy shortly.

[Baroness Neville-Rolfe (Con)]

My Lords, I was disappointed that this report neglects nuclear energy. Its reliable, emission-free 24-hour baseload provides an essential complement to solar and wind, which sadly can be absent for weeks at a time. At a time of unparalleled low interest rates, will the Government’s forthcoming energy White Paper grasp the nettle and propose government support for nuclear via direct government involvement?

[Lord Callanan (Con)]

I thank my noble friend for her question, but the WEO 2020 report suggests a 10% increase in nuclear between 2019 and 2030. Beyond 2030, the Paris compliance scenarios envisage small modular nuclear reactors taking a stronger role, alongside CCUS and hydrogen. Of course, we will address all these upcoming matters in the energy White Paper.

United Kingdom Internal Market Bill

Baroness Neville-Rolfe Excerpts

2nd reading & 2nd reading (Hansard): House of Lords
Monday 19th October 2020 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I congratulate my noble friend Lord Sarfraz, a dynamic entrepreneur, on a very fine maiden speech, and also the noble Baroness, Lady Hayman of Ullock. I look forward to the noble Baroness boosting the parliamentary choir and hearing a bit more about that Welsh farm.

I rise to pursue two points. First, I want to address the operation of the internal market provisions. Secondly, I will comment on the great issue of the day and provide some much-needed support for the Government’s position.

The Bill makes a great deal of sense. We need the internal market to function smoothly. As we leave the EU single market, our own UK single market will be even more important. As an economist by training, I believe in the theory of comparative advantage, and that applies across the UK. We need to avoid protectionist measures so, for example, the Scots and English can exchange Scotch whisky and London gin without hindrance or charge. I apologise for resorting to GCSE economics, but the point is a very important one, and it is equally valid for services—80% of the economy. I declare my interests in the register.

That does not mean small variations in law need to be prevented. The Scots have different rules on minimum alcohol pricing and the Welsh were early regulators on plastic bags—both areas in which I am interested—and that has worked fine. However, devolution can only go so far, or it will harm the common interest immeasurably.

I congratulate my noble friend the Minister on producing an impact assessment, and his help with getting the promoters of the agriculture and fisheries Bills to do the same. However, it is disappointingly light on numbers. I think a better effort could have been made at economic assessment and the dynamics of growth—or lack of it, without a proper free market—and that this would have shown how vital the UK internal market measures in the Bill in fact are.

I also have a question for my noble friend. Why has the Competition and Markets Authority been chosen to gather information and monitor the new arrangements in a fancy new Office for the Internal Market? I can see the advantage in terms of recruitment and retention at the CMA. However, the CMA is much more focused on the consumer than on business success and, at a time when we face grave economic difficulties, I find this worrying. It is also a politically charged area, so does it really make sense to delegate these vital powers to a supposedly independent body? PHE and Ofqual spring to mind as not wholly satisfactory analogies.

Much has been said about Part 5 of the Bill. I agree that in principle this approach is undesirable. However, there is at least a theoretical possibility that EU action could place the UK in an impossible position as regards the coherence of its own internal market. If that came to pass, we would be presented with a very unpleasant choice. I am sorry to say this, but the real problem stems from the nature of the withdrawal agreement which the present Prime Minister inherited in an extremely unsatisfactory state from the previous Administration. As my noble friend Lord Howell hinted, the UK-EU joint committee has not stepped up to the mark in resolving the issues for whatever reason, as it would have done had everybody acted in good faith.

So having a safety-net provision in the Bill for use in extremis, and only after a special parliamentary vote, is probably the least damaging way forward. The fact is that treaty requirements sometimes conflict with each other and some member states fail to observe important treaty provisions, such as the Maastricht criteria, as my noble friend Lord Lamont reminded us so eloquently earlier today.

Trade Bill

Baroness Neville-Rolfe Excerpts

Committee stage
Thursday 15th October 2020 Lords Chamber

I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I support my noble friend Lady Noakes on these amendments. Their purport is to protect company data in line with government wishes, if the Explanatory Notes are to be believed—as I am sure they should be. In particular, it is claimed that the provision of data is to be wholly voluntary—that is the crux of the matter here—yet the provisions in the Bill are worryingly vague, as my noble friend explained so well. These amendments would define more closely what can be demanded, and I agree with them.

Data provided under the Act can be shared with other public and private bodies. Unfortunately, data provided to government is not always protected as well as it should be. In an earlier life, I represented Tesco in a competition inquiry. During the course of the inquiry, I was much surprised to be sent confidential data supplied to the competition authority by Morrisons. This was a mistake, of course, but the data was very interesting, as it informed me than Morrisons made more profit on food items than we did. Of course, I ought not to have received that information in the first place. I know of other similar examples of data supplied to government going astray, so I hope that the Minister will not seek to claim that serious mistakes in the distribution of data cannot occur. Since the amendments are fully compatible with the Government’s stated aims, I trust that they will be carefully considered.

--- Later in debate ---

[Baroness McIntosh of Pickering (Con)]

My Lords, I express my gratitude to my noble friend Lord Grimstone for making these amendments. This flags up a constant issue, whereby issues are raised late and at quite short notice by the devolved Administrations, but it also flags up a broader issue for another day as to where we are with the common frameworks.

I want to put one question to the Minister about the remarks that he has just made. He refers to the fact that the Cabinet Office will be responsible for disclosing this information and making it available to the devolved Administrations under Clause 9. He went on to say that in future they will now be consulted under Clause 9. I want to go one step further and ask him, in the usual way, that they are not just consulted but that the Government wait for them to give their consent to these changes, particularly if they might not just be technical but could be substantial. It is extremely important to keep the devolved Administrations on side, given that there will be elections at some point in the future where this could be used to the Government’s disadvantage. Could the Minister just confirm that they might await consent rather than just consultation?

[Baroness Neville-Rolfe (Con)]

My Lords, as I am very supportive of this Bill and of my noble friend Lord Grimstone, I put my name down to support the Government. However, having listened to earlier exchanges on both information and legal privilege, and having studied the wide power in Clause 8(1), I am a little uneasy that the data being collected can be passed on to devolved authorities in the way provided for in Amendment 86. The devolveds will obviously have very different objectives on international trade that are not always compatible with those of the Government, and they may take a different view on who in the public or private sector can safely be sent data that in some cases will be confidential and sensitive to a company’s competitive position. I assure noble Lords that other countries in the world would not be so keen to risk the interests of their businesses.

As the noble Lord, Lord Bassam, has said, we are not entirely clear who will be targeted. Will individuals be informed that their circumstances, if only reflected in a number, are the subject of trade policy discussions? I was thinking about scotch and the much smaller distilling interests in other parts of the UK. I am afraid I am also not entirely clear as to what borders my noble friend was talking about, although obviously I will look very carefully at his comments. As we are still in Committee, and therefore at the probing stage of some of these important amendments.

I am both curious about and a little uneasy with Amendment 89 from the noble Lord, Lord Stevenson, which I think forms part of this group. I was hoping to hear from him, particularly as I am not familiar with the customs legislation referred to. However, if I have understood it correctly, he seems to be adding very fierce penalties—imprisonment and/or a fine of up to 4% of a corporation’s annual turnover—for non-compliance. I have to say that I often agree with the noble Lord on business and enforcement issues, but these proposals could be disproportionate and damaging. They are penalties that stem in concept from EU law, notably competition law, and I have always had reservations about them. They seem likely to lead to companies hiring expensive lawyers and, more generally, to a loss of common sense and humility. I would also like to understand whether the financial penalties would apply to officials as well as to private operators. I suspect not, but the Minister may be able to clarify these matters.

To conclude, I urge my noble friend to be very careful in this area. The amendments are technical but it is very important that we get them right.

Trade Bill

Baroness Neville-Rolfe Excerpts

Committee stage
Tuesday 13th October 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I will speak only to Amendment 70 in this group. We voted to leave the EU on 23 June 2016 and that has been confirmed several times. We have left the EU but are currently in a one-year implementation period, which expires at the end of this calendar year. I do not believe that any further implementation period is needed, and I particularly do not think that one is needed in the context of an agreement with the EU.

The amendment says it shall be an objective in negotiating a trade agreement with the EU to secure a further implementation period—clearly ignoring the fact that we have already legislated for no further implementation period. But, if there were any issues, they would be most likely to bear on people who are exporting under WTO terms after the end of this year. So the amendment is not going to achieve the effect of helping those with complex supply chains, because those with complex supply chains who are expecting the arrangements with the EU, as part of a free trade agreement, to deliver the certainty they require will be of a much smaller order of magnitude than in the context of having no deal. We know that the Government want to achieve a deal, but it is not yet clear that we will be able to do so—so I could never support Amendment 70.

[Baroness Neville-Rolfe (Con)]

My Lords, I rise as someone with many years of experience in supply chains, including just-in-time supply chains. This area is often a problem in trade agreements, and indeed in the operation of such free trade agreements. I remember all the difficulties affecting our shoppers when quotas and rows between the EU and China held up bras and shoes on the high seas—not perishable, but as important as chicken for many of us. Food is trickier than goods, as noble Lords will remember from strikes affecting Channel crossings and the Icelandic ash cloud.

The point I want to make is that EU exit, or any continuity or future trade agreements, are likely to lead to changes in supply chains. We should embrace this, and I am afraid that I am not convinced that we need Amendments 70 and 95.

My own view is that the combination of more border checks, whether we agree a deal on trade with the EU and EEA or not—that is the reality—will change trade flows. New FTAs will bring changes in tariff schedules, rules of origin and perhaps new provisions on standards. This could be a huge opportunity at home for British industries and parts of British agriculture, as buyers turn to home production to avoid the complexities. Of course, they will also face competition, but I know from experience as a business executive that competition makes business sharper and better.

There may be a need for some transitional arrangements in EU or other FTAs—fisheries is an obvious area—and even help for small firms wrestling with new checks. But we should not seek an additional transition period with the EU, as my noble friend Lady Noakes has just said. We should not try to preserve existing systems in aspic, however good the intentions of those debating this Bill today. We will do much better if we lead the way in embracing the opportunities of EU exit and of new trade agreements.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I shall speak first, briefly, to linked Amendments 70 and 95, in the names of the noble Baroness, Lady McIntosh, and the noble Lord, Lord Wigley. I note that a Member of your Lordships’ House, the noble Lord, Lord Agnew, today found himself getting some attention for a claim that traders were taking a “head-in-the-sand” approach to trade post Brexit. I do not think that I could do better in response than quote the chief operating officer of the Food and Drink Federation:

“If any traders have their head in the sand it’s because, after many frustrating months awaiting critical answers, they probably think it’s more likely they’ll find those answers in the sand than they will from the Government.”


That was coming from an organisation which is not, I think it would be fair to say, a natural critic of the Government. I hope that the comments of the noble Lord, Lord Agnew, do not accurately reflect the view of the Government, and in particular that they do not indicate that they do not understand the extremely difficult position of small businesses, with so much else to deal with at the moment. We do not want to risk seeing them battered further on an uneven playing field by larger firms that are more likely to have the resources to react—something to which the noble Baroness, Lady Neville-Rolfe, just alluded.

I want to speak mostly to Amendment 93, in the name of the noble Lord, Lord Lansley. I appreciate the chance to support an amendment in his name, since we have had some disagreement on other elements of this Bill. I think that this is the first time that the issue of free zones has come up in this Committee, and I want to express the Green group’s strong opposition to the whole concept, noting that there were seven free ports in the UK at various points between 1984 and 2012 and that they were seen to have failed. Going back to the 1980s is surely not the answer for today.

I also note that the European Greens have been strong in their opposition, highlighting the links of free ports and free enterprise zones to tax avoidance, as exposed in the Madeira papers. To quote the historian, Quinn Slobodian, what they do is

“splinter the world into jurisdictions engaged in a constant competition to attract multinational companies, locking nations into a global ‘place war’ to offer businesses the most enticing incentives and the lowest labour costs.”

However, today we are mostly focusing not on the principle but on what the noble Lord, Lord Lansley, has created in his amendment, which is at least the chance of some democratic oversight and, crucially, a commitment to some local consultation. I would like to see in this amendment both a stronger position on local consultation and national oversight, noting that the impact is not only in the immediate area but in other economically similar areas, which are likely to see a loss of business and jobs to new zones. However, I hope we can return to that on Report. I will be very interested to hear the Minister’s response and perhaps what plans the Government have, particularly on local consultation and oversight, if they wish to push ahead with this revival of an old, neoliberal failure.

Trade Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Thursday 1st October 2020 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, in the digital era in particular, intellectual property is the lifeblood of our creative and tech industries. As the Alliance for Intellectual Property points out, the UK’s IP framework has a number of features that protect UK consumers and reward UK creators and inventors. It is quite possible that our trading partners may wish to reduce or water down these protections. To ensure that the UK’s IP framework will continue to deliver significant economic benefits, it is paramount that the UK does not concede or dilute its current IP standards as part of trade negotiations; indeed, they should be enhanced.

Ensuring that we will retain or enhance these core protections involves asking ourselves the following questions for each trade agreement. For instance, on international treaties generally, will the UK encourage all our trade partners to promote both the ratification of, and adherence to, terms of international treaties for the recognition and enforcement of copyright, trademark design and other intellectual property rights? With regard to trademarks, will we resist the introduction of proof of use?

With regard to maintaining the UK’s injunctive relief powers, in the UK rights holders can apply to the civil courts for no-fault injunctive relief. Will the UK Government ensure the preservation of their no-fault injunctive relief regime? With regard to design rights, will our negotiators ensure that the current level of protection is not weakened and that such protection is available to all UK designers, particularly regarding unregistered designs? With regard to copyright, will we make sure that the copyright term of 70 years after death is preserved? New Zealand, by contrast, has only a 50-year term.

With regard to copyright exceptions, will future free trade agreements negotiated by the UK include balanced copyright exceptions and limitations, and uphold standards such as the Berne three-step test? Will we resist any adoption of US-style fair use?

With regard to the liability of online platforms, will the UK oppose any obligations under any trade agreement, particularly with the US, that would broaden liability shields for online intermediaries or digital platforms? Will the UK ensure that its negotiators work together with the US to simplify the DMCA notice and takedown provisions and embrace a sharing of best practice within the US and UK systems? The amendment in the name of the noble Baroness, Lady Kidron, which I strongly support, would give this wider and greater force regarding children.

With regard to site blocking, will the Government make sure that our site-blocking provisions for pirate sites are protected and included in free trade agreements? It seems they have not been in the Japan free trade agreement. With regard to sovereignty over exhaustion rights, will we ensure that exhaustion continues to be a sovereign issue for the UK, that it is not prescribed in any trade agreement and that there is no shift to an international exhaustion regime?

With regard to the artist resale right, the ARR ensures that UK visual artists receive a modest royalty when their work is resold on the secondary art market. Will we be maintaining the ARR and pressing for it to be included in all future trade agreements? With regard to reciprocal public performance rights, will the Government press the countries that we are negotiating with to provide for full payment for all music rights holders from the use of their works or from recordings, public performance and broadcast?

With regard to source codes, will we be preventing the mandatory transfer of source codes, algorithms or encryption keys as a condition of market access? With regard to data, will we be supporting the development of AI through aligning open government data and text and data mining rules with our own? Lastly, with regard to robust enforcement measures, the effective enforcement of intellectual property rights and infringement is crucial for ensuring the integrity of future trade agreements. Will we be ensuring that effective mechanisms for enforcement are in place so that rights holders have the ability to enforce IP laws within these jurisdictions?

These are all significant aspects of IP rights that have hitherto been relied on by our exporters and service providers. The Minister assured me at Second Reading:

“As he will know, our intellectual property regime is consistently rated as one of the best in the world. One of our priorities will be to ensure that future trade agreements do not negatively impact on standards in this area and that our regime will promote trade in intellectual property.”—[Official Report, 8/9/20; col. 747-78.]


But how will we know for sure in advance? Here is a classic example. The Chartered Institute of Patent Attorneys points out that in the UK’s negotiating objectives under “Intellectual property” on page 11, the Government commit to:

“Secure patents, trademarks, and designs provisions that: are consistent with the UK’s existing international obligations, including the European Patent Convention (EPC), to which the UK is party”.


In the corresponding US negotiating objectives, the US Government state that they will seek provisions governing intellectual property rights

“that reflect a standard of protection similar to that found in US law.”

As CIPA says:

“These UK and US objectives are not fully aligned, and a similar non-alignment may well arise in negotiations with other countries. This carries the serious risk of creating damaging uncertainty about the UK’s continuing membership of the EPC”.


Let us take two more examples. The July letter of the noble Lord, Lord Grimstone, about the New Zealand negotiations on intellectual property gave very little away. In his slightly fuller letter on the Japan agreement in September, he said:

“New protections for UK creative industries—British businesses can now be confident that their brands and innovations will be protected. We have gone beyond the EU on provisions that tackle online infringement of IP rights, such as film and music piracy.”


That is all well and good, but it is precious little information on such an important subject. We should know in advance through a specific report what the IP situation on each trade agreement will be so that we can be assured that the relevant protection and provisions are in place. That is what this amendment does.

I turn briefly to Amendment 16 on data flows to which the noble Baroness, Lady Neville-Rolfe, will be speaking and which I have signed. However, I do not want to steal any of her thunder. It is sufficient to say that this was not dealt with by the Minister at Second Reading. It supports the free flow of data and regulated access to data sets; ensuring that data can flow across borders is essential for digital trade, in particular for e-commerce consumption and supply chains and the use of data collection and data analytics through the cloud and otherwise.

In his September letter on the Japan agreement, the Minister said that cutting-edge digital and data provisions had been agreed. Again, how are we to judge? How are we to judge, too, the impact of any safe harbour or privacy shield provisions on our wider digital economy, especially in the light of Schrems II? Already, the Government’s consultation on a national data strategy with its promise to remove legal barriers to data use are problematic. We have heard from the noble Lord, Lord Agnew, that the Government Digital Service is carrying out a risk assessment. What impact will that have on our trade agreement negotiations?

All of this argues for a specific impact report prior to a trade agreement being signed in respect of data flows. I shall leave the Minister to the mercies of the noble Baroness, Lady Neville-Rolfe. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I shall speak to Amendment 16 in my name, which requests a similar report on data. I thank the noble Lords, Lord Clement-Jones and Lord Stevenson of Balmacara, for their support. I in turn support Amendment 15 in their names on intellectual property. This is an issue on which we have worked together over many years, and of course the Minister, my noble friend Lord Younger, is something of an expert on IP, so I am hopeful of making progress and look forward to his response.

Our amendment on data is possibly even more important than that on IP, if that is possible. Data is like the electricity on which it depends: it allows everything to work and permits communication and analysis across the world. Data flow now underlies almost every aspect of our lives from financial services to the food supply chain, from defence to the music industry. The cloud is everywhere; it has made some people very rich, and has radically changed the market valuations of the world’s companies—here I refer to my own registered interests.

However, unlike IP where there are well-established international frameworks and bodies, in data there is inadequate international alignment of standards, and that has led to disputes between the EU and the US, as I know only too well as a former Minister with responsibility for data. The combination of the GDPR and the European Court ruling on Schrems caused huge problems that we solved with the EU-US Privacy Shield Framework. Led by my right honourable friend Matt Hancock and my noble friend Lord Ashton of Hyde, who is now of course our esteemed Chief Whip, we put the GDPR and associated changes on to the UK statute book so that the UK would be declared equivalent to the EU and data could continue to flow after EU exit. We still await clarity on that equivalence decision, which is important to many sectors and is a matter of much concern to the EU Scrutiny Committee on which I have the pleasure of sitting.

Trade Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 29th September 2020 Grand Committee

Given the timescales involved, I request that the Minister facilitate an urgent meeting with his Ministry of Justice colleagues and the Department for Transport, which also has an interest in this, and myself, so that we can agree a way forward. I could then support, and, I hope, facilitate, a government amendment tabled to the private international law Bill in Committee in another place next week, or agree an amendment to this Bill which the Government might bring forward on Report. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, this is the first time I have spoken in the brave new world of Grand Committee. We have lost Moses, and instead we have something that looks like the translation booths that I remember from my time as the UK Minister at the European Council in Brussels—the numbers were about the same, given the number of EU languages, although of course everyone spoke English informally.

As my noble friend knows well, I welcome the Bill and the Government’s global ambitions. Again, I declare my interest as chairman of the UK-ASEAN Business Council. Today, it is with particular pleasure that I support the noble Lord, Lord Berkeley, and the noble Lord, Lord Bradshaw, for whom I think the noble Baroness, Lady Kramer, will speak. Although we sit on opposite sides of the House, the noble Lord, Lord Berkeley, and I share a practical bent when it comes to infrastructure, and especially to railways. Our Amendments 8 and 19 would make it easier for the private sector to finance trade in railway rolling stock, as he explained, and would allow the UK to implement the Luxembourg rail protocol to the Cape Town convention, bringing rail into line with aviation, which is important in the current climate. That would help to build a more dynamic rail sector, harking back to our heritage as a pioneer of rail technology. As someone descended from an engineer who helped Stephenson build the “Rocket”, I find this extremely attractive.

As the noble Lord, Lord Berkeley, has indicated, another way forward that would achieve these aims may have been found. If so, I welcome that. I thank my noble friend Lord Grimstone for his assurances and work on this issue, and I associate myself with the comments of the noble Lord, Lord Berkeley, on the way ahead.

[Baroness Kramer (LD) [V]]

My Lords, I thank the noble Lord, Lord Berkeley, and the noble Baroness, Lady Neville-Rolfe, and bow to their expertise. I am stepping in in the place of my noble friend Lord Bradshaw, who is, unfortunately, not able to speak today. I know that the three of them have had sufficient conversation to enable me to be sure that I can support everything that has been said up to this point.

Many of us are utterly frustrated that, in this era when we are so concerned with climate change, the advancement of rail is frequently constrained by the concerns of rail equipment companies about the security of their rolling stock. This protocol addresses that issue. It provides a public registry for rolling stock, which would hugely facilitate cross-border operations of freight and passenger trains, and the certainty that a registry offers. It would free up financing for rail stock, because it provides mechanisms for repossession of collateral in cases of insolvency.

Stimulating private investment in this arena is absolutely critical. This is not a burden that most countries around the world can carry at government level, so ensuring private participation is crucial. We move now into an era where our concern about climate change means that rail options, in contrast to aviation or road options, are increasingly attractive because of the environmental benefits, and very often it is far more cost-effective for exporters and importers.

As the noble Baroness, Lady Neville-Rolfe, said, the UK has increasingly become a player once again in the manufacture of rail equipment and it needs international markets. It would of course be of benefit if those markets had much greater certainty and confidence in those who are selling.

I am somewhat concerned because, when I last looked—and perhaps the Minister might correct me—only Luxembourg had actually ratified this treaty, although many countries have signed it, as the UK did in 2016. We really want to make sure that there is no obstacle to UK ratification, which would undoubtedly give others the confidence to go ahead and ratify, lifting the whole platform of rail as part of the ongoing future, so that it has much more significant international consequences than even domestic consequences.

I hope very much that we can use this opportunity to bring the issue once again to the Government’s attention. I am very comforted: it sounds as though the Government have found a route for ratification to be achieved. I do not think any of us particularly care what the route is, provided that it is secure and effective. I look forward to hearing the Minister’s comments on this issue.