United Kingdom Internal Market Bill

Baroness Penn Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

This power grab, and the rather ignoble assertions made by the Minister the first time round, exposes a key divide between us. Why do all the important things that she identified have to be done from the centre, when existing mechanisms allow these bodies, which have far greater knowledge of what is happening locally, to spend the resources more effectively? As I said in response to an earlier amendment about the common frameworks, it is now patently obvious that the Bill is actually about gathering powers, which should be devolved, to a relatively insensitive centre which is trying to imprison a multinational country composed of vibrant, diverse regions, with diverse histories and needs, into a straitjacket of a unitary state. We can, and need to, do better than that.

[Baroness Penn (Con)]

My Lords, I begin by reminding noble Lords of the purpose of this part of the Bill. The power to provide financial assistance supports the Government’s determination to deliver on the commitments on which they were elected: levelling up and delivering prosperity across the whole United Kingdom, and strengthening the ties that bind our union together. It provides for a unified power that operates consistently UK-wide—one which will allow for strategic investment throughout the UK, underpinning the Government’s determination to see all parts of the UK flourish. It makes sure that we meet our manifesto commitment to deliver a UK shared prosperity fund which allows the Government to invest in communities across England, Scotland, Wales and Northern Ireland. Previously, in many of these areas, the EU mandated how our money had to be spent, with little say from elected politicians in the United Kingdom. The UK Government intend to take a much more collaborative approach in delivering any funding that replaces EU programmes.

In this context, I will speak to Amendments 64 and 68, which seek to remove Clauses 42 and 43. The noble and learned Lord, Lord Thomas, asked why such a power should be included in this Bill. The ability of the UK Government to invest in and support businesses and communities in all parts of our union, as these clauses provide for, helps to achieve a stronger and fairer internal market. Indeed, this is the argument the EU makes on the role of European structural and investment funds in strengthening the European single market. It is right that, as we leave at the end of the transition period, the UK Government have the right tools to make sure the whole country can benefit from investment which strengthens communities, economies and connectivity within and between all parts of the UK.

Another point of focus from noble Lords, including the noble Lords, Lord Purvis and Lord Fox, the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Finlay, among others, was the role of the devolved Administrations and other local partners, including local authorities. Let me be clear: this power is in addition to the devolved Administrations’ existing powers. It will allow the UK Government to complement and strengthen the support given to citizens, businesses and communities in Scotland, Northern Ireland and Wales. It does not take away responsibilities from the devolved Administrations. Rather, the power will enable the UK Government to deliver investment more flexibly and dynamically and in collaboration with the devolved Administrations and other partners.

We have taken a collaborative approach to investment with devolved Administrations already, for example through our successful city deals programme, as noble Lords have talked about. The UK Government intend to continue to work in this spirit of partnership with stakeholders. We will make sure that this new power can facilitate UK government support for projects, making it far more responsive and responsible for addressing the needs of communities and businesses throughout the country.

We have seen how important this can be. Colleagues on these Benches and in the other place have already noted that our experiences of Covid-19 have demonstrated the value of a responsive UK Government. The noble Lord, Lord Stevenson, questioned the support in this House for that statement; I tend to disagree, unless the party opposite does not support the furlough scheme and the Bounce Back Loan Scheme that have protected thousands of jobs and businesses across the UK during this pandemic. To make sure that the UK Government can deliver on this ambition for all parts of the UK, I hope these amendments will be withdrawn or not pressed.

Turning to government Amendment 66, we listened carefully to the debate by noble Lords on this part of the Bill in Committee, where questions were asked on how the clause would operate. Through Amendment 66, the Government seek to introduce a requirement in Clause 43 to report annually to Parliament on the use of this power to provide financial assistance. This would put a requirement in legislation to provide a summary on the use of the power for scrutiny by parliamentarians, other key partners and the wider public. This is in addition to the scrutiny role that Parliament already performs for public spending through voting on the spending allocations, as part of the estimates process and in line with the principle of the PAC concordat.

This requirement makes sure that key partners, including devolved Administrations, have transparency on where funding under the power has been directed. Any future funding decisions are subject to fiscal events. Accordingly, the requirement added by Amendment 66 requires a summary of the use of the power in the previous financial year. I hope your Lordships’ House will agree that this government amendment improves the opportunity for Parliament to see and scrutinise financial assistance provided under the power in Clause 42.

I will now discuss Amendments 65 and 67. Amendment 65 would mean that this new clause would seek to establish a UK shared prosperity fund commissioner, whose primary task would be to make recommendations for the disbursement of the UK shared prosperity fund. Amendment 67 would mean that financial assistance for economic development would be managed and administered through the devolved Administrations. As I have said, this power to provide financial assistance is wider than any single fund or organisation. It will ensure that the UK Government are well positioned to deliver financial assistance, following the end of the transition period, and to replace EU structural funds. It is crucial that the UK Government can use successor funds to invest strategically and have the additional flexibility needed to invest across the whole UK that this power provides. These amendments, including the establishment of a commissioner, would curtail that flexibility. In addition, decisions on governance for the fund should not be made through legislation.

Noble Lords are, however, right to seek progress on the UK shared prosperity fund. The Covid-19 pandemic presented exceptional circumstances, and it is right that our focus and priorities shift accordingly. The Government have conducted a one-year spending review to prioritise the response to Covid-19 and focus on supporting jobs. However, in these challenging times it is important we do not lose sight of our long-term objectives. I reassure my noble friend Lord Trenchard that investment under EU structural funds peaks next year and will tail off until 2023, with spending in each of England, Scotland, Wales and Northern Ireland remaining higher than the annual average.

To ensure a seamless transition from EU structural funds into the UK shared prosperity fund, we announced additional spending today in the spending review to help local areas prepare over 2021-22 for the introduction of the UK shared prosperity fund, supporting our communities to pilot programmes and new approaches. As noble Lords have also referenced, we have published the heads of terms setting out our plans for the shared prosperity fund.

The noble and learned Lord, Lord Thomas, asked whether the spending would be efficient and effective. The bureaucratic burden of EU programmes meant that places have had to wait a long time before they received any funding. Places typically see no investment in their communities until at least a year after the programmes have started. The provision of additional funding next year will be quick and responsive; it will be phased in as EU investment declines.

The heads of terms also set out that there will be two portions of the fund: one targeting places most in need to support people and communities to open up new opportunities; and a second targeted differently at people most in need through bespoke employment and skills programmes, again tailored to local need. As the noble Lord, Lord Stevenson, noted—I hope the noble Baroness, Lady Bennett, who had not seen the spending review document, will take some reassurance from this—the terms also state that investment should be aligned with the Government’s clean growth and net-zero objectives.

We have not taken back control over investment to hoard it in Whitehall or to roll over EU prescriptions on how we invest in our local economies. Local places across the UK will be able to shape investment to reflect their needs. This means a strong role for local partners across the UK. The UK Government intend to work with devolved Administrations and local communities to ensure this power is used to best effect and that the UK shared prosperity fund supports citizens across the UK. This includes engaging with local authorities and devolved Administrations, as well as wider public and private sector organisations. I reassure noble Lords that the Government have held 26 engagement events across the UK on plans for the shared prosperity fund, including 16 events in devolved Administrations, and that UK government officials regularly speak with their counterparts in the devolved Administrations to discuss the design and operation of the fund to ensure it supports every part of the UK.

Further details on additional funding for next year will be published in a prospectus in the new year. We will set out further details on the UK shared prosperity fund in the UK-wide investment framework, to be published in the spring. A multiyear profile will be set out at the next spending review.

The short answer to the noble Lord, Lord Fox, on his final question on the role of the office for the internal market is no. It looks only at Parts 1 to 3 of the Bill and relevant effects, so it would not look at decisions under this power.

Given the further details I have set out today, I encourage noble Lords not to press their amendments.

[The Lord Speaker (Lord Fowler)]

My Lords, I have received requests to ask a short question from the noble Lord, Lord Liddle, the noble Baroness, Lady Finlay of Llandaff, and the noble Lords, Lord Fox and Lord Purvis of Tweed. I call the noble Lord, Lord Liddle, to ask a short question for elucidation.

--- Later in debate ---

[Baroness Penn (Con)]

I am not sure that the noble Lord’s first questions cover points that we have not covered in this debate already but, for clarity, this does not change the devolution settlements. We are talking about a UK-wide investment programme that will work in collaboration with the devolved Administrations, local partners and local authorities.

I am very happy to clear up the noble Lord’s point about £220 million. That is in addition to money that is still coming through the EU structural funds, which will continue to flow until 2023. As I believe I said in my speech, each of the nations will continue to receive the same level of funding, if not a bit more. That first year of funding is for pilot projects and to aid the transition to the shared prosperity fund, which will then ramp up and there will be a multi-year settlement for that fund in the next spending review.

[Baroness Finlay of Llandaff (CB) [V]]

The noble Baroness, Lady Noakes, said to be careful what you wish for. She intimated that, in the event of Clause 44 being deleted from the Bill, the shared prosperity funding being discussed might be withheld completely. Can the Minister state clearly, with a simple yes or no, whether it is indeed the Government’s policy that, without Clause 44, the funding will be withheld or diminished?

[Baroness Penn (Con)]

My Lords, I do not think that I can go any further than what has been announced in the spending review today: that it is the Government’s intention to use the powers under this Bill to deliver the shared prosperity fund.

[Lord Fox (LD)]

My Lords, I thank the Minister for attempting to answer my final question but I fear that she may have been wrongly advised. Clause 31 states:

“The CMA may from time to time undertake a review”.


Subsection 1(b) certainly points to “Parts 1 to 3”, as in the Minister’s answer. However, subsection 1(a) says that such a review can refer to

“the internal market in the United Kingdom”,

which is a far broader swathe than the narrow answer given just now.

While I am up and reading the legislation, subsection (2) states:

“The CMA may receive and consider any proposals that may be made or referred to it for undertaking a review”.


Can the Minister confirm that the devolved authorities are one of the bodies that can request such a review of the whole UK internal market as in Clause 31(1)(a), rather than the answer that was just given?

[Baroness Penn (Con)]

The noble Lord will probably be unsurprised to know that the advice I have received has not changed in the short time since he asked his further question. I will commit to reviewing that advice; if any part of it was not accurate, I will write to the noble Lord. My understanding is that those reviews do not refer to the powers in this Bill, and whether the devolved Administrations or others can refer matters to the CMA for review relates to other parts of this Bill.

[Lord Purvis of Tweed (LD)]

The Minister gave a number of examples of how the UK Government are currently able, under their powers, to fund UK priorities across all parts of the United Kingdom. The Government do not have the legislative powers to spend on devolved areas within devolved competencies. What powers are the Government seeking to have by January next year for them to spend on devolved policy areas in our devolved nations?

[Baroness Penn (Con)]

The Government are seeking the power under this Bill to spend across the whole of the United Kingdom in the areas set out in the Bill. The operation of the £220 million announced at the spending review will start from the next financial year and the full shared prosperity fund will begin the year after. More detail on how that will operate will be set out in due course.

[Lord Thomas of Cwmgiedd (CB) [V]]

I thank all noble Lords who have spoken in this interesting debate. I apologise to the noble Baroness, Lady Noakes, for referring to the document published today as the Red Book instead of its true colour which, as one sees on the screen, is blue. I was misled by the heading Google has for it, which is the Red Book.

However, Google had another use because it took up a point made by the noble Lord, Lord Naseby, and alerted me to the fact that the great and late Senator McCain had a member of staff who would go through Bills before Congress and find where there were pork-barrel provisions. He was known as the ferret, so ferrets do have great uses in politics.

To return to the points made, it is clear from the debate that we all share a number of objectives: first, to have a more prosperous United Kingdom; secondly, to spend the money wisely; and thirdly, to spend it in a way that is effective and goes to those areas that need it. We all believe that such spending and levelling up will benefit the union. However, there is profound disagreement as to the way in which this should work with our devolution settlement. It seems to me from the response given to my noble friend Lord Purvis of Tweed and from the Minister’s speech that only one conclusion can be drawn from what the Minister is saying and that these powers are needed not to spend the money outside the areas of devolved competence but to spend it in the areas of devolved competence. That is the aspect that fundamentally divides us and is fundamentally wrong about this clause. It seems to me that, given the Minister’s position and the clarity that comes through her statements, this is a direct attack on devolution under the guise of some other words. Therefore, I seek to press to a Division the amendment that I tabled to remove this clause, which is so destructive of our union.