United Kingdom Internal Market Bill

Lord Brown of Eaton-under-Heywood Excerpts

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

[Lord Brown of Eaton-under-Heywood (CB) [V]]

My Lords, it is always good to follow the noble Lord, Lord Hendy. I start by welcoming and congratulating the two excellent maiden speakers. I doubt they were as nervous as I am making my maiden remote Zoom speech.

I shall vote for the amendment to the Motion moved by the noble and learned Lord, Lord Judge. Like him and so many others who have spoken in this remarkable debate, I deplore Clauses 42 to 47 in Part 5, and I express my deep regret that our great country, champion for centuries of the rule of law, domestically and internationally, has reached the point of prospectively repudiating binding treaty obligations entered into less than a year ago. The damage to our international reputation and standing needs no additional emphasis from me. Similarly, I note the damage to our prospects of finding—as we now need to—trusting new treaty partners and, as mentioned by the noble Baroness, Lady Kennedy of The Shaws, to London’s standing as the economically very valuable centre of international legal practice and dispute resolution by both litigation and arbitration.

I now turn to a rather different aspect of Part 5. It is my contention that these clauses are not merely unlawful and, therefore, intrinsically objectionable in principle; they are quite unnecessary—unless, quite outrageously, they are in the Bill merely to shift the dial to try to bully the EU into a more helpful stance, as the noble Lord, Lord Barwell, suggested. Assuming that they are in the Bill for “good faith” reasons, I strongly agree with the noble and gallant Lord, Lord Stirrup, that, were it ever to be necessary to legislate to breach international law, that should follow—not, as here, precede—that need.

However, I would go further and say it never would be necessary. I will explain why. Naturally, I recognise the imperative under the protocol that it applies to honour and not imperil the Belfast agreement and that it does not destroy the essential unity and integrity of the United Kingdom internal market. This requires reaching a sensible, workable agreement by negotiation or, if necessary, the decision of the joint committee under Article 16 on, for example, what are reasonably to be regarded as “goods at risk”.

However—and this is really the crunch point—if the Government say they truly fear the EU playing hardball on the wider negotiations, threatening to act quite unreasonably or acting in bad faith in its interpretation and application of the protocol, then, instead of our pre-emptively breaking, as these clauses do, the agreement ourselves, we would be able to treat them as being in breach. This would entitle us not merely to invoke, as we would, the dispute resolution mechanism provided for but, in the meantime, temporarily and pending the eventual outcome of any arbitration, to take all necessary and proportionate measures to protect our fundamental interests, which obviously include the Belfast agreement.

That is it: both parties owe the “good faith” obligations and that is plain under Article 5 of the Vienna convention. Neither side is entitled to act unreasonably, such as to frustrate the essential object of the agreement. With those thoughts in mind, it seems not merely outrageous in principle but, in fact, ultimately absurd to include provisions that could never be properly required given that there is, as the Government fear, bad faith on the EU side.

Domestic Gas and Electricity (Tariff Cap) Bill

Lord Brown of Eaton-under-Heywood Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 11th June 2018 Grand Committee

[Lord Hunt of Wirral (Con)]

My Lords, I rise to support my noble and learned friend Lord Mackay of Clashfern in his amendment, and in doing so I declare my interests as set out in the register, in particular as a partner in the global commercial law firm, DAC Beachcroft LLP. As the noble Lord, Lord Carlile, has pointed out—we enjoyed his journey through history— this amendment will ensure that the Bill meets the Government’s ambition to have a cap in default-rate energy tariffs in place by the winter while also ensuring that the correct scrutiny of such a major intervention in the energy market will be in place; namely, the CMA being able to review and improve the methodology if an appeal is brought.

I want to put forward three core reasons why the Bill in its current form does not provide appropriate scrutiny. First, setting a price cap that maintains competition and innovation will be extremely difficult. Competition is improving and a range of important policy costs such as the smart meter rollout and subsidies for renewable and vulnerable policies are included in energy bills. There are material risks to consumers if the methodology is not correct, and I welcome the amendment proposed to Amendment 5. The CMA clearly possesses the necessary expertise to hear an appeal on the cap, and there is no better source in support of that than the Government themselves. I shall quote from their recent Green Paper, Modernising Consumer Markets:

“We have an independent expert competition body, the Competition and Markets Authority (CMA), to promote competition in the interests of consumers and business across the economy … The work of the CMA from 2014-2017 is expected to achieve benefits to consumers well in excess of £3 billion”.


I agree with this endorsement and I believe that appeal rights to the CMA will provide a reassurance to consumers and the industry alike.

Secondly, removing the right of appeal to the CMA from the provisions of this Bill would undermine the established approach which has been in place since privatisation. Some noble Lords may remember that as a junior Minister I took through the Gas Bill in 1985 and I still bear the scars, particularly on setting up a system of regulation which at the time was quite innovative. Since privatisation there has been an approach that underpins investor and consumer confidence. Moreover, the CMA already has a track record of improving regulatory decisions. In 2016 it set out that Ofgem’s previous attempts to regulate retail tariffs in its retail market review had damaged competition and should be removed, while in 2015 the CMA heard an appeal, supported by Citizens Advice, on the level of the energy network price control. It found that Ofgem had made an error and £105 million was returned to consumers.

Thirdly, the Government have suggested that the courts, through judicial review, would be better placed to hear an appeal. I do not agree with that. JR is concerned only with the process for making a decision, not the substance. The CMA is a specialist competition body that is designed to look at these issues. It has teams of experts within the organisation and the Government announced in the Budget last year around £3 million-worth of funding to ensure that the CMA could continue to support competition and consumers. This makes the CMA better qualified and resourced than the courts to review a price control. I hope that noble Lords will understand that those are three very clear reasons in support of my noble and learned friend’s amendment.

Perhaps I may anticipate, if I dare, what the Minister may say. Looking at his initial response at Second Reading, I recall his main concern was delay. As my noble and learned friend explained, the amendment explicitly rules out the potential for a CMA appeal to delay or block the introduction of a price control. Delay is not usual anyway. In the past 11 price control decisions the CMA has not caused a delay and the amendment would now make that impossible.

My noble friend also may say we have concerns that a right of appeal could be used by certain of the major players to frustrate a price control. We know, however, that delay will not be possible via the amendment and the energy sector overwhelmingly supports CMA appeal rights, as do investors in the utilities sector. Furthermore, consumer groups would be able to exercise the right of appeal.

Thirdly, in the Official Report at col. 1018, if I recall, the Minister raised the fact that the Select Committee had considered the matter and recommended judicial review as an appropriate route of appeal. I believe there is a capability question here. However, I would also point out that judicial reviews actually take longer to resolve than CMA appeals—9.7 months versus 8.8 months. That is a comparison since the year 2000. As my noble and learned friend pointed out, the amendment would commit the CMA to resolve a case in four months. We rest our case.

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, I regret I took no part in Second Reading. Indeed, I ought to say at the outset that I defer to no one in my claim to the profoundest possible ignorance about this area of the law and all the technical know-how that underpins it. As my noble friend Lord Carlile says, over the years I have had considerable experience of judicial review. My object is to support and echo rather than add substantively to the arguments already canvassed ably by all of the Lords who have spoken at Second Reading and again today. There are threefold basic advantages, which strike me as perfectly obvious, between the appeal sought in the amendment and judicial review, which, obviously, but for the amendment, would be the fall-back position of anybody wishing to challenge the authority’s decision.

First, there is the question of the expertise of the tribunal in question. As the noble and learned Lord, Lord Mackay, said, judicial review judges have no more expertise in this area than I myself have already recognised I lack. In fact, the criteria by which this judgment falls to be made are, as set out in the statute, highly problematic and not obviously soluble by judges as opposed to an expert custom-built tribunal already in place to take appeals.

Secondly, there is the focus of challenge. As has been said, judicial review focuses essentially on the process by which the decision was arrived at. There is not a substantive challenge to the merits. As the noble Lord, Lord Carlile, said, only perversity could allow a judicial review challenge on the substantive merits basis. That is not a likely or fruitful way ahead here.

Thirdly—this links with the second point—there is the form of relief. If you succeed on a judicial review challenge in this circumstance, you set aside the decision under challenge but remit the matter back to the body so that it can, without the deficiencies of the process that you have identified, or on a non-perverse basis, reach a different decision. It is not open to the judicial review court to say, “Well, this is plainly a wrong process. They didn’t take account of this, that or the other consideration. So we will impose instead a different cap”. That is not open to it so you simply have a further decision, with, again, all the problems and delays that that would bring in its wake.

Finally, on Amendment 6, I observe only that costs can be a useful sanction and it really should be left to the CMA itself—assuming there is to be a provision for an appeal to the CMA—to decide whether in the particular circumstances it can be empowered to provide, as the amendment would, that the costs should be borne by the Exchequer, but that should not necessarily be the outcome. There may be circumstances which make that inappropriate.