United Kingdom Internal Market Bill

Lord Falconer of Thoroton Excerpts

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

[Lord Fox (LD)]

My Lords, this has been a relatively short debate in terms of the Bill so far, but it has raised some fundamental issues which beg some quite deep and considered answers from the Minister.

When the noble Lord, Lord Inglewood, brought up Cumbrian cattle-driving and we had the noble Lord, Lord Liddle, to follow, I felt we might have had quite a long discussion around that, although we did not. The noble Lord, Lord Inglewood, in characterising Defra as an English department, brought out the Janus face Secretaries of State have in being not only Secretary of State for the United Kingdom but in most cases also Secretary of State for England. Herein lie some of our problems and uncertainties.

The noble Baroness, Lady Hayter, set out and explained very well the issues surrounding mutual recognition. In the noble Lord, Lord Rooker, this House has the benefit of someone with fantastic knowledge and it is important to listen to him. Animal feed is an important area, although it is not always clear. If I may beg your Lordships’ indulgence for a short anecdote, in the mid-1970s our farm was subject to one of the small outbreaks of anthrax, which is very rare—I found the animal that died of it, and it was not a pretty sight. We were put into quarantine—something like lockdown—and it was tracked down to the importation of cheap beans from India. That is why the control of animal food in this country is really important.

In terms of animal feed on the island of Ireland, I was struck that the Government have already exempted the electricity market there—the Minister and I debated this on a statutory instrument—from the overall UK market. They have done that because of the integrated nature of electricity on the island of Ireland; it is an entirely sensible move, of which we approve. It seems to me that animal feed is very similarly integrated and would benefit from a similar island-of-Ireland-wide process. The Minister might like to think about that going forward.

As usual, the noble Baroness, Lady McIntosh, asked a series of excellent and important questions. We need answers to them to understand the objectives of the Bill.

In Amendment 21, the noble Baroness, Lady Finlay, seeks what I think many of us seek to do: to look at this, as somebody mentioned, through the other end of the telescope. This is turning things upside down. Why do we not start with the common frameworks and what is currently working around the devolved authorities and legislate only what needs to be done to create the market we all want? My noble friend Lord German’s twin-track, two-road approach is a very good example. Where is the gap? How do these twin tracks come together? There is no explanation anywhere of how the common frameworks and the Bill are supposed to work together. The only conclusion I can draw is that the common frameworks are allowed somehow to dwindle, because the Government seem to be putting an enormous amount of energy into the Bill.

As usual, the noble Baroness, Lady Noakes, is right: we need to facilitate trade and make it as frictionless as possible across the UK. It is a shame we cannot make it frictionless across the whole of the European Union. The fact is, we have devolution, and the internal market Bill must respect that. At present, it seems that it does not. The noble and learned Lord, Lord Hope, made this point very ably.

As usual, my noble friend Lord Purvis came up with a series of important questions, including Scotch whisky-based ones. He came up with the revelation that there is a complete and absolute internal contradiction in the Bill. The Government brought forward an amendment that causes the following to happen: if England decided to set up its own approval system and started approving active chemicals banned in the EU, Scotland could refuse them. Conversely, Scotland could presumably go further than the EU ban and ban substances which England approved. That is the Government’s position, based on an amendment they brought to the Commons. However, he Minister has said that we must stop this happening, and that the Bill will do that. Something is not right, and the Minister needs to explain what is wrong.

The telling point made by my noble friend Lord Purvis and other noble Lords, including the noble Baroness, Lady McIntosh, is that without clear definitions, it will not be the Government causing the race to the bottom—it will be companies taking this to the courts. That is why we expect from the Minister a very detailed answer to these important questions.

[Lord Falconer of Thoroton (Lab)]

I strongly endorse what has been said by the noble Lord, Lord Fox. This is an incredibly important and rich debate in which detailed answers are required. It has been a very powerful debate because it has identified a range of problems, both of principle and detail, suggesting that either the Bill has not been properly thought out—subject to what the Minister says in answer—or that there are fundamental problems with it.

I strongly echo what was said by the noble Lord, Lord Inglewood, and endorse what the noble Baroness, Lady Noakes, said—we want frictionless trade as much as possible. I do not know about the noble Baroness, but my experience of business is that if every five minutes one is in the courts trying to work out what is allowed and what is not, that is the classic recipe for a lack of certainty. This Bill, as said so accurately by the noble Lord, Lord Purvis, is creating a whole range of private rights not to be discriminated against, to be treated the same in one place as another. Unless the Bill is clear and has a practical impact, it will be an absolute goldmine for lawyers. It is therefore critical there is confidence this has been properly thought through and the principles work. I am dubious— I am not talking about Part 5 but about the internal market provisions.

We had a very important debate on Amendment 7 about imports, tabled by my noble friend Lady Hayter. My noble friend and the noble and learned Lord, Lord Hope, asked why the devolved Assemblies or Parliaments are excluded from having any voice on what is imported. We were treated by my noble friend Lord Rooker and the noble Lord, Lord Inglewood, to an explanation of all the drawbacks of including food and animal foodstuffs in the arrangements. They gave a devastating series of reasons why these are wrong. Could we have detailed answers for the point made by the former chair of the Food Standards Agency? I ask the Minister to convince us if he can that my noble friend was wrong and the Government are right in the way they have approached this.

The amendments which were very powerfully introduced by the noble Baroness, Lady McIntosh, indicated legal issue after legal issue. I draw attention to two where an answer is important. First, how do the measures already in place apply, and why are they better than the common frameworks approach? Secondly, what is meant by substantive change, rather than significant change? That feels like an issue that could be litigated over for a long period of time.

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[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to the noble Baroness, Lady McIntosh of Pickering, for putting down this question. The Law Society of Scotland makes a valid point about why there would be a new, and potentially competing, definition of sales between this legislation and the Sale of Goods Act. I will just ask two supplementary questions. The first is a genuine probing question about the Government’s view. Given that many sales are conducted online now—and probably the vast majority in the coming years—what is the Government’s view, with regard to this legislation, on the location where an online sale takes place and how that is covered by the definition?

The example given by my noble friend Lord Fox was about phasing in the banning of coal in England, but not yet in Wales or Scotland. It was a genuine question, and it was a shame that the noble Lord, Lord Callanan, did not have a chance to answer. On a reading of this legislation, someone in England who is banned from purchasing coal for use in their household in England would, under the definition of “sale” in Clause 13, be able to buy household coal from a Welsh or Scottish coal merchant, at a local or online sale, who would then be able to deliver. It would be good if that could be clarified, even if the Minister needs to write to us about it. It is a genuine issue to highlight.

My second question links to this amendment more directly. The noble Baroness, Lady McIntosh of Pickering, and other noble Lords who have Scottish legal qualifications will be familiar with this. I see the noble and learned Lord, Lord Falconer, on the Opposition Front Bench. Sales in Scotland often have a cut-and-paste element, stating that the law of contract of England applies. Of course, it does not in Scotland. That tends to be viewed as not having effect, and that the cut and paste is not accurate, as contract law is different north of the border. When it comes to the definition of sales through a contract, if the sale of an imported good is conducted within Scotland, is it considered local or not? If that is the case, does the contract law of Scotland apply under this legislation or is the default the law of contract for England? If the latter, that is problematic for transactions carried out north of the border.

[Lord Falconer of Thoroton (Lab)]

I am obliged to the noble Baroness, Lady McIntosh of Pickering, for raising these points. There is a raft of unanswered questions here. It is late at night, so I will try to focus on only the most important. Am I right in assuming that the market access principles, recognition and discrimination, apply to the rental and gifting of goods? If they apply to the rental of goods, what is the policy purpose? What is the purpose of applying them to the gifting of goods and what does it mean in practice? For example, does it apply to statutory requirements for the provision of food by food suppliers that are subject to statutory requirements?

The second head of issues concerns the position of public bodies engaged in commerce. I understand, but only from the Explanatory Notes, that the supplying of drugs by the NHS, even though it does so in a commercial context from time to time, is not covered by the Bill. Is this right? I have particularly in mind Clause 14(2), which says:

“‘Sale’ does not include a sale which … is made in the course of a business but only for the purpose of performing a function of a public nature.”


I read in the Explanatory Notes that that means the NHS supplying drugs. If that is right, what does the completely impenetrable Clause 14(3)(b) mean when it says:

“Subsection (2)(b) does not exclude a sale which is … not made for the purpose of performing a function of a public nature (other than a function relating to the carrying on of commercial activities)”?


Can the Minister explain this to the House? It matters quite considerably because I suspect it will cover a great deal of commercial activity performed by public bodies.

Thirdly, and separately, what is the position in relation to the goods that are made partly in one part of the United Kingdom and partly in another—for example, cars on an assembly line that crosses borders, or planes or high-tech equipment where parts from elsewhere come into it? As a result of Clause 15(3) and (4), is there a separate application to each of the individual components or does one look only at the completed goods?

Lastly, and this is perhaps the most significant, how do the Government envisage that this will operate? My understanding of Clause 6, on the non-discrimination principle, is that where a statutory or regulatory requirement in one part of the country discriminates indirectly, making the sale of those goods disadvantageous in another part of the United Kingdom, that disadvantageous provision can be supported only if it has one of the legitimate aims identified in Clause 8(6).

Let us take minimum alcohol pricing in Scotland. This is a relevant requirement which indiscriminately discriminates against incoming goods on the basis that alcohol brought into Scotland from England by a supplier is the subject of a disadvantage as defined in Clause 8(2); namely, minimum pricing makes it less attractive because the goods are more expensive to buy. As I understand it, this can be justified only if that minimum pricing statutory requirement has one of the following aims:

“the protection of the life or health of humans, animals or plants”

or

“the protection of public safety or security”.

Am I right in understanding that if, for example, a large supplier of alcohol from England into Scotland wished to challenge minimum alcohol pricing, he could do so by taking his buyer to court? There would then be a private law action in the courts of either Scotland or England—could the Minister tell me which it would be, assuming that the minimum alcohol pricing was in Scotland and the supplier was in England?—and the courts would have to decide whether or not minimum alcohol pricing was a regulation that had a legitimate aim.

The consequence of this Act—which is quite tricky to understand and is perhaps unthought-out—is that we in Parliament are handing over to the courts the determination of policies such as minimum alcohol pricing. That seems at the moment to be the consequence of the way that the Bill is drafted. I cannot believe that that is what any sensible Government would wish. Could the Minister please explain how Clause 8 works? I hope she can explain why my conclusions on the basis of Clause 8 are wrong—I really hope they are.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank noble Lords for their contributions to this short debate. There were a lot of questions in there, some of which I will just have to write to noble Lords about because my briefing does not cover the whole gamut of what was asked and I would rather give a full answer.

Amendments 66 and 67 are relatively technical amendments relating to the definitions of “sale” in the Bill. I am willing to provide further details on this issue and discuss any concerns that my noble friend has. Amendment 66 would narrow the definition of “sale” in the Bill. It would narrow the types of supply-related activities that a trader could carry out and benefit from the market access principles. It would therefore reduce the effectiveness of the market access principles in reducing barriers to trade across the UK.

The United Kingdom Internal Market Bill is intended to provide a structural underpinning and additional protections to the status quo of intra-UK trade, ensuring certainty for businesses and investors in the form of a safety net of regulatory coherence. We should not cut holes in the safety net. The definition of “sale” that we have will ensure that businesses can continue to trade in a frictionless way, no matter how they are supplying their goods. It also seeks to align broadly with the scope of the “placing on the market” concept that is central to our existing goods regulation.

I say to my noble friend Lady McIntosh that the Sale of Goods Act 1979 was a very UK-specific way of defining a sale. The EU style of definition that has been brought into our legislation is much broader, and there is a need to ensure that the same principles align across the whole legislative piece. “Placing on the market” is therefore included in this as a concept but not in the Sale of Goods Act. In short, the Government cannot support this amendment, and I ask my noble friend to withdraw it.

Amendment 67 would exclude the supply of goods free of charge from the market access principles. It would include the rental of goods, as the noble Lord, Lord Purvis, pointed out. That would lead to the strange outcome that a good could be lawfully sold under the mutual recognition principle in a part of the UK for only a penny but could not be supplied there under that principle free of charge. This would affect a range of items such as commercial samples, marketing merchandise or introductory offers, and would reduce the effectiveness of the market access principles in reducing barriers to trade across the UK.

I was asked a question by the noble Lord, Lord Purvis, when we were talking about coal. I think the distinction my noble friend was trying to make was between a ban on the sale of coal and a ban on its use. As in his example, you could legally buy it in Wales, but you could not then legally use it in England just because you bought it over the border due to the difference in rules. For these reasons, I ask my noble friend not to move Amendment 67.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I remember the noble Lord asking that question earlier in the debate. I am more than happy to write to him on that and on the other issues that I have not been able to cover in my response.

[Lord Falconer of Thoroton (Lab)]

I am not complaining, but the Minister did not try to answer any of my questions, so I would like a comprehensive response.

I am really interested in whether the Government envisage that in private law actions the courts will be resolving whether regulations that are discriminatory on the face of it for public purposes, as defined in the Bill, are valid—that is, whether they are for a legitimate aim. If they are, then the consequence is that Parliament is subcontracting decisions on these policy issues to the courts. I am not asking the Minister to deal with the other issues, but if she could deal with that one now, I would be grateful. If she cannot, because the answer is not yet known or has not been worked out, I would be grateful if she could indicate that. This issue seems to be absolutely key to the question of certainty for business. If where we come out at the end of the Bill is the courts system deciding on the legitimacy of a whole range of regulations, I am sure that that would not be what the Government would have wished. That is why the common frameworks process looks so much more attractive.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Having looked at that question, I would rather write to the noble and learned Lord giving a full answer—but I will do so very speedily, before we come to the next stage.

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

I have received one request to speak after the Minister from the noble and learned Lord, Lord Falconer of Thoroton.

[Lord Falconer of Thoroton (Lab)]

I go back to the very interesting answer that the Minister gave on the coal example. Let us assume that the coal example, which he described as being a prohibition on sale but not use, did not come in a pre-existing requirement and that it had been entered into after this Bill became law. I would be right, would I not, in assuming that such a requirement would offend against the non-discrimination principle under Clause 8? It is obviously a disadvantage to be able to sell coal to people who cannot use it. In those circumstances, it is valid only if that was a provision entered into after the Bill became law if such a provision was justified by one of the legitimate aims identified in Clause 8(6). Would I be right in assuming that? Would I be right in assuming that the question of whether the ban on the use of coal survived would depend upon a private law action between the supplier of the coal and the buyer of the coal?

[Lord Callanan (Con)]

I do not think the noble and learned Lord is correct in his assumption, but it is a detailed legal point, so I will take further advice and reply to him in writing.