Budget Statement

Lord Fox Excerpts

Wednesday 3rd November 2021 Grand Committee

[Lord Fox (LD)]

My Lords, first, I want to congratulate the House authorities on making this room as comfortable as it could be, but this debate really should have been in the Chamber and not the Moses Room.

On the face of it, the Minister and his colleagues are responsible for the highest tax since the 1950s and, as we heard from the Minister, there is a promise of record capital spending. I am not going to dwell on the Government’s philosophical U-turn to embrace tax and spend, but I am going to question the purpose and effectiveness of this Government’s approach, and I will focus largely on growth.

The Chancellor’s latest fiscal rules are predicated on the need to generate growth in the national wealth, and this begs two questions. Does this Budget leave people with the money and the confidence to create consumer-led growth, and does it ensure that businesses have confidence in government plans to invest in productivity-led growth?

First, where is the economy headed? The Minister will point to the independent Office for Budget Responsibility projection of GDP growth for next year of more than 6%, but that hides an underlying rate of little more than 1%. The 1.3% annual growth projected for the end of the spending review period is effectively no growth at all. When you take into account underlying issues such as our ageing population, it is stagnation, not growth. Set alongside this, the OBR has warned that the cost of living could rise at its fastest rate for 30 years. Its latest forecast predicts that inflation is set to jump from 3.1% to an average of 4% in 2022; others point even higher, some north of 5%. Rising inflation will no doubt bring rising interest rates and rising housing costs—and let us not forget the already banked rise in tax and national insurance.

On the personal income question, the noble Lord, Lord Davies of Oldham, quoted the Resolution Foundation; I have used the IFS, but the results are very similar. The IFS said that millions of people are set to be worse off next year amid spiralling costs and tax rises. Supporting the IFS, the OBR pointed out that, once rising prices and rising taxes are taken into account, average household incomes are set to fall next year and will not recover before 2023. Take-home pay in those average households will fall by 1%—or about £180 a year.

For lower-paid workers, the Chancellor has made much of the cut in the universal credit taper rate and the rise in the national living wage. Those are good things, but their story—their outcome—is not so good for those people. According to the IFS, as the cost of living is set to increase faster than benefit payments, low-income households will also feel “real pain”, and

“millions will be worse off in the short term.”

Let us not forget that 75% of the 4.4 million households on universal credit will be worse off as a result of the decision to take away the £20 per week uplift. Can the Minister please explain how deliberately making 3.3 million homes poorer equates with levelling up? Even if there are enough HGV drivers to put stock on the nation’s shelves, it seems unlikely that this country will enjoy consumer-led growth.

The second point of analysis is whether this Budget drives growth through investment by business. For a business to invest, it needs a strong sense of what the government plan is and confidence that the Government will stick to it. Again, I take my lead from external experts, in this case Make UK, the trade organisation that represents the vast majority of businesses that make things in this country—in other words, that help to drive prosperity. Its view is very clear and damning. At the end of a long blog, it says that

“there still remains an absence of a medium to long-term economic plan which goes beyond simply chasing the next week’s headlines”.

How can business invest in the long term when the Government are not explaining the detailed view of the future?

Meanwhile, SMEs have been kept in a state of confusion around the important issue of business rates. The Lib Dems have always advocated wholesale business rates reform, but what has been announced is another temporary fudge of a system that prolongs the uncertainty that small businesses face. If those businesses are facing uncertainty, how can they be committed to investment? Additionally, businesses that have taken on more debt during the Covid crisis will start to see rising interest rates. Perhaps the Minister could tell your Lordships what the Treasury’s projections are for every 1% increase in interest rates in terms of insolvency of small businesses.

Businesses tell us that they want a detailed plan, particularly around climate change. Yet again, the messages from BEIS and the Treasury are very mixed. There are lots of warm words, but actions such as cutting the cost of internal flights send the wrong messages. Does the Minister now realise that that has backfired and it was the wrong decision? Climate change needs big thinking. The Liberal Democrats have plans to spend £150 billion on a green recovery over the next three years—that is the sort of thing we need.

As the Minister set out, R&D is an important part of the Government’s aspirations, yet, in reality, R&D spending has been cut back by the pushback of two years. That makes achieving the 2.4% GDP target all the harder, particularly in respect of getting money from the private sector. Tax reliefs will not be enough, so can the Minister tell us what else the Government are going to do to get that money?

In conclusion, this was a time for important questions to be answered. What does the digital and green future look like and how is it funded? What does the levelling-up and rebalancing of our economy mean and how can we deliver it? What will the skills revolution actually be like and how will it be delivered? Yet, in spite of taxes being raised to the highest level in my lifetime, these questions remain unanswered. Instead, what we have seen and what people tell me they have seen is a disjointed collection of press releases. It is a shame that the Government did not use this opportunity to address the real issues facing the country.

Government Departments: Non-Executive Directors

Lord Fox Excerpts

Wednesday 8th September 2021 Lords Chamber

[Lord True (Con)]

No, my Lords, I cannot give such an undertaking.

[Lord Fox (LD)]

My Lords, I am grateful to the BEIS website, which points us to the 2014-15 annual report on departmental boards. In it, there is fulsome praise from the then Paymaster-General for how such departmental boards

“help the Whitehall machine function more effectively”.

That was one Matt Hancock—and we all know how, six years later, that ended up. However, it is not just in the Department of Health that the non-executive appointment process and the purpose of NEDs have become opaque. As we have heard, the whole system has become the captive of political appointees. Does the Minister agree that these are public appointments and that, for the public to see benefit from them, there should be clarity in the appointments and clear objectives as to how they operate?

[Lord True (Con)]

My Lords, on the first point, Mr Hancock is no longer a member of the Government.

National Science and Technology Council

Lord Fox Excerpts

Wednesday 23rd June 2021 Lords Chamber

[Lord True (Con)]

My Lords, there are a whole range of bodies and organisations—the academic world, business, the scientific community, universities—and a whole range of people contributing to our effort in harnessing and developing science and technology. This new initiative is not intended to supplant the work of anybody but to signify at the very highest level—a new Cabinet committee—the determination of the Government to move forward and exploit these opportunities in a fully co-operative manner.

[Lord Fox (LD)]

My Lords, following on from that question, when this new body was announced, it was linked to the research and development budget. As the Minister knows, until a few years ago, research councils independently directed the flow of R&D support. Just two years ago, UK Research and Innovation absorbed those research councils with the idea of focusing the effort in science. Now, with ARIA, the national science and technology council and the office for science and technology strategy, the Government have announced three new research bodies this year alone. There is no shortage of complexity, as the Minister pointed out, but where is the money? Either the Prime Minister’s new committees are making a budget grab, taking over from UKRI, or they have no money and therefore no way of implementing these strategies. Which will it be?

[Lord True (Con)]

My Lords, I consider that a less than enthusiastic response to an initiative in respect of which I have welcomed the support of Her Majesty’s Official Opposition. The Prime Minister is tasking the whole of government, working with the new council and office, to take the success of the United Kingdom’s approach to vaccines and apply it to other priorities. We are setting bold visions, acting with speed and taking risks which can bring high rewards and benefits to the UK, including developing technology to reach net zero and cure cancer, not only treat it. A broad range of work will take place. Funding for specific programmes of research is obviously a matter for the normal process of the consideration of public finance.

Vice-President of the European Commission

Lord Fox Excerpts

Thursday 29th April 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, I am in relatively frequent contact, remotely and face to face, with Vice-President Šefčovič. I am not sure that I can commit to meeting before every one of those meetings. I have committed to provide agendas for joint committee and Partnership Council agreements and to appear before scrutiny Committees frequently, so that the House has a good idea of the grounds of discussions.

[Lord Fox (LD)]

My Lords, the Minister has recognised several times the problems that exporters are having with standards. Can he tell us how many times since January he has raised this issue with his counterpart, and, when they next meet, will he be proposing practical solutions that can significantly reduce the trade barriers that the lack of alignment has created?

[Lord Frost (Con)]

My Lords, the question of support for business in this new environment is being taken forward by a large number of government departments, at all levels. We have a good dialogue with the member state customs authorities that we deal with, and implementation is going forward in a very pragmatic fashion. I expect that, at the Partnership Council, practical difficulties of the kind the noble Lord mentioned will be very much on the agenda when we meet for the first time, and going forward.

Taskforce on Innovation, Growth and Regulatory Reform

Lord Fox Excerpts

Wednesday 17th March 2021 Lords Chamber

[Lord True (Con)]

My Lords, I note the noble Lord’s comments and will obviously refer them to the Ministers responsible.

[Lord Fox (LD)]

My Lords, in the terms of reference to which the Minister referred, the aim of TIGRR is to “reduce administrative barriers”. Since January, hundreds of thousands of businesses have started to encounter extreme administrative barriers doing things that had previously been seamless. Because of their poor negotiating, the Government have left these businesses—from fishing to cosmetics, advanced manufacturing and food—with miles of new red tape. Does he agree that it is a bit absurd to set up this task force when they have dumped literally container-loads of red tape on British business?

[Lord True (Con)]

Absolutely not, my Lords. Again, the noble Lord does not show the respect due for the decision of the British people to leave the European Union. The reality is that this task force is asked to look at reducing barriers in whatever context, and I draw his attention to great steps forward. For example, there is the trade agreement with Japan.

Budget Statement

Lord Fox Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Fox (LD)]

My Lords, we have a long debate in front of us and, in opening for the Liberal Democrats, I will not try to cover every single item in the Budget. I will not have time to go into detail about the £10 billion of debt amassed during the Covid crisis by the poorest households. I will leave it to others to explain why the universal credit uplift should be made permanent, and why this debt should be addressed before we see a further escalation of homelessness across the country. Similarly, I will not speak in detail about the challenge facing small businesses, viable enterprises that have supported jobs in our communities in the travel, tourism and creative sectors, for example—viable businesses, but already experiencing a debt crisis while facing spiralling fixed costs. Instead of giving them a ladder out of this hole, the Budget offers them a chance to dig themselves into more debt through the recovery loan scheme. This debt will haunt the economy for years.

I want to focus on two other big gaps in this Budget. The first is the national strategy deficit. Anyone reading the two inches of documents that come with modern Budgets will see that there is no shortage of the word “strategy”, but no actual evidence of strategy; instead, we have broad aims. There is the aim of net zero by 2050, for example, but no plan in this Budget or anywhere else for how we are going to get there. Indeed, some of the Budget measures cut across net zero.

Then we come to industrial strategy. In this instance, the Chancellor inherited something that had worked across several Parliaments. Sitting atop this was the Industrial Strategy Council. It was launched as a joint industry-government body that would steer the UK to higher productivity. As the noble Lord, Lord Henley, the then Conservative Minister for BEIS, said in 2017:

“The Industrial Strategy Council will be independent. It will be responsible for putting the right evaluation and reporting structures in place and make recommendations to government on industrial strategy.”


Then, last week, it was abolished. There was no announcement to Parliament, no Statement to your Lordships, just short letters to the council members. There was a chorus of disapproval in British manufacturing. In justifying their decision, the letters note:

“The UK is in a completely different situation than it was in 2017.”


It cites Brexit, the net zero challenge and Covid. Can the Minister explain why these three challenges make the need for an industrial strategy less, rather than more, urgent?

This decision officially confirms that BEIS is a vassal of the Treasury, a Treasury led by a Chancellor to whom the concept of a strategic approach to manufacturing seems anathema. Instead of this, Her Majesty’s Government have the Build Back Better document. This is actually a rehash of existing activities. It recycles 142 pre-existing policy initiatives, and these do not hang together that well. I would call the document flimsy, but it is bulked out with acres of colour photography, and therein lies the explanation: this is a Government dazzled by flash photographic announcements and bored by the hard graft of strategic development. They are insouciant about delivery.

The second gap I want to briefly cover concerns social care and its relationship with local government finance. This Budget is eerily quiet about this vital service, and this silence is a scandal. We all know what it means to elderly, vulnerable people to have recourse to proper care, and we all know that this is failing people every day. But there is a second, knock-on issue. The 5% rise in this year’s council tax will hit everyone, the poorest and richest, and 60% of this rise is due to the social care precept that the Treasury is essentially forcing local councils to raise. Since 2016, this precept has added hundreds of pounds to individual council tax bills all over the country. In short, councils are being made to tax local residents to shore up the failing social care system, so that the Conservatives can pretend that they are not doing it.

Once again, this is no strategy for social care, just a tactic of lumping it to hard-pressed councils. Meanwhile, the money these councils have to spend on other services—roads, libraries, the bins and other care—is being squeezed, so squeezed that the Government are allowing some councils to capitalise revenue spend. This capitalisation is essentially mortgaging future revenue. I ask the Minister: how is this prudent or just for future council tax payers? How do the Government think the levelling-up agenda can succeed when red wall seat councils are being squeezed so hard in this way?

This country is just beginning the long road to economic recovery from Covid. Our businesses are only now realising the huge economic stress of Brexit, and we are in the very first stages of addressing the climate emergency. To meet these three challenges, we need something more than glossy photographs and clever slogans; we need strategic focus and a Government who get down to the hard graft of delivery. This Budget offers little prospect of that.

Economic Update

Lord Fox Excerpts

Tuesday 12th January 2021 Lords Chamber

[Lord Agnew of Oulton (Con) [V]]

As I said in my earlier comments to the noble Baroness, Lady Kramer, I am not able to give the commitment the noble Lord asks for. The Chancellor will give an economic update in his Budget on 3 March, and I am sure that this matter will be addressed then.

[Lord Fox (LD) [V]]

My Lords, in the self-congratulatory response of the noble Lord, Lord Agnew, he favourably mentioned the household savings ratio. As my noble friend said, this pandemic will hit poorest families hardest; they are already having their incomes squeezed, and they have no savings at all to see them through this. It is clear also that the most deprived in the UK are the least likely to self-isolate; given the current level of support, they simply cannot afford to. The poorest people in this country cannot afford to wait for a March Budget and, despite the Minister’s smug response, this Statement offers them nothing. So can the Minister explain why the Government are blind to the fact that adequately helping the poorest people in this country is not only right but vital in the national fight against Covid?

[Lord Agnew of Oulton (Con) [V]]

I would remind the noble Lord of the large number of interventions we have made which will substantially support the most vulnerable in society: support to renters to reduce the ability to force evictions; the mortgage holiday, which has been granted to 2.7 million people since last March; the support in the many individual programmes we have announced. All these are applicable to some of the poorest in our society. We are very aware of their vulnerability. I would gently remonstrate with the noble Lord that it was not a statement of self-congratulation when I was answering the noble Lord, Lord Tunnicliffe; it was merely a statement of what we have done over the last 10 months.

European Union (Future Relationship) Bill

Lord Fox Excerpts

3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 30th December 2020 Lords Chamber

[Lord Fox (LD)]

It is a pleasure to follow the noble Baroness, Lady Donaghy. I will focus on three business consequences of this treaty. First, the deal creates an ocean of new paperwork. The Financial Times reports that each year British companies trading with Europe will have to fill in an extra 215 million customs declarations, at a cost of about £7 billion per year. At best, each delivery to and from the EU will take an average one day longer. Can the Minister explain how the Government will ameliorate this fettering of British trade?

Secondly, there will be double regulation. Any UK company wishing to export to the EU will now have to comply with both the new UK regulations and standards and the EU ones—an extra set of design, testing, certification and administration costs. For example, UK chemicals regulation requires British-based companies to reregister every chemical that is currently legal in the EU. Double regulation means double cost. In the case of chemicals, that is about £1 billion of extra cost. What are the Government doing to alleviate the millstone that is hanging around British industry?

Thirdly, on rules of origin, traders can self-certify the origin of goods sold and then enjoy what is called cumulation. That is good, but the deal does not allow for parts imported from regions outside the UK and EU to be counted towards local content—what is called diagonal cumulation. This will make it hard, or impossible, for our more complex manufacturers to avoid being hit by heavy tariffs from the EU. What are the Government doing about that?

These are undeniable issues. The Minister and the Government should face up to them. This Conservative treaty makes things worse for investors, workers and consumers.

Finally, it is clear that, despite its size—no skinny treaty here—this deal is actually a master framework. As the House has heard, from the noble Earl, Lord Kinnoull, and other noble Lords, there are many further deals to be made. As the noble Earl set out, there is a welter of committees to hammer out these details— 32 committees and working parties by his count. Noble Lords should remember that, if either party is not happy, the entire deal could be terminated with just one year’s notice. The UK and the EU will be arguing about our relationship for years. So much for this deal giving certainty to business. Business will soon realise that things are not fixed; they are still moving. Without certainty, capital takes flight.

Taxation (Post-transition Period) Bill

Lord Fox Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 16th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, over the course of this parliamentary term, we have seen the introduction of many things. Although the Government have not invented content-free legislation, they have certainly furthered that process through the liberal use of secondary legislation following primary legislation which is unable or unwilling to set things out in exact detail, and we are faced with that again today.

On a slightly more frivolous note, this Bill introduces, or highlights, the way in which a word like “notwithstanding” can suddenly be vested with some sense of terror, like a shark arriving on a beach. We are glad that the “notwithstanding” clauses were not, in the Government’s view, necessary in this Bill, so there is a little piece of brightness there.

The sunny optimism of the noble Lord, Lord Sharpe of Epsom, was very welcome. We welcome him to this House and look forward to his wisdom, and perhaps his anecdotage—I am sure that there is plenty lurking there somewhere. I would call into question his maxim that every problem is an opportunity in disguise. As a former chief executive of the Liberal Democrats, I am quite able to give evidence of why that is not true.

I thank the Minister for his very clear explanation of the nature of the Bill. When I looked at it, I set out with the notion that it is the plumbing, which it is. It is easy to dismiss the plumbing, but then you think about what the world was like before we had plumbing and what it is like when we do not have plumbing and you realise that it is important. That is why the Bill is important and why we welcome it. Given the nature of our role in this House, I will seek clarification on some of the issues rather than make what could be called a traditional Second Reading speech.

The Bill sets out a new framework for customs, VAT and excise duty for goods moving in and out of Northern Ireland. The Minister was very clear, and said twice in two different ways, that Northern Ireland is, and remains, part of the UK customs territory, but on the second occasion he followed it with a big “however”. That “however” is that EU rules for goods but not services will apply in Northern Ireland. Therefore, it remains part of the UK customs territory but it also remains part of the EU customs territory, and there is a dichotomy in that process. That adds complication such that a £200 million scheme is required to help people with it. Like others, I ask the Government to update us on whether that scheme is ready to run.

The complexity lends itself to the six-month adjustment period that my noble friend Lady Kramer introduced. For the benefit of the noble Baroness, Lady Bennett, and others, I should explain that my noble friend is a member of the Economic Affairs Select Committee, and there is a protocol that allows those who have important Select Committee meetings not to sit through the extent of the debate.

The big question set out by the noble Baroness, Lady Altmann, my noble friend Lady Suttie and others concerned non-qualifying goods. We understand that there will be such goods but we do not know what they are and what the criteria are for creating them. We are not sure of the process for communicating what they are and we have no idea about the timing. This is not an abstract debate; it is about real people, with products, trying to understand what they need to do. Like them, I see adverts on my television every night telling me to get ready. Can the Minister tell us what they are getting ready for? What goods will be non-qualifying, and when will people know? That is really important and, again, it begs the question about delaying implementation so that people really can get ready, because that is what they want to do.

The Minister mentioned the role of duty suspension. It is an interesting role and one that I had not talked to the Minister about before. It would be interesting to know whether any of the rules around duty suspension are changing and whether the Government considered changing some of them, perhaps to add or remove friction from the system.

The Minister also talked about the removal of VAT relief on low-value items, and that is a welcome area. I would be interested to know whether the Minister can tell us what the expected increase in tax take is for that, and indeed what extra enforcement will be required to get that tax through the door. It strikes me that there could be an awful lot of different transactions that, in the end, add up to not much take. But I accept the Minister’s point that levelling up the playing field for our high streets across the country is really important. This is a very small measure but I would not overestimate its effect. A lot of things are happening to our city-centre and town-centre shops, and this is just one small element of them. My noble friend Lady Suttie and the noble Baroness, Lady Ritchie, talked about measures to manages shortages and potential price rises, and perhaps the Minister could set out what those would be.

My noble friend Lady Kramer and the noble Baroness, Lady Altmann, raised the issue of the trusted trader scheme. A lot of hope has been vested in this scheme but, without shooting too cheap a shot, our evidence of tracing schemes thus far has been relatively disappointing, to say the least. How can we be sure that this system will stand up to expectations? The accepted wisdom of many is that it is a small scheme that will not facilitate the sort of trade we are looking for.

Finally, a number of your Lordships raised the issue of removing tax-free shopping for foreign visitors. Here, without debating the issue, one needs to know what the facts are. Can the Government publish the cost-benefit analysis that I am sure they must have carried out before publishing such an important change in the rules? Can they explain how the difference in tax raised, which would have had to extend to EU visitors, is weighed against the economic effects on tourism and trade from foreign visitors? That number is very important and when we see it, I am sure we will be better able to understand why the Government have made this decision. Without those numbers, one might imagine that they just put a damp finger in the air and tried to work out which way the wind was blowing.

This is important plumbing, but it is inexplicable why we have had to wait this long so that businesses can get ready. I understand that we had to get through the internal market Bill, but that ran very late. Businesses need to be ready and for that, they need to know what they have to do. The Bill is essentially content free. The real detail comes with the regulation and the secondary legislation. When will we see that? When will businesses know what they have to do so that they can continue to trade? It is up to us and the Government to make sure that they know what they have to do.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for clearly setting out his objections to the last set of amendments. In his closing words he said that the Government view the common frameworks process as complementary to the market access principles. Listening to the noble and learned Lord, Lord Hope, it was very clear that there is a discontinuity—a lack of complementariness—between the two positions. As the noble and learned Lord set out, a central feature of the framework agreement is to come to an agreed process for divergence between the four nations, within which the UK has a major role. That divergence is killed off by the automatic nature of the market access principles. That is the central point that the noble and learned Lord’s amendments address. In doing so, the new versions of the amendments have taken on board the comments that have come back from the other place, having recognised the level of uncertainty that could have been injected by a previous proposed new clause, which has now been removed. The amendments adopt the regulations within the Bill to facilitate that decision, so that it is consistent with the way that the Bill seeks to operate, but also consistent with the principles of devolution that have served this country so well to date.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, perhaps we need to remember why we are here. It is really quite simple. When the case for Brexit was all about “taking back control”, we failed to understand that the Government meant taking control to themselves, even over issues that were fully devolved. However, when the Bill was published—without any involvement from the devolved authorities, remember—we soon discovered that it ran roughshod over devolved competences, as the noble Lord, Lord Fox, said, trumping the common frameworks programme.

I have often wondered whether this was deliberate or an oversight, though the lack of prior consultation suggests the former. However, that makes the statement on the publication of the Bill, on 9 September, signed by the Scottish Secretary but not the Welsh Secretary, and by Mr Sharma and Mr Gove, a bit strange in the light of this Bill. It says that the devolved Administrations will enjoy a “power surge” when the transition period ends.

Let us take that at face value. Perhaps the particular construction of the Bill was clumsy—as an oversight rather than deliberate—and perhaps it is right that the Government did not intend to bring back to themselves all the powers long devolved to the other three authorities, but in that case the amendments tabled by the noble and learned Lord, Lord Hope, would rectify the problem. They would simply restrict the market access powers in the Bill, which of course are only about devolved competences, to those where the four-party process failed to reach agreement.

As the Government are one of those four parties, they will be in a very strong position to revert to the Bill, and to Parliament, for the powers they feel are vital for an internal market on areas where disagreement cannot be overcome. That seems, to this side of the House, a simple, clean solution. It would hard-wire in a common frameworks process which the Government themselves described last week in the latest of their three-monthly reports on the frameworks—reports which, I think, we added to Schedule 3 to the EU withdrawal Bill as a requirement for the Government to publish—as

“an agreed approach to ensuring regulatory coherence”

in devolved areas. That is absolutely spot on—coherence, not uniformity—and that is probably where we are trying to get to. The problem is that, as written, the Bill adopts “uniformity”.

The same document, which has just been published, despite having talked about coherence, then asserts:

“Common Frameworks cannot guarantee the integrity of the entire UK Internal Market.”


However, the document does not provide any evidence of why the frameworks will not work. It gives no examples of where, within devolved competences, any agreements might not work. Indeed, the Minister, in introducing the debate, again asserted that it would have to be for Parliament alone to decide when the market access rules would not be used, but he did not explain why the four-party process would not be able to deal with that and why they would come to Parliament only when there was a failure to agree. The same document notes the “freezing power” contained in the withdrawal Act, and it also notes that it has never needed to be used, but it fails to suggest where it might be needed.

Therefore, in the Bill the Government are saying that on the one hand the frameworks are very good and have been able to produce coherence but, on the other hand, the Bill allows the market access principles to trump that process, even if it produces agreement.

We have it said before and I say it again: we on this side of the House want an internal market which thrives and serves the needs of business, the professions, consumers and the environment, but it has to be one that respects rather than dismantles devolution. These amendments seem to us to offer the path to achieve that, so we will support the noble and learned Lord when, as I am sure he will do, he asks the House to vote. I hope that in the light of that vote we can, as the Minister suggested, continue the dialogue so that we can reach an agreed position that would safeguard all that has been going on with the devolution settlements and the common frameworks process but, in the last analysis, would of course come back here.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, I welcome the noble Baroness, Lady Bennett, back to her seat—just in time for tier 3 to arrive. We have again had a short debate. As we have seen the evolution of this argument—in the amendment’s approach to common frameworks it is, in a sense, the yin to the yang of the noble and learned Lord, Lord Hope—we are now looking at a different way of trying to ensure that diversity can survive under the automation of the market access measures.

In the past, the Minister has brought to bear the Government’s disapproval of the breadth of the exclusions that previous versions of this amendment made. As the noble Baroness, Lady Bennett, pointed out, many of those have now dropped off. So, in a sense, the Government have already pushed this to a narrower set of exclusions. The Minister highlighted his uncertainty around the word “proportionate”. Of course, none of us would want to do something disproportionate, but I cannot help thinking that the Government, in all their wisdom and with all their clever legal people, could come up with a frame of words that will prevent hideous problems developing in the courts—so I cannot help thinking that that is something of a red herring.

As the noble Lord, Lord Stevenson, said, this is getting more modest than was previously attempted, but it still has the overriding aim of dealing with the problem which keeps coming up throughout this debate. The Minister has magnanimously said that the devolved authorities are perfectly at liberty to develop new and innovative ways of doing things—so far, so good—and then, of course, the market access principles mean that those innovations will get undercut if someone else in the British Isles is doing it differently. I do not understand how the Minister can keep linking those two sentences without seeing that the one excludes the other. If it does not do it in governmental terms, it will do it in the courts. This will be a creature of the courts, because there will be businesses that will be going at a legal opportunity to get their products into devolved authorities that have sought to raise standards, as they see it.

The issue of minimum-unit alcohol pricing often comes up, and it is quite clear that this legislation will not affect that at all. We are all in agreement there. But if we were seeking to bring that in once this legislation was in place, what chance would it have of surviving the courts? That is why we will support this amendment.

[Lord Callanan (Con)]

I thank everybody who has contributed to what has been a very good, albeit brief, debate. I have listened very carefully to the points that have been raised, and I will respond directly to the points of the noble Lords, Lord Stevenson and Lord Fox. Innovative policy-making relating to public health and the environment will be fully possible under the Bill, within the clearly defined market access principles. Schedule 1 sets out a clear exclusion process for:

“Threats to human, animal or plant health”.


There are also several other exclusions relating to the environment and public health: chemicals and pesticides, for example. All of these are drafted tightly to strike the right balance between these objectives and the integrity of the market.

It is also essential to remember that neither of the market access principles affects the devolved Administrations’ abilities to uphold and enforce rules governing how consumers use goods. Neither would they prevent reasonable “manner of sale” restrictions, as long as they are not discriminatory. If an Administration wanted to introduce minimum alcohol pricing or the plastic bag charges, they are fully able to do so and can use them to fulfil environmental or public health aims in future; the principles would not be an obstacle to that, as long as those rules do not discriminate. I say to the noble Baroness, Lady Bennett, that she is wrong: if a future devolved Administration wanted to introduce the plastic bag charges, they would be able to do so under these market access principles, as long as they were non-discriminatory.

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[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

Does anyone else in the Chamber wish to speak?

[Lord Fox (LD)]

There is almost no one left in the Chamber who has not spoken. This has been an interesting debate and, no doubt, the Minister is carrying away lots of advice from some of the Benches. I thank the noble Lords, Lord Adonis and Lord Liddle, for their passion. If that passion is matched by votes in the event that the noble and learned Lord, Lord Thomas, decides to ignore the advice of the noble Baroness, Lady Noakes, and press this to a vote, I will have more excitement because otherwise, it is merely a rhetorical gesture.

The noble and learned Lord set out his view on devolution. It is quite clear, as was set out a number of occasions, that in the structural fund process, which this will herald the replacement for, the devolved authorities were in the driving seat of deciding where and on what the money was spent. It is not clear from anything the Minister said today, or in answer to questions last time, that the Government will not seek to impose things on the devolved authorities. The Minister said there would be governance structures; it would be interesting to hear how those governance structures will be introduced and what the Government envisage. In other words, do central Government have the veto in deciding what goes where? In the end, that is the difference between this being genuinely consultative and, as we have heard described around the House, a Westminster-knows-best process. Consultation is fine but only if it is adhered to.

My final point on the quantum of money and its distribution comes back to a question I asked earlier. I think the Minister said that the amount of money envisaged to go into the shared prosperity fund is equivalent to that which came through the structural fund. The Minister also indicated a much broader remit for spreading that money around than was the practical reality of the structural fund. How will the Government manage the process of certain areas that have been particularly well funded through the structural fund, such as Cornwall and Wales, getting less money if there is no increase in funds and they are spread more widely? Furthermore, the European Union distributed that money using classifications of need, so how will the UK Government develop those? Do the Government envisage that they will be different, and can they undertake that they are transparent?

In conclusion, if the noble and learned Lord, Lord Thomas, decides to call a vote, we on these Benches would support it, but there are a lot of questions we would be grateful if the Minister could answer.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords—[Inaudible]—on earlier discussions around this issue and the issue that will come up in the next group of amendments on state aid and spending as a result of moneys which may be available to support that. We should pause and take note of the fact that the noble and learned Lord, Lord Thomas, has engaged with this issue again despite the view taken in the other place that it is a financial privilege. The noble Baroness, Lady Noakes, is right in saying we are in a difficult area. I am not sure how the comments from the noble and learned Lord, Lord Thomas, will take him forward. He certainly has a point, but I do not think this is the right amendment or place to explore it. It needs a wider perspective. Many of these issues date from time immemorial; it is important to respect them and understand where they come from, but they should not block debate and discussion on key issues.

The issue the noble and learned Lord is raising, which has also been picked up the Minister, is how, in the future, possibly using statecraft—whatever that is—we will manage spending in the devolved areas, which are not reserved, when the funding mechanisms are different and have to be adapted to meet current arrangements. There are issues that will need to be addressed in the future, but we covered a lot of ground in earlier debates, and I thought the points made by the Minister on the shared prosperity fund were sufficient to ensure that we do not need to go back over this again. It is not our view, as Her Majesty’s loyal Opposition, that we need to divide the House on this issue again.

If the issue is common between us, we need to understand where we can get to in respect of comments made from the Dispatch Box. The noble and learned Lord, Lord Thomas, made a number of good points and asked a number of questions, and I am sure the Minister will respond to them. I do not think the points added by my noble friends Lord Adonis and Lord Liddle vitiate that approach; they made a good case that we will need more in this area in the future, but this is not the right amendment to take us down that route.

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Therefore, big, centrally important constitutional principles are at stake here, and I will strongly support both the noble Baronesses, Lady Finlay and Lady Bowles, if they press their amendments to a vote. It is very important that noble Lords are on the record as to their position when it comes to defending and taking forward the devolution settlement in our United Kingdom.

[Lord Fox (LD)]

My Lords, I can assure the noble Lord, Lord Adonis, that we on these Benches are not keen to hustle this through; we are keen to see one or other of these amendments put back so that we can continue to have the discussions in this area that we need.

I shall speak briefly to both amendments, starting with Amendment 50F, as put forward by my noble friend Lady Bowles. The Minister said that the amendment limited Parliament’s scope. Au contraire, it would make sure that Parliament was in the driving seat of any significant changes. State aid is clearly important—so important that the Government are prepared to crash the entire economy to maintain control of it. If state aid is so important, Parliament and not Ministers or the Secretary of State should be in the driving seat. That, briefly, is what my noble friend Lady Bowles’s amendment seeks.

On Amendment 50E, in the name of the noble Baroness, Lady Finlay, even through the attenuation of the virtual system, her passion for and understanding of devolution, her understanding of the union and the threat she sees posed to it by the overall communication atmosphere created by this Bill and other things—a view which many of us share—rang through her speech. It is clear that, without co-creation, as she called it, that threat to the union remains strong. The Minister should heed the noble Baroness and, whether or not she presses her amendment, look at ways of genuinely bringing on board the devolved authorities so that there is shared ownership of this important process. If either proposer presses their amendment, we will support them.