United Kingdom Internal Market Bill

Debate between Lord German and Baroness Noakes

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

[Lord German (LD)]

My Lords, I have added my name to Amendment 21 to which the noble Baroness, Lady Finlay, has spoken. It seems to me that the clarification that the amendment is seeking is to understand whether, where a statutory regulation, rule or law is passed in a devolved Administration, that would exist until such time as the UK Government decided something different. Whether or not that is the intention of the Government, I do not understand.

The difficulty that I face in trying to work out the logical progression and the sequencing of what is happening in this Bill is correlated with the issue that we had on the common frameworks. It seems to me that the Government are moving down a dual carriageway in which one road is the internal market Bill and the other is the common frameworks progression, and between them is a brick wall. I do not understand how you can cross over between one and the other. That is the understanding that I got from the discussion we had in the earlier days in Committee.

The problem is that by the end of this year—I will use this as an example, which I would like the Minister to respond to at the end, if he would—the framework on emissions trading, which is a legislative framework, will be completed. I understand that it is with Ministers for final sign-off, but it has been agreed. If that emissions trading legislative framework is agreed, presumably there will then be legislation. I would like to understand where that legislation fits within the context of this Bill. Clearly, that has been reached by agreement—it has been agreed by all parts, including the United Kingdom Government, that there will be a legislative approach to this particular area of work. Then, of course, there will be a piece of legislation that sits either within this Bill or without it. I would like to know where that legislation will occur: will it be stand-alone legislation or will it be an amendment to the Bill we are discussing today?

There are two other frameworks—one on nutrition and one on hazardous substances—that are also virtually complete. They are non-legislative, and I understand that they will be agreed by Christmas. Take those three areas: on one side we have a legislative proposal and on the other we have a non-legislative proposal that the Government have agreed will be a non-legislative proposal and will therefore not require other legislation. And it will not require this legislation, because that is what the Government have agreed. Perhaps the Government could explain how the two are interconnected.

I understand that the reason for turning down a frameworks-only approach is because there are gaps, but we are yet to find out what the Government have established is a gap. We have asked for a current example that we can use, and I hope that, over the past few days, the Minister has found a current example that he can give us.

It seems to me that the fundamental principle that Amendment 21 is trying to establish absolutely is that, where there has been a legislative agreement or legislation that has been passed by either Wales, Scotland or Northern Ireland, when the Government introduce new legislation or regulations on the back of this legislation, such legislation will look only at the future and not the past and will have no retrospective effect.

[Baroness Noakes (Con)]

My Lords, I would like to remind the Committee of two things about this Bill. First, the Bill is to facilitate trade between all parts of the United Kingdom, not make it harder. Secondly, businesses favour barrier-free trade. That was the very clear message that came from the consultation on the White Paper during the summer. We should be trying to minimise the possibility of barriers being put up to trade within the United Kingdom.

If we allow exclusions of goods from mutual recognition, that will inevitably lead to higher costs. This is analysed in quite considerable detail in the internal market White Paper. Costs generally end up being borne by consumers. Excluding goods can also result in businesses deciding to withdraw from certain markets, which can in turn restrict consumer choice. I know the noble Baroness, Lady Hayter, is keen on consumer protection; she reminded us of that on the first day of Committee. Restricting trade tends to operate against consumer interests, so we should be very careful in trying to put amendments to the Bill that make trade more difficult. I also remind noble Lords that restricting trade is more likely to hit the devolved Administrations’ economies because of their greater dependence on exporting to the rest of the United Kingdom.

I want to comment on a couple of the amendments in this group, Amendments 7 and 8. The noble Baroness, Lady Hayter, said that Amendment 7 was a probing amendment, but by seeking to exclude imports into any part of the United Kingdom we are reducing the internal market rules to a very parochial interpretation. It seems to ignore the plain fact of commercial life, which is that there are complex supply chains and complex distribution logistics. It is of course the way we have been living in the EU; at the moment, we are quite accustomed to importing in one place and those imports being accepted throughout the rest of the community.

It also seems to me that the noble Baroness’s amendment would, in effect, impact exports between different parts of the United Kingdom. For example, if something was exported to Wales and imported to England, it would stop it then being imported into Scotland with the protection of the internal market Bill. That does not seem to make any kind of sense. It is pretty clear from the impact assessment that Wales and Scotland in particular are reliant on intermediate goods coming from other parts of the United Kingdom.

The noble Lord, Lord Rooker, spoke to Amendment 8. I did not follow what he said about pig semen because I do not think that, by any definition, pig semen is an animal feedstuff. I did have a chance to check the definition of “animal feedstuff” while he was speaking, and it is not. Perhaps we can put that to one side. We have to understand that if we try to exclude food and animal feedstuffs from the UK internal market mutual recognition rules, this will again potentially impact the devolved Administrations the most, given their import and export profiles. For example, if you look at Wales’s agri-food chain, you will see that 48% of agricultural inputs to Welsh food manufacturers come from the rest of the UK and 31% of food and drink sold in Wales comes from the rest of the UK. We should be thinking really hard about who we are likely to hurt when we put amendments such as this in the Bill, which restrict barrier-free trade.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, as noble Lords who have attended this Committee to date know, my role is occasionally to get up and give a minority perspective on the amendments before us. There are 20 amendments in this group and, one way or another, each of them would allow barriers to trade to be erected by one or more of the devolved nations. The effect of the amendments is to restrict the amount of trade to which the market access principles will apply and thereby reduce the extent to which barrier-free trade can take place throughout the UK’s internal market. I say to the noble Lord, Lord Anderson, that that is not an argument against devolution; it is an argument for trade and economic success, which I hope that we all want to achieve for the United Kingdom.

I will not repeat all of what I said on the earlier group, but the more that laws relating to trade in goods and services diverge between the component parts of the UK, the more likely it is that costs will rise and choice will diminish for consumers. Barriers to trade are also likely to result in lower GDP, as the impact assessment analysed, and we need all the GDP that we can get at the moment, given the impact of lockdown and similar anti-Covid measures. I am sure all those noble Lords who support and voted for devolution did not vote to become poorer through devolution.

The amendments give very considerable cover to the devolved Administrations to erect trade barriers under the guise of higher standards but, actually, on grounds of protectionism. At the very least, I predict that there will be massive scope for lawyers to argue for a very long period and to mount legal challenges. That may well be good for the fees of the legal profession—and for the noble and learned Lord, Lord Falconer of Thoroton—but the important thing I want to stress is that it will result in uncertainty for business. If there is one thing that is bad for business, it is an uncertain business trading environment.

Therefore, while I understand the desire for higher standards—and many noble Lords have spoken to this in respect of the particular varieties of relaxation that they are seeking in the Bill—at the end of the day, they can result in trade barriers. We really should be very careful not to wreck the UK’s internal market before it has even started.

[Lord German (LD)]

My Lords, I shall address Amendment 54 in my name. As the noble Baroness, Lady Finlay, said in moving her amendment, it harks back to debates we have had on the mysterious absence of common frameworks from the Bill. As your Lordships will know, common frameworks are a way of doing business that is supported by the CBI. The amendment would insert a new schedule into the Bill. It may look arcane, or like an obscure pub quiz question, so perhaps noble Lords would like to answer the question: what unites ozone-depleting substances and Caerphilly cheese? The answer is that the list in the schedule is the list of subjects where all four Governments in this country have agreed that legislative common frameworks are necessary. However, this is not intended as an exhaustive list. It would be possible to add to this by secondary legislation if new areas emerge that require a common framework.

I concede that it would not have been necessary to have such a schedule if the dual carriageway with the brick wall in between the two approaches that the Government are taking—this Bill and the common frameworks—were guaranteed to coincide and meet. Both approaches are progressing and have the enthusiasm of the Government behind them. This amendment would be a way of ensuring that those approaches coincided and met. The amendment would help, since it identifies common frameworks without using the name.

One of the more striking aspects of the Bill, as noble Lords and Ministers keep telling us, is that common frameworks on their own cannot guarantee the integrity of the entire UK internal market. They are sector-specific and not intended to address the totality of economic regulation. In answer to every question asked, there has been a real silence from the Government, who have failed to identify any areas where the integrity of the internal market might be threatened that are not covered by common frameworks. We had reference to the threat to the sale of barley from English farmers to Scotland, which has proved an issue already resolved by the common framework. There is also the wholly hypothetical example of a devolved Government wishing to legislate for additives to flour, which is already in one of the common frameworks on nutrition.

We therefore have to manage this problem of having two-track approaches to the internal market. The amendment proposes a way of creating that gateway between the two and ensuring that there is a link between them, so that we know that we are on the same course for a functioning internal market.