Northern Ireland Protocol Bill

Debate between Lord Hannan of Kingsclere and Lord Dodds of Duncairn

Committee stage
Wednesday 2nd November 2022 Lords Chamber

[Lord Dodds of Duncairn (DUP)]

My Lords, I am truly grateful for the opportunity to participate, and would have done so earlier had I stood up more quickly. I will address some of the issues raised by the noble Lord, Lord Kerr, and the noble and learned Lord, Lord Judge.

First, the noble Lord, Lord Leigh, touched on the reasons behind Clause 12 and why it is necessary, and I think it is worth reminding noble Lords of the current position following the approval of the Subsidy Control Act. Under the provisions of that Act, Northern Ireland is specifically excluded from the UK subsidy scheme. Therefore, we are subject, as per Article 10 of the Northern Ireland protocol, to EU state aid laws, and all the laws listed in Annexe 5 to the protocol shall apply to the UK

“in respect of measures which affect that trade between Northern Ireland and the Union which is subject to this Protocol.”

I have spoken to Invest Northern Ireland—the body that looks after foreign direct investment into Northern Ireland—about these matters. In effect, while the UK is setting up a new, more flexible state aid regime, under Article 10 of the protocol the UK subsidy control regime would apply only to about 50% of the financial support that will be provided to Northern Ireland, with the remainder continuing to fall within the scope of EU state aid rules, applying mainly to the manufacturing of goods.

So, Northern Ireland will be forced to adhere to the strict rules and conditions of EU law on things such as no expansions, maximum grant rates, only new establishments and so on, and when the projects are large or outside the scope of the exemption regulations, Northern Ireland will have to seek European Commission approval. Effectively, we have two regimes which are very different in policy terms and practical effect. Under the UK scheme, things effectively will be automatically approved unless specifically prohibited, and in Northern Ireland, under EU rules, everything will be prohibited unless approved—very different policies, and two very different systems operating in one country.

The reasons behind Clause 12 are sound; otherwise, there will be no level playing field across the United Kingdom for state aid. The noble Lord, Lord Kerr, talked about uncertainty, but Invest NI has expressed concerns about the application of this dual regime. We will be at a disadvantage compared to other parts of the UK competing for inward investment. Other parts could be much more attractive as a location for investment as a result of not having to wait for European Commission approvals, for instance. Northern Ireland approvals will take significantly longer than the new timescales envisaged in the Subsidy Control Act for the rest of the United Kingdom. Other areas could have far fewer conditions or restrictions and might well receive greater levels of funding and subsidy than will be possible under the EU regime in Northern Ireland, which prohibits subsidies greater than 50%, whereas under the Act subsidies should be “proportionate”, but no maximum is specified.

Indeed, your Lordships’ Select Committee on the protocol in Northern Ireland, on which I am honoured to sit, wrote to the noble Lord, Lord Callanan, on this matter. He responded by letter on 22 March 2022, saying that he recognised that

“in some cases a more flexible approach will be available in Great Britain than in Northern Ireland and that this could affect all subsidies relating to trade in goods.”

There are real concerns about the application of EU state aid to Northern Ireland when it is not applicable to the rest of the United Kingdom.

On the issue of what replaces the EU regime for Northern Ireland, I have heard what has been said. That is why I am on record in this House as agreeing with the Opposition Front Bench that we need to see the regulations, and they should be published in good time for your Lordships to consider in detail. It is not enough simply to have broad outlines of policy or indications of where it might go; we need to see the regulations at the same time as the legislation. I fully accept that this should be done, and I said so in a previous debate.

I understand also the very strong opinions, many of which I share, on the idea of giving the Executive more and more power at the expense of the legislature. However, I ask noble Lords to bear in mind the situation we are faced with in Northern Ireland as a result of the protocol. Powers have been taken away in 300 areas of law affecting the economy in Northern Ireland. Powers have been taken away from this House, this Parliament and the Northern Ireland Assembly in Stormont, and handed over to the European Commission in Brussels, which initiates law in all those areas.

Noble Lords have expressed great dissatisfaction with the idea, which is regrettable in many cases, that one of His Majesty’s Ministers may be able to sit down with a pen and paper or an iPad and write what comes to mind; but we have a situation where somebody in the European Commission building in Brussels—I do not know who or where they will be, or their name; they are certainly not accountable to anyone here or in Northern Ireland—will write laws for Northern Ireland. It will not be a question of putting them down in statutory instruments, which this House may reject—although we have heard that it hardly ever rejects them. There will be no system of approval or disapproval at all. There will be dynamic alignment of the laws of the European Union with Northern Ireland. Legislators and the people of Northern Ireland will be handed those laws by the European Commission and told: “That’s the law you’re now operating.” Those laws are not necessarily going to be made in the interests of Northern Ireland. They are made by people who have their own interests.

I understand why noble Lords may rail against the delegated powers in this Bill, but why is not the much greater problem of the powers that have been given to Brussels to impose laws directly on part of the United Kingdom in the 21st century a subject for even more outrage? People may say that the Government signed up to this. I agree—they did, against our advice. We voted against it, as did other noble Lords in this House and Members of the other place. But we have this problem and we need to fix it. If it cannot be fixed, we are in serious trouble. I hope that negotiations and the negotiating mandate of the European Union will change to allow these things to be negotiated, but there is no sign of that thus far. If they do not change, this sovereign Parliament must take action to protect the people of Northern Ireland against laws imposed on them. Surely that should have the support of all true democrats in this mother of Parliaments.

[Lord Hannan of Kingsclere (Con)]

My Lords, listening to the noble Lord, Lord Dodds, just then, my mind drifted back a decade or so to a debate in the domed hemicycle in Strasbourg on the issue of state aid in a neighbouring jurisdiction, one that was partially under single market regulation; namely, Switzerland. One after another the MEPs from different groups got up and fulminated against the unfair competition and unfair subsidies that were being carried out in particular Swiss cantons. It became clear as they spoke that what they regarded as unfair subsidies were lower taxes—lower corporation and business taxes, and a lower VAT rate. My point is that what we regard as an objective measure will not necessarily be seen that way in Brussels when it has full control of these things.

I did not make the wise life choices that my noble friend Lord Leigh of Hurley did, so I have no idea how efficacious these vehicles are, but surely that is an issue that ought to be determined through our own national democratic mechanisms and procedures, rather than handed to us by people over whom we have no control. It is this point of trade-offs that I think is being missed.

Of course, how could one not be persuaded by the customary wry, terse brilliance of the noble and learned Lord, Lord Judge, in the way he phrases the problem of executive overreach? I think that all of us on all sides recognise the problem. But we are dealing with a world of imperfections, and the alternative is an also unconstrained, and to some degree arbitrary, power where decisions are made, often by middle-ranking European Commissioners who are not accountable to anyone. Inadequate as the statutory instrument is, there is some mechanism of control here. But, as the noble Lord, Lord Dodds, just explained, we will have a situation where the state aid regime in Northern Ireland is being imposed by people who are completely outside the democratic process.

Now, I very much hope that this Bill goes through without these amendments. I realise that I am a very lonely supporter of it in these debates, but I hope that once it has gone through, Northern Ireland can become a bridge between the United Kingdom and the European Union, and a forum for co-operation. But that will be possible only if we live up not only to the Belfast Agreement but to the wider principles on which it rests: above all, representative government and a proper link between taxation, representation and expenditure.