United Kingdom Internal Market Bill

Lord McNicol of West Kilbride Excerpts

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

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

My Lords, hybrid proceedings will now resume. If the capacity of the Chamber is exceeded, I will immediately adjourn the House.

These proceedings will follow guidance issued by the Procedure and Privileges Committee. When there are no counterpropositions, the only speakers are those listed, who may be in the Chamber or remote, and the Minister’s Motion may not be opposed. When there are counterpropositions, any Member in the Chamber may speak, subject to the usual seating arrangements and capacity of the Chamber. Any intending to do so should email the clerk or indicate when asked. Members not intending to speak on a group should make room for Members who do. All speakers will be called by the Chair. Short questions of elucidation after the Minister’s response are permitted but discouraged. A Member wishing to ask such a question, including Members in the Chamber, must email the clerk. The groupings are binding. Leave should be given to withdraw.

When putting the Question, I will collect voices in the Chamber only. Where there is no counterproposition, the Minister’s Motion may not be opposed. A participant, whether present or remote, who might wish to press a proposition other than the lead counterproposition to a Division must give notice to the Chair either in the debate or by emailing the clerk. If a Member taking part remotely wants their voice accounted for in the Question, if put, they must make this clear when speaking on the group. Lords following proceedings remotely but not speaking may submit their voice, Content or Not Content, to the collection of the voices by emailing the clerk during the debate. Members cannot vote by email—the way to vote will be via the remote voting system.

Motion A

Moved by

--- Later in debate ---

[Lord Adonis (Lab)]

I strongly support everything that has just been said by the noble and learned Lord, Lord Thomas, and I hope that my noble friends in the Labour Party will support him in his amendment if he presses it to a vote. The points he has raised are absolutely fundamental to the devolution settlement. The big issue here is what happens in lieu of the big decisions that used to be made about the structural funds. The noble Baroness the Minister said in our last debate that it was the European Union that would decide, which of course was technically true because these were EU funds, but the advice upon which projects are prioritised within the devolved Administrations very clearly flowed from the devolved Administrations themselves. If we do not observe that principle in respect of the Shared Prosperity Fund and whatever may replace it over time—the noble and learned Lord, Lord Thomas, has explained that we are putting in place within statute a regime that could now last for decades—what we will be doing is substantially rolling back the devolution settlement.

The noble and learned Lord used a slightly antiquated term, “statecraft”, but it is coming back into vogue, because we have so little of it. Indeed, as some noble Lords might recall, the Prime Minister told us some while ago that it would be a failure of statecraft if there was not a deal, which he very nearly railroaded the country into over the past weekend. It would be an equal failure of statecraft if the devolution settlement starts to break down because of irreconcilable differences between the devolved Administrations and the UK Government on fundamental issues relating to the allocation of structural and regional funding within the UK.

The position that we are in, which is why I think it is so important that the noble and learned Lord presses his amendment, is this: can we simply take the rather vague assurances that the Minister has given us today as being sufficient? In respect of the operation of the whole devolution settlement, which is something that one would expect to roll over from Government to Government as a part of our constitution, I do not think that the assurances which have been given as set down in Hansard are sufficient. It is important to have them in statute. Thus, I think that the arrangements that the noble and learned Lord has set out in his Amendment F1 are absolutely appropriate to what we are facing in this area.

The other reason is that in my experience, people’s past behaviour is always the best guide to their future behaviour. On the basis of the Government’s past behaviour, I do not believe that we can accept those assurances as being sufficient. This is the Government that introduced the towns fund under which Ministers themselves could decide on a wholly arbitrary basis that was not related to any objective statements of need, how they would allocated hundreds of millions of pounds—I think in the end billions of pounds under the fund; I have just been told £4 billion—based on arbitrary and essentially political criteria. How can we accept a vague assurance about consultation with the devolved Administrations when we know that that is how Ministers of the Crown have behaved?

It seems to me to be absolutely essential, not simply desirable, that we put into statute the requirements of the noble and learned Lord’s Amendment F1. They seek that the Government should make these further investments only after consultation, which is the crucial element of his proposed new wording for Clause 48

“on the principles under which financial assistance may be provided by a Minister of the Crown.”

That would set out in law the requirement that there must be consultation on principles.

If I have a concern about the noble and learned Lord’s amendment, it is that it is too weak. This is the classic problem when one starts to compromise. You end up by giving up too much ground. As I read it, I think that the wording of his amendment is too weak because it requires consultation on principles. On my reading of the amendment, it does not require the consent of the devolved Administrations to disbursements that are made in respect of additional investments like the Shared Prosperity Fund.

I will put this to the noble and learned Lord: what would happen if, having consulted, the United Kingdom Government do what they now seem to do routinely—the Prime Minister has told us that he does not believe in devolution—and simply override the view of the devolved Administrations and decide on a political basis to make what are essentially politically motivated investments anyway?

I hope the noble and learned Lord can disabuse me, but my reading of the wording of his new amendment is that the United Kingdom Government would, having consulted, none the less be able to ride roughshod over the devolved Administrations and decide what they want to do for political reasons in London and Westminster. The noble Baroness said—we liked her words—that she was seeking to give backing to the principle that it is not the case that Westminster knows best; my reading of the state of the law, which is what will matter on these things, is that it would be perfectly okay for future Governments to say not only that Westminster knows best but that the Conservative Party knows best and will distribute funding in Scotland, Wales and Northern Ireland in respect of Conservative Party priorities and not any priorities agreed with the devolved Administrations.

I strongly support the noble and learned Lord’s amendment. It goes to the heart of what will happen to devolution after Brexit. My concern is that, in the process of compromising as this Bill has gone through, the amendment is too weak to deliver the objectives which the noble and learned Lord so rightly set out.

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

My Lords, I have had three more requests to speak. I will take them in order: the noble Lord, Lord Liddle, the noble Baroness, Lady Bennett of Manor Castle, and then the noble Baroness, Lady Noakes. I call the noble Lord, Lord Liddle.

[Lord Liddle (Lab)]

My Lords, the serious point here is whether responsibility for economic development measures, which are the purpose of the shared prosperity fund, will be devised, agreed and undertaken with the consent of the devolved Administrations and devolved bodies in England.

Last time I spoke on this, the Minister claimed that the distribution of EU funds was decided in Brussels. That is not the case, as she well knows. As I am sure the noble Lord, Lord Callanan, would confirm on the basis of his great experience of European matters, the EU established criteria against which funds should be spent and rules for determining the areas of greatest need, which were based on the relative GDP of an area in the European Union—which areas were Objective 1, which were Objective 2, and all the rest. It did not decide on individual projects. That was never determined in the Commission.

The way individual projects were decided under the structural funds—as I think Conservative and Labour Governments have practised since the 1990s—was on a bottom-up principle, which I think the noble Lord, Lord Heseltine, probably started off agreeing with. If we were to have effective economic development, it had to have the buy-in of local areas, and of the nations when we had devolution. The best way to do this was through mechanisms that brought together locally elected people with businesspeople in bodies at local, regional and national levels to determine which projects should be prioritised.

As I understand it, the present proposal is that, instead of this devolved system, which has worked reasonably well over the past few decades, this Government want to take power to centralise decision-making. The precedent for this—as my noble friend Lord Adonis mentioned—is the towns fund, which is a completely centralised pork barrel dished out to Members of Parliament representing constituencies that the Conservative Party has recently won. That is what the towns fund is. I know from my own county, Cumbria, that Carlisle, Workington and Barrow will be recipients of towns fund money. Why? Yes, they have great needs, but it is because they have recently elected Conservative Members of Parliament.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, when the Minister introduced the Motion, she explained clearly that the other place had claimed financial privilege and that it was customary for this House to respect that decision made by the Speaker. The noble and learned Lord, Lord Thomas of Cwmgiedd, said that this was not a financial issue. I respectfully say to the noble and learned Lord that it is not for this House to determine whether or not it is a financial issue. As I understand it, it has been accepted by this House for a very long time that the final arbiter of what is or is not a financial issue for which privilege can be claimed is the other place, through its Speaker. If we continue to disregard the Commons claim of financial privilege in relation to amendments we send to the other place for consideration, we not only show a lack of respect, particularly to the Speaker, but might be starting on a route to a constitutional clash with the other place, which would be most unfortunate.

When I sat where the noble Baroness, Lady Hayter, sits, many years ago, we often faced financial privilege being invoked against amendments we were pleased with ourselves for having sent back to the other place for consideration, but we always respected that decision when it came back. I hope that the noble Baroness, Lady Hayter, will continue that tradition in this place. Does the Minister know of any precedence for this place insisting on its amendments not once but twice in the face of a financial privilege claim by the other place, and does she agree with me that this is not a path down which this House should go?

[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.

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, I thank all noble Lords for their contributions to a debate that was slightly longer than the one we had during the previous round of ping-pong. I will address the points made by the noble and learned Lord, Lord Thomas of Cwmgiedd, and in doing so I hope to address those made by other noble Lords too.

On financial privilege, I very much welcome my noble friend Lady Noakes saying that this is not a decision by the Government but one taken by the Speaker in the House of Commons. I do not have an answer for her on whether there are any precedents for twice resisting financial privilege as a reason given by the Commons, but it must be highly unusual. This is not the place to raise further constitutional questions in bringing that principle into doubt in this Bill.

The noble and learned Lord talked about a principled basis for the spending powers being taken through this Bill. I completely agree with him on that. He spoke of consultation, the establishment of principles and advice from jointly appointed advisers. We do not propose a structure involving jointly appointed advisers, but we do plan to have the devolved Administrations represented in the governance structures for the fund. I apologise to the noble Lord, Lord Fox—I cannot give further details of how that will work at this stage; we will work on that with the devolved Administrations. There are further stages to come in the development of the shared prosperity fund, its governance and the principles around it, after this debate and in future. As I have said to noble Lords before, the fund will not be introduced until the following financial year, which gives us time to work through some of these details.

I hope I have made it clear to noble Lords that the Government have already been engaging in consultations on the shared prosperity fund. To date, we have conducted 25 engagement events across the UK, attended by over 500 stakeholders, including the devolved Administrations. The noble Lord, Lord Liddle, made a good point about LEPs and mayoral authorities—of course we will want to consult and collaborate with those organisations as well as the devolved Administrations as we take these proposals further. Those mentioned at the Dispatch Box were not an exclusive list of those whom we wish to engage, but the debate has focused very much on the question of devolution.

As for the establishment of principles, raised by the noble Lords, Lord Fox and Lord Liddle, and others, there is not a huge amount of disagreement here. The EU set the terms and conditions for investment in the UK as well as other member states, with which the UK Government and the devolved Administrations alike had to comply. Devolved Administrations and other areas were then responsible for managing EU funds in those projects. The idea of setting out principles in a framework and then collaborating in local delivery is very much something we wish to take forward. We have set out some of those principles already in the heads of terms for the shared prosperity fund that we published at the spending review. We have said that a much more detailed investment framework will be published in the spring, following further discussions.

Regarding the focus of that investment, I would have thought the noble Baroness, Lady Bennett of Manor Castle, would welcome our saying at the spending review that investment should be aligned with the Government’s clean growth and net zero objectives. Those are the kinds of principles we have already set out and that we want to see in the investment from these funds.

On the establishment of principles and the conduct of consultations, the Government and noble Lords are rather in agreement. The noble Lord, Lord Fox, asked about the quantum and the distribution of funding. Again, I apologise and will have to disappoint him slightly. I said at the spending review that the quantum will ramp up to £1.5 billion a year, I think, to match that commitment to, at minimum spend, the previous levels. I also referred in the last debate to our setting out certain commitments in our manifesto that will guide us in future. But there is more work to be done on the detail—from taking the heads of terms to the investment framework—to get the kind of answers that the noble Lord is asking for.

I have mentioned some of the details of the shared prosperity fund, and I also talked about our approach to city deals. I gently disagree with certain noble Lords’ use of “pork-barrel politics” terminology. I point to examples of our trying to take a collaborative approach—a principles-based approach from the centre, while also working with those on the ground regarding their needs. That is very much the approach we plan to take with the shared prosperity fund.

I am afraid that I will have to take away the concerns of the noble Lord, Lord Stevenson, about a possible replacement for Erasmus and how that might operate. Again, this is an example of the fact that the detail of this matters. The Government take this very seriously. However, we disagree on some points. This power will be used for the shared prosperity fund and may be used in other areas. We want it to be flexible enough for the UK Government to respond quickly and at scale to investment challenges and opportunities. It is not practical to set out a single plan for investment in legislation now, which is why, for the shared prosperity fund, we will set out plans and collaborate with the devolved Administrations as we will have developed that. In other areas in future—the noble Lord mentioned Erasmus, for example—we will take a similar approach.

I hope that the noble and learned Lord, Lord Thomas, will feel able to withdraw his amendment although it did not sound as though he was minded to.

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

I call the noble Lord, Lord Adonis, to ask a short question for elucidation.

[Lord Adonis (Lab)]

I want to ask the Minister a very specific question. She talked about consultation, but will she undertake on behalf of Her Majesty’s Government to commit that they will not make investments under the shared prosperity fund, or any of its successors, in the territories of the devolved Administrations without their consent? This is about not just consultation but consent. Further, does she realise that, if she does not do so, none of the other assurances that she has given is worth the paper they are written on?

--- Later in debate ---

[Lord Thomas of Cwmgiedd (CB) [V]]

I thank all noble Lords who participated in this debate—particularly the noble Lords, Lord Adonis, Lord Fox and Lord Liddle, and the noble Baroness, Lady Bennett of Manor Castle—which has lasted slightly longer than I anticipated.

The debate on both this occasion and previous ones has centred on the question of financial privilege. I am very grateful to the noble Baroness, Lady Noakes, and the noble Lord, Lord Stevenson of Balmacara, for their observations on the uncharted territory into which we might be moving. It is important for the future to work out the way in which ancient principles may no longer be applicable to constitutional issues if we are to keep our union together.

In looking at this whole series of debates together, there has been another consideration. At least there is now a much greater understanding of the importance of respecting the devolved settlements and devolution. I was heartened when the Minister referred to an abandonment of “Westminster knows best”. That is progress indeed. I have also taken the Minister’s assurances into account. As one looks at the debates in the other place on the previous debates in this House, it is clear that those from Edinburgh, Cardiff, Belfast and other places within those three nations, pay particular attention to what has been said. I am glad the Minister has given assurances in relation to principles of consultation and heeding advice.

It is a question of weighing up whether putting a structure into the Bill in the circumstances I have outlined would be a sufficient safeguard. Or is there a better safeguard: that is, the deterrence of the catastrophic result for our union if the Government did not adhere to the principles that have been explained? It would be catastrophic not only for the union but for trust in government if there was ever a hint of unprincipled distribution or application of these funds—[Inaudible.]—and of the pork barrel.

Therefore, with considerable hesitation, but bearing in mind that deterrence is a strong way of ensuring people keep to their principles—possibly stronger than structures in some places—with great reluctance I beg leave to withdraw this amendment.

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

Is it your Lordships’ pleasure that Motion F1 be withdrawn?

[A noble Lord]

No.

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

You wish to test the opinion of the House? The Question will be decided by a remote Division. I instruct the clerk to start the remote Division.

[Baroness Penn (Con)]

My Lords, I believe the clerk will give us some advice on how to proceed in hybrid proceedings in these circumstances. I suggest we adjourn for five minutes until we get that advice on how to proceed.

--- Later in debate ---

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

My Lords, the Hybrid Sitting of the House will now resume. In accordance with paragraph 93 of the Procedure Committee guidance, leave to withdraw cannot be objected to. Therefore, motion F1 is withdrawn.

Motion F1 withdrawn.