United Kingdom Internal Market Bill

Lord Stevenson of Balmacara Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Wednesday 18th November 2020 Lords Chamber

The noble and learned Lord, Lord Hope, said that actions speak louder than words. He also said that these amendments reset the relationship with the four nations, which is why noble Lords on these Benches will support these amendments if they are pushed to a vote.

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

My Lords, this has been an excellent debate, despite the fact that it is decidedly one-sided—although the noble Baroness, Lady Noakes, did her best to redress the balance—and I look forward to the Minister’s response. I said to him in an earlier meeting that this might be one occasion—perhaps the only one—when the House would be happy to hear a full response from him to the points made by the noble and learned Lord, Lord Hope, and his distinguished co-signatories and supporters.

I say that because, as the noble and learned Lord said, although the amendments sensibly address the rules for the mutual recognition of goods in Part 1, services in Part 2 and professional qualifications in Part 3, their underlying, ancillary purpose is to support and enhance the relationship between the Governments of the four nations of this United Kingdom. They focus on the key question raised by the Bill: is this to be a single market under new rules created and imposed from Westminster or is it to be all four nations working together, managing appropriate divergence, as they are currently doing through the successful common framework process?

I hope the Minister will give us a full answer to the important questions raised by this debate. I also hope that he will reaffirm his Government’s commitment to our devolution settlement, because, as we have heard, our current settlement is under pressure—not least because of recent comments from the Prime Minister. This is not confined to the devolved Administrations. The virus, the recession and recent spats over local lockdowns, who manages public health and welfare best and who pays have exposed a centre that seems unable to listen and outlying areas that do not feel they are being consulted. As we will come to in later amendments, these are bodies with far greater knowledge of what is happening locally, but which lack the resources to solve the problems they identify. It can be argued that the Bill is actually about gathering powers which should be devolved to an insensitive centre which is trying to imprison a multinational country composed of vibrant, diverse regions with diverse histories and needs into a straitjacket of a unitary state. We can and need to do better than that.

As many noble Lords have said, the most striking aspect of this debate so far has been the wide cross-party support for these amendments, coupled with the fact that no fewer than seven members of the Select Committee considering common frameworks have made it clear beyond peradventure that the common framework process is alive and well, doing the job that the Government say they need done: supporting frictionless trade across the UK, improving standards, managing divergence and strengthening the union. Why is this process not at the centre of the Bill?

We support these amendments and will support the noble and learned Lord if he decides to test the opinion of the House. However, we heard from the Minister in earlier stages of the Bill and in separate meetings that his mind was not closed on this issue. Obviously, other interests are at stake here. However, the case made today by virtually everyone who has spoken has been strong and formidable in the arguments deployed. I urge the Government to give the House an assurance that they accept the principle that lies behind the amendments and that they will come back at Third Reading with amendments of their own which give effect to it. If so, we would support that.

It is clear that there is more that unites us on this issue than divides us, and it is clear from the tone and content of the debate that this would be the preferred solution of your Lordships’ House.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, in preamble, I say again that I agree with those who would like to see our old proceedings back; as long as I am trusted and have the privilege to answer to this House, I will seek to do so from this Dispatch Box. However, I say to my noble friends on the Liberal Democrat Benches that if they want to have heckling from the noble Lord, Lord Foulkes, they should be careful what they wish for.

In reply to the noble Lord, Lord Rooker, I try always to be in a conciliatory mood. Particularly after a debate such as this I am mindful of the wise advice of the Emperor Marcus Aurelius: “Accept modestly; surrender gracefully.” Unfortunately, however, as noble Lords who have had the privilege of serving in office will know, conciliation does not mean that one must accept specific amendments.

This debate was rooted in a passionate and sincere spirit, almost universally shared, of concern for the union and respect for devolution. As I say, that unites almost all of us who have spoken, including the Member now on his feet. The noble Lord, Lord Foulkes of Cumnock, made a fascinating and thoughtful speech, which of course I will study carefully. Those of us who care for the union and support devolution should be cautious in echoing the separatist claim that this or that action is being done to undermine devolution when it is not. The debate about effect and perceived effect is legitimate. The claim of bad intent that we have had from some is risky, if not perilous.

The UK Government and the devolved Administrations all have a clear stake in a smooth-functioning internal market, as my noble friend Lady Noakes pointed out. However, the Government have been clear—we have made no secret of this in the Bill—as my noble friend Lord Naseby said, that the right place for final decisions on the internal market should be the United Kingdom Parliament, where parliamentarians from all parts of the United Kingdom can debate and vote on legislative proposals.

I was asked a specific question by the noble Baroness, Lady Andrews; the noble and learned Lord, Lord Thomas of Cwmgiedd, touched on it also. New restrictions on the sale of goods, including goods made from plastic produced in or imported into one part of the UK, will be subject to the mutual recognition principle for goods unless an exclusion in Schedule 1 applies. The Bill will preserve the devolved Administrations’ ability to regulate in line with their own strategies and regulate production of goods in their territory. However, goods, including ketchup, sold lawfully elsewhere in the United Kingdom will not be denied access to other parts of the UK market unless an exclusion applies. Consumers are of course not required to buy them.

The noble and learned Lord, Lord Hope of Craighead, in his powerful opening speech claimed that the Bill “destroys divergence”—that it is not possible under the Bill. I want to make it clear that to say it is not possible is incorrect. The Bill will apply only where divergence would create a market barrier under the conditions set out in the Bill. Domestic producers will have to conform to local regulation, and devolved Administrations will be able to regulate the use of all goods.

My noble friend Lord Callanan and I have welcomed positive engagement with a number of your Lordships across the House on the common frameworks programme— some noble Lords have been kind enough to allude to that. This issue and the concerns raised in our debates are important. I hope we will be able to draw lessons from these discussions in the constructive spirit that they have taken on to date and find ways to set at rest some of the concerns expressed that we believe are unjustified.

As I have said before to your Lordships’ House, we, along with the devolved Administrations, remain committed to the common frameworks programme. We recognise the importance of the issue and the need to underline unequivocally the Government’s continued commitment to the frameworks programme, before and after the passage of the Bill. An iron curtain will not fall. For all the profound respect I have for the noble Baroness, Lady Finlay, I do not believe that that sort of language is helpful.

Our commitment has been made clear to your Lordships’ House at every stage in our debates and discussions on this to date, as the noble Lord, Lord Stevenson of Balmacara, said, and in the regular publication of framework analysis, which has been in circulation since 2008. The pursuit of this aim must respect the interests of the other parties involved in the common frameworks programme. There is no indication at present that the devolved Administrations would support placing common frameworks on a statutory basis. Indeed, when I had the privilege of giving evidence to a Welsh Senedd Select Committee last week, that was not the impression I received. However, in any case, common frameworks have not been designed to carry legal force.

The Government have made it clear—yes, I will use the word—that the frameworks programme and the UK internal market are two complementary undertakings. The devolved Administrations will continue to be able to innovate and regulate in devolved policy areas, but the UKIM Bill will create limits on the extent to which they can enforce new requirements against traders from other parts of the United Kingdom. The market access principles will ensure that any divergence does not damage the ability of UK companies or investors to trade with every part of the United Kingdom. I appreciate the feeling across the House on this matter, but the Government view retaining the flexibility and voluntary nature of the programme and respecting market principles as important and viable complementary objectives.

I acknowledge that there may be an appropriate way to put frameworks into the Bill while retaining the flexibility and the voluntary nature of the programme and respecting the market principles. However, I respectfully suggest that the approach proposed here to make these amendments to the Bill is not the right one, and I will seek to explain why.

The approach proposed in these amendments would significantly change the nature of common frameworks, giving agreements within them primacy over the market access provisions in the Bill, as acknowledged and argued by the amendments’ signatories. Although I understand the intention of these amendments in seeking to define the relationship between the common frameworks and the market access principles, they are problematic in a number of respects. The approach would automatically disapply the market access principles and mutual recognition of authorisation requirements in relation to regulations or requirements that implement agreements reached under common frameworks. I disagree with my noble and learned friend Lord Garnier; this creates a risk of legal uncertainty. On this I agree with my noble friend Lady Noakes in her powerful speech about the interests of business and consumers, particularly in the smaller economies of the United Kingdom—an aspect ignored by the signatories to the amendments.

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

My Lords, the noble Baroness, Lady McIntosh, and my noble friend Lord Foulkes have made the case clearly around the issue raised in Clause 5(3), and I hope the Minister will be able to respond. I join them in thanking the Scottish Law Commission for its considerable work in scrutinising some of the detail of the Bill—as always, it has been very helpful. I put on record our thanks to the noble Baroness, Lady Ritchie, for her very comprehensive and clear explanation of Amendment 24 in her name, and to others who have spoken.

We on this side had the benefit of a presentation by the Equality and Human Rights Commission and the Northern Ireland Human Rights Commission on this point, and I was seized by the fact that this is very important indeed to them and a matter that really has to be dealt with. The ground has been covered very fully and I just want to make sure that it is clear that we support this important amendment. It is designed to ensure that the non-discrimination principle in Clause 5 cannot be used to challenge the statutory provisions introduced in Northern Ireland after the end of the transition period to fulfil the obligation set out in Article 2 of the Northern Ireland protocol. That is relatively easy to say, but it is rather difficult to see how it translates into legislation. I hope that, when he responds, the Minister will be able to give us clarity on this.

As my noble friend Lord Hain said, the stakes here are very high. If you have not been to Northern Ireland, it is sometimes very difficult to get why it is so important to the people there and to the institutions that have to operate within Northern Ireland. There is a very widespread respect for human rights and equalities issues in Northern Ireland; it is something that comes up in conversations wherever you have them, in relation to employment, services, goods and operating in the commercial sector in Northern Ireland. Once you have had that conversation, and once it has been explained to you why it is so important, it is very clear that this is a matter that cannot be left. It is up to the Government to explain now how it is going to happen, and I look forward to hearing from the Minister.

[Lord Callanan (Con)]

My Lords, I thank all noble Lords who have contributed to this debate.

Amendment 6, in the names of my noble friend Lady McIntosh and the noble Lord, Lord Foulkes, seeks to clarify the meaning of Clause 5(3). This subsection explains that

“A relevant requirement … is of no effect in the destination part if, and to the extent that, it directly or indirectly discriminates against the incoming goods.”


This wording was chosen by the Government because it targets discrimination, while leaving intact other elements of a regulation that may be perfectly useful or serviceable. For example, consider the case of one requirement covering two products. One of those products is not discriminated against, but the other faces indirect discrimination due to the particular market structure for that product. Clause 5 ensures that the regulation of the product which is not facing discrimination continues. This would not be the case if the requirement were struck down in its entirety when any part of it is discriminatory.

This amendment gives rise to a risk that a court would read this as attempting to oust its jurisdiction on normal grounds of challenge. That is clearly not the intention of this provision, which is to target the mischief of discrimination without going further or interfering with other legislation. I am sure that it goes without saying that we would not want to invoke any such confusion, nor do I think that that is what my noble friend and the noble Lord are trying to achieve. For these reasons, I hope that my noble friend will feel able to withdraw her amendment.

On Amendment 24, from the noble Baroness, Lady Ritchie, and others, I am very happy to accept a letter from the noble Baroness, and I will ensure that it gets a full reply. The Government are fully committed to Article 2 of the protocol—that goes without saying. We have demonstrated this by making the necessary amendments to the Northern Ireland Act to establish the dedicated mechanism and by working closely with the Northern Ireland Human Rights Commission and the Equality Commission for Northern Ireland to operationalise the dedicated mechanism, ready for the end of the transition period.

The Article 2 commitment is about protecting the specific rights that individuals are afforded under the Belfast/Good Friday agreement and non-discrimination in this regard. It is supported by six EU equality directives that are all designed to tackle discrimination because of specified protected characteristics of individuals and to promote equal treatment. It will be part of the role of both commissions, through the dedicated mechanism structure, to monitor, advise, report on and enforce the Article 2 commitment and report to the Government and the Executive Office in Northern Ireland in this regard.

As I have said, we have already delivered the relevant legislative measures to give effect to Article 2 of the protocol, and no further amendments are required in this regard. I can assure noble Lords that the rights for individuals in Northern Ireland captured within the scope of the Article 2 commitment will continue to be protected going forward and will not be impacted by the outworkings of this Bill.

In reply to the noble Baroness, Lady Suttie, I can say that, for statutory requirements to be relevant requirements under Clause 6, they must be requirements that apply to, or in relation to, goods sold in the nation in question. If the employment law requirement were to meet that test, they would not be disapplied because they had discriminatory effects.

I hope that, with those assurances, that the noble Baroness, Lady Ritchie, will not press Amendment 24.

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Moved by

[Lord Stevenson of Balmacara]

10: Clause 8, page 6, line 47, at end insert—
“(c) the protection of consumers;(d) the protection of environmental standards;(e) the promotion of social and labour standards;(f) the protection of public health;(g) the protection of animal health.”

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

My Lords, In moving Amendment 10, I also speak to Amendments 21, 41, 48 and 49, which together deal with various exemptions and derogations that we believe should be appropriate in the case of the market access principles. I thank the noble Lords, Lord Anderson, Lord Young and Lord Wigley, and the noble Baronesses, Lady Bowles and Lady Jones, for their support, and I look forward to their contributions.

Now that we have accepted by a majority Amendment 1 from the noble and learned Lord, Lord Hope, and the Government have said they will not oppose Amendments 38 and 51, I hope we can assume that the common frameworks process will be at the centre of our future concerns about the internal market. We think it will ensure that the devolved nations will be able, within the limits of UK law, to formulate and apply policies that best suit their local circumstances, working together in order to enable the functioning of the UK internal market. Each devolved Administration will retain the ability to diverge from the harmonised rules in their territory within the mandate given to them by the devolution settlement, but only after consulting the relevant policy group to see if a common outcome can be reached and agreed to.

We fully accept that there have to be backstop powers retained by the UK Parliament that are subject only to the normal “consult and seek consent” modality, and we accept that that brings into play the market access principles system set out in the Bill. However, that does not operate by agreement. It is hard-edged; it is a set of strict statutory rules that do not permit any real divergence. For example, my noble friend Lord Foulkes mentioned in the last group that Clause 8, on the non-discrimination principle, refers to “legitimate aims” and limits them to

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

and/or

“the protection of public safety or security.”

So it is very tight—but does it have to be that way? Surely we want exclusions to permit various exceptions from the lists, as set out in our Amendments 10 and 41. Others will make the case for the extension of the legitimate aims in Amendments 21 and the rest, affecting services.

The Welsh Government put around a note, which they prepared in response to the papers put around last night by the Government. They argue that the Bill’s limitations have been too tightly drawn and that they go much beyond current international regulations, and effectively put new restrictions on devolved competence. One of the policy statements issued yesterday by the Government said:

“Each part of the UK will be obliged to follow a rigorous process to justify an exclusion. This will include suitable evidence and a risk assessment shared between UK administrations, to confirm the nature of the threat posed and the effectiveness and proportionality of any proposed measure in response.”


This is hard-edged. This is not the language of consult and seek consent, let alone of a Government trusting in the common framework process.

Our amendments seek to add significant exclusions to the market access principles for goods and services and in relation to the recognition of professional qualifications. We think they are justified, we think they are proportionate and, otherwise, will not have an adverse impact on the powers we think the UK Government must retain. I beg to move.

[Lord Anderson of Ipswich (CB) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Stevenson, and to have put my name to five of the six amendments in this group. The purpose of these amendments is to preserve the potential for legitimate policy divergence that is inherent in the devolution settlement. That potential is squeezed out for the future, save in limited and inconsistent respects, by the non-discrimination and mutual recognition principles as they appear in the Bill.

The scheme of these amendments is to provide for derogations from the applicable market access principles, to be available on a consistent basis across Parts 1, 2 and 3 of the Bill. Such derogations would be safety valves against the pressures that build up when central and local interests clash—safety valves of the sort that the member states of the European Union were sensible enough to gives themselves in their treaties, and that exist in devolved, federal and confederal states all over the world. Their purpose is more than merely political. The exercise of devolved powers has, in the past, produced creative and positive results in fields ranging from the requirement of fire suppression systems to the sale of electric shock collars. Noble Lords drew attention in Committee to the potential for similar action in future, if not prevented by the Bill, from measures against obesity to bans on the sale of peat.

The amendments are not a recipe for pointless and obstructive barriers to trade, which I strongly agree are to be avoided, because the use of those exceptional powers would remain subject to strict statutory controls. If challenged, rationality and the absence of protectionist purpose would have to be demonstrated, much as when the Scottish Government were put through its paces on minimum alcohol pricing. Yes, there will be cases in which compliance has to be demonstrated in the courts. Who, if not the courts, can be the arbiter of whether public authorities, whether central or devolved, have exceeded the limits of their legal authority? Litigation is always an inconvenience, and I would not wish it on my best friend, but the universal fact that the scope of a legal power must, in the last resort, be determined by the courts is no sort of justification, I would suggest, for withholding or removing that power from the devolved Administrations.

As for cases that last 10 years, as a barrister I can only dream enviously of such a durable source of income. Urgent cases can be quickly resolved, and the major source of delay will be removed once we move outside the jurisdiction of the Court of Justice of the European Union. Without its intervention, the time occupied by the Scottish case on minimum alcohol pricing —which delayed the introduction of that measure—would have been very much shorter.

The common frameworks incentivise consensus. Among their many advantages, therefore, is a likely reduction in recourse to litigation. So I welcome Amendment 1, which, if it remains in the Bill, will prioritise the common frameworks, and significantly narrow the circumstances in which the market access principles apply. For as long those principles remain in the Bill, it seems to me that something in the nature of these amendments is needed, if only and the noble Lord, Lord Stevenson, as a backstop. These amendments would diminish, in a controlled fashion, the crudely centralising force of the market access principles. They would also help to preserve the mutual respect between nations that the perpetuation of our union requires.

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[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

My Lords, I have received no requests to ask the Minister any short question, so I call the noble Lord, Lord Stevenson of Balmacara.

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

My Lords, I thank everyone who has spoken in this debate for their thoughtful and often powerful contributions. It has been a wide-ranging debate and a very interesting one. It has raised new dimensions in our debate today, and for the ones we will have in succeeding days on Report.

It made me think of two things that I want to share with the House in concluding. A lot of the problems with the Bill arise from the accelerated timetable it has gone through. The feeling I am left with after this debate is that if there had been more time for debate prior to its publication, we would not be facing the rather uncomfortable tension between the wish to maximise consumer benefit and reduce barriers to trade, which has been expressed by a number of speakers and which we fully support, and being unable to respond to local wishes in parts of the country on issues that matter to local people. We want there to be competition not only in raising standards but in innovation and finding new ways of dealing with issues of public policy that may arise.

Interestingly, various derogations and exemptions that appear in the amendments in this group mimic the concerns expressed during the Trade Bill, which we will return to later this year, and which were resolved in the Agriculture Bill, with the Government conceding that there needed to be a statement on the standards of environment, animal welfare and animal production standards in relation to the agricultural trade and products. If you add public health, social and labour standards, we are back with the lists that appear in today’s amendments. I wonder why that is; I do not really have an answer. However, it might be worth more consideration. I will look carefully at Hansard to see whether we can find a common thread that might be picked up in later amendments, and on which it might be worth pushing for further debate if we can—or perhaps to a vote.

In passing, I am sorry that the noble Baroness, Lady Noakes, whose contributions are always of interest, was foxed by the term “cultural expression”. I believe that is the term used when state aid is used to support activities that would otherwise not be possible. A reference here would be the horse race betting levy, which would otherwise be banned, or the support that this Government brought in to support the film industry, animation, high-end drama and other aspects of cultural life, building on work done initially by the Labour Government. I think that is where it comes from. If it is valid for anyone in the public sector or an elected organisation to wish to see more work, investment and activity in the green economy, for example, as the Prime Minister announced today, it is just as appropriate to say that there could be support for cultural expressions, the term used to talk about the culture industries.

The general feeling is that the Bill is too tightly constrained around how the market access provisions will work—so much so that there may be disbenefits to consumers unless people in different parts of the country can respond differently to issues they feel strongly about. As I said, I will read Hansard, but I feel that while the common frameworks will be able to carry most of the load of the issues raised today, they will not take us all the way and it may be necessary to return to this issue at some stage. In the interim, I beg leave to withdraw the amendment.

Amendment 10 withdrawn.