United Kingdom Internal Market Bill Debate

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Department: Cabinet Office
Moved by
Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
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At end insert “and do propose Amendment 8M as an amendment to the words restored to the Bill by non-insistence on Amendments 8L, 13 and 56—

8M: Schedule 1, page 48, line 47, at end insert—

“5A (1) The United Kingdom market access principles do not apply to, and sections 2(3) and 5(3) do not affect the operation of, any requirements which—

(a) make a contribution to the achievement of—

(i) environmental standards and protection, or

(ii) protection of public health,

(b) are a proportionate means of achieving that aim, and

(c) are not a disguised restriction on trade.

(2) For the purposes of subparagraph (1)(b), a requirement is considered disproportionate if the aim being pursued in the destination part of the United Kingdom is already achieved to the same or a higher extent by requirements in the originating part of the United Kingdom.””

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara (Lab) [V]
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My Lords, in moving Motion B1 in my name, I thank the Minister for his full and comprehensive introduction and make it clear that we agree with his Amendment 15C, which we think is very helpful to the overall operation of the internal market Bill. In particular, it picks up points that we have been making in relation to market access. I have just one point of correction to what he said: the changes set out in my Amendment 8M remove the amendment completely from the main part of the Bill. He said Clause 1, but I think he meant Schedule 1; in other words, even more disguised and hidden than perhaps was the impression he gave when speaking.

In opening this debate, I do not want to spend a lot of time on this issue, which is quite narrow. Indeed, the arguments are very similar to those we have already heard from the noble and learned Lord, Lord Hope. The Minister’s defence of the current drafting in the Bill depended largely on the often-used threat by Ministers that those who are preparing amendments do not understand the unintended consequences that might flow from their drafting. I suggest to the Minister with some humility that we are not the experts on drafting. If there is an issue here that we should progress a little, we would certainly be happy to work with him and the team of draftspeople in his department to try to make sure that any egregious issues are removed. He drew particular attention to a concern about the phrase used in proposed paragraph 5A(1)(c), which those who wish to bring forward changes to market access would not be permitted to do so if they were disguised restrictions on trade. As I understand it, that comes from the existing WTO regulations and is therefore relatively well understood among those involved in the operation; these are trivial points, however, compared to the main points of principle that he raised.

I want to make three main points. The noble and learned Lord, Lord Hope, has already explained in his amendment that the common frameworks issues he talked about require a market access regime as well; the two are interrelated—almost two sides of the same coin. The devolution settlement has to be observed in both the spirit and the letter of the law. We think that the Bill can both honour and enhance the devolution settlement, provided, first, that we emphasise the common frameworks and the coherence that they can bring to the whole process of a devolved settlement and, secondly, that we do not make the market access principles, which operate automatically, too narrow and too prescriptive. That would fatally undermine the opportunities for devolved Administrations to diverge—if they wish and as agreed by all concerned—in a managed and coherent way.

We have a devolved system of government. That must necessarily imply divergence, so it has to be part of the system. In some way, the argument revolves around how it is possible to frame that managed divergence in legal terms. My Amendment 8M uses derogation powers that are already in the Bill to highlight areas of public good that could benefit consumers, workers and traders. The Minister said there was already coverage on these areas within the Bill, so, in a sense, he is making my point that areas such as public health and the ability of people to work in the environmental areas will be public goods if they can be brought forward. Any sensible Government would ensure that the system made it possible for those who wish to make changes that would raise standards —managed and with agreement—to do so.

The amendment therefore enhances efforts to improve environmental standards and public health; I cannot believe that the Government would want to be against that. It amends a schedule, and does not change any of the main clauses in the Bill. We are talking about trying to find a system for allowing divergence to happen in a proportionate way, which will not in any sense damage the ability of traders to trade but will benefit consumers and workers. It is a very small change. As the Minister rightly said, it has been slimmed down in the process of arriving at this point in the Bill’s discussions, and it is very much tied to the amendment that we have just accepted by a majority of over 100 in relation to the common frameworks. I beg to move.

Baroness Henig Portrait The Deputy Speaker (Baroness Henig) (Lab)
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The question is that Motion B1, as an amendment to Motion B, be agreed to. I have had no notice of anyone in the Chamber wishing to speak—in fact, I call the noble Baroness, Lady Bennett.

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With that explanation, I hope that noble Lords will be able to support the Government’s approach—the noble and learned Lord, Lord Falconer, looks sceptical—to reinstate these original clauses on exclusions in the Bill.
Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara (Lab) [V]
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My Lords, this has been a very short debate, but, as the Minister has said, it has been quite interesting, and revelatory in some senses. I thank the noble Baroness, Lady Bennett, for speaking in support. I think that I thank the noble Lord, Lord Fox, for his suggestion that “yin and yang” are the words I was looking for in terms of my relationship with the noble and learned Lord, Lord Hope. We are certainly not yin and yang if you consider size or intellectual ability, but, even so, it is a nice thought.

I recognise that the Minister was not going all out to take down the arguments I was making, and I am grateful to him for that; he can sometimes be quite destructive when he does, and it is nice to have the sunny side of him on show today—he does have a sunny side.

I cannot understand why there is such a concern about divergence. For those of us who were born and brought up in Scotland, it is well known that building regulations there are substantially different for not unreasonable reasons: the weather up there is so different from that which one experiences further south. Those regulations were different in Scotland for many years before devolution took place, and have continued to be.

Of course, there are many other areas of difference, right across a range of activity in Scotland: a different legal system, a different religious environment as well as other factors. This has led to different ways in which people operate, trade is conducted, and people shop and carry out their business. The idea that divergence is not already present in the system and not respected as such seems very strange.

I know that the Minister stands by Schedule 1 because he referred to it at length, but those who have read it carefully—I suspect that not many people have read it right the way through because it is dry—will know that, basically, the only real reason for divergence is set out there very clearly. It says that there has to have been a threat to life caused by a “pest or disease”—that is a very wide-ranging thought and a way we can approach it. Nevertheless, that is really the only sure and certain basis under which divergence would be permitted, other than that which already exists.

In that sense, we are on the right track: there could be a better way of formulating that. The schedule contains many other ways of implementing curtailment and restriction that we could use if the wording currently in our amendment is not satisfactory. However, I do not think that the Minister has said anything that would negate our feeling that this amendment, in its essence, is the counterpart to the amendment that we already agreed in relation to common frameworks—and that it would play a necessary part in making sure that devolution continues. I recommend it, and I would like to test the opinion of the House.

Baroness Henig Portrait The Deputy Speaker (Baroness Henig) (Lab)
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Members taking part remotely have given their voices in support of this Motion, and I will take that into account.

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Lord Fox Portrait Lord Fox (LD)
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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 Portrait Lord Stevenson of Balmacara (Lab) [V]
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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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Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara (Lab) [V]
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My Lords, I agree with others who have spoken that this has been an interesting debate. It is clear that good discussions have taken place between Ministers and the movers of the amendments, which is a good sign and reflects changes.

The Government have made a concession and a commitment to extensive consultation prior to bringing forward proposals for their state aid regime. That is a major change compared to where we were at the start of this Bill, which we welcome.

Like the noble and learned Lord, Lord Thomas, we agree that control of state aid and the regime which underpins it must lie at the UK level, but, as we discussed when debating a recent regret amendment to the statutory instrument referred to by the Minister, we think that policy development in this area has been quite bizarre. How on earth Parliament is expected to opine on state aid rules without first knowing what those state aid rules might be—whether we are continuing where we were, whether we are changing to WTO or whether it is somewhere in between—is beyond me; it is not the way we normally do things, as we made clear in that debate. I imagine, and it has been said by others, that it is because this issue is still at the heart of the never-ending discussions in Brussels about the future of the EU free trade agreement. We may begin to see progress once that is resolved, but we are where we are, and we are moving to World Trade Organization rules—much discredited—on 1 January and have yet to consult on an appropriate state aid regime. This is not the way we should do things.

However, we on this side of the House accept that Ministers have given assurances at the Dispatch Box, and they have been repeated today, that spending on state aid, as opposed to the control of policy on it, is an issue that has to respect the devolution settlement. It needs to be done in a way which brings forward the consultation and the seeking of consent that have been discussed by just about everybody who has spoken today. However, a final assurance from the Dispatch Box is required to take the trick on this matter. If the Government repeat that they will make every effort to work consultatively and seek the consent of the devolved Administrations, I do not think that this is right amendment on which to divide the House on this issue or the right time to do it, so we would not support that.

The noble Baroness, Lady Bowles, on the other hand, is moving ahead of the game, looking to future changes and asking how they would be introduced. She is right that these are big decisions that need to be thought through very carefully. If they are to be slipped through in some form of secondary legislation, they will not achieve the scrutiny and debate that they should. She makes some good points about that, and about the gap that will emerge if there is no primary legislation, let alone the need for consultation and discussion with those who have to implement the legislation once it is brought in. Although I discussed it with the noble Baroness prior to this evening’s debate, I suspect that this amendment has been picked up too late to be included in the Bill at this time. As she said, however, it would be good to hear the Minister set out his plans at the Dispatch Box. Again, if he does so, I would not be prepared to divide the House on this issue.

Lord Callanan Portrait Lord Callanan (Con)
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My Lords, I have once again listened carefully to the points made in the debate today. It is always particularly entertaining to listen to the noble Lord, Lord Adonis, who has once again benefited us with his Brexit prejudices. I give some advice to the noble Lord: he just needs to accept that we had a referendum on this subject as well as a general election that was mainly devoted to it. He really needs to use his considerable talents in other areas and get on with his life. The issue is settled; we are leaving the European Union. I respect his ideas and opinions, but he lost. As a Conservative from the north-east, I know when I have lost an election, and there have been plenty of them in the past.

Regarding devolution, in my previous job I chaired the Joint Ministerial Committee with the devolved Administrations on ongoing EU business. I attended many meetings with both Scottish and Welsh Ministers. Of course, we did not always agree on the outcomes or the issues, but we certainly had a very good personal relationship. I listened to their concerns very closely, as indeed they listened to mine; as I said, we had a good working relationship.

I reiterate, first, that I welcome the shared consensus in this House to continuing the UK-wide approach to subsidy control and confirming this in law. While I am grateful for the time and the effort that has been devoted to scrutinising this provision as is right for your Lordships’ House—perhaps too much time and effort, but we are where we are—it is important to note that we have asked the other place, the elected Chamber, to think again on the relationship between subsidy control and common frameworks. It has been clear that subsidy control does not fall within the common frameworks programme, and that any undue delay is not something to be supported. I hope that noble Lords will be able to respect that decision. I recognise the concerns of the Welsh and Scottish Governments, but I reiterate that the noble Baroness’s amendment is not the best way forward. This amendment is inconsistent with the reservation clauses that both Houses have now agreed should remain in the Bill.

I also reiterate that state aid has always been reserved and, as such, has never been part of the common frameworks programme. This amendment seeks to reverse a decision which has already been made. We need to move forward on this issue as I have indicated, and this will be done through the forthcoming consultation.

The noble Baroness, Lady Finlay, asked me for an assurance that we will make every effort to get devolved Administrations’ support. Amendment 51B demonstrates that the Government are committed to maintaining a constructive, collaborative relationship with the devolved Administrations, as it is in all our interests to ensure that a new regime works for the whole of the United Kingdom. We hope that this amendment will enable us to discuss and resolve any such issues before the publication of any consultation response, and we will commit to listen very carefully to the devolved Administrations’ concerns.

We all agree that the UK Government and devolved Administrations should work constructively and co- operatively in this policy area. That is why, as I have said, the UK Government have set out an amendment that commits to consulting them. The amendment ensures that, before publishing any relevant report relating to the outcome of the UK subsidy control consultation, the Secretary of State will provide a draft of the proposed response to the devolved Administrations, inviting them to make representations. The Secretary of State will then consider any representations and determine whether to alter the report in light of that consideration. If after all that we decide to legislate, it will, of course, come to this House.

This process will ensure that the devolved Administrations’ voices are heard, but it avoids creating the unnecessary delays and confusion that a legislative requirement to try to agree a common framework would introduce. Potentially waiting 18 months for a UK-wide system to be agreed would create uncertainty for UK businesses and damage our efforts to promote the UK’s economic recovery. For these reasons, I respectfully suggest that the approach put forward in the amendment from the noble Baroness, Lady Finlay, is not appropriate at this time.