Subsidy Control Bill

Lord Wigley Excerpts

Committee stage
Monday 31st January 2022 Grand Committee

Moved by

[Lord Wigley]

1: Clause 1, page 2, line 4, after “Parliament” insert “or in legislation enacted by Senedd Cymru or the Scottish Parliament”

[Lord Wigley (PC)]

My Lords, I am delighted to have the opportunity to open Committee on this important Bill by moving Amendment 1, which stands in my name, and for which I am grateful for the support of the noble and learned Lord, Lord Hope, and the noble Baroness, Lady Humphreys. I apologise that I was unable to participate at Second Reading: at that point I was self-isolating after testing positive for Covid. I wrote to the Minister to explain my absence. I was able to follow the whole Second Reading debate on the parliamentary live feed and from that I am aware that the dimension I raise in this amendment was touched upon by several speakers—and of course, I am conscious of the sentiment expressed in Senedd Cymru on the matter.

The point of the amendment is to ensure that Senedd Cymru and the Scottish Parliament are fully involved in the procedures triggered by Clause 1, and thereby the application of the Act for which Clause 1, of course, provides. This goes to the heart of the issues addressed by the Bill. That relates to the essential and totally valid role of Senedd Cymru and the Scottish Parliament in matters relating to subsidy control. I make it clear that I accept that there needs to be a framework in any common market or customs union in which subsidies can be permitted or prohibited. Therefore, there has to be a clear and transparent mechanism for defining the context within which subsidies can be paid, and therefore also the mechanisms of subsidy control that are necessary.

Let us be clear: subsidies have been a tool of government for both Conservative and Labour Governments down the years. One has to think only of the agricultural subsidies applied in UK long before our accession to the Common Market to see that such interventions have been regarded as legitimate. Before the UK entered the European Union, both the Wilson and Heath Governments operated substantial capital and revenue interventions, such as the selective employment tax and the regional employment premium. At one time, such schemes on a revenue basis and capital investment schemes could provide as much as 45% support for manufacturing industry investment. Indeed, when I was head of finance at Hoover, we negotiated an investment package in which £11 million out of a £16 million expansion scheme—substantial money in the early 1970s—came from public funds.

However, in acknowledging the validity of such interventions, as I believe the Minister does, it would be quite unacceptable for the power to decide whether subsidy controls are necessary to rest in one legislature alone. It must be on the basis of parity of esteem for all relevant legislatures—and Senedd Cymru and the Scottish Parliament are most certainly relevant legislatures. It would be totally unacceptable if one Parliament could legislate to protect its own interests while other Parliaments, with responsibility for economic development within their nations, were denied that power. If such powers are to be at the disposal of one partner within the union, they must be equally available to other nations.

It could be that the intention of the Government in proposing the wording of Clause 1(7) is to use the term “an Act of Parliament” in a generic manner, but the definition in Clause 89, the interpretation clause, rules that out, as indeed does the normal usage of that term at Westminster. It may well be that the Government do indeed regard Westminster as the senior partner in these matters and are deliberately choosing to legislate in a preferential manner that enables Westminster, by the use of Acts of Parliament, to seize control of this entire agenda. If that is so, it can be little surprise that the devolved Governments are extremely unhappy about the implications.

This matter, in various guises, is likely to arise again at various junctures in our deliberations. Indeed, other amendments on the Marshalled List raise these considerations. I shall listen to other speakers when they address those other amendments in due course, and there may well be better ways of dealing with this fundamental dimension than the wording that I propose in Amendment 2. However, let the Committee be in no doubt that an equal, even-handed approach must be built into the Bill for it to be acceptable in both Wales and Scotland. On that basis, I beg to move Amendment 1.

[Lord Hope of Craighead (CB)]

My Lords, I have added my name to the amendment of the noble Lord, Lord Wigley, and I agree with what he has just said in support of it. As he mentioned, it will be apparent from the many amendments on the Marshalled List that mention the devolved Administrations that there are real concerns that the provisions of the Bill as they stand will have an adverse effect on the relationship between those Administrations and the UK Government.

I recognise that subsidy control was made a reserved matter by Part 7 of the United Kingdom Internal Market Act, but that does not mean that the UK Government should shut their eyes and ears to the views of competent authorities throughout the UK, and of the devolved Administrations themselves, as to the way that subsidies are distributed and controlled. After all, while we were in the EU the Commission had a very robust evidence-based consultation procedure which ensured that other voices were heard, and that should continue to be the position.

“Respect” and “co-operation” were the key words in the recent report by the Constitution Committee, of which I am a member, about building a stronger union in the 21st century, but I am afraid that those virtues were absent when the internal market Bill was being designed and debated in this House and the other place. As a result, relations with the devolved Administrations became very strained. We do not want to go back to that, but the way in which the Bill has been drafted appears to pay very little attention to the concerns and needs of the devolved Administrations.

I am sure that the Minister will remember, very well, the conversations we had with regard to the amendments I tabled to the internal market Bill to enable exemptions from market access principles to be given to agreed common frameworks. They did not seem to get us very far, until, at the very last moment, there was a change of mind in the Government and an appropriate amendment was put through. Of course, I understand that the Minister’s hands were tied, but I hope there may be a little more flexibility this time.

I respectfully ask the Minister to say something about the legislative consent procedure in relation to the Bill. The Constitution Committee said:

“For the Sewel convention to operate well, constructive relationships and good faith is required between the UK Government and the devolved administrations.”


I hope that that is how things are being handled this time and that the Minister will keep the Committee updated as discussions continue, with a view to settling the devolved Administrations’ concerns, which I believe are still there; as I understand it, a consent Motion has not been achieved in either case.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lords, Lord Wigley and Lord McNicol of West Kilbride, for tabling Amendments 1, 13, 16, 17 and 20, and all other noble Lords who participated in this debate. I say at the outset, in answer to the noble Baroness, Lady Randerson, that the use of the Moses Room is not intended to minimise the importance of this Committee stage. We agreed through the usual channels that this would be the best use of time.

Before I discuss each amendment in turn, I start by saying that the proposed UK subsidy control regime empowers public authorities, including the devolved Administrations, to award subsidies flexibly and quickly to meet their policy objectives. As noble Lords have said, the United Kingdom Internal Market Act 2020 amended the relevant devolution Acts to make the regulation of subsidies a reserved, or in Northern Ireland an accepted, matter. The devolved Administrations are, and will remain, responsible for spending decisions on devolved subsidies within any subsidy control system.

As the Minister in the other place clarified, the devolved Administrations have standing to challenge UK Government or any other subsidies in the Competition Appeal Tribunal in instances where the interests of people in the areas in which they exercise their responsibility are affected. Some provisions of the Bill engage the legislative consent Motion process, as they alter executive competence; for example, they confer new functions on DA Ministers. We hope that the devolved Administrations will agree with us on the importance of the Bill and be able to give us their legislative consent for the relevant provisions. Those discussions are continuing and I will keep the Committee updated.

We have engaged closely with the devolved Administrations throughout this process at ministerial and official level, not only on the LCM process but on our policy development ahead of the Bill’s introduction, in advance of our publication last week of the illustrative documents, and as we continue through the parliamentary process in the run-up to implementation. In response to the noble Baroness, Lady Humphreys, I confirm that the Minister for Small Business met the Welsh Minister for Finance and Local Government, Rebecca Evans, last Thursday—27 January. The meeting discussed the Bill as part of ongoing engagement to understand concerns on it and to provide reassurance.

I will begin with Amendment 1. Clause 1 provides an overview of what each part of the Bill will cover and establishes its application to other legislation. Clause 1(7) and (8) specify that if a subsidy is granted, or a scheme is created, using powers contained in either primary or secondary legislation, the subsidy control requirements will apply, unless an Act of Parliament specifies otherwise. The specific reference to an Act of Parliament here is solely to clarify that nothing in the Bill should be interpreted as conflicting with the fundamental principle that no Act of Parliament may bind a future Parliament; in other words, it reflects the constitutional reality and does not create any further exemption or special treatment.

Amendment 1, proposed by the noble Lord, Lord Wigley, extends this clarificatory statement to cover the Senedd and the Scottish Parliament. In doing so, it fundamentally changes the character of this statement from a clarification to an exemption from the subsidy control requirements. The amendment would allow the Senedd and the Scottish Parliament to set aside the subsidy control requirements set out in the Bill, not only for the purpose of subsidies given directly in primary legislation, for which specific provision is made in Schedule 3, but for subsidies given by means of a power in that legislation; in other words, for all devolved spending powers in Scotland and Wales.

The discrepancy highlighted here between the Parliament of the United Kingdom and the legislatures in Northern Ireland, Scotland and Wales is not a matter of government policy but a reflection of constitutional reality. The subsidy control regime differentiates between devolved legislatures and Parliament in a way that respects the devolved legislatures and reflects this Parliament’s status as the supreme legislative body of the United Kingdom. The devolved legislatures have a unique constitutional status and we have ensured that the requirements placed on subsidies given directly in devolved primary legislation are proportionate and respectful of their status and processes. Schedule 3 sets out the specific arrangements that take account of this. None the less, it is important that the subsidy control requirements apply comprehensively and that we do not create exemptions.

As for subsidies given through powers conferred by Parliament or the devolved legislatures in secondary legislation or otherwise, it is essential that these are compliant with the subsidy control rules without exception. As it stands, the clause simply clarifies that express or implied repeal by a future Act of Parliament remains a possibility. It does not suggest that the Government will, on a whim, propose legislation that exempts a particular project or power from the subsidy control requirements.

It is absolutely right that subsidy control is a reserved matter: by its very nature, it affects how all public authorities in the UK, including devolved authorities, may exercise their spending powers. That is because its purpose is to establish common rules for different authorities with different interests and policy objectives to protect UK competition and investment. The Bill will also facilitate our compliance with our international obligations, including those set out in the EU-UK Trade and Cooperation Agreement, which reflect exactly this constitutional reality.

I turn to Amendments 13, 16 and 17. Clause 10 concerns the making of subsidy schemes and streamlined subsidy schemes. Public authorities using a streamlined subsidy scheme will not have to access any subsidies they award under the terms of the scheme against the subsidy control principles. Streamlined subsidy schemes will have parameters for use that must be complied with by the public authorities using them, and can be made by a Minister of the Crown. Two illustrative streamlined subsidy schemes were published by the Government last week; I trust that they provide practical examples for noble Lords of the possible terms of these parameters for use.

Together, Amendments 13, 16 and 17 would have the effect that a Scottish Minister, a Welsh Minister or the Northern Ireland department would have the power to make streamlined subsidy schemes and lay them before their relevant devolved legislature. I will therefore take them together. The first amendment would allow streamlined subsidy schemes to be made by Ministers in Scotland or Wales or the Northern Ireland department. The second and third amendments would require such streamlined subsidy schemes to be laid before the relevant devolved legislature when made or amended.

Related amendments on this matter, regarding the role of the devolved Administrations, were made in the other place. The position of the Government remains that we will create streamlined subsidy schemes for public authorities across the UK to use to award subsidies that help UK-wide priorities. Streamlined subsidy schemes will therefore function best when they apply across the length and breadth of the United Kingdom. The Government will design these streamlined subsidy schemes such that they are fit to be used by public authorities in all parts of the United Kingdom.

Given that these streamlined subsidy schemes will be part of the UK-wide subsidy control regime, the appropriate place for them to be laid is in this Parliament. We have published two illustrative streamlined subsidy schemes and an accompanying policy statement that sets out for Parliament how the Government intend to use these schemes. We have worked with the devolved Administrations while developing this policy at both official and ministerial level. Officials will continue their close engagement with the devolved Administrations as the regime continues to develop. Finally, it is important to note that Scottish Ministers, Welsh Ministers or a Northern Ireland department, as primary public authorities, can also make schemes for use by other public authorities where that is within their existing functional powers; for example, the Scottish Government may choose to make a scheme for use by local authorities in Scotland.

On Amendment 20, Clause 11 sets out the terms for making regulations to define subsidies and schemes of interest or schemes of particular interest. The amendment would require the Secretary of State to seek the consent of each of the devolved Administrations before making regulations on subsidies, schemes of interest or schemes of particular interest under the clause. If this consent was not forthcoming, the Secretary of State would be required to make a statement to the other place explaining why they had chosen to proceed with the regulations without DA consent.

This amendment was also raised in the other place; the Government’s position on it remains the same. Regulations made under Clause 11 will define subsidies, schemes of interest and schemes of particular interest to ensure that the work of the subsidy advice unit is focused on subsidies and schemes that are most likely to cause negative effects on competition and investment in the United Kingdom, or which may do the same to our trade with other countries.

These regulations are key to the functioning of a reserved policy area. It is right, therefore, for the regulations to be debated and voted on here in the UK Parliament. I simply do not believe that it is appropriate to require the Secretary of State to seek consent even when the Secretary of State may ultimately proceed without that consent from the devolved Administrations on a reserved matter. A requirement to seek the consent of the devolved Administrations each time regulations are made under Clause 11 also risks introducing significant delays into the process, particularly if regulations need to be amended quickly in the future, such as in the event that economic conditions change rapidly. In such cases, the Government may need to legislate rapidly without consent, so the amendment would not achieve its aim.

The Government have had numerous discussions with Ministers and officials in the Scottish Government, the Welsh Government and the Northern Ireland Executive and we are committed to continuing to engage regularly with them. We have published illustrative regulations on subsidies and schemes of interest and of particular interest, in addition to the accompanying policy statement outlining the Government’s approach to this important question. Ahead of publication, officials have discussed the approach to these regulations with each of the DAs, taking on board their comments and suggestions as the policy has developed. We have also provided early sight of the draft regulations for comment ahead of publication. I assure noble Lords that this engagement will continue as we prepare for implementation of the regime. I also welcome any comments or questions that my noble friend may have regarding the illustrative products. Indeed, I welcome any further comments or questions from the devolved Administrations. I therefore humbly request that the noble Lord withdraws his amendment.

[Lord Wigley (PC)]

My Lords, I am grateful to the Minister for her response, which I will come back to in a moment. First, I thank all noble Lords who have participated in this short debate. The noble and learned Lord, Lord Hope, spoke of respect and co-operation between Westminster and the devolved Administrations. That goes to the heart of what we are talking about. We need a regime, as far as these aspects of business are concerned, that has mutual respect and co-operation between all parties; otherwise, we are bound to find ourselves in a position where one body is trying to outdo the other and perhaps to gain political kudos for doing so. That is not what this should be about.

The noble Baroness, Lady Humphreys, whose support I was grateful to receive, spoke about the Bill giving no consideration to the issues that arose in respect of earlier Westminster Bills taking powers from the devolved Administrations. That is the feeling that exists, certainly in Cardiff Bay and the Senedd and, as I understand it, in Edinburgh as well.

I was grateful to the noble Baroness, Lady Bryan of Partick, for her comments. She highlighted the failure of Westminster to adequately consult in good time. That, again, is an element of this lack of respect. By properly consulting in time, there is an opportunity to be able to amend proposals taking such consultation on board. But it is done at the last moment. I understand that one consultation took place last Saturday—not from this department, I think—on something that is happening today. That is no good. There has to be an active engagement between the Governments of our three nations, or four nations if we include Northern Ireland—I have not included Northern Ireland in this because of the complex situation there, but of course the principles apply equally.

The noble Baroness, Lady Jones, spoke of the need to have proper respect for devolved Administrations. That should run through every Bill. I noted the strong feelings that the noble Baroness, Lady Randerson, who spoke mainly to Amendment 20, had concerning the consent of the devolved Administrations. The parity of esteem that the noble Lord, Lord McNicol, talked about goes to the heart of this issue.

The other amendments in this group will no doubt be taken at later stages in different guises, because they touch on subjects that arise in different parts of the Bill, but the noble Baroness, Lady Bloomfield, said that the question of the relationship between the Governments in Cardiff, Edinburgh and here at Westminster “reflects the constitutional reality”—those are the words that she used. Those words will create a reaction in Edinburgh and Cardiff that will cause even greater problems.

We need to seek a new partnership approach. If the unity of purpose within these islands is to mean anything, it must be on the basis of respect between all three or four partners and not the idea that because Westminster was the original one and the all-powerful one, it can overrule or ignore what is felt in Edinburgh, Cardiff or Belfast. I believe that it is possible in the general context to get a formula that can reflect that need for recognition and respect, but it is not going to be achieved in the way that the Bill is drafted. The reaction in Cardiff and Edinburgh was totally foreseeable and it could have been avoided—and it needs to be avoided.

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Moved by

[Lord Wigley]

2: Clause 2, page 2, line 21, at end insert—
“(1A) No payment may be regarded as a subsidy if it is equally and freely available to all enterprises whose economic activity, to which the payment relates, is undertaken wholly or largely within the territory of the body making the payment.”

[Lord Wigley (PC)]

My Lords, I apologise for appearing to hog the Committee at this early stage. I will have a self-denying ordinance as things go forward, I promise. Amendments 2 and 3 are in my name and go to the heart of the use of subsidies as a legitimate tool for securing economic objectives. From the Minister’s remarks at Second Reading, it is clear that the Government accept that in some circumstances the payment of subsidies may be legitimate. Surely that must be right.

Let us take as an example the Covid crisis. If the payment of subsidies was necessary to enable a company to bring forward a vaccine more quickly, say, or to enable an adequate supply of face masks to be available for hospital and home care workers, if that is the only way of securing such socially necessary provision, no one in their right mind would oppose such payments being made. Equally, if subsidies were made to one company to give it an unfair advantage over another, that would clearly not be an acceptable use of public funds, unless it was to enable economic or social benefits to become available in a manner that would not have been possible by paying similar subsidies to other potential providers.

This brings us to the fundamental question of the circumstances in which the payment of subsidies is legitimate and who decides that that is the case. I do not pretend for one moment that we can define in legislation all the circumstances and eventualities in which a credible argument can be made for the use of subsidies, although there clearly needs to be transparency and the circumstances need to be defined in terms that can be appreciated by those who might want to supply goods or services for which subsidy payments may arise. This might be difficult to define in words that are both comprehensible and able to withstand scrutiny in the courts.

To make that process easier, I believe that it would be helpful if some of the principles on which a determination of the efficacy and appropriateness of subsidies could be defined in the Bill. If such a detailed approach is difficult—or, indeed, impossible in some circumstances—at the very least there should be some principles spelled out in legislation for the benefit of the Governments of the four nations of these islands and for the guidance of those involved in the provision of goods and services, who have the right to know the ground rules within which they operate.

Amendment 2 seeks to deal with a set of considerations that may well arise for Governments trying to operate within the framework of the Bill. For colleagues to appreciate the background against which I bring it forward, I draw the Committee’s attention to the way in which successive Governments in Wales have tried to tackle the endemic unemployment levels that have blighted Wales for most of the last century, consistently running at twice the level experienced in England. To tackle this, the Welsh Government have—absolutely rightly, to my mind—tried to ensure that public sector contracts for the provision of goods and services in Wales go, as far as possible, to contractors based in Wales or those that will make it their policy to employ people living in Wales to undertake the work.

Clearly, there has to be value for money and tender prices are a factor that cannot be ignored, but that is only one of several relevant factors. The best deal for the community as a whole is not necessarily ensured by insisting that tender prices are the only factor that determines where widgets must be purchased. Quality of product, security of supply, and aftersales service are absolutely legitimate considerations which may trump a pure price consideration.

There is also the effect on the local economy. It is worth noting that in pursuing a local sourcing policy, which clearly can also have significant environmental benefits by cutting unnecessary transport costs, the Welsh Government have succeeded in raising the level of local sourcing from under 35% to some 55% over the past 20 years. The target is to push that figure to 70%. To my mind, that is an absolutely valid approach. If sandwiches for Welsh hospitals can be made locally rather than brought in from Birmingham or London, they most certainly should be sourced locally, as should service provision contracts. There was a nonsense a few years ago when a contract for grass cutting in schools in Anglesey was apparently placed with a company in the east Midlands.

The net effect of this approach has been to reduce Welsh unemployment figures so that they now stand below the level in England for the first time in my lifetime. Activity rates have also increased.

I readily concede that this approach does not solve all our problems. The level of GDP per head of population remains stubbornly low, and I understand that this argument has to be confronted. The quality of work and the added value must also come into the equation. Our Governments, in Wales and Scotland as well as Westminster, must take these considerations on board when developing public policy.

In this amendment I seek to write into the Bill a provision that states that it is absolutely acceptable for Governments to seek to secure economic activity within the communities for which they have responsibility and that it is legitimate in some circumstances to pay subsidies to businesses that employ people within those communities and pay taxes to local government in those areas, and whose profits may circulate in those local economies.

I make it clear that this is not a block on tendering for contracts to provide goods and services for an area. Those who are primarily based away from that area should not be debarred, but surely it is necessary that when such decisions are made, consideration is given to whether companies are willing to locate an office in the areas offering subsidies, to purchase supplies from within those economies and to have a transparent policy of recruiting people in those areas, preferably to work within their communities.

My amendment states that no payment should

“be regarded as a subsidy”

for the purpose of this Bill

“if it is equally … available to all enterprises”

that undertake “economic activity” to which the subsidy relates “within the territory” of the governmental body making any such payment.

In his wind-up speech at Second Reading, the Minister stated that it would continue to be in order for a public authority to give subsidies if in doing so it is “addressing regional inequality”, so I hope that he will either accept the amendment or undertake to bring forward his own, either at the end of Committee or preferably on Report when it can be voted on. It may be that the wording of this amendment needs to be tightened and more focused. What I now seek is an indication as to whether the UK Government appreciate that other Governments must have their hands free to improve the economic well-being of their communities and that the judicious use of subsidies is a perfectly legitimate tool in trying to stimulate economic activity.

Briefly, Amendment 3 is different in nature but relates also to ensuring that Governments are not precluded by this Bill from making payments for the provision of local services by public bodies in their territory. There are many aspects of local services that may be provided by both public authorities and private contractors. One has to think only of care homes, refuse collection, recycling or highway maintenance to see areas where there could be arguments as to whether public authorities are subsidising activities in competition with the private sector.

My amendment is tabled to give the Minister an opportunity to state categorically that the Bill, when enacted, will not constrain public authorities from making such payments and to point out in the Bill where such safeguards are provided, if indeed they are. If they are not, we will need to return to these matters on Report. I believe I may be knocking on an open door with this amendment but I will listen to what the Minister has to say. I beg to move.

[Viscount Chandos (Lab)]

My Lords, I support Amendments 2 and 3 in the name of the noble Lord, Lord Wigley. With the agreement of the Committee, I shall speak to my Amendment 2A. My amendment would add just one word to Clause 2(2) and I will try to be commensurately brief.

Clause 2(2) lists examples by which financial assistance may be given, starting with

“a direct transfer of funds (such as grants or loans)”.

It does not purport to be exclusive or comprehensive, so why do I think it is important to add equity to the examples given of grants and loans? The guidance published last week, following Second Reading, includes the following:

“Subsidies can be provided in many different forms, including grants, soft-loans, loan guarantees, and tax breaks. Other forms, such as taking an equity stake in firms … may also constitute subsidies [to be inserted—link to future section on determining whether an intervention is a subsidy].”


That prospective insertion of a link to a future section—further evidence of the Government’s ill-preparedness for a Bill that they have known for months, if not years, was needed—gives a clue as to why it is important to add equity to the examples given in the Bill.

A grant from central or local government is self-evidently a subsidy. It is relatively easy—not totally simple, but not rocket science either—to gauge whether a loan is, for the borrower, more favourable than market terms and hence has a subsidy embedded within it. A loan will ordinarily carry the requirement to pay regular interest and, by final maturity, to have repaid all the principal amount. The arithmetic is pretty simple. Equity is much more difficult to analyse as the future returns are unpredictable. The risk of loss is total and the potential returns unlimited. Professional venture capital and other investors can take strongly divergent views about the prospects for any one company, which explains the huge dispersion of returns between different funds.

I acknowledge that it can be difficult to say whether an equity investment is made on market, and hence unsubsidised, terms. A judgment has to be made about the share of the company concerned received for the investment made; the speed with which a decision to invest is made; the proportion of the funding contributed; any liquidation preference attached to different classes of shares; and a whole range of other conditions, whether imposed or waived. Even if private sector investment is made pari passu with the public sector’s commitment, that may not be prima facie evidence that the public sector’s investment is on market terms, since the commitment, particularly if as a significant cornerstone investment, may in itself attract private sector investment in a way that could disadvantage competitor companies.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I think I said that an equity investment is still considered a direct transfer of funds from one entity to another. The whole point of not putting in an exhaustive list is to avoid worry about what you leave out of a list, rather than what you have in it. I believe this is already covered by the Bill.

[Lord Wigley (PC)]

My Lords, I am grateful to everybody who has participated in this short debate. I am not sure whether the noble Viscount, Lord Chandos, is happy with the response he got, but no doubt there will be opportunities to pursue that further. I also noted the comments of the noble Lord, Lord Lamont. There is clearly an issue here that needs some further consideration.

I was grateful to the noble Lord, Lord German, for his contribution. He was Minister for Economic Development in the Welsh Government. Was it 20 years ago?

[Lord German (LD)]

Yes.

[Lord Wigley (PC)]

It was a long time ago but clearly the noble Lord learned many lessons, not least the one he repeated: to stress that we in Wales received considerable benefit from the European Union and that there is a need for a guarantee that, pound for pound, we will not miss out from the changes taking place. That is a bit on a tangent from the issues we are debating; none the less, it is a well-made point and needs to be well received. Hopefully that will be the case. I agree very much with the noble Lord, Lord German, on his point about the Government spelling out in greater detail the rules coming through that will provide a level playing field. Those are very much needed.

I was grateful to the noble Lord, Lord Fox, for his interesting contribution, as always. He asked what a subsidy is. That really goes to the heart of the Bill, does it not? It is clear from the detailed response we had from the Minister that it will require quite a lot of exercising.

The noble Lord, Lord McNicol, again emphasised the need for greater clarity and transparency. That is what is coming out of this. I thought that the Minister’s responses recognised in many ways that the issues exist, but she believes that they are already covered in the Bill. We are going to need to press those aspects further as we go through the Bill. It is essential that the Bill is understood not only by those of us who work in the world of politics but, even more so, by those at the sharp end of business and industry who have to live with the consequences of it. They need transparency, and they need to be sure that they are not being enticed down a road where there may not be any hope of a satisfactory outcome. As the Bill progresses and we probe more aspects of it, I hope that that light will start shining through and that, if necessary, there will be appropriate briefings outside Committee on any further thinking or clarity that the Government can give to these issues.

I believe that the matters raised in my two amendments are relevant. The Minister confirmed that, to all intents and purposes, what is covered in Amendment 3 is covered by the Bill. That is fine; I said that I might be knocking on an open door. I am grateful for that, but I have no doubt that we will need to return to some aspects of the more general debate we have had. On that basis, I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

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[Baroness Randerson (LD)]

My Lords, I will speak specifically to Amendment 6, to which I have added my name. The noble and learned Lord, Lord Thomas of Cwmgiedd, explicitly outlined its importance.

This very important group of amendments seeks to get to the core of what this is all about: why are subsidies required? As it stands, the Bill sets out seven subsidy control principles, which you could actually call rules and which on their own can easily be interpreted in a mutually contradictory way. They are further complicated by additional “energy and environmental principles”, by “subsidy schemes” versus “streamlined subsidy schemes”, and by “schemes of interest” versus schemes of “particular interest”.

This web of rules is combined with a complete lack of context. I take to heart the points just made by the noble Lord, Lord Lamont. As a councillor in south Wales, I was on the receiving end of changing maps. There is great significance in maps as an instrument to encourage investment in certain areas. If you are not going to have a deprived areas map for places to be assisted, you can have a carefully written industrial strategy that sets out terms on which assistance would be given to help the less prosperous areas. There is also a clear potential for overlap with other government schemes. It seems that levelling-up funding could well be seen to be in direct contravention of several of the principles set out in the Bill.

All this is further complicated by the unbalanced power structure at the top. I will not go through it again, but we will undoubtedly do so at different points on our amendments over the next few meetings. Briefly, the crux of the problem is that the Secretary of State is the Minister for England at one moment and the UK’s referee at another. In addition, there is a weak regulator with ill-defined powers and a lack of transparency, with high financial limits at which subsidies have to be registered. All this together strikes me as a chaotic system that is cooking up a bureaucratic nightmare because it does not have the clarity of the map or of the industrial strategy. It is a lawyer’s dream come true and invites litigation.

My noble friend Lord Fox gave us some excellent examples, and we could add to them the overt conflict between the principles of this Bill and those of the ARIA Bill. I was one of the Peers sitting here prior to Christmas discussing the Government’s desire to have the freedom to invest without particular principles that they would have to obey. I cannot see how that does not conflict with this Bill.

The amendment from the noble and learned Lord, Lord Thomas, tries to start to sort this out. So far the Government clearly do not know what they want, or they would have set it out in much greater detail and with much more clarity. Another way of looking at this is that the Government have been given all the cards in terms of power and can brush aside competition. They can hide significant subsidies that fall below the very generous thresholds that they have set out. It leaves the Government free to pick winners on the flimsiest of evidence—almost as was done over PPE at the start of the Covid pandemic, and we know what grief that has caused to both the Government and taxpayers.

Crucially, Amendment 6 sets out a process of agreement between the four Governments on what constitutes “disadvantaged areas” that are hence in need of levelling-up subsidies. As the noble and learned Lord, Lord Thomas, said, this must be a decision taken at a political level. It is not suitable for the CMA or the Competition Appeal Tribunal; their job is to judge individual cases against the rules established as a result of political decision-making.

Amendment 6 would once again establish in legislation the existing concept of common frameworks in relation to this topic. There are of course dozens of common frameworks on everything, from nutritional labelling to rail technical standards, from blood safety to motor insurance. Each has a set of rules on how the four Governments of the UK will co-operate to ensure that individual internal markets work properly. If any mechanism is likely to disrupt relationships within the internal market then subsidies are the one, so a formal common framework with evenly balanced dispute mechanisms is required. That way, the Governments of the four nations can establish their own priorities for subsidies and ultimately subject them to a formal dispute procedure if needed.

[Lord Wigley (PC)]

My Lords, I had not intended to intervene in this debate, and I am going to do so not from a particularly Welsh angle but from a general one. I identify with Amendment 6 and the comments of the noble and learned Lord, Lord Thomas of Cwmgiedd, with regard to the practicality of any Act like this being interpreted by the courts. We are going to create a monster if we are not careful, and it may well fall down because of its own inertia.

Three areas of experience spring to mind for me in addressing this question. The first is the old—am I allowed to say it?—Chinese saying that if you give a man or woman a fish then you feed them for a day, but if you teach them to fish then you feed them for a lifetime. Therefore, any long-term economic strategy must be geared towards enabling that to fulfil itself, so that we are not just providing subsidies for the day but providing a basis on which to build.

The second experience that comes to mind is writing an economic plan back in 1970 with the late, great Phil Williams, whom some colleagues here will remember from the National Assembly. We did an analysis to find winners in terms of industry and in terms of geographic location. Most of them worked out. In fact, they were fairly common-sense things—electronics, chemistry and so on—and I suspect that they would have fulfilled themselves had there been no grant mechanism, because they were doing what there was a momentum towards.

My third and final point concerns our experience in Wales with regard to European funding; I have no doubt that similar experience will have been obtained in Cornwall, South Yorkshire, Merseyside, parts of Scotland and wherever such funding was available. The funding went not just to narrow projects but to areas of investment with a long-term payback, such as work, even blue-sky projects, in our universities. These would not create immediate jobs but provided a basis on which industry and commerce, and those who were going to invest in them, could look to the future. The scheme of grants that was available then through the European Union was very broad; we should not ignore that dimension. We need mechanisms that enable that to happen. If we can get this right, it could be very valuable. It may well be that this Bill has that potential in it, but there is a lot that needs to be clarified at the moment. Some of these amendments may help tease that out.

[Lord Bruce of Bennachie (LD)]

My Lords, I wish to intervene briefly because this has been a really interesting debate. The intervention by the noble Lord, Lord Lamont, seemed to ask legitimate questions about whether the intention of the Government’s strategy relates to levelling up or regional development.

In the 1970s, I was involved with the economic development strategy. I remember the map that the noble Lord, Lord Lamont, talked about. It was about unemployment and travel to work but it did not always take account of things such as depopulation. There are certain communities where, if there is no work, people go and look for it, but the communities are then told, “You don’t have high unemployment, so you’re not entitled to any support”. Yet those people can be encouraged to stay there, or alternatives can be brought in.

Secondly, it seems to me that this should have some relationship to the economic realities of the region. We have seen situations in which ideas have effectively been dumped into a region, with massive incentives from government, but simply did not survive. These were big projects that became white elephants and embarrassments. On the other hand, supporting local and growing businesses has proved very effective. It is exactly the kind of thing that local councils and local organisations are better at, because they have that degree of knowledge in a way that central government often does not and they are kind of organic.

I remember, in the 1970s and 1980s, the Highlands and Islands Development Board, which was set up in the 1960s. It described itself as an investment bank with a social conscience. At the time, the Scottish Affairs Select Committee was holding an inquiry that Conservative MPs had asked for, originally with a view to discrediting the board. I must say, they rather changed their view at the end of the evidence. The chairman was asked, “How many of the projects that you have supported failed, and what was the average rate of return on the investment you made?” We got an answer to those. When asked, “How did those compare with the private sector?”, the answer was, “Almost exactly the same.” The question then was, “So why do we need the Highlands and Islands Development Board?”, to which the answer was, “All these projects were turned down by the private sector in the first place but succeeded.”

We have been through a period of highland depopulation, and it is beginning to happen again. In my part of the north-east of Scotland, we lost our development assistance, perfectly understandably, on the arrival of the oil and gas industry. Now that it is leaving, we may well need to support not the fossil fuel industry but new industries, perhaps related to energy, or some of the traditional industries that add value to the food production of the area and that sort of thing.

I suggest that we are entitled to ask the Government for some kind of explanation of strategy as to how this is going to work, whether there should be a map and what kind of sectors can be expected or allowed to be encouraged. At the very least, the objective over 10 years would be to reduce the inequalities between the high-growth, high-population areas and the low-population areas to the benefit of both. I accept the point that stealing from one to give to the other is not the answer, but it is sometimes quite difficult to know what the balance is within that. The questions being asked are legitimate and justified; the Government should give us some idea of what the answers might be.

Agricultural Exports from Australia: Tariffs

Lord Wigley Excerpts

Tuesday 8th June 2021 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

My Lords, as a fellow whisky drinker, I share the noble Lord’s sentiments. Fears about a flood of cheap imports affecting our agricultural sector are, with due respect, overstated. Australia, of course, is a much smaller market than the EU so we expect low volumes with high standards. For example, we currently import 250,000 tonnes of beef each year, with 91% coming from the EU and 190,000 tonnes from Ireland alone. Less than 1% of Australian beef exports come to the UK market. Even if that figure was to increase, as we expect it will, it will still not dent these much larger figures from the European Union.

[Lord Wigley (PC) [V]]

My Lords, I draw attention to my registered farming links. Is the Minister aware that the president of the Farmers’ Union of Wales, Glyn Roberts, has written to the Prime Minister stating that if Welsh farmers were to employ the land and management practices commonplace in Australia they would face prosecution or even imprisonment? Michael Gove has previously stated that importing meat in such circumstances represented a red line that would not be crossed. Why have the Government betrayed that pledge?

[Lord Grimstone of Boscobel (Con)]

My Lords, I am not familiar with the letter the noble Lord refers to, but I will make sure to study it after this Question. As I said earlier, we do not believe that this deal will mean a flood of cheap imports. We will use a range of tools to defend British farming. I want to emphasise the opportunities that this deal will give to British farmers in terms of their exports, whether they are large or small and whichever part of the United Kingdom they come from.

Trade Bill

Lord Wigley Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 6th January 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I am pleased to offer the Green group’s support to all these amendments, particularly Amendment 26. It is a pleasure to follow the detailed, highly informed expositions of the noble Lord, Lord Hain, and the noble Baroness, Lady Ritchie of Downpatrick. I do not feel there is a great deal to add, so I will be very brief, but I want to ask two questions of the Minister. First, what assessment have the Government made of the understanding and ability to deal with this of small businesses, particularly in Northern Ireland but also those exporting goods and services to Northern Ireland? How are they dealing with, and how will they be able to deal with, the trading co-operation agreement arrangements? Is the Minister confident that there is sufficient support for those, given the uncertainties that the noble Lord, Lord Cormack, just referred to?

Secondly, venturing into a very complex area but one that I know is of great importance to some people, as I understand it there is a hard border down the Irish Sea for seed potatoes and possibly also for fresh potatoes. Can the Minister explain the situation with potatoes going to and fro across the Irish Sea?

[Lord Wigley (PC) [V]]

My Lords, I am delighted to follow the noble Baroness, Lady Bennett, and to support very warmly the vital point made by the noble Lord, Lord Hain, who has shown such great commitment to Northern Ireland over the years and continues to do so, particularly in the dimension of the Brexit process. I also warmly support the comments made by the noble Baronesses, Lady Ritchie and Lady Altmann, and the noble and right reverend Lord, Lord Eames. I address these remarks particularly to subsection (1)(b) of the new clause proposed in Amendment 26, relating to goods originating in, or moving from, Northern Ireland and entering Great Britain.

Assurances were given to business in Northern Ireland by the Prime Minster that there would be no bureaucratic hindrances whatever on the goods they trade with other parts of the United Kingdom. It now appears that in some circumstances there can be documentary imposition placed upon them. This has serious implications for those selling such goods and those operating ports such as Holyhead. I remind the House that many of the products from Northern Ireland destined for UK markets have in the recent past been coming via Dublin and Holyhead. This is a matter I have repeatedly raised here in the Chamber. If trade such as this requires documentation, whereas trade directly from Northern Ireland to English ports does not, clearly this represents discrimination against Holyhead whether the goods, or part of them, originated wholly in Northern Ireland or were partly imported from third countries.

Holyhead has already suffered in recent days since the conclusion of the Brexit deal, with shipments that previously would have come from Dublin via Holyhead to English markets or on to continental markets now shipped from other locations in Ireland and not coming via Holyhead. Some, indeed, are going directly to the European mainland. We need clarification, so I hope that the Minister will accept Amendment 26 and can give some assurances, which are needed by those operating the port of Holyhead.

[Baroness McIntosh of Pickering (Con)]

My Lords, I seek clarification on Amendment 26. We were promised unfettered access to the Northern Ireland market. I am privileged to sit on the EU sub-committee on the environment, which has taken a great deal of evidence on food producers, hauliers, and others in connection with trade between Great Britain and Northern Ireland in the run-up to the agreement now in place from 1 January 2021.

This unfettered access is clearly not in place. Although the briefing I was fortunate to receive last week from the Food and Drink Federation says their concerns in this regard are reduced, they certainly remain. One of the difficulties relates to sausages, which seems to cause great hilarity because of the “Yes Minister” sketch that keeps being revived. Sausages and processed foods such as pies, in the short term, are apparently not permitted to enter the Northern Irish market. Are the Government, including the Minister and his department, aware of this? I know that there is a longer-term concern over these goods as well as milling flour, rice, some sugar products, and seed potatoes to the rest of the European Union, but there is the short-term issue of exporting these goods to Northern Ireland. I imagine that this is an unforeseen consequence of the deal which was announced at very short notice. I would be grateful for a commitment from my noble friend to ensure that this will be resolved and that sausages, whether made in north Yorkshire by Heck or other producers across Great Britain, will have access sooner rather than later to Northern Ireland.

What is the position on the time and cost to be taken on issuing export health certificates? Does my noble friend share my concern and that expressed by others, including the British Veterinary Association, of which I am an honorary associate, about the shortage of vets and potential impact on exports and movement between Great Britain and Northern Ireland in this regard?

There is a need for a provision along the lines of Amendment 26, and I look forward to hearing what the Minister has to say to allay my fears.

--- Later in debate ---

[Lord Wigley (PC) [V]]

My Lords, I am glad to add my name to those who have spoken in support of Amendment 24 and, yes, we have been here before many times over recent months. Clearly, I totally support the principle that trade agreements should be acceptable to devolved Governments—they may not have a veto, but that acceptance should be sought. The opposition and the reservations of the devolved Governments to the recent European agreement should be a timely reminder to the UK Government of the importance of securing that sort of consensus.

I have some reservations about the adequacy of both this amendment and of the Bill as it stands in meeting the needs of the Welsh Government, so I will pose a question to the Minister. If there were a UK agreement with New Zealand for the import of lamb in terms that would undermine Welsh hill farmers, what safeguards are in the Bill as it currently stands? If the Minister believes that this amendment is unnecessary, will he please tell me how the Bill as it stands meets such worries and how he can persuade the House and the Welsh Government of that fact?

[Lord Morris of Aberavon (Lab) [V]]

My Lords, I wish to say a few words on Amendment 24, which I support, moved by my noble friend Lord Stevenson. Like the noble Lord, Lord Wigley, I am concerned about the position of Welsh lamb, as I come from a family that has been breeding them for centuries now and continues so to do in three counties in Wales. If there were any barrier, inhibition or taxation on its export, it would ruin the hill farmers of Wales.

I am surprised that my noble friend had to table the amendment at all. I welcome what is devolved very much. I repeat what I have said many times: what is devolved is devolved and cannot be withdrawn without primary legislation. Proposed new subsections (2), (4) and (5) concern me. One of the side-effects of the coronavirus pandemic is a wake-up call to Whitehall that there are four Governments in the United Kingdom as far as health is concerned. I wish there had been more fruitful dialogue between Whitehall and each of the devolved Governments so that there was more uniformity. It was not to be, and I respect the decisions of the Welsh Government on matters entirely within their competence. I support the amendment.

Trade Bill

Lord Wigley Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Tuesday 15th December 2020 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady McIntosh of Pickering, and to see her acknowledging, as she often does, the benefits and opportunities that freedom of movement gave to her life, and to see her seeking to preserve at least some of those for young people in the future. It is also a great pleasure to speak after the noble Baroness, Lady Bull, and the noble Earl, Lord Clancarty, such champions in your Lordships’ House of the creative industries. We have heard a great deal of powerful testimony about the economic importance of those creative industries. I will take a second to focus on the importance to the quality of life for all of us and the way in which cultural exchange enriches all our lives. The loss of that will make us much poorer in the most fundamental terms, rather than just focusing on the economic ones.

I thank the noble Lord, Lord Fox, for tabling this amendment and all noble Lords who backed it. I urge that this be put to a vote, and very much hope that those on the Labour Front Bench find themselves able to support that vote, for the opportunities and freedoms which have already been outlined.

Picking up on the points made by the noble Baroness, Lady Noakes, I am not sure, given that we now have a deal along the lines of what has been outlined here with Switzerland, how this can be labelled a “pipe dream”, given that it has already been achieved with one small part of Europe. The Government obviously do not think that it is a problem with taking back control to have that agreement with Switzerland. We know that Switzerland is particularly famous for its banking and financial sector, but one would hope that was not the only sector that the Government are focused on and wish to see this kind of freedom of movement in.

The Government’s statement on that Switzerland mobility agreement says that

“UK suppliers will be able to do business in Switzerland as they do now. There will be no economic interest tests, no work permits and no lengthy processing times…This offer will be open to businesses of all sizes, including the self-employed.”

What are the Government trying to achieve in the coming few days? What is the aim for next year? What is the aim for the future?

I also note that it would appear that we have lost a chance of involvement in Erasmus+. This is built on the kinds of relationships that the noble Baroness, Lady McIntosh of Pickering, referred to, with internships, interchange studies and apprenticeships. They set up the relationships that then create the opportunity to deliver these services for British businesses. How do the Government plan to ensure that those relationships are built in the future, so that the opportunities remain for British businesses and creative people to have those interchanges?

[Lord Wigley (PC) [V]]

My Lords, I shall speak in support of Amendment 13, so eloquently moved by the noble Lord, Lord Fox, despite the technical difficulties. I follow the noble Baroness, Lady Bennett, with great pleasure. It is good to see her back in the Chamber. I agreed with everything she said. I also welcome the comments of the noble Baronesses, Lady McIntosh and Lady Bull.

The amendment touches on a matter that is now assuming immensely greater interest among the people of these islands, as the harsh possibility of a no-deal Brexit dawns on them. People are awakening to the reality that their right to move to work in EU countries might now be limited as a direct result of the 2016 vote, notwithstanding the multitude of platitudes expressed by Brexiteers during that referendum.

Perhaps I may refer to one particular group in the service sector, and, in doing so, I draw attention to my registered interests. I highlight the need for those in the performing arts sector to have unrestricted free movement across the countries of our continent. The noble Earl, Lord Clancarty, has already very effectively addressed this dimension, which is so close to his heart. Such freedom of movement is absolutely basic to the cultural services they provide. Many of them, particularly those who are self-employed, have been devastated by the Covid lockdown, and restrictions on their movement once the Covid threats ease would be a second body blow that they just could not endure.

The Government claim that they support the securing of mutuality for the creative sector between the UK and the countries within the European Union. When the Minister responds, will he clarify where they stand on the Creative Europe programme? It is so important for the devolved nations in developing their existing links and helping them maximise their contribution to the UK’s soft-power objectives.

Other people are expressing horror at the fact that they will not be able to take their pet dogs with them when they travel to and forth in our continent without pre-arranged veterinary certificates. Lo and behold, we do not have the number of vets required to handle such cases, as so many of them originate from the European Union and have been given the impression, rightly or wrongly, that they are no longer welcome here. With a proportion of them now opting to go home and very few new vets coming to the UK given the Brexit uncertainty, the whole of the animal sector faces a crisis. Apparently, there have been a significant number of qualified vets among refugees seeking a home in Britain. It would be very helpful if the Government could fast-track them to enable them to help us out in the plight that faces us.

The harsh, cold reality of a no-deal Brexit is now staring us in the face. There is something ironically, cruelly appropriate that the free movement of people—one of the original attractions of having our continent reunited after two disastrous wars during the first half of the 20th century—is now one of the first potential casualties of Britain’s retreat into offshore isolation, hiding behind an array of gunboats to secure our place in the world. Presumably, that is the new normal to which the noble Baroness, Lady Noakes, referred. And is it not cruel that we—the generation who have enjoyed freedom of travel for work, education and leisure purposes—are the ones taking that great boon of unhindered travel away from our children and grandchildren? We should be thoroughly ashamed of ourselves, and I can only shudder at how history will judge us.

I fully support the amendment, although I do not pretend for one moment that it will somehow begin to put right all the negative impact of Brexit in its worst, ugly guise that now stares us in the face. I say no more.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, it is a pleasure to follow the noble Lord, Lord Wigley. I agree with every word that he said, and he said it most eloquently.

I want to speak in support of the amendment moved by the noble Lord, Lord Fox. I have to say that very carefully because it is getting more and more confusing. We have the noble Lord, Lord Fox, the noble Baroness, Lady Fookes, the noble Lord, Lord Faulks, me—Lord Foulkes—and now there is another Fox here, although I think of the noble Lord as the friendly fox. I am sure I am giving nothing away when I say that.

These days, sadly, the Brexiteers comprise almost the whole of the Cabinet. It seems to be the only requirement to be a member of the Cabinet—not to have ability but just to have campaigned for Brexit. It is certainly not ability—that is very obvious. Also, this place is becoming increasingly packed with Brexiteers, who, sadly, inhabit both sides of the House.

I am what they all call a “remoaner”. I ask the noble Baroness, Lady Noakes, whether “remoaner” is the right term. Well, I make no apologies for continuing to be a remainer—and I will continue to be one. Over the last 40 years we have had not just mobility for trade and reciprocal rights to work but free healthcare as we have travelled throughout Europe. We have had the right of abode, which we will now get for a measly 90 days. That will thwart some of the people on the other side of the House with two homes. We have had the right to study and many more reciprocal rights. I say to the noble Baroness, Lady Noakes, and others that that is sharing sovereignty, not surrendering it. Sharing sovereignty does not mean surrendering it.

I want to take this opportunity to say just one thing: that those of us who have valued, and continue to value, those rights should not be intimidated in any way by the Brexiteers. After all, they went on and on for decades until they got their referendum, which, sadly, they won. It is our right to continue to advocate the case for European co-operation. Incidentally, we should also not be put off by the faint-hearted in our own parties.

Those of us who believe in the European ideal—the European single market, a customs union, European co-operation generally, and working with our closest allies and neighbours—should keep on saying that. We should reaffirm our commitment and determination to return to membership at the first possible opportunity. After all, as others have, rightly, said, the current fiasco over Brexit makes it even more imperative that we should look at that option.

Bankers, those working in insurance and people in many other businesses are moving from the United Kingdom to the continent of Europe. That is one of the ironies of it, and some of them of course are Brexiteers. Jacob Rees-Mogg in the other place is making huge amounts of money out of investments in Ireland and not in the United Kingdom, and Jim Ratcliffe of INEOS, one of the leading Brexiteers, is moving production of the new Grenadier vehicle to the continent of Europe. That is not patriotism; it is despicable, and it should be criticised by people opposite who aver that they believe in the United Kingdom.

So let us reaffirm our belief and not be intimated by the Brexiteers, and let us start now. I remember the referendum when we reaffirmed our commitment to the European Union. I fought very hard for that and we have enjoyed the last 40 years. I hope that I will be around for the next referendum—I might just be if it comes sooner rather than later—to make sure that we return to the European Union, taking our rightful place as part of the united Europe that, sensibly, we have been, and ought to remain, part of.

Trade Bill

Lord Wigley Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Monday 7th December 2020 Lords Chamber

[Lord Curry of Kirkharle (CB) [V]]

My Lords, it is a privilege to add my name to Amendment 6 in the name of the noble Lord, Lord Purvis of Tweed, which he presented so articulately. This is a critically important Bill and I am concerned that, as with other Bills associated with leaving the European Union, we do not have much time. This new chapter in our history gives us a unique opportunity to make sure that we adopt best practice and put in place appropriate conditions and processes that reposition the UK as a global leading influence. I said during the debate on the Agriculture Bill that we should be ambitious and set the bar at a level that demonstrates our commitment to deliver on issues of deep concern. We will debate some of these later today.

The Trade Bill is an opportunity to make a statement about our intentions and ambitions as a nation. This principle also applies to the scrutiny process we put in place as a democracy to match the best of them, whether that of our former partners in the EU, the US or, as has been mentioned, Japan. We need to ensure that we have a transparent and robust process and that Parliament has the opportunity to be consulted and to debate the purpose, intention and outcome of trade deals. Government should see this amendment not as an attempt to slow down or thwart the negotiating process but as a helpful and positive contribution to give Ministers confidence in their negotiations. If this amendment is accepted, they will have the reassurance of having the backing and support of both Houses of Parliament. I hope that the Minister will accept this amendment.

[Lord Wigley (PC) [V]]

My Lords, I am delighted to support Amendment 6 in the name of the noble Lord, Lord Purvis, and to follow the comments of the noble Lord, Lord Curry of Kirkharle, with whom I largely agree on this matter and on many similar matters we have debated in recent weeks.

The House is indebted to the noble Lord, Lord Purvis, for finding a way around the difficulties which were raised against amendments in these areas in Committee and for overcoming the hurdle imposed by the prerogative considerations relating to trade deals. I cannot agree with the reservations of the noble Lord, Lord Lansley, on this dimension. His Amendment 12 could have an application for devolved Parliaments, for reasons I will qualify, but I recognise the general reasons he has put forward and will support him if he presses his amendment to a vote in due course.

As noble Lords might well anticipate, I speak from the viewpoint of the devolved Governments and Parliaments. In the context of Wales, in Committee we addressed several of the issues which might arise in the negotiation of free trade agreements. In Amendment 6, particularly subsection (9) of its proposed new clause, the obvious issue is whether the implications of free trade agreements could have an adverse impact on the economies of Wales, Scotland or Northern Ireland. The need for these devolved Governments to be drawn in at an early stage is twofold.

First, it is to enable them to alert the UK Government to any negative impact they might not have fully taken on board, not least negative effects on, say, farming, environmental dimensions or food safety considerations, which conflict with the devolved Governments’ policies on such devolved matters. Secondly, the beneficial provision of the proposed new clause in this amendment is to enable the devolved authorities to flag any special dimension that might help the devolved nations capitalise on new opportunities arising from trade negotiations, which would be beneficial for them and, possibly, the people of England.

I realise that trade treaties lie outside the ability of Parliament to amend as they progress, and that the devolved Governments will also have to work within parallel constraints. It is for another occasion for us to debate that principle, and I suggest that there are two sides to that argument. There can, however, be no doubt that the devolved Parliaments should have just as strong a voice on the impact of trade deals on matters within their competence as Westminster does on issues that impact policies that affect England only.

I would go further than this amendment provides, as we have in other legislation before Parliament, by requiring that, if the devolved Governments are not agreeable to the steps taken by the UK Government, there should be a requirement for ministerial explanation and a cooling-off period. That, however, is not before us today.

I have one last point. If Westminster is implacably opposed to the devolved Governments having their say in these matters, it will certainly only hasten the day when these Parliaments seek the powers to make international treaties for themselves to protect the interests of their people. Is that what noble Lords really want? I urge all sides to support this reasonable amendment and for the Government to accept it.

[Lord Goldsmith (Lab) [V]]

My Lords, I am happy to follow the noble Lord, Lord Wigley, and his underlining of the importance to be attached to the views of the devolved Administrations when dealing with trade agreements. I will speak to Amendments 6 and 12, on parliamentary scrutiny, with the experience I have gained as chair of your Lordships’ EU International Agreements Sub-Committee, but not on its behalf, save to the extent that I draw on reports already made by the committee. In any event, members of the committee are free to give their own views, and I note that some, including the noble Lord, Lord Lansley, are speaking in this debate.

There are two points I want to deal with. The first is to comment on the commitments made today by the Minister in the Written Ministerial Statement, to which attention has already been paid. I thank him for sending me a copy of that and I fully underline, support and agree with the noble Lord, Lord Lansley, that the Minister has been courteous, co-operative and helpful, so far, in his engagement with the committee on the trade agreements he is responsible for dealing with.

I welcome that the Government have put the commitments in the Written Ministerial Statement on the record today, and I look forward to hearing them repeated in this debate and to discussing and developing the detail to ensure that Parliament is able to scrutinise all future UK trade agreements meaningfully. As the noble Lord, Lord Lansley, has rightly underlined, these amendments deal with trade agreements only and not other international agreements. The committee that I chair is involved in those other agreements. The UK will be making many important new trade agreements, which can be just as crucial as the laws we make in Parliament. I will return to that point. Therefore, Parliament’s ability to scrutinise these agreements comprehensively will be of great importance.

I therefore commend the Government for their commitment to work with the International Trade Committee and the EU International Agreements Sub-Committee to ensure that we are briefed throughout the negotiations and have access to treaty texts and other related documents, to the extent necessary, on a confidential basis and at a reasonable time, before the start of the short 21-day scrutiny period set out in CRaG. This approach was introduced for the UK-Japan trade agreement, but will be particularly important for the upcoming US, Australia and New Zealand agreements, for which, unlike the Japan agreement, there will be no underlying EU agreements to refer to and make a comparison with.

Effective scrutiny, however, also requires that those who are affected by trade agreements, and experts, have the chance to comment on the consequences of any agreement. While “extensive stakeholder engagement”—I quote from the Government—on trade negotiations by the Government is welcome, it is imperative that specified stakeholders and experts also have early enough sight of the agreements to enable them to form a view and to feed into parliamentary scrutiny of the agreements. Again, this will be particularly relevant where there is no underlying EU agreement standing as a comparator and baseline.

United Kingdom Internal Market Bill

Lord Wigley Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

[Baroness Finlay of Llandaff (CB) [V]]

My Lords, it is a great pleasure to follow the noble Lord, Lord Purvis of Tweed, who has repeatedly shone a light into dark corners of this Bill, and to follow my noble and learned friend Lord Thomas of Cwmgiedd.

I strongly support Amendment 64 and Amendment 65, to which I have put my name. It has become increasingly apparent that Clause 42 would enable the Government to work around, rather than work with, the devolved Governments, in particular replacing the regional development funding, which has been so significant here in my own country, Wales, in addressing endemic problems such as economic inactivity and lack of skills. After all, the Government can already provide funds to support devolved matters, providing they do so in partnership with the elected Governments.

In that surprising article last week in the Daily Telegraph, already referred to, the Secretary of State claimed:

“For the first time, this money will be able to be spent by people who have been directly voted for by the people of Wales. People who know the local communities best, and who can develop coherent proposals that are aligned with broader UK-wide priorities.”


It is astonishing that this Government seem to have ignored the group of stakeholders endorsed by the Welsh Local Government Association and the majority of its members, convened—but not commanded—by those directly elected to the Welsh Senedd to develop a framework for regional investment to determine the spending priorities for this funding.

But of course we now have the Chancellor’s statement and can see in box 3.1, as referred to by my noble and learned friend Lord Thomas, the heads of terms of the UK shared prosperity fund. It states, with reference to additional funding in 2021, that the Government will provide such funding to communities using the new financial assistance powers in this Bill. This seems to bypass the elected Welsh Government by inviting local authorities to directly bid to central government. Perhaps the Minister will confirm whether I have understood correctly or not.

I am afraid this Government’s record is to spend on things that have always been the Government’s responsibility. Think of the rail infrastructure: the electrification of the Great Western main route was cut short at Cardiff, despite all the arguments in favour of extending west. Then there are major energy projects, such as the tidal lagoon or broadband, where the Welsh Government had to invest huge funds, including from the EU—which the Minister seems to loathe—to make good the underinvestment by Whitehall. Some suggest that this looks deliberately timed to be before the elections to the Senedd and the Scottish Parliament, and to drive a wedge through the devolved nations’ ability to consider their whole-population needs.

The history of the £3.6 billion towns fund, which relied on Ministers selecting which towns would receive funding, does not inspire confidence. The National Audit Office and the Public Accounts Committee were not convinced by the rationale behind these choices. The committee said:

“The justification offered by ministers for selecting individual towns are vague and based on sweeping assumptions. In some cases, towns were chosen by ministers despite being identified by officials as the very lowest priority (for example, one town selected ranked 535th out of 541 towns).”


The Minister may try to provide reassurance that this Government would not use the powers in Clause 42 to undermine the political priorities of the elected Government in Wales. But once on the statute book, this clause would open the way for future Governments of any colour to ride roughshod over an elected devolved Government. Clause 42 undermines the devolution settlement, which has functioned well for the last two decades. The clause should be removed.

Amendment 65 is an intelligent and thoughtful proposal from the noble Lord, Lord Stevenson of Balmacara, to depoliticise the allocation of funding to replace the EU structural funds to reflect economic and social need, not political expediency. It gives an appropriate role to the devolved Governments, while recognising that this is UK funding designed to level up regions with weaker economies in line with the Government’s own declared aspirations. If the Minister is unable to accept Amendment 64 and remove the offending clause in its entirety, I call on the Minister to settle for this compromise amendment, which will allay suspicions that the Government want to manipulate regional funding for their own ends rather than address objective, clear economic priorities.

[Lord Wigley (PC) [V]]

My Lords, I am pleased to support Amendment 64, moved by the noble and learned Lord, Lord Thomas of Cwmgiedd, to leave out Clause 42. I agree with him and with the noble Baroness, Lady Finlay, in her pertinent comments in support of that amendment. If, however, we do not succeed in removing this provision from the Bill or succeed with Amendment 65, the Bill most certainly needs to be amended to meet the widespread criticism, expressed in the devolved legislatures and, only last Friday, in the Western Mail—if I may quote it rather than the Telegraph—which stated in its editorial’s headline:

“This plan is a direct threat to devolution.”


And it is just that.

I wish to speak to Amendment 67 in my name, which addresses the issue at the heart of the Welsh Government’s misgivings and those of my party, Plaid Cymru. It revolves around the linked questions of what replaces the European regional funding, of which Wales has been a major beneficiary over the past few decades, and who controls the expenditure priorities for any replacement funding coming from the UK Treasury.

The need for this amendment can be properly appreciated only if it is considered in the context of the immense benefit Wales has secured from the European Regional Development Fund and the European Social Fund over the past two decades. Wales is not the only part of the UK that has benefited; Scotland, Northern Ireland, Cornwall, Merseyside and South Yorkshire have also received significant investment. However, it has been Wales—in particular, the area known as West Wales and the Valleys—that has received the most significant level of investment. There is a good reason for this or, I should say, an understandable reason, for it is bad news, not good news: West Wales and the Valleys, the area which includes most of the old coal mining, slate quarrying and marginal land farming in Wales, is, sadly, one of the poorest regions in the entire European Union. The GDP per head of population in this area has been below 75% of the EU average. We were entitled to European funding due to persistent, long-term economic poverty, which the UK Government had, for most of the 20th century, failed to address—and certainly failed to eradicate.

The system utilised by the European Union established the criteria, framework and ground rules of the funding programme, each round of which lasted seven years. The Welsh Government put forward their proposed investment programme, which had to be agreed with the EU authorities in Brussels. The Welsh Government provided matched funding, which had to be additional to the normal spending budgets. That principle of additionality caused some controversy in the early days, with the UK Treasury reluctant to make additional funds available until it was instructed to do so by the EU regional commissioner—one Michel Barnier, God bless him.

The detailed rollout of the programme was, and still is, overseen by WEFO—the Welsh European Funding Office. The funding has been used for a range of projects, two of which I was involved in: the creation of the Galeri performing arts centre in Caernarfon and the management centre of the business school of Bangor University, both assisted by some £6 million of European funding. They could not have gone ahead without it. Both projects have been tremendously successful, as I know both the noble Baroness, Lady Humphreys, and the noble Lord, Lord Hain, can testify.

The third round of this European programme is still running. For the period 2014-2020, the operational programme is worth some £3 billion to Wales. At the time of the Brexit referendum, leave campaigners stressed repeatedly that the funding coming from Brussels would be replaced in full—I repeat, replaced in full—by money from the Treasury in London. I well remember, as I am sure many noble Lords do, being told that the funding emblazoned on that Brexit battle bus—the claimed Brexit bonus of £350 million per week—would, in just a fortnight, fund the annual replacement cost of the European Regional Development Fund and the European Social Fund money coming to Wales. Of course, we were told that the Welsh Government would be fully in control of its use. Those were the promises made, on which basis Wales—regrettably, to my mind—voted to leave the European Union. The time has come to redeem those promises, and Amendment 67 facilitates that commitment.

Amendment 67 seeks to establish the principles that will safeguard the funding coming to Wales and, likewise, to Scotland and Northern Ireland from funds denoted in Part 5 of the Bill. Specifically, the amendment provides that funding should reflect need, not some ad hoc arbitrary criteria, nor a Barnett-type formula, which has been repeatedly condemned by committees of this House yet was used again today in another place by the Chancellor of the Exchequer in the Autumn Statement. Funding on a needs-based distribution, related to the GDP per head of population, would be the basis. In that way, it respects the pattern of distribution of European regional funding—a pledge made during the referendum. Amendment 67 requires the Minister to bring forward a needs-based formula to be approved by order, subject to the affirmative resolution procedure, and provides for the Minister to secure the agreement of the devolved Governments to the content of that order. The amendment also proposes that each annual figure be presented as part of a three-year rolling programme, to ensure that coherent, long-term investment programmes can be secured and the money is not frittered away on short-term fixes.

We have heard a lot during the passage of the Bill about the fears in Cardiff, Edinburgh and Belfast of a power grab by the UK Government, taking away from the devolved Governments powers they currently enjoy. The Government respond, of course, that there is no such power grab and the devolved Governments will retain the powers they currently exercise. This amendment puts those assertions to the test. Either the devolved Governments retain the power to determine capital expenditure projects in their territories, or they do not. If they do not, it will be a flagrant violation of the commitments made during the Brexit referendum and the last general election. If the Government insist on retaining the rights to impose capital expenditure projects on and in Wales, it will set alarm bells ringing. There have been press reports of projects such as the construction of reservoirs in Wales, which is an incendiary topic, given our experience over the past century.

Of course, there may be joint projects of mutual interest, but those must be negotiated by the respective Governments, not imposed by Westminster and Whitehall. The days of imperial diktat have long since gone; if there was one dimension which could trigger an avalanche of support for the independence movements, it would be such an approach by Westminster. It is my fear that this Bill, without amendment along the lines that I propose, heralds such a retrograde step—a rolling-back of the freedom we have enjoyed within a European context and its replacement by Westminster central direction of the sort that Wales suffered in the bad old days before devolution. Amendment 67 is in the interest of establishing a stable harmony between the nations of the UK and I urge the Government to accept it.

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[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, the amendment in my name and that of the noble Lord, Lord Stevenson, borrows much from other amendments tabled in Committee and on Report, and credit is due to the authors of those amendments.

This amendment has three purposes. The first is to take the OIM out of the CMA after six months and set it up independently, using the budget already allocated for that purpose. For appointments to the OIM the Secretary of State must consult and seek the consent of Scottish and Welsh Ministers and the Department for the Economy in Northern Ireland.

The second purpose is enabling, not compulsory. It is to allow the OIM to become the competent body to investigate harmful and distorted subsidies and subsidy races made by any Administration within the United Kingdom that relate to harm within the United Kingdom. This can happen only after public consultation about state aid provisions, which the Government have already said will take place, and requires the consent of the devolved Administrations. The OIM will also, subject to the devolved Administrations’ agreement, be empowered to make recommendations to the Secretary of State for changes to the tests for harmful subsidies, and to its powers and functions. Finally, there is to be a general review of the competence of the OIM between three and five years after Section 30 comes into force.

The changes, following the devolved Administrations’ agreement, can be brought about by affirmative regulation. Overall, the amendment solves the problem of the unsatisfactory location of the OIM in the CMA and gives a vision for the consensual evolution of the OIM in its investigations of subsidy effects.

We have already debated, in Committee and since, why the CMA is not the right body. The mismatch stems from three sources. First, the CMA is expert in matters that are reserved, not devolved. Secondly, the CMA deals largely with disturbances to the market caused by market participants, whether that be through anti-competitive activities such as cartels, or through market concentration—which is culturally very different from looking at the actions of Administrations as they affect markets in the context of devolution. Thirdly, the tie to BEIS does not make it neutrally positioned in how it is embedded, or perceived, no matter what its objectives may be.

To some extent this proposal follows the TRA precedent of setting up in one location and spinning off, utilising whatever preliminary work has been done. Furthermore, if there is to be a body to examine subsidies —and it is an ‘if’ that can develop in the light of experience—an independent OIM, specialising in the workings of devolution, would seem the right home. As required, I give notice that it is my intention to test the opinion of the House on this amendment. I beg to move.

[Lord Wigley (PC) [V]]

I support this amendment, the remarks of the noble Baroness, Lady Bowles, on these matters, and the need to have the OIM and CMA working at arm’s length. I have spoken several times on the need to have an office of the internal market that is at arm’s length from all government and is responsive to the needs and reservations of every nation—Wales, Scotland, Northern Ireland, and, yes, England. I would prefer the OIM to be required to obtain the consent of all four nations, but I accept the wording in this amendment as a significant step in the right direction. I am very happy to support it and to vote for it if a vote is taken.

[The Deputy Speaker (Lord Russell of Liverpool) (CB)]

The noble Lord, Lord Flight, does not appear to be present in the Chamber and the noble Baroness, Lady McIntosh of Pickering, has withdrawn from this group, so I call the noble Lord, Lord Naseby.

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[Baroness Bennett of Manor Castle (GP) [V]]

It is a pleasure to follow Lord Cormack, who has neatly demonstrated in this last group on Report how much this has been a cross-party, cross-House effort. There may be many things that we disagree on, but what has been broadly agreed is that the Bill is not currently fit for purpose. We have seen that again and again, with very strong votes for the amendments put forward by your Lordships’ House from a wide range of directions. It is fitting that, in opening this group, the noble and learned Lord, Lord Mackay of Clashfern, demonstrated the House’s persistence in the face of technological challenges, which has been a great credit to the House right through this debate and, indeed, through the entire Covid-19 pandemic.

I will speak briefly to Amendment 75, introduced by the noble Lord, Lord Purvis of Tweed, to which I have attached my name, as have the noble Lords, Lord Fox and Lord Wigley. I shall not go through it in detail; it is a very detailed amendment, but that reflects of the nature of this debate and the issue of trust. Your Lordships’ House has heard again and again, including in reports from its respected committees, of great concern about details, plans and policies not being put in the Bill. This is one more amendment that seeks to tackle that. Looking at the overview of this, your Lordships’ House has, perhaps slightly ironically, been standing very firm as a defender of devolution and democracy. We will almost certainly return to this again and I urge all Members of this House to stand up for these issues, which are crucial for the future of the United Kingdom, whatever shape that might take.

[Lord Wigley (PC) [V]]

My Lords, I am glad to have the opportunity to speak in this group of amendments and to follow the noble Baroness, Lady Bennett, who has made a massive contribution to our work on the Bill. As I have stated in previous debates, the House would be well advised to listen to the words of the noble and learned Lord, Lord Mackay of Clashfern. Time after time, he has alerted the House to the need to find an acceptable compromise on these matters. In particular, Amendment 75, in the name of the noble Lord, Lord Fox, to which I have added my name, serves that purpose. The amendment addresses the need to have a coherent framework for the work of the Joint Ministerial Committee and to provide a mechanism for when there may be disagreements. The noble Lord, Lord Purvis, stated that this amendment provides for any opportunity to achieve a consensus where that is possible—an excellent aspiration.

Likewise, the noble Lord, Lord Cormack, stressed tonight, as he has before, the need to find ways of co-operating. As I am sure he would be glad to hear, I add that my main objective in seeking greater powers for Wales is not primarily to demolish the union, but to change it into something that better serves the interests of our respective countries. That means giving greater power and being prepared to be flexible, something that has not been entirely apparent in the Government’s attitude to the Bill.

There clearly has to be some mechanism for dealing with situations where there is a disagreement among our four nations. It should have been the duty of the Government to find an acceptable solution, but they have failed to do so. I therefore believe that we should give MPs in the other place an opportunity to address this matter again by writing an amendment along these lines into the Bill.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to follow the noble Lord, Lord Wigley. I endorse everything that my noble friend Lord Cormack said about our noble and learned friend Lord Mackay of Clashfern.

I have not spoken in general terms about the union. Suffice it to say that, as a Scot by birth with a Scottish father, who made her maiden speech next door on the Scotland Bill, I care passionately about this area. I lend my support to the terms of the amendment as set out by my noble and learned friend. I urge my noble friend Lord True to show the same spirit as our noble friend Lord Callanan when he accepted many of the areas, identified by the Law Society of Scotland in earlier parts of the Bill, on which we felt that the Government should consult. I am just disappointed that those fell to the terms of consent being sought. I am not sure that is appropriate in all those circumstances.

We must not lose sight of the fact that the Scottish Parliament withheld its consent to this legislation. It behoves the Government to move as far as possible and to consult. I am mindful of the old BT advert: it is good to talk. By talking and consulting, many misunderstandings are removed. It also behoves the Government to ensure that the common frameworks are allowed to reach their natural conclusion in the areas that are already well advanced. I wish my noble and learned friend Lord Mackay and his amendment the best, and hope that our noble friend Lord True might be magnanimous and come forward with something similar at the next stage.

United Kingdom Internal Market Bill

Lord Wigley Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Monday 23rd November 2020 Lords Chamber

Moved by

[Lord Wigley]

22: After Clause 10, insert the following new Clause—
“Market access principles: protection of devolved competences
The United Kingdom market access principles do not affect the existing powers of Senedd Cymru, the Scottish Parliament or the Northern Ireland Assembly, with regard to—(a) their existing procurement practices and procedures, or(b) their existing competence to legislate to secure and apply procurement policies which underpin their economic and social strategies.”Member’s explanatory statement
This amendment seeks to ensure that existing policies pursued by the devolved legislatures are not undermined by this Act and aims to prevent uncertainty regarding the legitimacy of procurement rules and regulations currently in force in the devolved territories.

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[Lord Wigley (PC) [V]]

My Lords, Amendment 22 stands in my name and that of my good and noble friend Lord Hain. It follows on fairly naturally from Amendment 21, which we have just passed. The objective of this amendment is to put on the face of the Bill an unequivocal statement that nothing in this Bill, if enacted, will diminish or constrain the devolved Governments from continuing to use their purchasing power to help achieve their economic objectives. As there have been many worries expressed in this Chamber, in the other place, in Cardiff Bay and in Edinburgh about the danger of a clawback of powers to Westminster, I believe that it would be helpful for the devolved Governments if an unequivocal statement along the lines which I propose could be included in the Bill. I know that Ministers in the devolved Governments would welcome such a definitive statement.

I have at earlier stages, and in the context of the Trade Bill, drawn the attention of the House to the way in which successive Welsh Governments—Labour, Labour/Plaid Cymru coalition and Labour/Liberal Democrat coalition—have all regarded the purchasing power of the Welsh Government as a valuable tool in implementing their policies and achieving economic objectives. It would be very strange were that not the case.

When the late Professor Phil Williams and I, with the help of many others, published in 1970—yes, 50 years ago—An Economic Plan for Wales, we identified that a key ingredient in Wales’s economic plight, namely that the GDP per head in Wales was significantly below the UK average, was the fact that activity rates in Wales were some six percentage points below those in England and that therefore a central objective of economic policy in Wales should be to raise those activity rates to the UK average. Over the subsequent three decades, it was an uphill struggle. Only after the establishment of the National Assembly—now our Senedd, of course—were real inroads made. It was only a couple of years ago that, for a brief time, activity rates in Wales were actually higher than the UK average.

I focus on this for a very good reason: that a significant contributory factor to this success was the deliberate strategy pursued by successive Welsh Governments of using their procurement policy to support businesses within Wales. They did this within the constraints of European competition policy, and without lowering standards. When the Assembly was established, between 30% and 35% of goods and services were procured by the Welsh Government from within Wales. By now, the figure is 55% and the target, I understand, is to achieve over 70% procurement from within Wales. As the larger corporations realised this was happening, some of them opened new sales offices in Wales. In due course, this led to their also establishing local suppliers within Wales. This means that, for every pound spent by the Government, there is a multiplier effect within the Welsh economy: more jobs are created and a virtuous circle is established.

Previously, we saw on occasion the total nonsense of purchasing bodies within Wales—central government, local government, our health authorities, universities and colleges—using suppliers many miles distant when a local capability existed. I well recall during my time as an MP a school in north-west Wales having its grass cutting done by a company from England and a hospital getting its sandwiches from a supplier in the Midlands. Now, the green agenda has at long last become more generally recognised as essential for the survival of the human race, and the concept of buying local and eliminating unnecessary product miles has become mainstream. Supporting local economies is now seen as a valid, indeed essential, objective of government policy. Last month, partly as a response to the devastation that Covid could cause to small businesses, a campaign began called Where You Shop Matters, underpinned by Visa. That campaign has gained widespread support in Wales and, hopefully, will do so elsewhere.

Clearly, it will never be possible to source all Welsh government procurement within Wales. We do not produce all the goods in Wales, and where we do, they do not necessarily compete on price, standards or punctual availability. The fact that they are made in Wales certainly should not overrule all other considerations, but, other things being equal or within a tolerable latitude of being so, economic, social and environmental good sense tells us that this is a valid governmental approach.

Let us not pretend that the sourcing of relatively mundane supplies within the local economy is going to solve all our problems; it is not. The truth is that, despite raising employee activity rates, Wales’s GDP per head remains stubbornly near the bottom of the UK league table. To get to the top of that table requires innovation, creativity, investment, enterprise, self-confidence and initiative. However, as we have slowly started to depend more on ourselves and less on others, we have seen those factors move in the right direction. Within a UK single market, Wales needs the latitude to develop its own solutions to what are long-standing psychological, as well as economic, challenges. The last thing we need now is for central government in London to impose dramatic straitjackets on our capability and capacity to help ourselves.

My amendment seeks assurances that the Bill will in no way limit devolved Governments in taking initiatives in their procurement policies to create economic gain that will serve their communities. It seeks to ensure that existing procurement practices and procedures will not be constrained and that the devolved Governments may continue to legislate in a manner that helps to ensure that their procurement policies underpin their economic and social objectives. That has been permissible under European single market rules, and I ask the Minister to confirm that the Bill cannot and will not be used to undermine those policies within the UK internal market. I beg to move.

[Baroness Boycott (CB)]

My Lords, I agree with many of the noble Lord’s points. I have tabled Amendment 23 and I am very grateful to the noble Lords, Lord Whitty and Lord Randall of Uxbridge, for supporting it. It simply seeks a derogation from market access principles to allow all four nations of the UK to put in place proportionate measures to protect the environment, to support the progressive improvement of environmental standards and to tackle climate change.

The combination of the market access principles in the Bill and the absence of an agreed common framework means that, although different Administrations will not be prevented from introducing different standards, in practice we risk seeing a stifling of innovation and a chilling effect when one nation wants to introduce different, higher environmental standards for a particular good or service, or wants to introduce other measures to tackle climate change. Effectively, we are disincentivising Governments from aiming higher because incoming goods from other parts of the UK implementing lower standards will not have to meet the new ones.

Some examples bring this issue to life. The first is the sale of peat for horticulture, which should not happen anywhere, but if any of the four nations were to decide to ban the sale of peat for horticulture due to its impacts on biodiversity, that nation would still have to sell peat from elsewhere in the UK. A second example is single-use plastic. The Welsh Government are currently proposing to ban the sale of nine single-use plastic products, but we are proposing to ban only three. Given how the mutual recognition principle currently operates, Wales would have to allow the sale of the six additional products if they had been manufactured elsewhere in the UK, which would totally undermine that policy. Thirdly, the Government are planning to phase out the sale of household coal and wet wood next year in England. However, under the mutual recognition principle the sale of both household coal and wet wood from other parts of the UK would carry on in England.

In Committee, the Minister said that protecting the environment and tackling child climate change are vital. The EU provides that in certain circumstances, it is possible to go beyond its commonly agreed standards to protect the environment—for instance, banning particular kinds of packaging, such as metal drink cans. However, the Bill as drafted does not allow for environmental or climate-related exceptions. It provides for exceptions in only a limited range of circumstances, such as to prevent the spread of disease or pests or to authorise the use of a chemical in a particular part of the UK. There also exclusions for fertilisers and pesticides, which were added during the Bill’s passage through the Commons.

My amendment asks for one further, crucial addition to the list of exclusions—for environmental standards and for tackling climate change. I would welcome the Minister’s clarifying the decision-making process. Why was it considered necessary to introduce exclusions in certain policy areas, but not in others such as the environment and climate change? I know that that is a broad brush stroke, but it is still possible to address individual elements, which currently we are not. Surely, there can be no more important time to incentivise ambitious climate and environmental policy.

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[The Deputy Speaker (Lord Lexden) (Con)]

I call the noble Lord, Lord Wigley, to conclude the debate.

[Lord Wigley (PC) [V]]

My Lords, first, I thank the dozen or so noble Lords who participated in this debate, which was very focused and has raised a number of issues that will need to be taken further. I was grateful to the noble Baroness, Lady Boycott, for introducing her amendment, many parts of which overlap with mine; I certainly support her amendment in its own right, irrespective of how it interplays with mine. I am sure that she and other colleagues will accept the principle of product miles being an important element in the consideration of environmental and economic policy.

I was taken by the references the noble Lord, Lord Liddle, made to regional policy in England. This was touched on by the noble Baroness, Lady McIntosh, as well. That is absolutely valid, because circumstances vary from area to area, certainly between the south-east and the north of England, and between other areas. Where there are different circumstances one needs different policies and mechanisms of government that can deliver those policies in line with the areas’ requirements.

Therefore, in advocating these powers for the three devolved nations, I also accept entirely the argument that there should be an ability to fine tune policy for the regions in England. It is for those regions to stand up and be counted, and to demand the powers to do so. After all, the facility in Wales of having our own Government has enabled us to take new initiatives that have helped to solve some problems—not all of them, but some of them. The noble Baroness, Lady Bennett, whose support and that of the Green group I welcome for both amendments, has underlined on a number of occasions the need for there to be devolution to the regions of England.

I listened carefully to the comments made by the noble Lord, Lord Empey, in particular, who raised a question that I do not think has been fully answered by the Minister regarding how the use of orders might be undertaken in Northern Ireland. That leads me on to the question, in responding to the Minster’s argument that there will be a separate policy statement on procurement reform, of whether that new policy and the legislation associated with it will be driven through by statutory instrument. We might be in a position where Wales and Scotland could, like Northern Ireland but for different reasons, be subject to that sort of policy.

What I want from the Minister before I conclude this short debate is some assurance that, in drawing up the consultation and procurement proposals he has in mind for a later stage, that will not go through the back door, which he is not admitting to doing through the front door in this Bill. I would be grateful if he could respond specifically on that question: that the procurement reform will not undermine the thrust of the argument we have had in the debate. I would be grateful for his comments on that before I conclude.

[Lord Callanan (Con)]

The Government intend to deliver measures on procurement through a wider package of procurement reform. The aim is for primary legislation to be made in the second Session, as I said in my answer. I hope that is enough reassurance for the noble Lord.

[Lord Wigley (PC) [V]]

I am grateful to the Minister for clarifying that this will happen in the second Session, but I very much hope that it will not open a totally different view of the devolved competencies and the balance of powers needed not only between the three devolved nations, but regionally in England. I hope that that can be given greater thought.

I will not press the amendment, but I believe that the approach encapsulated in it can be combined with some of the other amendments we have already passed that will be part of the revised Bill that goes back to the House of Commons. If that is the case, there may be opportunities for Welsh MPs to pick up this matter in the House of Commons so that we can come back to it again when we consider how the House of Commons responded to the Bill as it finds it. Having said that, I beg leave to withdraw the amendment.

Amendment 22 withdrawn.

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[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I welcome the government amendments as I would welcome any improvement, but unfortunately they do not go far enough to compensate for all the implications of the OIM being within the CMA. I shall say more on that in later groups, and I do not need to rehearse all of it now, save to say that these amendments do not sufficiently change the nature of the CMA, its culture and what it was originally set up to do, so it is no longer—or it never was—the right home for a body that has to operate with the much more sensitive and different objective of the OIM.

I recognise that requiring the CMA to support the operation of the internal market in the interests of all parts of the UK, to act even-handedly with respect to the national authorities and to recognise consumers among the other classes of interested persons all featured in debate in Committee. Indeed, I rather recognise some of the wording. Amendment 55, reflecting the balance of the panel, is also welcome. Again, I seem to recall saying similar things. But I would like the Minister to clarify one thing. I am still concerned about what is controlled by this panel amendment. If the panel size in the amendment is a minimum of three, as it is for the CMA, how can you guarantee that all those interests are represented by three? In Committee, I introduced an amendment to say that the investigating panel should be a minimum of five because I thought that that was the number of people you would need to do an investigation. So both the pool from which the investigations can be drawn and the panel need to have all these characteristics. Is that how it is going to work going forward or are we restricted to the three individuals?

Amendment 56, requiring the consent of the devolved Administrations, looks good until you get to Amendment 57 and the override of one month. While I acknowledge that that can give time for discussions or whatever else may go on, absent any other conditions or explanations of why that override has been operated, it just looks like a convenient delay that you can put up with and then have your way in the end. So I do not think that that goes far enough. As I said, I do not object to the CMA having representatives of the devolved Administrations appointed to the board, but the OIM should not be in the CMA.

[Lord Wigley (PC) [V]]

My Lords, I am glad that the Government have moved a little on matters relating to the CMA and the IOM, but it is not quite far enough. I support Amendment 54. The Government have opted to give the CMA a central role. They could have opted to use not the CMA, but a whole new body created to cover this essential work that would have fully understood the world of devolved politics. They have chosen not to do so, although, to be fair, they have certainly moved on the IOM.

The consequence is that the Government lay the CMA open to criticism that it is simply unaware of the detailed issues that might concern devolved Governments. If the CMA had a nominee from each of the three devolved Governments it would avoid finding itself in a whole new world, as seen through the prism of Cardiff, Edinburgh and Belfast. This is an amendment to save the CMA from getting into an almighty and unnecessary tangle—or, as we would say in Welsh, since we are all quoting from Celtic languages tonight, into a smonach. I suspect that the CMA has not a clue what a smonach is; I rest my case. Amendment 59 is merely a consequential provision to deal with occasional vacancies on the CMA’s board, so I support that also.

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

The noble Lord, Lord Cormack, has withdrawn from the debate, so the next speaker is the noble Lord, Lord Bruce of Bennachie.

United Kingdom Internal Market Bill

Lord Wigley Excerpts

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

I am a committed unionist and a proud Briton. I was pleased to see how successful the common framework was in delivering. I was at some of those meetings where the common frameworks were being discussed, representing both Northern Ireland and Wales on those occasions. I take no pleasure at all in the possible break-up of what, to me, is the greatest country in the world. It is far from inevitable, but the preservation of the union has to be worked at constantly. It is vital for the devolved Administrations and Westminster to work together—which Amendment 1 provides for—never more so than now. That is why I support this amendment and urge others, and indeed the Government, to do the same.

[Lord Wigley (PC) [V]]

My Lords, it is a delight to follow the noble Lord, Lord Bourne, with whom I served in the National Assembly 20 years ago and who has done a good hard day’s work for Wales. We do not always agree, but we certainly agree on the need for us to work together whenever possible in the interests of Wales and the wider interest represented in this Chamber.

I rise to support Amendments 38 and 51, to which I have put my name. I will also speak to Amendment 1, moved so effectively by the noble and learned Lord, Lord Hope. The House is indebted to him for the diligent and convincing work he did in Committee and has done on earlier legislation before this House. He has highlighted the need to establish an acceptable mechanism for facilitating a harmonious working relationship between the four Governments of these islands in the context of the UK common market. The noble Baroness, Lady Finlay, has also been diligent in pursuing these points, and has warned graphically today about the iron curtain that will fall if the Bill goes forward unamended. I know that several colleagues will have received representations from the Welsh Government on these and associated matters.

I will not restate the detailed arguments in favour of the common frameworks. I am sure that I am not the only Member participating in this debate who is, by now, heartily sick of having to restate time and again the same old arguments concerning the relationship between the devolved Governments and the Westminster Government in the context of the post-Brexit world that we inhabit. I am sure that noble Lords from England are tired of hearing the same issues arise time after time—as they have in a succession of Bills and debates over the last four years—about how new legislation to create appropriate manufacturing, farming and trading relationships between Wales, Scotland, Northern Ireland and England will work out, how a level playing field may be established and how differences may be resolved without undermining either the integrity of the UK market or the authority of the devolved Governments within their own devolved competences. Both need to be achieved, but the Government address only the first: the integrity of the UK market.

Members of this Chamber from Wales are heartily sick of having to press the same issues time after time for the simple reason that they still have not been resolved. Colleagues from Scotland and Northern Ireland may well feel likewise. The Minister is no doubt equally tired of having to trot out the same old responses. The debates continue because the uncertainty continues and, even now, six weeks before the end of the transition period, we still do not know what the trading parameters applicable from 1 January next year will be.

If that uncertainty were not enough, this week, the Prime Minister described devolution as a disaster. The tragedy of the post-devolution era is that Westminster still has not adjusted its mindset to accept that it now has to work in partnership, not as a domineering and patronising big brother that always expects to get its own way. It is that failure, more than anything else, that now stands to blow the United Kingdom apart, and it is central to this amendment.

It is facile to blame the SNP for advocating the policy that is, after all, their raison d’être. The far more relevant question is why, in every election since 2003, have the SNP secured the support of the Scottish electorate to govern Scotland? It is no use the Prime Minister shooting the messenger; he must ask himself, as must all his colleagues in government: how is it that such a clear message from Scotland has come about? One element in the answer to that is Brexit and, in particular, the failure of the Government to put forward an acceptable model for the post-Brexit trading relationships within the United Kingdom. This amendment offers them an opportunity to put that right.

Once again, these amendments seek to establish a partnership in which, as the noble and learned Lord, Lord Hope, described, there is a system of framework agreements that can help to ensure that one Government will not overrule the other three Governments on matters where responsibility is now returning from Brussels. I am glad that the noble and learned Lord, Lord Mackay of Clashfern, has his name to these amendments because, through the passage of this Bill and earlier legislation impinging on these matters, he has consistently advocated to join common frameworks. He understands how important this is in a Scottish context for such a provision to be included; indeed, he understands the reservations that many Members of the Scottish Parliament, across party lines, have with this Bill as it currently stands.

I am glad that the noble Lord, Lord Bourne, added his name to this amendment and was delighted to hear him speak from his personal experience. As former leader of the Conservatives in the National Assembly, as it was then, he understands the need to get this right. He also understands the thinking among Senedd Members in Wales today. There is enough cross-party agreement in Cardiff, Edinburgh, Belfast and Westminster that this area needs to be revisited and that the Government, surely, must move to make some accommodation along the lines of these amendments. I hope that the Minister is in a reflective mindset and, indeed, a conciliatory mood today, and that he will be positive in his response.

[Lord Falconer of Thoroton (Lab)]

It is a pleasure to follow the noble Lord, Lord Wigley, and a real privilege and honour to follow the speeches of the noble and learned Lords, Lord Hope of Craighead and Lord Mackay of Clashfern, the noble Baroness, Lady Finlay of Llandaff, and the noble Lord, Lord Bourne of Aberystwyth. They were speeches of real quality, and they got absolutely to the heart of the problem that had been identified in the Commons—indeed, identified time and again.

Everybody accepts the need for trade that is as frictionless as possible within the internal market of the UK. Everybody equally respects the need for appropriate divergence. How are those two matters to be dealt with? The answer, which everybody in this House and the Commons agreed with, was the common frameworks process, set up by the Conservative Government, with the agreement of the devolved Assemblies, in October 2017. It is a process that has stood the test of time and works to deliver divergence by agreement.

I note in passing that the noble and learned Lord, Lord Mackay of Clashfern, said that he often led the noble and learned Lord, Lord Hope of Craighead. However, one thing that the noble and learned Lord, Lord Hope of Craighead, did not learn from the noble and learned Lord, Lord Mackay of Clashfern, was emollience. However, the trenchant language used by the noble and learned Lord, Lord Hope, today was appropriate. He said that “actions speak louder than words”. He said that if we are to believe the commitments repeated in the last 24 hours by the Government on devolution, they need to deliver on their promise that the common frameworks process should be allowed to complement the internal market arrangements.

The noble and learned Lord, Lord Hope of Craighead, said that, without some amendments to this Bill, it would be a “misuse of language” to say that they complement each other. I beg to suggest that what he meant by that is that if you have only the market access principles and no legal recognition of the common frameworks process, that process is completely ignored because—to use the language of the noble Baroness, Lady Finlay of Llandaff, in an earlier part of the proceedings on this Bill—this is a “blunderbuss” that, in the words of the noble and learned Lord, Lord Hope of Craighead, does not allow for a key part of the functioning of devolution, namely divergence in the appropriate case.

We on this side of the House support Amendments 1, 38 and 51. We think they do give effect to the common frameworks in a legally binding way, without in any way undermining the need for a properly functioning internal market—the need for which we recognise. I earnestly ask the Government, on behalf of this side of the House, to do what they kept saying they would do: find a solution to the problem. It is so important, not just for the proceedings of this Bill but for the preservation of the devolution settlements in Wales, Scotland and Northern Ireland, and the preservation of the union.

--- Later in debate ---

[Lord Wigley (PC) [V]]

My Lords, I am delighted to follow the noble Lord, Lord Randall, and agree with much of what he said.

I support the amendments in this group, including the lead amendment, and will address in particular Amendment 21, which also stands in the name of the noble Lord, Lord Stevenson, to which I have added my name. I very much agree with his comments and will not repeat his references to the pleas made to us by the Welsh Government. We need to build flexibility into the Bill to deal with the issues that have been addressed.

In addition to the exclusions identified in Amendment 10, I refer to the two groups identified in Amendment 21, namely, in proposed subsection (2), paragraphs (f) and (g), which deal with cultural issues and regional socio-cultural considerations. Although there are many aspects to consider, the category that I wish to highlight is the Welsh language. It is used widely in day-to-day life in Wales, a factor recognised by many commercial concerns that use it to promote their goods or services, and for advertising. Contracts offered by either the national Government in Wales or local government may well include requirements relating to the use of the Welsh language in the delivery of services or the definition of goods.

The use of Welsh in Wales is underpinned by legislation. It is not just a question of equal validity, a principle incorporated in the Welsh Language Act 1967, replaced in the Welsh Language Act 1993 in favour of stronger provision, and further strengthened by legislation in our National Assembly a decade ago. Among other considerations is the need to provide information in Welsh, in order to give Welsh speakers the right to receive information and, where appropriate, respond, in the language of their choice. Such requirements can arise in the context of service delivery, particularly personal services, community participation and cultural activities. I therefore ask the Minister to give me an assurance that the Bill in no way overrules or diminishes Welsh language rights, and that related dimensions can be recognised under this legislation as a valid reason for a derogation.

Before I conclude, perhaps I may respond to comments made earlier by my good friend the noble Lord, Lord Cormack. I, too, would have much preferred to be with noble Lords in the Chamber. If I had, I would have pointed out to the noble Lord that the noble Baroness, Lady Bennett, is most certainly not the only Member of the House who regards the union as unacceptable in its present form. As he well knows, while I accept that all good sense tells us that there must be a close working relationship between the nations of these islands, which would probably include a customs union and possibly some form of Britannic confederation, the present relationships do not work in many ways. Those can best be encapsulated by the phrase, “Power devolved is power retained”—a feature that has raised its head on many occasions in our deliberations on the Bill. As has been acknowledged for Northern Ireland, both Wales and Scotland should have a fundamental right to determine their own future, whether in the present union, a confederal union or, indeed, the European Union. In the meantime, we should also do our best to get on with each other, co-operate on those matters in which we have common interests and avoid the excesses demonstrated by the Prime Minister in his remarks about Scotland last week.

United Kingdom Internal Market Bill

Lord Wigley Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd November 2020 Lords Chamber

[Baroness Finlay of Llandaff (CB) [V]]

My Lords, as other noble Lords have explained, the aim of these amendments is to ensure that not only is the office for the internal market appropriately constituted and organised so that it is accountable to all four democratically elected legislatures of the United Kingdom but also that the Competitions and Markets Authority—if this is to be the home of the new office—should be reconstituted to reflect the fact that its functions no longer relate exclusively to reserved matters.

I say “if” the office for the internal market is to sit within the Competitions and Markets Authority. Other noble Lords have already addressed that issue thoroughly and made clear that it is neither necessary nor desirable. The more radical attempts by the noble Baroness, Lady Bowles, and the noble Lord, Lord Stevenson, to establish the office for the internal market as a truly independent and unattached new body are far more logical and would ensure the proper functioning of the office. The noble Baroness, Lady Bowles of Berkhamsted, explained this very clearly. Their proposal has great merit. We will all be interested to hear the Minister’s arguments as to why a truly independent office is deemed undesirable.

Ministers keep claiming that passing the Bill is extremely urgent. If it is that urgent, perhaps he could explain why it would not be possible to initially brigade the office for the internal market under the CMA as an interim measure until it can be established by statute. After all, that is what seems to be happening with the Trade Remedies Authority. If I am correctly informed, the Government found it easy enough to establish a new body—the Trade and Agriculture Commission—as an independent statutory body.

If there are compelling arguments supporting the current proposal then it is imperative that the CMA can demonstrate that it really can command the trust of the devolved Governments and legislatures. If the Minister cannot give us those arguments during this debate, can he write to us specifying the justification? Nothing in these amendments suggests that it would be impossible for the CMA or for the OIM to function should a future devolved Government simply not want to engage.

The right of appointment of a board member to the Competitions and Markets Authority is important, but the board could function without one or more of these members. In the case of the OIM panel—where the devolved authorities would have to be fully engaged in appointments—if consent is not forthcoming within one month then the Secretary of State could proceed without their consent as long as he made a statement as to why proceeding without consent was desirable. That seems to strike an appropriate balance between ensuring the operability of the new arrangements and ensuring that the devolved institutions have confidence in a body that will have such significance for the future integrity of devolution.

[Lord Wigley (PC) [V]]

My Lords, I am delighted to follow the noble Baroness, Lady Finlay of Llandaff. As she has made so many of the points that I intended to address, I shall not repeat them and I shall curtail my comments accordingly. I agree with the telling arguments made by the noble Baroness, Lady Randerson, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I shall also limit my remarks because of the diabolical communications between Wales and Westminster this afternoon. Noble Lords may see this as an ironic reflection on the amendments that we have just been addressing.

I oppose Clause 30 standing part of the Bill and support Amendment 117, to which I have added my name and to which the noble and learned Lord, Lord Thomas, has spoken. Like the noble and learned Lord, I shall desist from being drawn into the argument that Wales has so often been treated as part of England; that is for another day.

In the earlier debate on Amendment 110, the noble Baroness, Lady Bowles, said that the CMA should be equally available to all four nations. During the debate on the last group of amendments, the noble and learned Lord, Lord Mackay of Clashfern, argued that the devolved Governments should have a voice. This is why I have added my name to Amendment 117.

The Bill is reinventing the CMA as a hybrid body with the OIM—very different from the widely respected body that has hitherto existed. The CMA has to be restructured accordingly.

The Bill is bringing the CMA into a highly controversial area, as it will be dragged into polarised arguments between the Governments of the four nations. Several noble Lords have already raised doubts about whether it is in any way appropriate that the CMA should be used in this way. If the CMA is going to act as an adviser to the Government, it has surely to be an adviser to all four national Governments within the UK. It has to be equally responsive to all four Governments and not beholden unto one Government more than the other three.

It is in that context that I support the amendment requiring there to be a nominee of each of the devolved Governments on the CMA board. Unless this is delivered, the CMA will be seen as the referee and as a body beholden unto one of the teams between which it potentially has to adjudicate. This will inevitably lead to conflict, and it is to give the devolved Governments greater confidence in the CMA that Amendment 117 proposes having a nominee of the devolved Governments within its structure. Having rejected earlier amendments to amend the statutory functions to avoid these dangers, the very least the Government can do is accept Amendment 117, or alternatively bring forward on Report an amendment to achieve a similar purpose. I urge the Minister for once to take a sympathetic approach to this constructive amendment.

[Lord Hain (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Wigley, and all previous speakers in the debate. I wish to speak especially in support of Amendments 117, 118, 125 and 131. As Amendment 131 is in the next group, I shall not speak in that debate as I am listed to do.

These amendments concern the future governance of the Competition and Markets Authority—the CMA—and the creation within it of an office for the internal market, or OIM, under the Bill. These amendments seek to ensure that appointments to these bodies are representative of the four constituent legislatures of the UK and that, in overseeing the internal market within the UK, the OIM does not effectively act as an arm of the UK Government and therefore of only one nation, England.

These proposals are important because they are part of the emerging architecture of what Robert Shrimsley of the Financial Times has called the “one-legged economic strategy” of No. 10, namely the “levelling-up” of the UK regions and nations, which appears to mean allowing No. 10 to subsidise favoured industries without any willingness to partner with either the devolved Administrations or, for that matter, regional and local government, such as mayors. In July, the Financial Times quoted an individual close to these discussions as saying:

“The current plan is an odd combination of reserving state aid [for control from London] but then agreeing to a free-for-all. They just want to be able to bung money at things and do not want UK internal market legislation cutting across that.”


The Bill therefore seeks to create a UK-wide, or at least a Great Britain-wide, regime for market access overseen by the new office for the internal market within the CMA that undermines the current devolutionary settlements, certainly for Scotland and Wales and potentially for Northern Ireland, depending on the outcome of the UK trade negotiations.

The provisions of the Bill to curtail the scope of EU state aid rules that could potentially apply through Article 10 of the Northern Ireland protocol, which the Prime Minister agreed to last year, reflect objections by No. 10 to possible “reach back” into the UK by these EU rules. The Government now seek to give the Westminster Government legal powers to control UK state aid, which will potentially replace the estimated £2 billion average annual European Union structural funds previously distributed to the UK’s devolved nations and regions. Just as the Government are resistant to demands by the EU for a level playing field between the UK and the EU, neither do they apparently wish to see the UK’s internal market subsidy regime between England, Scotland and Wales, and possibly in the event of no deal even Northern Ireland, overseen by an independent UK regulator.

The reason why Scotland and Wales in particular are so unhappy about the Bill is that the arrangements proposed are seen by them as undermining the very principles of devolution. This is because the Bill not only curtails devolved competence in specific ways, for example, by making state aid a matter reserved to Westminster, but will ironically also cut much more deeply into areas of devolved competences to regulate economic activity in relation to goods and services than did the previous EU rules. This is because areas of permissible exemptions from similar EU internal market rules, including public health, environmental protection and the protection and promotion of local heritage, do not appear to be exempt from the proposed UK internal market rules. The Bill also gives the Westminster Government new spending powers in devolved areas with no obligations to consult the devolved Administrations.

The previous Conservative Government of Theresa May envisaged that post-Brexit there would be a new legally enforceable regime for state aid under the CMA. However, the arrangement now envisaged for the office for the internal market is that all appointments to its board and the panel of task force members will, like those currently at the CMA, which is a non-ministerial department of the UK Government, be made by Ministers at Westminster and that the role of the new office will be purely advisory.

Amendments 117 and 118 would give each of the devolved Administrations the power to appoint a member of the CMA board itself and would also ensure that the consent of the devolved Administrations is obtained for appointments of the chair and members of the office for the internal market panel. The Bill as it stands provides only for consultation with, as opposed to consent from, the devolved Administrations in relation to such appointments. Amendment 125 would require the CMA to lay its annual plan, proposals for its plan and its annual report before each of the devolved legislatures. Amendment 131—I accept that it is in the next group—contains similar provisions related the involvement of the devolved Administrations in appointments to the OIM and would strengthen the independence and enforcement powers of the OIM so that it would not be effectively an agent of the Crown.

In addition to crucial aspects relating to undermining devolution in the UK, there is an additional disturbing element to what the Government are trying to achieve here. As pointed out by the Institute for Government, under the Bill as it stands the office for the internal market will have very limited powers. Its reports may be useful in gathering relevant information about how the internal market functions, but there is no obligation on any of the Governments to act on them.

In the Conservative manifesto of 2017 there was a promise to use the returning £2 billion average annual EU structural fund money to set up a UK shared prosperity fund. The March 2020 Budget said that the fund would be realigned to match domestic priorities. The Government have yet to publish a consultation on this fund, but the Welsh Government have already made clear that they are strongly opposed to the idea of the fund being administered from Westminster.

The devolved Administrations have vocally expressed their opposition to the proposals relating to the Bill’s blueprint for the future UK economy, which they say was drawn up with no consultation or respect for divergence between the nations. Nicola Sturgeon has pronounced it “an assault on devolution” and the Welsh Government called it

“an attack on democracy and an affront to the people of Wales”.

I have previously argued that the rarely convened Joint Ministerial Committee, which was created to allow the UK Government and the devolved regions to discuss issues relevant to devolution and consider any disputes between the Administrations, should adopt a modified form of the EU system of qualified majority voting so that the Westminster Government would need the support of at least one of the other three nations for a measure to go forward. Such a measure is supported by the Welsh Government, but not—unsurprisingly maybe—by the chair of the committee, Michael Gove.

The Covid crisis has emboldened the UK’s devolved Administrations to make decisions that significantly diverge from those in Downing Street, and they are thought by many to have shown greater surety in their handling of the pandemic than has Westminster. Far from rewarding them for their competence, however, the Government are exploiting Brexit as an opportunity to impose an autocracy on Great Britain, and potentially on Northern Ireland as well, in respect of these internal market rules.

United Kingdom Internal Market Bill

Lord Wigley Excerpts

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

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I concur with the comments of my noble friend Lord German, the noble and learned Lord, Lord Hope, and others concerning consent and what might be termed the proper conduct of devolution. But I will limit my remarks to the amendments in the name of the noble Baroness, Lady McIntosh, relating to the publication of decisions, to which I added my name, not for the purpose of signalling that I am satisfied with consulting rather than obtaining consent, but because I want to flag up that there must be transparency.

It is difficult to tell from provisions throughout this Bill how transparent various procedures will be, which raises my concern that they may not be very transparent at all. The internal market is a matter of significant public interest, and while individuals may not bury themselves in the minutiae, they will feel the impact. There are various organisations on the front line of helping consumers and small businesses to understand laws and their rights. Therefore, whatever the procedure, there should be publication of the proceedings that are formulating the structure of the internal market.

I have amendments on transparency elsewhere relating to the CMA and the OIM, and they are part of the same theme. If the consumer voice is to be heard and articulated by consumer organisations, access to information is paramount. Otherwise, interventions and understanding may come too late.

[Lord Wigley (PC) [V]]

My Lords, I agree with the noble Baroness, Lady Bowles, on transparency, and I look forward to coming to those points later. I am pleased to speak to this group of amendments, and in particular to Amendments 30 and 64, to which I have added my name, and to Amendments 75A and 100A, which stand in my name.

Perhaps I should first make it clear that I support Amendment 15 in the name of the noble Baroness, Lady Finlay of Llandaff, moved by the noble Lord, Lord German, which stipulates that not only should the UK Government consult the devolved Governments but that they must obtain their consent. I would have added my name to that amendment had other colleagues not got there first. I agree with the noble Lord, Lord German, that it would be far better if we did not have these powers in the Bill at all. I also believe that the points made by the noble Baroness, Lady Bennett, go to the heart of why devolution of power was made in the first place and is still very much needed.

Amendment 16 does not go as far as Amendment 15. It advocates the need to seek consent of the devolved Administrations but it does not impose a requirement to obtain that consent. Amendment 17, likewise, does not go as far as Amendment 15, in that it again requires the Government to publish the result of consultation, so the implication is that the UK Government may well consult the devolved Governments and then blithely ignore their viewpoints. There is, as the noble Lord, Lord German, implied, no earthly point in having a consultation system if the UK Government may then, willy-nilly, totally ignore the devolved Governments’ viewpoints.

I now turn to the group of amendments that relates to Clause 12. Amendment 64 in the name of the noble Baroness, Lady Hayter, requires the UK Government Minister, in this context, to consult and seek the consent of the devolved Governments. Likewise, Amendment 75 in the name of the noble Baroness, Lady McIntosh, requires the Minister to consult the devolved Governments. But both these amendments give the appearance of consulting the devolved Governments but place no obligation whatever on the Minister to take any notice of the response elicited. The Minister can happily consult then blithely ignore the views of the devolved Governments. That is not good enough. Indeed, it is highly dangerous. It gives the appearance of consultation without providing the substance of a requirement to respect the outcome of any such process. In reality, this plays out a charade of having a joint approach between the four nations and provides an open road for the UK Government Minister to totally ignore the views of the devolved Governments.

My Amendment 75A simply requires the Minister, with regard to subsection (2), to consult and obtain the consent of the devolved Governments. I readily recognise that the UK Government may argue that the devolved Governments should not have a veto over the Westminster approach. That is something I recognise and respect, but the implication is that Westminster should have such a veto. In regard to devolved functions, the whole point is that the four nations should have the right to make their own policies. That is what devolution is about. The Government seem to take the Orwellian approach that all four nations are equal but one is a little bit more equal than the others.

My Amendment 100A applies the same principle to the consultation issues relating to Clause 20(7) and the need for the Minister also to obtain the consent of devolved Governments in that regard. What this comes down to, yet again, is the need to have an acceptable mechanism to resolve disagreements, to have the common frameworks to which we have resorted on so many other occasions and not to take the approach that the Government of England—which it is for the devolved function—always has the right, by dint of its respective size, to overrule the other four nations. If such a mechanism were in place, we would not have to put ourselves through the pain of raising these questions on every occasion that the issue of consultation between the Minister and the devolved authorities arises. I implore the Minister to bring forward an amendment on Report that would obviate the need for us to return to these issues, time after time. Until such a change to the Government’s approach is forthcoming, we will have no choice but to press amendments along the lines of this group at a later stage.