United Kingdom Internal Market Bill

Baroness Boycott Excerpts

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

[Baroness Boycott (CB)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Teverson. I thank him and the noble Baroness, Lady Jones of Moulsecoomb, for supporting this amendment. I very much agree with what the noble Lord, Lord Young of Cookham, said. I also agree with the noble Baroness, Lady McIntosh, when she said that, if this internal market Bill does not align with the Agriculture Bill, then something is wrong and we are missing a trick.

I have tabled Amendment 52, which seeks to introduce a derogation from the market access principles to allow all four nations to put in place proportionate measures to protect the environment, support the progressive improvement of environmental standards and tackle climate change. My concern is that, in the absence of an agreed common framework, we will not be able to protect existing high regulatory standards in cases where one nation wants to introduce something new and higher, in the environmental sense, for a particular good or service—although not legally prohibited from doing so, it could be disincentivised from doing so. Under the market access provisions in the Bill, goods from other parts of the UK would not have to meet those requirements if standards elsewhere were lower. Other Peers have spoken about this. It is about protecting us against a race to the bottom in setting environmental standards or measures to tackle climate change.

At Second Reading, the Parliamentary Under-Secretary of State, the noble Lord, Lord Callanan, said of the Bill:

“It will protect our common causes, such as the setting of high standards in our economy”.—[Official Report, 19/10/2020; col. 1285.]


But the Bill does not give legislative effect to these commitments. It fails to create the proper framework and fails to deliver the safeguards and assurances needed to ensure that all four nations of the UK can legislate ambitiously, progressively and effectively to protect the environment. Currently, the Bill provides for exceptions only in a limited range of circumstances, such as preventing the spread of diseases or pests. Even then, this is only under very strictly controlled conditions.

Environmental matters generally fall within devolved competence. Regulatory divergence already exists within the UK and there have been a number of examples of really innovative policies which have delivered legitimate public policy objectives—and specifically progressive environmental rules. I know that this has been mentioned before, but Wales was the first country in the UK to introduce a charge on carrier bags. It is atrocious to think that that could somehow have been denied.

Amendment 52 would allow an individual nation to refuse mutual recognition on the grounds of measures protecting the environment or tackling climate change. To give a practical example of why this is so important, there have been mounting calls to ban the sale of horticultural products that contain peat. This is obviously to protect biodiversity, but also to avoid the extraction of peat and the release of high levels of soil-based carbon. If one of our four nations’ Governments decided to ban the sale of products containing peat, this could potentially be undermined by the failure to match those efforts in other jurisdictions, where producers could continue to actively sell these products in a market where they would otherwise be banned.

My amendment would require suppliers to comply with these devolved rules where they relate to the protection of the environment or tackling climate change, meaning that even if regulation in England were to fall behind, say, that found in Wales, those supplying the Welsh market would still have to comply.

At Second Reading, the Minister, the noble Lord, Lord True, responded:

“commerce, services and professions must be enabled to operate freely across the whole United Kingdom. That is … demanded … by business”.—[Official Report, 20/10/20; col. 1426.]

However, business coalitions such as the Aldersgate Group have commented that the objectives of frictionless trade and encouraging a race to the top for environmental standards do not contradict one another. A fully functioning and innovative internal market should strive to both reduce unnecessary costs and uncertainty and protect all four nations’ right to regulate in the public interest.

Finally, protection of our environment and tackling climate change really are not an option anymore. If you listen to Christiana Figueres, who set up the Paris Agreement, you will know that we have 10 years in which to try to get ourselves to 50% of carbon emissions. That means reducing by about 7% to 8% a year. Not to do this is a complete abdication of our rights as legislators because, if we do not put policies in place in this Government and this Parliament, then we will be left pretty legless in the fight ahead.

As the noble Lord, Lord Teverson, said, we cannot do business as usual; we have to do business in a new way. We have many excellent Bills before us that can make this happen, and I commend my amendment to the House.

[Baroness Noakes (Con)]

My Lords, as noble Lords who have attended this Committee to date know, my role is occasionally to get up and give a minority perspective on the amendments before us. There are 20 amendments in this group and, one way or another, each of them would allow barriers to trade to be erected by one or more of the devolved nations. The effect of the amendments is to restrict the amount of trade to which the market access principles will apply and thereby reduce the extent to which barrier-free trade can take place throughout the UK’s internal market. I say to the noble Lord, Lord Anderson, that that is not an argument against devolution; it is an argument for trade and economic success, which I hope that we all want to achieve for the United Kingdom.

I will not repeat all of what I said on the earlier group, but the more that laws relating to trade in goods and services diverge between the component parts of the UK, the more likely it is that costs will rise and choice will diminish for consumers. Barriers to trade are also likely to result in lower GDP, as the impact assessment analysed, and we need all the GDP that we can get at the moment, given the impact of lockdown and similar anti-Covid measures. I am sure all those noble Lords who support and voted for devolution did not vote to become poorer through devolution.

The amendments give very considerable cover to the devolved Administrations to erect trade barriers under the guise of higher standards but, actually, on grounds of protectionism. At the very least, I predict that there will be massive scope for lawyers to argue for a very long period and to mount legal challenges. That may well be good for the fees of the legal profession—and for the noble and learned Lord, Lord Falconer of Thoroton—but the important thing I want to stress is that it will result in uncertainty for business. If there is one thing that is bad for business, it is an uncertain business trading environment.

Therefore, while I understand the desire for higher standards—and many noble Lords have spoken to this in respect of the particular varieties of relaxation that they are seeking in the Bill—at the end of the day, they can result in trade barriers. We really should be very careful not to wreck the UK’s internal market before it has even started.

United Kingdom Internal Market Bill

Baroness Boycott Excerpts

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

[Baroness Boycott (CB) [V]]

My Lords, I tabled Amendment 166, which would amend Clause 48. I thank the noble Baronesses, Lady Jones and Lady Hayman, and the noble Lord, Lord Whitty, for supporting it. As ever, it is a great pleasure to follow the noble and learned Lord, Lord Hope of Craighead.

Clause 48 gives powers to Ministers to provide financial assistance across the UK for a number of purposes, including all economic development and provision of infrastructure. My amendment would set out on the face of the Bill that any financial assistance to be provided must be consistent with the achievement of any applicable climate and environmental goals and targets. As we all now know, we are in the midst of a climate and nature emergency. These powers to provide assistance would be subject to almost no restrictions. The recently published Global Biodiversity Outlook 5 report from the UN highlighted how we have failed to halt environmental decline over the last 10 years, and the 2020 progress report by the Committee on Climate Change says that clear investment priorities to help support economic recovery and the transition to a low-carbon economy are now essential. We need to ensure that financial assistance helps, not hinders, this progress.

My concern is that, if we do not have this amendment, the Government could risk supporting projects, companies or industries that threaten in some way or another to undermine the progress towards meeting our environmental and climate goals. Providing financial assistance for projects that are not consistent with our climate and environmental goals could have major environmental impacts, for instance on roadbuilding, transport and housebuilding. It is also really important that the goals and targets include countries’ respective own targets on net zero—for instance, new targets set under the Environment Bill such as the Welsh recycling targets, which are extremely good.

This is an opportunity to support a progressive domestic climate and environmental policy in all parts of the UK, which is tremendously important ahead of COP 26; Amendment 166 could help achieve this. Indeed, if we do not have an amendment such as this when we turn up in Glasgow this time next year, we could be in a very embarrassing situation. What assurances can the Minister give that these powers will be exercised in a manner that is consistent and compatible with any climate and environmental goals and targets applicable in the relevant parts or part of the UK?

[Baroness Jones of Moulsecoomb (GP) [V]]

My Lords, it is a real pleasure to support Amendment 166 from the noble Baroness, Lady Boycott, which I have signed along with the noble Lord, Lord Whitty, and the noble Baroness, Lady Hayman. I also, of course, support Amendment 169, tabled by my noble friend Lady Bennett of Manor Castle. These amendments are important because they come back to the crucial question of what the market is for: does the market exist to serve us or do we exist to serve the market?

The noble Baroness, Lady Boycott, used the word “progressive”. We need a progressive agenda. We have to harness and tame the market to make sure that it protects our natural world. The market does not care, and would rather see a woodland turned into logs than exist as a habitat for thousands of species, a sink for carbon, a filter for water, a protector of soils, or the hundreds of other ecosystem services that it provides. In truth, we should be seeing amendments like Amendments 166 and 169 in every single Bill that the Government bring to your Lordships’ House. Their absence is a dereliction of duty by Ministers, not only because we have made promises about the environment, but because we make things worse for everybody when we do not do these things. It is not just about making the market worse; it is society that suffers.

It is a year to the day since the Government announced that the Treasury would conduct a net-zero carbon review following the passage into law of the 2050 net-zero target. This review is still nowhere to be seen. Can the Minister please tell the Committee what has happened to the review, whether it is still happening and, if so, when it will be published?

United Kingdom Internal Market Bill

Baroness Boycott Excerpts

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

[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.

[Lord Hain (Lab)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Boycott. I endorse everything she has said; indeed, her amendment is powerfully put. I shall speak specifically to Amendment 22, tabled by my good friend the noble Lord, Lord Wigley, to which I have added my name. He spoke very eloquently about the need for the amendment, and I shall briefly add one or two points to his compelling speech.

Procurement is clearly devolved to both Scotland and Wales, as is made clear the recent transposition of EU procurement directives being achieved via legislation in the Scottish Parliament. Does the Minister agree that that is indeed as clear-cut as I have stated and believe it to be? It would be helpful to get that on the record.

There is strong interest in the Senedd in improving the impact of procurement on the Welsh economy by encouraging suppliers to have operations located in Wales, creating employment locally and using local supply chains, a point well made by the noble Lord, Lord Wigley. That is not discrimination. A company based in Scotland or indeed Lithuania can meet these conditions, but that flexibility is important so that the Welsh Government can continue to ensure that the billions of pounds spent by the public sector each year in Wales through procurement processes creates value in the local economy for a nation that has seen massive deindustrialisation. I still live in my old constituency of Neath, which was a heavy industry and mining constituency. The consequences of deindustrialisation have been huge, dismembering those communities and depriving them of the industrial base and secure jobs they once had. The ability, using the public sector, as the Welsh Labour Government are trying to do, to create and support strong local companies is very important. Such community benefit clauses and approaches were possible even under European law.

I had an informal conversation with the noble Lord, Lord Empey, about Northern Ireland’s position. Of course, Northern Ireland is still subject to the single market and customs union rules—even after the UK leaves the EU—under the Northern Ireland protocol. It is my understanding and belief that under EU law, it is still possible to use procurement in the proactive, positive way that the Welsh Government have done to support local jobs and businesses. Can we be assured that that will not be undermined, or even made illegal, by this centralising Westminster Government?

Procurement can also be used to discourage a race to the bottom—for example, by requiring bidders to have strong employment rights policies and equal opportunity policies in order to qualify for a successful procurement opportunity. It is really important that the devolved Administrations continue to have the opportunities and rights to use procurement in that proactive and creative fashion.