United Kingdom Internal Market Bill

Baroness Finlay of Llandaff Excerpts

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

Moved by

[Baroness Finlay of Llandaff]

At end insert “but do propose Amendment 50E in lieu—

50E: Clause 50, page 41, line 27, at beginning insert—


“(A1) Subsections (1), (2) and (3) shall take effect when the Welsh Ministers, the Scottish Ministers and the Northern Ireland Executive have agreed with the Secretary of State a common framework applicable to the United Kingdom to regulate the provision of subsidies by a public authority to persons supplying goods or services in the course of a business or, if agreement cannot be reached, 18 months after the passing of this Act.””

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

My Lords, I shall speak to Motion G1 and move my Amendment 50E to Clause 50. At this stage I am minded to seek the opinion of the House, particularly because I wonder whether the House wants to have a conscience vote on some of these issues. I have found the Government’s response to our deliberations worrying. I remain concerned that the damage to the union that will come about as a result of their refusal to commit to a process of codesign of a future subsidy regime will come back to haunt us all.

We are of course a revising Chamber. We asked the Commons to think again, and after many hours of debate we gave clear messages through large majorities on key aspects of the Bill. We have seen some concessions and they were essential changes, but the huge problem of the current approach to the devolved Administrations remains unresolved. Given the Government’s current difficulties with the pandemic and unknowns over the end of the transition period, less than three weeks away, I fear that any stand-off with the devolved Administrations will compound and massively magnify them by fuelling the break-up of our union within only a few years. I say this because, as someone living in Wales and with family in Scotland, I see the Bill acting as a recruiting sergeant for separatist movements.

It is imperative to recognise the common frameworks, and we have signalled that clearly. As part of “taking back control”, the devolved institutions must have at least as much latitude—or call it “control”—as they felt they had within the EU to deal with the question of state aid. To establish durable intergovernmental working with the devolved Administrations, there must be clarity and certainty that the differing needs across the UK will be acknowledged and are seen as a joint responsibility that listens from the ground up and gives decision-making to the devolved Administrations.

As I understand it, neither Parliament nor the devolved Administrations had legislated on state aid in the past as these decisions were taken at EU level and regulations were directly applicable. Now that the EU mechanisms have been removed, it is still unclear where the decision-making now happens. State aid was not on the list of reserved powers and it has never been tested in the courts; indeed, such a test would do untold damage to relations between the constituent nations of the United Kingdom.

I hope I misheard the Minister, or that it was a slip of the tongue. If I heard him say “dissolved competence” instead of “devolved competence”, I am really worried.

My noble friends and I have listened to the objections that three years is too long to wait to put a framework in place, so we have reduced it to 18 months and I am currently minded to seek the opinion of the House on this. Eighteen months is scarcely longer than it would take the Government to consult on a framework and bring forward the legislation to enact it. This could be far speedier should the Government accept the offer from the Scottish and Welsh Governments to proceed rapidly on developing a clear process for them to be part of the codesign of state aid, establishing the consensus through a seat at the table from the outset of such deliberations.

Of course, I share the House’s clearly stated support, restated again today, for the common frameworks process. That is essential, and I do not wish to jeopardise that in any way, as we must move forward together. Yet I believe that the Government will try to say that state aid is already reserved—in fact, I believe that is what I have already heard—and that to include it in the common framework process might somehow jeopardise that position of constitutional principle.

I would be very happy to accept a clear assurance that the Government will make every effort to ensure that the consent of the devolved Governments to a subsidy regime will be secured and will make a statement to Parliament when introducing the necessary legislation if they should override that process. To summarise, I believe that this House will want to hear that the Government will seek to agree with the devolved Governments any new subsidy framework and will explain to Parliament whether they have succeeded or not and, if not, why not. I believe that that is the minimum we can expect. I beg to move.

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

My Lords, I will speak to my Amendment 50F and Motion G2, which I may wish to move. I also support Amendment 50E and Motion G1. Amendment 50F looks to the stage at which there may be changes to state aid provisions, whether that be changes in definitions, remedies, or the scope of exemptions, or introducing conditions or time limits on approval. I agree with the Minister that at the moment they are gone, but might not alternatives be introduced, or some aspects reintroduced? I think that would also constitute a change.

The EU state aid provisions were indeed the subject of a statutory instrument recently, and they end at the end of the transition period. But, as the Minister has informed us previously, the UK will follow WTO rules and consult and report on whether any wider scope is to be introduced. If the outcome is a recommendation for going wider—some kind of policy change—it begs the question of how it will be introduced.

My proposal is not made instead of consultations and approvals with the devolved Administrations, which we support; it is in recognition that the full range of public authorities and businesses are affected wherever they may be. Therefore, the detail of how any post-consultation policy change is implemented is of significant interest.

The withdrawal Act was used to make the changes that happen at the end of the transition period. But it would seem inappropriate for that to be used for any new policy. A new policy other than moving to the WTO default should surely have the scrutiny of primary legislation.

I know the Minister may say that how policy is to be implemented can be a point in consultation, but my submission is more constitutional than convenience. Parliament should be able to scrutinise and amend, and to spot those weaknesses and problems that this House in particular has the experience to iron out, especially at the first time around of making independent, post-Brexit state aid rules.

Therefore, my Amendment 50F seeks to put on the face of the Bill that changes to the test for harmful subsidy remedies, the scope for exemptions or the conditions or time limits on approvals may not be done by regulation. I do not seek to prevent policy change being made by the Secretary of State; I am just saying that, at least first time around, it should be made by primary legislation. It may be that the Minister can put my mind at rest, and I await his response with interest.

--- Later in debate ---

The forthcoming consultation remains the best way in which to design the details of a future UK-wide approach to subsidy control. The Government’s commitment to consulting the DAs on this matter reflects the importance of moving forward in a collaborative and constructive manner. For all those reasons, the Government cannot agree with Amendments 50E and 50F, and I invite both noble Baronesses not to press them to a Division.

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

My Lords, I am most grateful to all noble Lords who have spoken in this debate. I start by commenting on the amendment proposed by the noble Baroness, Lady Bowles. She highlighted the constitutional issues here and that this is ahead of its time.

As my noble and learned friend Lord Thomas of Cwmgiedd said, we need a unified state aid scheme and we need something in the Bill to strengthen and not weaken the union, because the devolved Administrations must be fully involved. I appreciate the passion of the noble Lord, Lord Adonis, for supporting the devolved Administrations. The noble Lord, Lord Fox, made some very important points about who is in the driving seat and heard clearly and reiterated the threat that some of us see to the union, as well as the need for co-creation. I appreciate very much the support that he has offered.

The noble Lord, Lord Stevenson, is right that there has been a good discussion, but I am not convinced that we have really heard enough from the Minister. While the Minister certainly works with the devolved Administrations—and I am not disputing that—I was listening very carefully for the words that “consent” would be sought over agreements and that there would be “agreement”. Simply consulting is not enough; one can consult and then reject and ignore whatever is said.

Being at a distance in the hybrid House, it is difficult to feel the atmosphere in the Chamber or know what the feeling of the House is. Some may disagree, but my feeling is, from where I am now, that many in the House are unionists and feel passionately that we must not jeopardise that union and must strengthen, however we can, the working between the devolved Administrations and Westminster. Therefore—hesitantly, but I feel that there is a need for it—I wish to test the opinion of the House, because I wish to give all Members of the House, whichever Bench they sit on, the opportunity to vote according to their conscience over the threat that this poses to the union going forward. I beg to move.