United Kingdom Internal Market Bill

Baroness Hayter of Kentish Town Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 26th October 2020 Lords Chamber

Moved by

[Baroness Hayter of Kentish Town]

1: Clause 1, page 1, line 6, after the first “Kingdom” insert “to protect and promote the interest of consumers and safeguard the environment”

[Baroness Hayter of Kentish Town (Lab)]

My Lords, in moving Amendment 1, I welcome that today we are not starting on Part 5 of the Bill, as there are two other major issues which need to be reformed. Indeed, the Bill’s genesis never involved including Part 5, but concerned how to use repatriated competitive and other regulatory powers post transition. Today we will deal with two of these: first, how to give the new competition regime a consumer focus; and secondly, how to organise returning powers into the devolved structure the UK will operate in 2021, as opposed to the 1973 position when we entered the EU.

Amendment 1 deals with the whole point of market intervention and competition policy: to promote the interest of consumers where, for whatever reason, they are operating in an imperfect market. But it also acknowledges that helping businesses to grow or consumers to benefit must not be at the expense of our precious environment. The amendment would write into Part 1 that its purpose is to benefit consumers and to safeguard the environment.

Anyone who has worked in regulation or in the courts knows that these overarching objectives, or duties, are essential in interpreting or enforcing the specific clauses, resulting legislation or indeed future legal cases arising from the Act. The overarching purpose is usually taken into account. Before he left the CMA, the noble Lord, Lord Tyrie, as its chair, called on government to strengthen the CMA’s consumer duty, writing that the internal market will work for consumers only if it is

“fair, competitive and adequately, proportionally and properly regulated.”

Amendment 1 would ensure that legislation on how the internal market is governed has this objective hardwired, or mainstreamed, into its overarching purpose.

A clear example of why this is so necessary is the Agriculture Bill. The Government refused to accept a UK-wide commitment to retaining food standards. I gather that Prue Leith has resigned from the Conservative Party in reaction to that rejection. More importantly for this Bill, just because the UK Government do not want to guarantee high food standards for consumers does not mean that the other countries of the UK do not.

As we roll out a new internal market for the UK, it is essential that an overarching objective of the legislation—the interest and well-being of consumers—be written into the Bill. Given the role of the CMA with regard to this Bill, it is similarly important that it has the duty to the consumer at the forefront of its work. As the noble Lord, Lord Tyrie, said, for the internal market to work for consumers, the CMA must be fit for this task:

“Until Brexit, much of the competition work lay with the Commission. If we are to ensure our companies play fair, do not profit at the expense of ripped off customers, are overseen ... by a competent authority, we need ... changes to the ... composition and duties of the CMA”,


which

“needs new duties to act quickly and with the consumer interest paramount and powers to make this possible”.

The amendments in this group are part of the effort to achieve these aims. Amendment 1 adds the duty to the purpose of the Bill, and Amendment 112, also in my name, adds it to the CMA’s objectives.

The group addresses two other issues: what is known in EU-speak as proportionality, and procurement. Amendment 2 in the names of my noble friend Lord Stevenson, the noble Lord, Lord Anderson, and the noble Baronesses, Lady Bowles and Lady McIntosh, would write the principle of proportionality into law to make sure that the Government, in exercising their powers under the Bill, do not go further than is necessary to effect mutual recognition and non-discrimination; and, vitally, that they respect the principle of subsidiarity whereby matters are agreed at the most local level possible. This would make sure the Government act only when their objectives cannot be achieved by the devolved authorities and would be better done at UK level.

The Government recognise and use this principle of proportionality. Indeed, just last week they tabled an amendment to the Medicines and Medical Devices Bill—which I believe is in Grand Committee even as we speak—stating that disclosure of information relating to medicines covered by international agreements may take place only where it

“is proportionate to what is sought to be achieved by it.”

That same principle needs to be hardwired into this Bill to make sure the powers are not used—for convenience or whatever—by the UK Government when they could be used better by the devolved authorities.

As the Minister will know, having been around the EU for some time, subsidiarity was not always in the EU mandate but, once introduced, influenced all decision-makers’ thinking, making them think twice before taking powers to themselves at too global a level. For those reading this in Hansard, the Minister at this point has a very disbelieving look on his face.

Finally, Amendment 59 in the name of my noble friend Lord Stevenson aims to retain public procurement as a devolved matter, thus exempt from market access principles. This is not to say that public procurement should not adhere to recognised principles, but to ensure that these are covered in the existing work on common frameworks in a public procurement framework. Since 1998, public procurement has been devolved, and our leaving the EU is no reason to alter this or for it suddenly to become a reserved matter, especially when a framework is already being developed. The Government have given no rationale for trying to make it reserved. In the White Paper, they said, without any reasoning:

“For goods, non-discrimination will apply within certain excluded areas such as procurement.”


They said they were considering—only considering—whether and to what extent non-discrimination should apply to public procurement. Perhaps the Minister could provide an update on their thinking. Perhaps he could also explain why Whitehall thinks it can deal with procurement any better than the devolved authorities, particularly given the recent example of UK-wide public procurement under Covid.

There are real concerns about simply handing public procurement to the Government, given that the WTO’s general procurement agreement, which would replace the UK’s 2015 regulations, would not include socially responsible public procurement provisions unless they were nailed down in advance. Amendment 59, therefore, aims to prevent the loss of these safeguards and keep public procurement devolved so that price-quality ratio, rather than simply price, is included in tender evaluation criteria and can be maintained by the devolved authorities along with the normal requirements of value for money et cetera. We want a UK-wide internal market to work for consumers and business, to safeguard standards, maintain the environment and ensure that competition does not fuel a race to the bottom. That would be good for neither workers nor consumers, nor indeed for businesses. These modest amendments would help to achieve that objective. I beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

Well, as I have said before to the noble Lord, we remain completely committed to the framework process and we remain committed to frameworks that have already been agreed—but we see this legislation as complementary to that, as it underpins the entire framework process. As I said to him with regard to the deposit return scheme, if it comes into force when it is predicted to do so, then indeed it will be covered by the market access principles, but we are confident that the deposit return scheme can be brought into effect in full compliance with the market access principles.

[Baroness Hayter of Kentish Town (Lab)]

I am slightly lost on that, but we will come back to it. I thank the Minister for his response and I am grateful for the very interesting debate that has happened. I will say a few words about what was said by the noble Baronesses, Lady Noakes and Lady Bowles, about the point of competition and why it should be here. I agree with the noble Lord, Lord Naseby, that competition is extremely good for consumers. We want to see a successful economy, and I see no difference whatever in what he was spelling out and what we want to achieve.

The problem, of course, is where, for whatever reason, there is not a perfect market. Although here we are talking about goods rather than financial services, I was involved in the Financial Services Consumer Panel, and even though we had and still have—although Covid is throwing everything out—a thriving financial services market that has been good for the economy, for consumers and for the taxpayer, it has sometimes been, as we know from all the compensation that had to be paid, at the expense of consumers. So we cannot assume, simply because we have a good, thriving economy and lots of competition, that there are not sometimes disadvantages for consumers. That is why it is important, while we want a competitive, thriving market, to make sure that those protections are there. So as we look forward to the internal market being all the things that have been described, it cannot be at the price of consumers.

As I have said, I really support competition—we all used to wear NHS glasses until someone freed up the market, so we are all able to get nice red ones now. I doubt there is anything much between us on that. It is important, though, as we look forward to a market that is going to work for the whole UK, that it is not at the expense of consumers or the environment. I have been buying plants recently, hoping that one day we will have some good weather, but they should not be in peat pots. That is not good for the environment. Something may be good for consumers and at a good price, but you also need to consider the environmental aspect.

Consumers are not just interested in price; they are interested in safety and the longevity of products. However, that is not always something they can see at the point of purchase. Price is very easy for consumers: they can look at it and compare. Other things behind the price are also important. It is important as we look to a new market mechanism that we take that into account. I am sorry to have gone on a bit about this issue but as we will come back to it on Report, it is probably helpful for the Minister to understand. We may not have got the wording quite right: I am not trying to trump the Government but to point out why those elements need to be included.

On the devolution issue, the noble Lord, Lord Empey, is right that there is a clash between the settlements and what we are now trying to do with the internal market; I think he called it a collision between London and the regions. I hear very much what the noble Lord, Lord Cormack, said: that if we get this wrong, we are threatening something much bigger than any of us thought. No Brexiteer wanted to challenge the union; that was not what divided some of us who had divisions on that issue.

We need to look at how we deal with devolution. I was really taken by the example that the noble Lord, Lord Inglewood, gave of the IGC process that led to the single market and other things. I will come on to that way of working when we consider a different group of amendments. The confidence to do things in a shared and consensual way is important. The noble and learned Lord, Lord Hope, said that it would probably be important to put in the Bill retention of the subsidiarity and proportionality principles. They have guided us well and there is no reason why we should lose them, just because we are leaving. I think we will return to that issue.

On procurement, I think the arguments were fairly common between us. I am afraid I was slightly thrown by what the Minister said and will have to read later exactly what he said about separate legislation. Maybe we can exchange correspondence on that issue, and on the timing. Clearly, we will need to come back to procurement to ensure that we have something that will work for all four nations. For the moment—and I am sorry about the length of my response—I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

--- Later in debate ---

[Baroness Hayter of Kentish Town (Lab)]

My Lords, it is always somewhat intimidating to follow an introduction such as the one we have just heard from the noble and learned Lord, Lord Hope. I think I heard him correctly when he said at one point that he did not have a monopoly of wisdom. That was the only bit of his speech that I really disagreed with.

As we heard from the noble and learned Lord and from the noble Baroness, Lady Finlay, we need a mechanism to ensure that the common frameworks are at the start of the process before market access principles are applied. How exactly that can be finessed between the menu of options we have in front of us, with these and other amendments today, can be a question for discussion—as indeed the noble and learned Lord, Lord Hope, indicated. But, essentially, the role of the common frameworks undoubtedly needs a statutory basis. The consensual mode of working that we have seen via the common frameworks surely has to take priority over other modes of rule setting, and a failure-to-agree process—which must be exhausted before other action is taken—needs to be in the Bill, as it is in the common frameworks mechanism.

Like other Members of your Lordships’ House, I was involved in the work of the European Parliament. I was a party functionary rather than an elected Member. Through that I witnessed the discussions, arguments, concessions, joint working, co-determination, consultation, redrafting and mutual respect that went into the emergence of EU regulations. There was no simple imposition by one all-powerful body. Negotiation and agreement were needed between the European Council, the Commission and the European Parliament for action to be taken. As the noble Lord, Lord Inglewood, mentioned, some really big decisions were referred to the IGC—the Intergovernmental Conference. It was a way of working that produced outcomes to which everyone could sign up. Now, consensus building might have taken time; there was the odd time when clocks were stopped at midnight, which we may have to do again today, but the position reached each time meant that all the parties involved could live with the resulting decision.

My view—and I think the view of all of us—is that the internal market process ought to be replicating, albeit on a smaller and much easier scale, those sorts of international and intranational methods that allow for joint working and consensus building as the prime route for decision-making. Of course, some issues will prove not to be amenable to consensus—this too was mentioned earlier—in which case there has to be an agreed adjudication and decision-making mechanism in place, but with the common frameworks procedures exhausted before any of that has to be set in train.

I turn to Clause 51, which has just been mentioned by the noble Baroness, Lady Finlay. This is understandably of major concern to the devolved legislatures and their Governments. In three quite simple, short subsections it amends the Scotland Act 1988, the Government of Wales Act 2006 and the Northern Ireland Act 1998—and all without a word of warning, far less the agreement of any of those elected authorities whose established settlements it undermines. Few of us expected to read a clause like that, dropped into a Bill on a quite different subject, which would blatantly amend these long-developed settlements.

We heard from the noble Lord, Lord Dunlop, in the previous group and we will hear from him shortly in this group. I hope he will not mind if I quote from what he said at Second Reading. He said:

“Devolution is now integral to the UK’s constitutional arrangements. At a time … when it has never been more important for central and devolved Governments to work together … to risk destabilising those arrangements seems careless, to say the least.”


He went on to ask whether

“we want our country’s future to be all about endless intergovernmental competition and conflict or about co-operation and confidence”.

His preference, of course, was for

“a modern, thriving, forward-thinking and inclusive UK union … to look and feel like a joint endeavour”.—[Official Report, 19/10/20; col. 1336.]

That is what this group of amendments is seeking to achieve, but it is not where the Government are going at present. They seem to be thinking of asking us to pass this Bill without legislative consent from the very authorities whose powers are being diminished. I cannot believe that the Minister wants such an outcome, but how seriously does he take this? Is he really happy to completely override the Sewel convention, set aside the success of the common frameworks process and challenge the devolution settlements that have served us so well for so long?

[Baroness Humphreys (LD) [V]]

My Lords, I will speak to the amendment to Clause 51 in the name of the noble Baroness, Lady Finlay of Llandaff, to which I have added my name. The amendment opposes this clause standing part of the Bill. In a Bill that stands accused of breaching international law and impacting on devolution settlements, this clause is probably one of the most harmful, in the power that it hands to Ministers, and through them the Executive, to make regulations.

As the Explanatory Memorandum explains, regulations made by Ministers under these powers are to be made by statutory instrument and may be used to amend, repeal or modify the effect of legislation, including Acts of Parliament, which of course include the Government of Wales Act 2006—and, as the noble Baroness, Lady Hayter, has just pointed out, all without consultation with the devolved Administrations.

However, the prime function of this clause, and the whole of Part 7, is to ensure that all clauses of this Bill become protected enactments. It neuters the powers of the devolved legislatures, ensuring that they are unable to put forward Acts in their own Parliaments, in their own areas of devolved competence, to modify this Bill if or when it becomes an Act. This is almost unprecedented. The noble Baroness, Lady Finlay, has already told us that, since devolution, the only other examples of protected enactments covering all sections of an Act are the Human Rights Act and the Civil Contingencies Act.

Even in the case of the withdrawal agreement Bill, which was initially intended as a protected enactment, the UK Government produced a clause-by-clause analysis justifying protected enactment status, which eventually resulted in only a few clauses being protected. Why is this approach not applicable to this Bill? The Welsh Government have asked for a clause-by-clause discussion of why each clause should be protected. I would be grateful if the Minister could outline the Government’s response to this request.

Up to now, the Government have not produced any detailed justification of why protected enactment status is necessary, which exemplifies their cavalier attitude to devolution in general. In Wales this is seen as an assault on our devolution settlement, heralding the return of direct rule from England.

We are faced here with another example, as with the Covid-19 response in England, of Whitehall insisting on managing from the centre rather than understanding and empowering local decision-making. The powers of our devolved legislatures and regional mayors, although limited, seem to be resented and distrusted by the Government, and the automatic response seems to be to claw back control to the centre. My fear is that this Government’s unthinking, knee-jerk reactions all add to the perception that the union is not working for the devolved nations and, as I have said in previous contributions, this is encouraging an increasing percentage of people in Wales to conclude that the future lies in independence.

My colleagues and I on these Liberal Democrat Benches want to see true devolution of power to all four nations, including England, in a federal UK where each nation is equal to the other and treated with equal respect. For our party, the union is important because, as federalists we know, that without a union, federalism cannot exist, but we also know, that without federalism, this union will not exist into the future.

Clause 51 is truly indicative of the UK Government’s attitude towards the devolved parliaments and their powers and the desperate need they seem to have to curtail those powers by a show of strength. It is vital to the devolved nations that this clause does not stand part of this Bill, and if the noble Baroness is minded to reintroduce a similar amendment on Report, she will again have my support.