United Kingdom Internal Market Bill

Baroness McIntosh of Hudnall Excerpts

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

The noble Baroness, Lady Noakes, got it right when she worried about the danger to the CMA if the OIM, even without the powers I think it should have, were bolted on to the CMA as it currently is. So my model would be Ofcom or even the National Audit Office. The only argument against this seems to be the injunction not to create new quangos—which, coming from a Government who are about to establish the Trade and Agriculture Commission on a permanent basis, feels a bit rich. I beg to move.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, the noble Lords, Lord Hain, Lord Cormack and Lord Empey, have all withdrawn their names from this debate, so I call the next speaker, the noble Baroness, Lady Bowles of Berkhamsted.

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

My Lords, I listened with interest to the noble Lord, Lord Stevenson. The separate grouping of these amendments has put an additional focus on some of the intent.

I see the merit in taking time to get it a bit more right and use regulations for the detail, but it seems to me that the moment to legislate is still when there has been agreement between the four nations, rather than in a fixed time period. I am not sure that I condone such a wide ability to amend any Act—could the Act or Acts not perhaps be named?—although I acknowledge that the purpose is limited. However, those are details; I accept the principle and direction the noble Lord is suggesting.

Concerning the new schedule in Amendment 131, I still question the ratio of six Secretary of State appointments to one each for the devolved Administrations, especially in the absence of introducing a regional element for England. Quite controversially, the new schedule also creates powers for the OIM to deal with distortive or harmful subsidies and subsidy races.

Such a provision is the elephant in the room if it is not done at some stage. Third countries could launch trade remedies complaints against the UK if they were affected by distortive or harmful subsidies. From that perspective, it is of great benefit to have a body that is seen to be independent overseeing those matters, rather than being at the political level of government, which is where it seems to be held at the moment. It is the opposite side of, but with the same logic as, the Trade Remedies Authority needing to be seen to be independent. However, regarding the four nations, the scope of intervention would be wider than would interest third countries, unless there is some corresponding agreement with third countries or the EU.

I am not actually sure how it would all work out. As yet, because I have concerns about the CMA—although I accept that looking at subsidies might be something it is better adjusted to do—it will be a little while before I could slip in this enormous power without resolving all the other issues that remain, including powers, unless the noble Lord is suggesting that this is all that the OIM can do. Anyway, I think that there are some good things and some bad things in there, and it is interesting food for thought.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

I call the noble Baroness, Lady Jones of Moulsecoomb.

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

My Lords, the Government are certainly getting a lot of advice during the passage of this Bill. As the noble Lord, Lord Cormack, said, they really ought to know that they do not have all the answers. So I do hope that the Minister listens.

The amendments in this group follow perfectly the Government’s announcement that they are putting the trade commission on a statutory footing. If the Government want to run an internal market, surely it is right to create a fully functioning governance body for that purpose. Merely tagging on a few functions to the Competition and Markets Authority shows a weakness of purpose and a lack of understanding of exactly how everything should run. Giving the new office for the internal market the power to investigate distortive and harmful subsidies could have a powerful impact on wiping out the implicit and explicit subsidies for fossil fuels, particularly unconventional oil and gas fracking. These implicit and explicit subsidies include a streamlined planning process and no requirement for the company to make a bond, unlike the landfill industry, equating to the government underwriting of the clean-up of fossil fuel sites in the event of corporate bankruptcy. So once again taxpayers would pay to clean up other people’s mess.

Just to be clear, the journalist at Drill Or Drop? suggests that the OIM can comment on controversial issues such as fracking, which, as we all know, is a dangerous, polluting, expensive, intrusive and—in view of our global need to limit our carbon emissions—unnecessary process. The OIM could give advice contrary to the devolved Administrations’ decisions. Can the Minister tell me if that is true?

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

I apologise to the Committee and very personally to the noble Lord, Lord Judd, whom I omitted to call before the noble Baroness, Lady Jones. So I call the noble Lord now.

[Lord Judd (Lab) [V]]

Thank you. My Lords, I will be brief. I just want to say how much I commend the amendments from my noble friend Lord Stevenson. He is setting out principles which are very important, rather than just the general purpose, and for that we should be grateful. I would also like to put on record that I am glad that he has taken, on previous amendments, the point that what we must be aiming for in all this is a situation in which there is a sense of shared ownership and the shared involvement of all the parts of the United Kingdom.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I appreciate the comments made in the debate and I appreciate that these amendments seek to correct, improve and debate the issue. Indeed, that is the role of this Committee. Given that, I take issue with the last point made by the noble Lord, Lord Fox.

Amendments 115 and 131 would bring in fundamental changes to the statutory basis for the Office for the Internal Market. They propose making the office a separate, standalone public body, thereby removing its Crown status. The noble Lord, Lord Stevenson of Balmacara, suggested that the new OIM should use Ofcom or the National Audit Office as a model. This would fundamentally change the nature of the OIM. It would change its funding model and would ask it to operate like a regulator, although it is not intended to act as one.

It has already been explained that the Government have concluded that the CMA is best suited to house the Office for the Internal Market to perform these functions, and the reasons were set out in the Government’s consultation response. I will again emphasise the key points. The CMA has built up a wealth of expertise and experience that makes it a natural fit to take on these additional functions. It has a global reputation for promoting competition for the benefit of consumers and for ensuring that markets work well for consumers, businesses and the economy. We will come on to discuss the concerns of the noble Baroness, Lady Hayter, about the interests of consumers being reflected in the OIM.

The Office for the Internal Market will build on the CMA’s existing technical and economic expertise which will now support the further development of the UK internal market. My noble friend Lady McIntosh asked how we can guarantee the independence of the OIM and ensure that we carry the devolved nations with us. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. It will not be an enforcement body and it will not be able to override the decisions of any of the Administrations. As noble Lords will know, the Government are continuing their engagement with the devolved Administrations as the functions are developed further.

In the last group, the noble Lord, Lord Purvis, asked what the incentives are for the devolved Administrations to use the OIM. All of the devolved Administrations have an interest in the smooth functioning of the internal market and the development of effective regulation to support it. The Government are confident that all the Administrations and legislatures will value the expertise and advice of the OIM and the authority of the evidence base that it will build up.

The noble Baroness, Lady Jones, asked whether the OIM will give advice on the decisions made by the devolved authorities. I assure the noble Baroness that the non-binding advice of the OIM will provide a complementary and expert resource to help facilitate better regulation and, should it be requested, this will include regulation developed by the devolved Administrations as well as by the UK Government. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. As I have said, it will not be an enforcement body and it will not be able to override the decisions of any of the Administrations.

An earlier grouping addressed the involvement of the devolved Administrations in the panel membership of the office. I will therefore say briefly that the direct devolved Administration appointments to the panel of the OIM would risk its effective and independent operation. Appointments to the body will be made by open and fair competition and the chair through the robust procedures of the Public Appointments Commission and the Cabinet Office, which operates across the jurisdictions of all of the devolved Administrations.

I turn to UK subsidy control. Clause 50 reserves to the UK the exclusive ability to legislate for a UK subsidy control regime in the future. It is an issue of national economic importance as it is essential to supporting the smooth functioning of the UK’s internal market. We will debate the detail of subsidy control reservation in a later grouping, but I will cover it briefly now. On 9 September, the Government published a statement regarding the future of subsidy control. In that statement, we committed to publishing guidance on the international commitments that will apply to the UK on 1 January 2021, before the end of the year. This will cover World Trade Organization rules on subsidies and any commitments we have made in free trade agreements.

We also set out our intention to publish a consultation in the coming months on whether we should go further than our WTO and international commitments. This will include consulting on whether any further legislation should be put in place. The amendment would create uncertainty and fundamentally undermine the future consultation which will be the mechanism through which decisions regarding future regulations for UK subsidy controls will be made.

In addition, it should be noted that the function of the office for the internal market will be to provide non-binding technical advice, monitoring and reporting on the health of the internal market. It is not the Government’s intention to give it a range of enforcement and regulatory powers, which the proposed new schedule would do in respect of UK subsidy control.

My noble friend Lord True said on an earlier group of amendments said that, in line with GDPR, not all respondents had consented to sharing their views, so publishing only a subset of the consultation would not offer an accurate enough reflection.

For the reasons set out now and earlier, I am not able to accept this amendment. I hope that the noble Lord will therefore withdraw it.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, I have had no request to speak after the Minister, so I call the noble Lord, Lord Stevenson of Balmacara.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I thank those who have spoken in support of the amendments, particularly the noble Baroness, Lady Bowles, who accepted the principles despite having doubts about some of the factual points, and the noble Baroness, Lady McIntosh, for covering a lot of ground and raising questions that will need to be addressed by Ministers. In fact, I do not think that they were addressed in the response this evening. I thank my noble friend Lord Judd for bouncing back after having been ignored and making some very good points about why it is important to seek principles as we go through the Bill, because they are sadly lacking at the moment. The legislation seems a formulaic response, almost an early policy draft of what one might do if one were to regulate an internal market. It does not smack of having had a lot of discussion and debate or even wider consultation. The Government do not seem to have in mind a process whereby they can arrive at a solution to the problem of how we get shared ownership and trust into a system which is broadly voluntary in its basis without it looking as though it is a top-down, heavy-handed approach. There may be political advantages in that in the short term, but in the long term it is not the way to go.

This was a probing amendment to which we heard some responses, but there are still one or two to come. I am left with the feeling that, whatever we call the body and wherever we locate it, if it is capable only of providing non-binding advice and has no powers, it leaves the question of who will police the whole system. What happens, for instance, if the devolved Administration in Scotland decide they want to do something in particular in relation to whisky, chicken or flour—and we now know an awful lot about flour adulteration? Who will police that? Will it be BEIS? If so, can the Government really say, hand on heart, that the right way to approach what is effectively a devolution issue is through a top-down, UK Government-organised structure? I wonder. I beg leave to withdraw the amendment.