United Kingdom Internal Market Bill

Baroness McIntosh of Pickering Excerpts

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

For now, while welcoming the fact that the Minister has realised that consultation needs to be written on to the face of the Bill, we would just like to add that extra bit that there must be consent within a month or the Government must explain why they are proceeding without the consent of the devolved authorities.

[Baroness McIntosh of Pickering (Con)]

My Lords, I warmly embrace my noble friend—in a metaphorical sense, he will be pleased to know—for adopting in Amendment 14 and others what was in my amendment in Committee, which is why I have appended my name to his Amendment 14. I congratulate him on moving in this regard and listening to the concerns expressed in this House so forcefully by myself and the noble Lord, Lord Foulkes of Cumnock, and as drafted for me and briefed to me by the Law Society of Scotland.

By the same token, I urge the noble Baroness, Lady Hayter, and the co-signers of Amendment 15 and others in this group not to press them. I would be interested to know the provenance of, and thinking behind, Amendment 15 and the others, because I have not picked up on any move, certainly from the Scottish Government and Parliament, to seek consent in this regard. I would be interested to know why the noble Baroness is going to press this when the Government have gone so far to meet the concerns expressed by the Law Society of Scotland and others in Committee. If we do not welcome and congratulate the Government and this Minister when they move as far as they have, it puts down a poor marker for future amendments to this Bill and others on these matters.

My noble friend has said that Amendments 18, 32 and 43 in his view are unnecessary. I think that Amendment 18 is paralleled by and complementary to his own amendment—government Amendment 19. I think that Amendment 32 is also paralleled by his Amendment 36 and his Amendment 35, which I have also signed. Amendment 43, in my name and that of the noble Lord, Lord Foulkes of Cumnock, I think is also complemented and paralleled by his Amendment 45, for which I am extremely grateful; I would like to pay tribute handsomely to my noble friend for moving in this regard.

I do have a hesitation as to why my noble friend has not accepted Amendments 26 and 28 in my name and that of the noble Lord, Lord Foulkes of Cumnock. They are actually seeking to consult in much the same way as an earlier clause that my noble friend has moved and agreed—which is extremely welcome—but, if my understanding is correct, he has not agreed to move in regard to Clause 12 to consult with the devolved Administrations before preparing guidance under Clause 12. I may be mistaken—in which case, I would be grateful if my noble friend would correct me.

I would also like to warmly welcome government Amendment 29. I would like to take this opportunity to commend the spirit of inclusion shown by my noble friend and the Government on this occasion to commit to obliging the Secretary of State to carry out a review of the use of Part 1 amendment powers and, in that regard, his commitment to consult the devolved Administrations. I wish to warmly commend his movement in that regard.

I would perhaps like to nudge my noble friend also to accept Amendments 26 and 28 as being on the same page as his own thinking. I repeat that I do hope that the noble Baroness, Lady Hayter, and the other co-signers of Amendment 15 and others will take this opportunity to withdraw or not move their amendments, given that the Government have moved as far as they have on this consultation, to which they are now committed. So I do not beg to move.

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

My Lords, I also welcome the Government’s amendments in this group and the speech of the Minister. If I may, I will try to answer the concern just expressed by the noble Baroness, Lady McIntosh of Pickering. I think it is fair to say that some of us fear that the Government might be tempted to try to overturn the amendments of the noble Baroness, Lady Andrews, in the other place, and so we would like the House to fully consider all the amendments in this group that have been tabled by the noble Baroness, Lady Hayter, and myself.

I would like to speak in favour of Amendments 15, 20, 27, 34 and 46. All of these amendments are based on the same principle: that, when issuing guidance as to the implementation of market access principles, or when seeking to extend or further limit the exceptions to the application of the market access principles, the Government must obtain the consent of the devolved Governments to doing so.

However, we are sensitive to the nervousness of the Government and wish to be helpful by providing clear reassurance in statute of coupling a consent requirement with a limited-time proviso. This states that, should consent not be forthcoming from one or more devolved Governments within a month, the Government may proceed to make the changes or issue the guidance, subject only to the need to make a statement to Parliament as to why this is necessary.

This is not an onerous requirement, and I know that what we have proposed is less than the unqualified requirement for consent that the devolved Governments in both Wales and Scotland would have preferred. But this amendment is a healthy, open compromise which can comprehensively allay the fears of the Government Front Bench as to the risk of the process somehow grinding to a halt should a Scottish or Welsh Minister try to delay. Indeed, our approach, advocated in the slightly different context of appointments to the office for the internal market by the Welsh Government, has been adopted by the Minister in government Amendments 56 and 57, so it seems difficult to see how the Government could object to this.

I therefore hope that the Minister will think again and accept these helpful amendments, rather than put us in a situation where we need to go to a vote.

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[Lord Callanan (Con)]

I of course thank the noble Lord for his help in answering the question more thoroughly than I did, and I can confirm my understanding that he is correct in what he says.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am overwhelmed that my noble friend the Minister has accepted Amendment 14. Perhaps I may press him a little more on Amendment 16. If I understood him correctly, he said that it should be for all of the devolved Administrations to publish their responses to a consultation. I would beg to differ. It would be much better for all concerned, including myself, to find in one location on a national Westminster-based government website all the responses that have been published.

He did not comment—I would be grateful if he would—on why he would feel unable to give reasons for any decisions reached. I am grateful to the noble Lord, Lord Foulkes, who has also signed Amendment 16. Is there any problem the Government would have in giving reasons for any decisions if they were not prepared to accept the responses to the consultations from the devolved Administrations?

[Lord Callanan (Con)]

I will write to the noble Baroness with further information on that point.

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[Baroness McIntosh of Pickering (Con)]

My Lords, I speak briefly on both these amendments. I have a lot of sympathy with what the noble Baroness, Lady Boycott, and co-signatories are pushing in Amendment 23. I presume that, in responding, the Minister will say that the Government are putting forward an economic Bill to create an internal market to compensate for us leaving the internal market of which we have been a member for 46 years.

Amendment 23, like Amendment 21, does not have regard to the one remaining part of the original Article 36 of the Treaty on the Functioning of the European Union that has been left out of Amendment 21. I gather this was an oversight that will be corrected at Third Reading. In my view, the fatal flaw is that any reference to public safety or security has been left out. It is interesting to note that environmental standards and protection of the environment—which, I would say, includes climate change—and many of the other issues in Amendments 21 and 23 are dealt with elsewhere. It is bizarre to leave out any reference to public safety and security when we are in the middle of a pandemic, which is why I could not vote for Amendment 21 at this stage.

I am full of praise for the noble Lord, Lord Wigley, for bringing forward Amendment 22. I presume that the Minister, in responding, will say that it is not this Bill but the Trade Bill that will prevent the Welsh Government or Yorkshire councils from seeking to favour their own produce in public procurement. I am particularly mindful of the work that Deliciouslyorkshire does. Obviously, all food in Yorkshire is delicious, but Deliciouslyorkshire is a marketing organisation that promotes foods made in Yorkshire.

I was very enthusiastic about one of the potential benefits, if there were to be any, of leaving the European Union in that we would be able to source more of our foods locally. Now I understand that, in the global procurement agreement in the Trade Bill, we will have to meet exactly the same threshold as we were required to meet in the European Union public procurement policies and tenders for bids. Am I right, or is the noble Lord, Lord Wigley, right? Will there be opportunities for the Welsh Government and Yorkshire councils to promote and source more of their own foods in, for example, local hospitals, prisons and schools than would otherwise have been the case?

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, I support Amendments 22 and 23, but I shall refer in particular to Amendment 22 in the names of the noble Lords, Lord Wigley and Lord Hain. Again, this is about ensuring that no straitjacket or limit is placed on the procurement practices of devolved Administrations. It is about protecting their functions, with particular reference to the market access principles, which should not override devolution settlements. The noble Lords, Lord Hain and Lord Empey, referred to the situation of Northern Ireland which, in terms of goods for procurement purposes, will be subject to the Northern Ireland protocol and, therefore, the EU.

While I believe there is a need to ensure that there are no borders anywhere, whether in the Irish Sea or on the island of Ireland, notwithstanding that, there are areas of clarification required. Can the Minister say, or perhaps write to us on it at a later stage, whether any procurement practices would apply to the devolved Administration in Northern Ireland which would be subject to UK oversight as per the Bill? Will there be any at all?

Secondly, on the previous group I asked the Minister whether he could provide an update on the interparliamentary Brexit forum, which consisted of representatives of the devolved Administrations and the UK Government. It has not met since September 2019. Maybe he could provide us with an update on when its next meeting is likely to take place.

Further to the point made by the noble Lord, Lord Empey, I am reminded of those made by the UK constitution monitoring group. It said that government Ministers have occasionally asserted that the United Kingdom Internal Market Bill is not a constitutional measure at all but is concerned only with economic policy. It would therefore perhaps be better to characterise it as a key building-block in an emerging economic constitution for the UK, post Brexit. However that may be, the group believes that the Bill raises fundamental questions about the governance of the UK following withdrawal from the European Union, in particular whether it will be possible to establish a common understanding of the future role and importance of the devolved institutions in UK governance. Would the Minister like to comment on that statement in his wind-up, and will he assure the House that market access principles will not be used to override the devolution settlement?

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Finally, I turn back to the services provisions. There must be a good answer to all of this, or the Government and my noble friend would not be trying to rush the new powers and exemptions through. However, as someone with wide experience of government and business, I am not yet satisfied. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful to my noble friend for moving this amendment and giving us the opportunity to have a general debate on Clause 16. I will take this opportunity to ask my noble friend if he could elaborate a little on the background to this clause.

I understand that, in their consultation, the Government wrote:

“the UK Government’s proposals are an adaptation of existing rules in the Provision of Services Regulations 2009 which contain regulations on mutual recognition and non-discrimination. Rules included in the UK Internal Market Bill will look to retain the effect of the Provision of Services Regulations”.

I am sure my noble friend Lady Neville-Rolfe was being very honest when she said that this is not clear and that she does not entirely understand the background to it. I do not think that she is alone. Against that background, is it entirely fair to have only given businesses the opportunity to consult on these provisions for one month? My understanding was that the normal consultation period is at least two, if not three, months, and I wondered why the consultation on these provisions was restricted to four weeks.

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

My Lords, I thank the noble Baroness, Lady Neville-Rolfe, for drawing this clause to our attention, and I agree with the comments that have been made. In particular, I agree with the question about how you distinguish between goods and services when, nowadays, many things are never sold but rather licensed or rented and must sit either with one foot in each camp or, possibly, goods become services and vice versa.

Other confusions also arise around things that originally can be excluded but then are not when there is a substantive change to their regulation. There was some discussion, in which I was not involved, on this in Committee. What constitutes a substantive change? If you have authorisation requirements and a list of 10 things, does it mean that five have to be changed or does it mean a significant change to one? If you had to add on another one because there are some changes in circumstances, who is to know whether it is then out or in?

There are certainly a lot of things that are not yet clear and, if it does—as the noble Baroness, Lady Neville-Rolfe, has said—interfere with our services, which are the majority of our trade, then we will be in a very difficult situation. I would welcome further clarification, or indeed amendments, to make matters clearer. I am not sure whether removing the clause actually helps because the knock-on effect elsewhere would of course be substantial, but I think that there is something that needs to be fixed.

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Moved by

[Baroness McIntosh of Pickering]

39: Clause 19, page 13, line 17, at end insert “but only to the extent that it directly discriminates against the service provider.”
Member’s explanatory statement
This amendment clarifies the meaning of Clause 19(1) regarding the effect of a statutory requirement under Clause 16.

[Baroness McIntosh of Pickering (Con)]

My Lords, in moving Amendment 39 I will speak also to Amendment 40, relating to Clauses 19 and 20. The amendments clarify the meaning of Clause 19(1) regarding the effect of a statutory requirement under Clause 16 and a similar provision in Clause 20 on indirect discrimination.

If I understood the Minister correctly, in summing up the debate on the amendment of my noble friend Lady Neville-Rolfe, he said that the service provider and regulatory requirement were, in his view, deemed limited enough in scope not to cause barriers to trade. I would like to probe and penetrate his thinking further.

The Law Society has drafted—and I am delighted to thank my noble friend Lord Foulkes of Cumnock for supporting these two amendments—the insertion, at the end, that no effect is only

“to the extent that it directly discriminates against the service provider”

in Clause 19, or indirectly in Clause 20.

When this was debated in Committee with earlier amendments, we expressed reservations about the meaning of “no effect” as it lacked clarity. In summing up the debate on Amendments 81 and 84, my noble friend Lord Callanan said:

“In Clause 21, a legislative requirement is one imposed ‘by, or by virtue of, legislation’.”


He went on to say:

“This extends beyond legislation to rules produced by bodies with powers delegated to them in respect of a particular field of regulation, and it may include licences or requirements contained therein. My noble friend’s Amendments 81 and 84 would appear to have the same effect. However, in my view, the term ‘of no effect’ is the more appropriate to apply in respect of a licence or a non-legislative rule.”—[Official Report, 28/10/20; col. 358.]


Having taken note of my noble friend Lord Callanan’s comments, I now seek to clarify that lack of effect would relate only to that element of the regulatory requirement that directly, or in the case of Clause 20, indirectly, discriminates against a service provider. It is hoped that the Government accept this amendment, as it is meant as a helpful clarification of Clause 19, and the related amendment to Clause 20. I beg to move.

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

My Lords, I hesitate to add to the excellent introduction that—if I may call her this—my noble friend Lady McIntosh of Pickering gave, except for one thing. We are dealing here with, in one case, direct discrimination and, in another, indirect discrimination, and only in these circumstances. Noble Lords will recall that, in a debate last week, as we were vividly reminded by the noble Baroness, Lady Ritchie of Downpatrick, the Minister got into a fankle—if I may be excused for using a Scottish word—on the question of discrimination. I hope that he will spell out these two areas carefully, so that the House is clear exactly what the Government think about this.

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[Baroness McIntosh of Pickering (Con)]

I am looking at Clause 19, and I must be being very dense this evening, but I do not see where it already lays out what I am seeking to achieve in Amendment 39. It would be helpful if my noble friend could point me in that direction separately.

I am grateful to all those who have spoken, especially the noble Lord, Lord Foulkes, and the noble Baroness, Lady Bowles, for supporting the arguments in favour of elucidation. I do not think the question of the noble Lord, Lord Purvis, was answered as to whether it relates to an entire regulation or only component parts of it. I am sure he is getting quite used to not having his questions answered on this Bill, so I will not elaborate that point further given the time.

I greatly enjoyed the interchange on various words that could be put in play. I am reminded of what we used to say during the time of a different leader, when we used to call it a right Eton mess, which has another connotation in that regard.

I still believe that there are strong arguments to bring into play the intention behind Amendments 39 and 40, and I may bring them back at a later stage but, for the moment, I beg leave to withdraw the amendment.

Amendment 39 withdrawn.

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Fundamentally, the problem is that the CMA is being used for a purpose for which it was never designed. The office for the internal market, which many of us do not believe is really necessary, should not, if it is necessary, be simply tagged on to the OIM. Amendment 54 acknowledges the fact that, by proposing the office for the internal market as a component of the CMA, it is not good enough to have representation of the board of the OIM; it has to be representation at the board level of the CMA. This is, first, to demonstrate a genuine understanding of the UK-wide role that it now has and, secondly, to protect the CMA from the possibility not only of being accused of getting things wrong but of actually getting things wrong. I will throw another word into the mix: it is very likely that we could finish up with a downright stramash.

[Baroness McIntosh of Pickering (Con)]

My Lords, I welcome government Amendment 52, in the name of my noble friend the Minister. In particular, I am looking at its proposed new subsection (2B), which states:

“The CMA must also, in carrying out its functions under this Part, have regard to the need to act even-handedly as respects the relevant national authorities.”


Would my noble friend the Minister not agree that this seems to dovetail completely with Amendment 54, in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd? This seems very attractive because this dovetails entirely with, and supports, the Government’s call for there to be one board member from each of the Administrations. I would like to hear from my noble friend a very good reason for why it would not be the case that those appointments would be made as set out in Amendment 54.

[Baroness Noakes (Con)]

My Lords, I thank my noble friend the Minister for the Government’s amendments in this group, which are very welcome. However, I will focus on Amendment 54, in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd. Any chairman of a board, whether it is a public or private company or a public body, will say that the most important thing about the board is getting a balance of skills and experience on it. In addition, nowadays, most boards feel the need to achieve a degree of diversity, generally expressed in terms of sex and race.

Putting together a balanced board is a complex task, and trade-offs often have to be made between the different characteristics that the different candidates can bring. The more that seats on the board are allocated to particular sources or interests, the more difficult it is to achieve balance. In something like the CMA, the board is not there to bring representative interests to bear; it is there to make sure that the CMA is run properly, so it should have people who can understand whether it is achieving its objectives or running itself effectively. Those are the most important characteristics.

If one has direct appointment to a public body such as the CMA, that can actually unbalance a board—you could end up with a lack of certain skills or experience, or an overrepresentation of certain commercial backgrounds, for example. When you have a single appointor, which in the case of the CMA is the Secretary of State, the challenge of getting a balance can be worked out between the Secretary of State, his department and the chairman of the relevant body. That is what happens in most public bodies. By taking away some of the appointments, you just make that process much more difficult to achieve.

I continue to believe, despite what noble Lords said earlier, that direct appointment by the devolved Administrations will inevitably be political, because they will be seen as representatives. Indeed, the noble and learned Lord, Lord Thomas, used the word “representatives” when he introduced this amendment earlier. A representative is never completely independent if he or she feels the need to represent.

One of the changes made by the Scotland Act 2016 was direct appointment to the board of Ofcom, and that was followed by similar legislation for Wales and Northern Ireland. I was deputy chairman of Ofcom at the time, so I understand the impact that that can have on board balance—but I do not want to talk about that beyond what I have already said about the difficulties in managing a board when direct appointments are made.

I would like to draw attention to Section 65 of the Scotland Act 2016, where the devolved Administrations were allowed to appoint a member directly. However, that appointment had to be made in consultation with the Secretary of State, which allowed one avenue for conversation to try to make sure that some degree of orderly balance was maintained in relation to the appointments. Amendment 54 does not even go so far as to recognise that precedent, and it is a very extreme action to be taken in relation to the CMA. I hope that the noble and learned Lord, Lord Thomas, will not press his amendment.