United Kingdom Internal Market Bill

Baroness Penn Excerpts

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

[Lord Purvis of Tweed (LD)]

My Lords, I will focus on whether Clause 48 should stand part, as my noble friends have done on this group. In so doing, I shall comment on the contributions. I agree with my noble friend Lady Randerson, who said that the contribution of the noble Lord, Lord Dunlop, was very important. I hope that the Government Front Bench was listening very carefully to that contribution. I see the Minister nodding, and that is very positive.

I looked again at the Explanatory Notes for Clause 48. It is quite telling that the Government are seeking financial assistance powers. I wondered for whom. The Explanatory Notes state that the power to provide financial assistance enables

“the UK Government to provide funding to local authorities, sectoral organisations, community groups, educational institutions and other bodies and persons in order to support and promote these policy areas across the UK.”

It is very telling that there is no mention of the devolved Administrations. It is fairly obvious that the Government’s intention is to have powers which effectively go over the devolved competencies of the nations, because in many respects the areas that had European structural funds are within the devolved competences. As the noble Lord, Lord Dunlop, and others indicated, there is no mention in the Bill of concurrent or shared expenditure, or of supporting joint policy initiatives. This is against the thrust of what we have had over the past 20 years with devolution.

This is not purely about devolution, because this affects developments within England too, such as growth deals and city partnerships. This expenditure will go beyond the structures that have already been agreed, and in many respects all those aspects have been included in the multiannual financial frameworks of the European structural funds. So it right to ask: what is the purpose of this? If this is the mechanism through which the shared prosperity fund will be delivered, why is there no reference to the shared prosperity fund? Why is the scope of the legislation far beyond what the Government said in their 2019 manifesto about a national skills fund? Why is there no reference to the delivery mechanisms that the Government have indicated should be in place for the shared prosperity fund? Or does the legislation seek to go beyond the shared prosperity fund? There is no statement in the Explanatory Note and there is no framework in the legislation for how that expenditure will be committed.

The sums are huge, as was mentioned by the noble Lord, Lord Stevenson, who I am glad introduced this group. I rely on the House of Commons briefing paper from September this year to give the figures. In 2018, public and private sector organisations in the UK received £5.9 billion from the EU, through various channels. On top of that, we received £4.4 billion for UK projects on infrastructure, some supporting the growth of employment, from the European Investment Bank. That is included within this clause of the legislation, but we know that UK support from the European Investment Bank will no longer be available, so what is the source of this expenditure to support infrastructure investment? How will infrastructure investment from loans or grants be delivered?

As the noble Lord, Lord Dunlop, and other noble Lords have said, to date, most expenditure has been allocated to member states and then managed through our devolved Administrations, regional partnerships or local authorities. Until this point, 76% of all European investment has been allocated, first, to the member state to manage—and then it has gone through our existing frameworks. If there is to be a new system to deliver that level of expenditure, separate from our existing delivery and accountability mechanisms, the Government need to say so.

Until now, in the multiannual financial framework 2014-20, the UK partnership agreement gave granular detail—it is a 373-page document—for all projects and where they are, with a chapter for UK-wide expenditure, and chapters for England, Wales, Scotland, Northern Ireland and Gibraltar. Interestingly, Gibraltar is included in this, but there is no reference in the scope of the legislation to providing financial assistance to Gibraltar, so the poor Gibraltarians have been completely dropped off the ability to support.

In their manifesto, the Government said about the shared prosperity fund:

“We will consult widely on the design of the fund, including with the devolved administrations, local authorities, businesses and public bodies.”


It was to be finalised after the comprehensive spending review. That has been delayed, for understandable reasons, but can the Minister state when the conclusion of the design of the fund will be published? If the shared prosperity fund is to be in place from April 2021, as the Government said in their 2019 manifesto, it leaves little time for our public bodies, which will be managing it, to operate. If it is not the intention of the Government for our public bodies to administer it, what central government structures will be in place to administer this fund? Why does this legislation have some areas that go beyond what the Conservative manifesto said, which was that it would be spent on skills?

Secondly, as was referenced by the noble Lord, Lord Dunlop, how do the intended powers of this legislation impact on the statement of funding policy? The statement of funding policy is the core document on financial relationships. It has population proportions expenditure and comparability factors, and it is applied to all spending and spending rounds. How does this power interact with the statement of funding policy? Will it be over the top of regional strategies? How will it be accounted for in the recipient public bodies? If it is to go to local authorities, how will it impact their accounting? If it goes directly to local authorities, how will it go to those areas?

I close with a tangible example. We heard references from colleagues from Wales and across England. I live in the Scottish Borders which, using the NUTS2 areas, has the lowest GVA per head in the United Kingdom, at 59.3% of the UK average. Outer London has 67.9% of the UK average. Under the Government’s current proposals, an area such as the Scottish Borders will not be eligible for this kind of support. Will the Government ensure that this funding is aligned to not only devolved but local authority strategies? Will it be aligned with the state aid maps? This separate approach will be beneficial for our country only if it is consistent with and supports our existing policies and strategies, at a local, regional and national level.

[Baroness Penn (Con)]

My Lords, this Government are determined to deliver on the commitments upon which they were elected: levelling up the whole United Kingdom, delivering prosperity for all citizens and strengthening the ties that bind our union together. Part 6 of the Bill helps to achieve this. This power to provide financial assistance will enable spending in the areas of infrastructure, economic development, culture and sport. It will also support educational and training activities, and exchanges within the UK and internationally. Previously, as noble Lords have noted, much of this was done at the EU level.

I reassure the noble Lord, Lord Bruce, the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Finlay, among others, that over the course of discussion and debate on this Bill, throughout Parliament and beyond, the Government have repeated our intention to work with the devolved Administrations. This power, in addition to existing powers, will allow the UK Government to complement and strengthen the support given to citizens in Scotland, Northern Ireland and Wales, without taking away devolved Administrations’ responsibilities.

As noble Lords have noted, the response to Covid has shown how the UK Government, alongside important co-operation with the devolved Administrations, can save jobs and support communities. This could only have been delivered strategically and at that scale by the UK Government. This power will ensure that we can invest UK taxpayers’ money nationwide on UK priorities as we leave the transition period, as well as supporting people and businesses across the UK to recover from Covid.

The UK Government are uniquely positioned to level up across every part of the UK, ensuring that the entire country can feel the benefit of increased trade, improved business conditions and a truly global economy. The power to provide financial assistance will facilitate this. Noble Lords will know that these aims support the Government’s manifesto commitments to strengthen the union, level up the country and match the current levels of EU structural funding in each nation through a UK-wide replacement programme—the UK shared prosperity fund. That is why I commend this clause to stand part of the Bill.

I will now discuss Amendments 167, 168 and 132. Collectively, they seek to remove the power to provide financial assistance in Part 6 of the Bill and replace it with provisions for the operation of a UK shared prosperity commission, detailed in a proposed new schedule. Let me begin by emphasising that the power to provide financial assistance in Part 6 would operate UK-wide to support a variety of purposes. This includes economic development but is not limited to it. It is therefore wider than any single fund or organisation. I say this in response to the question of the noble Lord, Lord Purvis, about the purposes of the power.

The effect of these amendments would be that the Bill would not confer on the UK Government the power to provide financial assistance UK-wide for infrastructure, economic development, culture or sport, or to support educational and training activities and exchanges within the UK and internationally. Although the UK Government have some existing powers to spend across the whole UK, the power we are taking now creates a unified power that operates consistently UK-wide, to deliver investment more flexibly, dynamically and in partnership with the devolved Administrations and other partners. Part 6 will make sure that the UK Government are well positioned to deliver investments following the end of the transition period, and to meet their commitment to replace EU structural funds.

I understand that the noble Lord, Lord Stevenson, tabled his amendment to probe the Government’s plans on this and I hope to be able to provide some answers. On the level of funding, the Government committed in their manifesto to maintaining, as I already said, at a minimum the existing levels of investment across all four nations from the EU structural funds. The noble Lord is correct that this was based not on Barnett but on an EU formula. In future, the UK can ensure that funding reflects the needs of the UK, not the 27 other member states, as this work is taken forwards. He is also correct that there are a number of ways in which this funding could be done but, if I may reassure noble Lords about the purpose of the funding, the Government have been clear on their aim: to tackle inequality and deprivation, and level up across the United Kingdom.

On timing, the noble Lord, Lord Stevenson, is right that to prioritise the response to Covid-19 and focus on supporting jobs, the multi-year spending review has been postponed. But he is also correct that we have some time, as EU funds are still being provided. Our aim is to ensure a smooth transition from current EU structural funds to the UK shared prosperity fund.

--- Later in debate ---

[Lord Bruce of Bennachie (LD) [V]]

Does the Minister not agree that shared prosperity requires an attitude of sharing—in other words, for the Government to talk with, not at, the devolved Administrations? Are they listening to Douglas Ross, the Conservative leader in Scotland, who says that the Government are completely failing to promote the benefits of the union to the people of Scotland and, indeed, that their attitude is alienating people? Will the Government recognise that, whatever the commitment behind what they are trying to do, the approach is counterproductive and deeply damaging?

[Baroness Penn (Con)]

My Lords, all I can say to the noble Lord is that the attitude and approach of this Government is one where we intend to work in partnership both with the devolved Administrations and with local communities to ensure that these new powers are used to the best effect and that the UK’s shared prosperity fund supports citizens across the United Kingdom.

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

My Lords, I thank all those who have contributed to this wide-ranging debate, which was conducted throughout at a very high level indeed with respect to the very important issues that we had in front of us. I am grateful to the Minister for her quick-fire response. She covered a lot of ground; I will have to read Hansard carefully to be sure that I picked up all her points.

I have three responses to make. First, I do not think she was convincing in her defence of why the new powers contained in Clause 48 are required. The noble and learned Lords, Lord Thomas and Lord Hope, among others, were incredulous about the reasons for them and put their case very well. I do not think she was able to be as convincing on that as perhaps she hoped to be.

However, the Minister was very positive in response to the questions that a number of us asked about the replacement for the current level of EU funds, saying that the level of funding will be a minimum to match, it will be based on need and will tackle inequality and level up spending for these issues around the UK, and there will be time for a smooth transition. She stressed the collaborative approach that will be taken, but I will want to come back to that. She also left a few serious concerns about how exactly the process would go.

I think she will want to look again at the words of the noble Lord, Lord Dunlop, who spoke with great power; he made a number of points about additionality, accountability and co-operation as the necessary building blocks for any process which involves the insertion of UK Government-led funding in areas which have previously been done on a co-operative basis—bottom up rather than top down. Part of that was also raised by the noble Lord, Lord Bruce of Bennachie, who asked the Minister to recognise the differences that have arisen over time.

I shall leave with her two points. At this stage in the process when it is not certain how things will develop—even if the total amount of money and other things being said around funding are convincing—lack of information and engagement will breed distrust and suspicion. The Government need to think very hard about what approach they will take on a consultative and other basis, or else they will bring instability with them as they move forward.

Secondly, the case made by a number of people who spoke—not just those concerned about the direct impact on devolution but those concerned about other matters to do with climate change—has not been properly answered. There will not be any real return for the Government on this if they think that devolution will be assisted by what looks like a power grab without collateral arrangements being put in place. These funds need to be administered locally and planned co-operatively. At the end of the day, as one person said in the debate, the levers that are used to fund the people who are going to see the money will be local. If the Government do not get that right at the beginning, the rest will not work. However, we will read carefully in Hansard what was said. It has been a good debate on all sides. I beg leave to withdraw the amendment.

United Kingdom Internal Market Bill

Baroness Penn Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Wednesday 18th November 2020 Lords Chamber

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am grateful to those who have spoken in support of this amendment—

[Baroness Penn (Con)]

My Lords, I believe that a noble Lord gave notice that he wanted to speak after the Minister.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

I am so sorry; I did not get the message. Who wanted to speak after the Minister?

[Baroness Penn (Con)]

I believe it was the noble Lord, Lord Fox.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

I am sorry. I call the noble Lord, Lord Fox.

United Kingdom Internal Market Bill

Baroness Penn Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

This power grab, and the rather ignoble assertions made by the Minister the first time round, exposes a key divide between us. Why do all the important things that she identified have to be done from the centre, when existing mechanisms allow these bodies, which have far greater knowledge of what is happening locally, to spend the resources more effectively? As I said in response to an earlier amendment about the common frameworks, it is now patently obvious that the Bill is actually about gathering powers, which should be devolved, to a relatively insensitive centre which is trying to imprison a multinational country composed of vibrant, diverse regions, with diverse histories and needs, into a straitjacket of a unitary state. We can, and need to, do better than that.

[Baroness Penn (Con)]

My Lords, I begin by reminding noble Lords of the purpose of this part of the Bill. The power to provide financial assistance supports the Government’s determination to deliver on the commitments on which they were elected: levelling up and delivering prosperity across the whole United Kingdom, and strengthening the ties that bind our union together. It provides for a unified power that operates consistently UK-wide—one which will allow for strategic investment throughout the UK, underpinning the Government’s determination to see all parts of the UK flourish. It makes sure that we meet our manifesto commitment to deliver a UK shared prosperity fund which allows the Government to invest in communities across England, Scotland, Wales and Northern Ireland. Previously, in many of these areas, the EU mandated how our money had to be spent, with little say from elected politicians in the United Kingdom. The UK Government intend to take a much more collaborative approach in delivering any funding that replaces EU programmes.

In this context, I will speak to Amendments 64 and 68, which seek to remove Clauses 42 and 43. The noble and learned Lord, Lord Thomas, asked why such a power should be included in this Bill. The ability of the UK Government to invest in and support businesses and communities in all parts of our union, as these clauses provide for, helps to achieve a stronger and fairer internal market. Indeed, this is the argument the EU makes on the role of European structural and investment funds in strengthening the European single market. It is right that, as we leave at the end of the transition period, the UK Government have the right tools to make sure the whole country can benefit from investment which strengthens communities, economies and connectivity within and between all parts of the UK.

Another point of focus from noble Lords, including the noble Lords, Lord Purvis and Lord Fox, the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Finlay, among others, was the role of the devolved Administrations and other local partners, including local authorities. Let me be clear: this power is in addition to the devolved Administrations’ existing powers. It will allow the UK Government to complement and strengthen the support given to citizens, businesses and communities in Scotland, Northern Ireland and Wales. It does not take away responsibilities from the devolved Administrations. Rather, the power will enable the UK Government to deliver investment more flexibly and dynamically and in collaboration with the devolved Administrations and other partners.

We have taken a collaborative approach to investment with devolved Administrations already, for example through our successful city deals programme, as noble Lords have talked about. The UK Government intend to continue to work in this spirit of partnership with stakeholders. We will make sure that this new power can facilitate UK government support for projects, making it far more responsive and responsible for addressing the needs of communities and businesses throughout the country.

We have seen how important this can be. Colleagues on these Benches and in the other place have already noted that our experiences of Covid-19 have demonstrated the value of a responsive UK Government. The noble Lord, Lord Stevenson, questioned the support in this House for that statement; I tend to disagree, unless the party opposite does not support the furlough scheme and the Bounce Back Loan Scheme that have protected thousands of jobs and businesses across the UK during this pandemic. To make sure that the UK Government can deliver on this ambition for all parts of the UK, I hope these amendments will be withdrawn or not pressed.

Turning to government Amendment 66, we listened carefully to the debate by noble Lords on this part of the Bill in Committee, where questions were asked on how the clause would operate. Through Amendment 66, the Government seek to introduce a requirement in Clause 43 to report annually to Parliament on the use of this power to provide financial assistance. This would put a requirement in legislation to provide a summary on the use of the power for scrutiny by parliamentarians, other key partners and the wider public. This is in addition to the scrutiny role that Parliament already performs for public spending through voting on the spending allocations, as part of the estimates process and in line with the principle of the PAC concordat.

This requirement makes sure that key partners, including devolved Administrations, have transparency on where funding under the power has been directed. Any future funding decisions are subject to fiscal events. Accordingly, the requirement added by Amendment 66 requires a summary of the use of the power in the previous financial year. I hope your Lordships’ House will agree that this government amendment improves the opportunity for Parliament to see and scrutinise financial assistance provided under the power in Clause 42.

I will now discuss Amendments 65 and 67. Amendment 65 would mean that this new clause would seek to establish a UK shared prosperity fund commissioner, whose primary task would be to make recommendations for the disbursement of the UK shared prosperity fund. Amendment 67 would mean that financial assistance for economic development would be managed and administered through the devolved Administrations. As I have said, this power to provide financial assistance is wider than any single fund or organisation. It will ensure that the UK Government are well positioned to deliver financial assistance, following the end of the transition period, and to replace EU structural funds. It is crucial that the UK Government can use successor funds to invest strategically and have the additional flexibility needed to invest across the whole UK that this power provides. These amendments, including the establishment of a commissioner, would curtail that flexibility. In addition, decisions on governance for the fund should not be made through legislation.

Noble Lords are, however, right to seek progress on the UK shared prosperity fund. The Covid-19 pandemic presented exceptional circumstances, and it is right that our focus and priorities shift accordingly. The Government have conducted a one-year spending review to prioritise the response to Covid-19 and focus on supporting jobs. However, in these challenging times it is important we do not lose sight of our long-term objectives. I reassure my noble friend Lord Trenchard that investment under EU structural funds peaks next year and will tail off until 2023, with spending in each of England, Scotland, Wales and Northern Ireland remaining higher than the annual average.

To ensure a seamless transition from EU structural funds into the UK shared prosperity fund, we announced additional spending today in the spending review to help local areas prepare over 2021-22 for the introduction of the UK shared prosperity fund, supporting our communities to pilot programmes and new approaches. As noble Lords have also referenced, we have published the heads of terms setting out our plans for the shared prosperity fund.

The noble and learned Lord, Lord Thomas, asked whether the spending would be efficient and effective. The bureaucratic burden of EU programmes meant that places have had to wait a long time before they received any funding. Places typically see no investment in their communities until at least a year after the programmes have started. The provision of additional funding next year will be quick and responsive; it will be phased in as EU investment declines.

The heads of terms also set out that there will be two portions of the fund: one targeting places most in need to support people and communities to open up new opportunities; and a second targeted differently at people most in need through bespoke employment and skills programmes, again tailored to local need. As the noble Lord, Lord Stevenson, noted—I hope the noble Baroness, Lady Bennett, who had not seen the spending review document, will take some reassurance from this—the terms also state that investment should be aligned with the Government’s clean growth and net-zero objectives.

We have not taken back control over investment to hoard it in Whitehall or to roll over EU prescriptions on how we invest in our local economies. Local places across the UK will be able to shape investment to reflect their needs. This means a strong role for local partners across the UK. The UK Government intend to work with devolved Administrations and local communities to ensure this power is used to best effect and that the UK shared prosperity fund supports citizens across the UK. This includes engaging with local authorities and devolved Administrations, as well as wider public and private sector organisations. I reassure noble Lords that the Government have held 26 engagement events across the UK on plans for the shared prosperity fund, including 16 events in devolved Administrations, and that UK government officials regularly speak with their counterparts in the devolved Administrations to discuss the design and operation of the fund to ensure it supports every part of the UK.

Further details on additional funding for next year will be published in a prospectus in the new year. We will set out further details on the UK shared prosperity fund in the UK-wide investment framework, to be published in the spring. A multiyear profile will be set out at the next spending review.

The short answer to the noble Lord, Lord Fox, on his final question on the role of the office for the internal market is no. It looks only at Parts 1 to 3 of the Bill and relevant effects, so it would not look at decisions under this power.

Given the further details I have set out today, I encourage noble Lords not to press their amendments.

[The Lord Speaker (Lord Fowler)]

My Lords, I have received requests to ask a short question from the noble Lord, Lord Liddle, the noble Baroness, Lady Finlay of Llandaff, and the noble Lords, Lord Fox and Lord Purvis of Tweed. I call the noble Lord, Lord Liddle, to ask a short question for elucidation.

--- Later in debate ---

[Baroness Penn (Con)]

I am not sure that the noble Lord’s first questions cover points that we have not covered in this debate already but, for clarity, this does not change the devolution settlements. We are talking about a UK-wide investment programme that will work in collaboration with the devolved Administrations, local partners and local authorities.

I am very happy to clear up the noble Lord’s point about £220 million. That is in addition to money that is still coming through the EU structural funds, which will continue to flow until 2023. As I believe I said in my speech, each of the nations will continue to receive the same level of funding, if not a bit more. That first year of funding is for pilot projects and to aid the transition to the shared prosperity fund, which will then ramp up and there will be a multi-year settlement for that fund in the next spending review.

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

The noble Baroness, Lady Noakes, said to be careful what you wish for. She intimated that, in the event of Clause 44 being deleted from the Bill, the shared prosperity funding being discussed might be withheld completely. Can the Minister state clearly, with a simple yes or no, whether it is indeed the Government’s policy that, without Clause 44, the funding will be withheld or diminished?

[Baroness Penn (Con)]

My Lords, I do not think that I can go any further than what has been announced in the spending review today: that it is the Government’s intention to use the powers under this Bill to deliver the shared prosperity fund.

[Lord Fox (LD)]

My Lords, I thank the Minister for attempting to answer my final question but I fear that she may have been wrongly advised. Clause 31 states:

“The CMA may from time to time undertake a review”.


Subsection 1(b) certainly points to “Parts 1 to 3”, as in the Minister’s answer. However, subsection 1(a) says that such a review can refer to

“the internal market in the United Kingdom”,

which is a far broader swathe than the narrow answer given just now.

While I am up and reading the legislation, subsection (2) states:

“The CMA may receive and consider any proposals that may be made or referred to it for undertaking a review”.


Can the Minister confirm that the devolved authorities are one of the bodies that can request such a review of the whole UK internal market as in Clause 31(1)(a), rather than the answer that was just given?

[Baroness Penn (Con)]

The noble Lord will probably be unsurprised to know that the advice I have received has not changed in the short time since he asked his further question. I will commit to reviewing that advice; if any part of it was not accurate, I will write to the noble Lord. My understanding is that those reviews do not refer to the powers in this Bill, and whether the devolved Administrations or others can refer matters to the CMA for review relates to other parts of this Bill.

[Lord Purvis of Tweed (LD)]

The Minister gave a number of examples of how the UK Government are currently able, under their powers, to fund UK priorities across all parts of the United Kingdom. The Government do not have the legislative powers to spend on devolved areas within devolved competencies. What powers are the Government seeking to have by January next year for them to spend on devolved policy areas in our devolved nations?

[Baroness Penn (Con)]

The Government are seeking the power under this Bill to spend across the whole of the United Kingdom in the areas set out in the Bill. The operation of the £220 million announced at the spending review will start from the next financial year and the full shared prosperity fund will begin the year after. More detail on how that will operate will be set out in due course.

[Lord Thomas of Cwmgiedd (CB) [V]]

I thank all noble Lords who have spoken in this interesting debate. I apologise to the noble Baroness, Lady Noakes, for referring to the document published today as the Red Book instead of its true colour which, as one sees on the screen, is blue. I was misled by the heading Google has for it, which is the Red Book.

However, Google had another use because it took up a point made by the noble Lord, Lord Naseby, and alerted me to the fact that the great and late Senator McCain had a member of staff who would go through Bills before Congress and find where there were pork-barrel provisions. He was known as the ferret, so ferrets do have great uses in politics.

To return to the points made, it is clear from the debate that we all share a number of objectives: first, to have a more prosperous United Kingdom; secondly, to spend the money wisely; and thirdly, to spend it in a way that is effective and goes to those areas that need it. We all believe that such spending and levelling up will benefit the union. However, there is profound disagreement as to the way in which this should work with our devolution settlement. It seems to me from the response given to my noble friend Lord Purvis of Tweed and from the Minister’s speech that only one conclusion can be drawn from what the Minister is saying and that these powers are needed not to spend the money outside the areas of devolved competence but to spend it in the areas of devolved competence. That is the aspect that fundamentally divides us and is fundamentally wrong about this clause. It seems to me that, given the Minister’s position and the clarity that comes through her statements, this is a direct attack on devolution under the guise of some other words. Therefore, I seek to press to a Division the amendment that I tabled to remove this clause, which is so destructive of our union.

United Kingdom Internal Market Bill

Baroness Penn Excerpts

Consideration of Commons amendments & Ping Pong (Hansard) & Ping Pong (Hansard): House of Lords
Wednesday 9th December 2020 Lords Chamber

Moved by

[Baroness Penn]

That this House do not insist on its Amendments 48 and 49 to which the Commons have disagreed for their Reason 48A.

48A: Because they would alter financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Baroness Penn (Con)]

My Lords, the Government have reinserted into the Bill the power to provide financial assistance. This was removed by your Lordships’ House through Amendments 48 and 49. There is a point of parliamentary principle at play here, which is that the other place wishes to assert financial privilege and preserve that House’s right to decide on public spending arrangements. Indeed, that is the reason for disagreement that has been sent from the other place, and we must respect its financial primacy. It would be contrary to normal practice for noble Lords to insist on any amendment disagreed for a privilege reason. Indeed, it is the only reason given by the Commons, as it alone should be deemed sufficient.

However, we have also heard clearly from the other place that this is a power they wish to remain in the Bill for other reasons, when asked to think again by your Lordships’ House. These clauses form the financial assistance power, which enables the UK Government to deliver strategic investment in all four corners of the United Kingdom. This is all the more important as businesses and communities throughout our countries recover from the Covid crisis. The past few months have demonstrated clearly how important the responsiveness and scale of UK Government support can be to protecting lives and livelihoods.

This power will cover infrastructure, economic development, culture and sport, and will support educational and training activities and exchanges both within the UK and internationally. These are policy areas in which funding was previously provided by EU programmes under terms and conditions set by the EU. It is right that, as we leave the transition period, the UK Government have the right tools to make sure the whole country can benefit from investment which strengthens the communities, economies and connectivity within and between all parts of the UK.

I emphasise again that this power is in addition to the devolved Administrations’ existing powers. It does not take away responsibilities from the devolved Administrations; rather, the power will enable the UK Government to deliver investment more dynamically and in collaboration with the devolved Administrations and other partners. The Government will work with the devolved Administrations to make sure that we can complement their existing and continuing powers, used to support citizens in Scotland, Wales and Northern Ireland. We will also work collaboratively with other crucial partners, including local authorities and wider public and private sector organisations.

We have taken this collaborative approach to investment with devolved Administrations already: for example, through our successful city deals programme. The UK Government intend to continue to work in this spirit of partnership with stakeholders as we deploy support with this power. Practically, the power means that the UK Government can make good on our commitment to the UK shared prosperity fund. We have published our heads of terms for the fund online. The UKSPF will help to level up and create opportunity across the UK in those places most in need—such as ex-industrial areas, deprived towns, and rural and coastal communities —and for people who face labour market barriers. These places will then develop investment proposals, with input from a range of local partners, to be approved by the Government. We will set out further details on the objectives and administration of the UKSPF in a UK-wide investment framework published in the spring. We will continue to engage the devolved Administrations as we develop the investment framework and in advance of its publication.

The noble and learned Lord, Lord Thomas, has put forward Amendments 48B and 48C. Let me be clear that the UK Government intend to work with both the devolved Administrations and local communities to ensure that this power is used to best effect and that the UK shared prosperity fund supports citizens across the UK. Indeed, the devolved Administrations will be represented in UKSPF governance structures. Our intention is to work with the devolved Administrations and respect the devolution settlements, and I hope that noble Lords will take this as a demonstration of that commitment. I can assure the House that officials in the Ministry of Housing, Communities and Local Government will continue their ongoing conversations with their counterparts in the devolved Administrations, and will discuss the detail in due course. This provides one example of what we seek to deliver with this power, but I hope it makes plain our intended approach for working collaboratively, while taking a UK-wide view of investment opportunities, to support all parts of the country. As such, I hope that this will encourage the noble and learned Lord not to test the opinion of the House on his Motion.

Motion K1 (as an amendment to Motion K)

Moved by

--- Later in debate ---

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

My Lords, I thank the Minister for her clear and concise introduction to this topic. Although she said she was relying primarily on the Commons argument that this issue engages financial privilege, she recognised there were other issues going on, and it was good of her to take the argument a bit further. We are, as the noble Lord, Lord Fox, has also said, completely cognisant of the restrictions placed on the House due to financial privilege being engaged. The noble and learned Lord, Lord Thomas, made a compelling case about the wider issues, and it is important to have those on the record. I will add to the list of points he made.

The Government clearly assert—and we believe them —that these will be additional to existing powers, and we should not be concerned, as we have been, that the devolved Administrations will have their responsibilities and authority challenged in this way. The Minister said that the driving force behind the shared prosperity fund is to add and complement existing arrangements. If she wishes to repeat it when she winds up, that would be helpful. In that sense, there should be no need for the concern that is currently in the devolved Administrations about that particular aspect of it. We do not have the detail, and I think she said the likely outcome for their consultation would not be before spring 2021, which seems a long way away in terms of what we are doing. We accept that existing programmes are currently running out—but they are running out; they are not being continued at the same level and, therefore, there will be a shortfall unless the Government are prepared to move a bit faster than the current timescale suggests.

The Minister also confirmed—and this is good news —that there will be engagement with the devolved Administrations. When she responds, perhaps she could explain a bit more about what that means. We have already heard from the Government today about programmes of engagement that have involved substantial change in previous views; it would be good to hear that language repeated when she talks about how the devolved Administrations might be engaged with this process.

The Minister has confirmed there will be some form of shared prosperity fund board, which is interesting. She may recall that at the previous stage of this Bill, we proposed a shared prosperity commissioner. I said at the time, and I still think, that that was code for a board, because we were trying not to engage financial privilege. We have clearly failed in that. Can she confirm the board will be independent and say more about the powers that might be invested in that board? Can she also talk a bit more about whether the programme itself, when it is brought forward, will be subject to guidelines? Will those be published and discussed before they are invented? Will there be themes to it, as there have been in previous rounds of the regional structural funds? Will the funds be competitive and open to all countries to bid for? Can she confirm, most importantly, that the plan will be for the funds under the shared prosperity fund to be separate from any Barnett formula calculations? That is not in the sense of making people not eligible for funding—that is not what we are about here—but a needs-based or different set of indicators to set out the ideas under which the shared prosperity fund will operate. I look forward to hearing her response.

[Baroness Penn (Con)]

My Lords, I thank noble Lords for this short but very useful debate. I think it might be useful to take the points of the noble and learned Lord, Lord Thomas, in turn. On the first point on financial privilege, I think the noble Lord, Lord Fox, was wise to stay out of that one. All I can say to this House is that the decision on financial privilege is made by the Speaker on advice from the clerks. It is the only reason, when invoked, that can be given. Though I have spoken to others, that is the process in the other place.

On the second point on the consultation of, and consent from, the devolved Administrations on spending on these matters, I have said before, and will again, since the noble Lord, Lord Stevenson, asked me to reiterate, that this is about an additional programme of spending to support the work of the devolved Administrations but also about taking a strategic look across the whole of the UK. It is important to remember that the main fund we are talking about, when it comes to the use of this power and the shared prosperity fund, replaces EU structural funds that were determined at an EU level for the needs of many different nation states. They were determined at an EU level and, while they may have been managed and delivered at a local level, the structure, framework and principles that people had to deliver were decided at an EU level.

The third point was about a principled basis for the funding. The Government set out, at the spending review, the heads of terms for the shared prosperity fund. Those have begun to outline how the shared prosperity fund will work. A portion of the SPF will target the places most in need across the country, such as ex-industrial areas, deprived towns and rural and coastal communities.

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[Baroness Penn (Con)]

My Lords, the Government made a number of commitments on the shared prosperity fund in the manifesto, both about the overall quantum of the fund and the funding that different parts of the UK can expect to receive. We set out in the spending review that that would ramp up to £1.5 billion per year as the structural funds tail off. Our approach will be guided by that but, as I say, more detail will be set out in advance of the operation of the fund in spring next year, with the multiyear settlement coming in the following year.

[Lord Thomas of Cwmgiedd (CB) [V]]

I thank all noble Lords who have spoken in this short but interesting debate. I will deal with the Minister’s points in turn.

First, it seems clear that these powers—the Minister actually said this in Committee—were being taken to give the UK Government power to spend across the United Kingdom. These powers would plainly not be needed unless they were encroaching on devolved powers. City deals can be done without them; the Government can spend without them. I say respectfully to the Minister and to those who say this is a financial matter that it is not. When powers are devolved, the spending power goes with them. The reason of financial privilege is not correct.

Secondly, on how the funding works, I find it difficult to understand why, in light of what the Minister has said, she cannot agree to the very short amendment I have put forward. It spells out the principles, deals with consultation and ensures that, within the areas of devolved spending only—the amendment is clear on this—there should be agreement so that funds are spent together. With respect, the importance of this amendment is to show that, as we go forward, we do so as a United Kingdom with the central UK Government and the devolved Governments working closely together. Putting this provision in the Bill, particularly the structure under which this is to be done in this area, would be an enormous reassurance. It would strengthen the union, not imperil it, by enabling inconsistent spending to occur in devolved areas. Having listened to the debate and heard what all noble Lords have said, I seek to take the opinion of the House on this issue.

United Kingdom Internal Market Bill

Baroness Penn Excerpts

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

Moved by

[Baroness Penn]

That this House do not insist on its Amendments 48B and 48C to which the Commons have disagreed for their Reason 48D.

48D: Because the Lords Amendments would alter financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Baroness Penn (Con)]

My Lords, the other place has disagreed with Amendments 48B and 48C regarding the power to provide financial assistance which the Bill confers on the UK Government. Once again it has invoked financial privilege. I remind noble Lords that this is not a decision for the Government to make but is independently determined in the other place. It would, of course, be contrary to normal practice for the House to insist on any amendment disagreed for a financial privilege reason.

Amendments 48B and 48C, in the name of the noble and learned Lord, Lord Thomas, required the Government to have the consent of the devolved Administrations before exercising the financial assistance power in devolved areas. As I emphasised last week, this power is additional to the devolved Administrations’ existing powers, which I was glad to see noble Lords accept in the debate last Wednesday. It does not override the devolution settlements. I note that the noble and learned Lord, Lord Thomas, has tabled further amendments on this matter and I thank him for discussing these with me in advance. I also thank the noble Lord, Lord Stevenson, and the noble Baroness, Lady Hayter, for their discussions with me on these matters.

Amendments 48E and 48F would require the Government to consult on and publish the principles for investment, and to seek advice from representatives jointly appointed by the UK Government and the devolved Administrations before providing financial assistance in devolved areas. I reassure the noble and learned Lord that, when using this power, we will, of course, work with the devolved Administrations and other key stakeholders throughout the country. As I have mentioned previously, the UK shared prosperity fund provides a more detailed example of how we intend to use the power to provide financial assistance. In doing so, I hope that noble Lords recognise that the process is consistent with the intent of the amendments proposed by the noble and learned Lord, Lord Thomas.

The financial assistance power means that the UK Government can make good on our commitment to level up and create opportunities across the UK in places most in need, such as ex-industrial areas, deprived towns and rural and coastal communities, and for people who face labour-market barriers. We have discussed the UK shared prosperity fund extensively and I reiterate that, while the specific arrangements for the governance of the fund are still being developed, there will be governance structures and the devolved Administrations will have a place within those structures. I hope that noble Lords will accept that this is a clear commitment to work collaboratively and demonstrates that this is not at all “Westminster knows best” or “a Westminster power grab”. As noble Lords have mentioned, we have also worked collaboratively with the Scottish Government, the Welsh Government, and the Northern Ireland Executive for over six years on city and growth deals, and we intend to continue in that spirit of partnership and joint working.

The power in the Bill creates a unified power that operates consistently UK-wide. In exercising that power, we will work with stakeholders, including the devolved Administrations. This will help to make sure that UK Government investments and devolved UK Administration spending will deliver effective outcomes for the people of Scotland, Wales and Northern Ireland. The UK Government are best placed to identify and fund schemes that take into account all parts of the country and across administrative borders to connect all parts of the UK. Indeed, we have shown how crucial the scale and responsiveness of the UK Government support can be throughout this difficult year.

The response to Covid-19 has illustrated how the Government can work strategically and at scale to save jobs and support communities throughout the UK, working alongside the devolved Administrations to keep every citizen safe and supported, no matter where they live. I hope that this will encourage the noble and learned Lord to withdraw his amendment.

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As the noble and learned Lord, Lord Thomas of Cwmgiedd, said, we need to think harder about how and where we operate—we should not just be thinking about a consultative, consent-seeking mode. We should be thinking harder about what works best when done from the bottom end of the prospective policy, what works best jointly through common frameworks or market access principles, and what has to be done by the UK. I am not sure we have quite got to the bottom of that in these debates.

[Baroness Penn (Con)]

My Lords, I thank all noble Lords for their contributions to a debate that was slightly longer than the one we had during the previous round of ping-pong. I will address the points made by the noble and learned Lord, Lord Thomas of Cwmgiedd, and in doing so I hope to address those made by other noble Lords too.

On financial privilege, I very much welcome my noble friend Lady Noakes saying that this is not a decision by the Government but one taken by the Speaker in the House of Commons. I do not have an answer for her on whether there are any precedents for twice resisting financial privilege as a reason given by the Commons, but it must be highly unusual. This is not the place to raise further constitutional questions in bringing that principle into doubt in this Bill.

The noble and learned Lord talked about a principled basis for the spending powers being taken through this Bill. I completely agree with him on that. He spoke of consultation, the establishment of principles and advice from jointly appointed advisers. We do not propose a structure involving jointly appointed advisers, but we do plan to have the devolved Administrations represented in the governance structures for the fund. I apologise to the noble Lord, Lord Fox—I cannot give further details of how that will work at this stage; we will work on that with the devolved Administrations. There are further stages to come in the development of the shared prosperity fund, its governance and the principles around it, after this debate and in future. As I have said to noble Lords before, the fund will not be introduced until the following financial year, which gives us time to work through some of these details.

I hope I have made it clear to noble Lords that the Government have already been engaging in consultations on the shared prosperity fund. To date, we have conducted 25 engagement events across the UK, attended by over 500 stakeholders, including the devolved Administrations. The noble Lord, Lord Liddle, made a good point about LEPs and mayoral authorities—of course we will want to consult and collaborate with those organisations as well as the devolved Administrations as we take these proposals further. Those mentioned at the Dispatch Box were not an exclusive list of those whom we wish to engage, but the debate has focused very much on the question of devolution.

As for the establishment of principles, raised by the noble Lords, Lord Fox and Lord Liddle, and others, there is not a huge amount of disagreement here. The EU set the terms and conditions for investment in the UK as well as other member states, with which the UK Government and the devolved Administrations alike had to comply. Devolved Administrations and other areas were then responsible for managing EU funds in those projects. The idea of setting out principles in a framework and then collaborating in local delivery is very much something we wish to take forward. We have set out some of those principles already in the heads of terms for the shared prosperity fund that we published at the spending review. We have said that a much more detailed investment framework will be published in the spring, following further discussions.

Regarding the focus of that investment, I would have thought the noble Baroness, Lady Bennett of Manor Castle, would welcome our saying at the spending review that investment should be aligned with the Government’s clean growth and net zero objectives. Those are the kinds of principles we have already set out and that we want to see in the investment from these funds.

On the establishment of principles and the conduct of consultations, the Government and noble Lords are rather in agreement. The noble Lord, Lord Fox, asked about the quantum and the distribution of funding. Again, I apologise and will have to disappoint him slightly. I said at the spending review that the quantum will ramp up to £1.5 billion a year, I think, to match that commitment to, at minimum spend, the previous levels. I also referred in the last debate to our setting out certain commitments in our manifesto that will guide us in future. But there is more work to be done on the detail—from taking the heads of terms to the investment framework—to get the kind of answers that the noble Lord is asking for.

I have mentioned some of the details of the shared prosperity fund, and I also talked about our approach to city deals. I gently disagree with certain noble Lords’ use of “pork-barrel politics” terminology. I point to examples of our trying to take a collaborative approach—a principles-based approach from the centre, while also working with those on the ground regarding their needs. That is very much the approach we plan to take with the shared prosperity fund.

I am afraid that I will have to take away the concerns of the noble Lord, Lord Stevenson, about a possible replacement for Erasmus and how that might operate. Again, this is an example of the fact that the detail of this matters. The Government take this very seriously. However, we disagree on some points. This power will be used for the shared prosperity fund and may be used in other areas. We want it to be flexible enough for the UK Government to respond quickly and at scale to investment challenges and opportunities. It is not practical to set out a single plan for investment in legislation now, which is why, for the shared prosperity fund, we will set out plans and collaborate with the devolved Administrations as we will have developed that. In other areas in future—the noble Lord mentioned Erasmus, for example—we will take a similar approach.

I hope that the noble and learned Lord, Lord Thomas, will feel able to withdraw his amendment although it did not sound as though he was minded to.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

I call the noble Lord, Lord Adonis, to ask a short question for elucidation.

[Lord Adonis (Lab)]

I want to ask the Minister a very specific question. She talked about consultation, but will she undertake on behalf of Her Majesty’s Government to commit that they will not make investments under the shared prosperity fund, or any of its successors, in the territories of the devolved Administrations without their consent? This is about not just consultation but consent. Further, does she realise that, if she does not do so, none of the other assurances that she has given is worth the paper they are written on?

[Baroness Penn (Con)]

I believe that this issue was the subject of the amendments tabled by the noble and learned Lord, Lord Thomas, in the previous round of ping-pong. Those amendments were sent to the Commons and the Commons rejected them, so we are discussing a new set of amendments in this round of ping-pong. This question was dealt with in the previous round and is, as the Speaker of the House of Commons determined for previous amendments, subject to financial privilege.

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[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

You wish to test the opinion of the House? The Question will be decided by a remote Division. I instruct the clerk to start the remote Division.

[Baroness Penn (Con)]

My Lords, I believe the clerk will give us some advice on how to proceed in hybrid proceedings in these circumstances. I suggest we adjourn for five minutes until we get that advice on how to proceed.