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.