United Kingdom Internal Market Bill

Baroness Pitkeathley Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 28th October 2020 Lords Chamber

Amendment 14 withdrawn.

[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

We now come to the group beginning with Amendment 15. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this amendment or anything else in this group to a Division should make that clear in the debate. The noble Baroness, Lady Finlay, is having difficulties connecting with us, so I call the noble Lord, Lord German.

Amendment 15

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[Lord Hain (Lab) [V]]

My Lords, as so often, my noble friend Lord Wigley has spoken for the wide consensus on this question in Wales. I will speak specifically in support of Amendments 74, 75 and 99, which seek to ensure that the Henry VIII powers of the Secretary of State to amend the Bill’s provisions relating to market access on mutual recognition, non-discrimination and the “legitimate aim” of regulatory requirements are referred to the devolved Administrations for their consultation and consent. I do so following a series of excellent opening speeches, notably by the noble Lord, Lord German, and the noble and learned Lord, Lord Hope.

The Bill has been justified on the basis that it is intended to support the UK internal market for goods and services once EU rules no longer apply after the transition period ends on 31 December. These rules, derived from EU law, place constraints on the ability of government institutions within the UK to impose constraints on the free movement of goods, as well as people, and significantly reduce the scope for measures that would restrict intra-UK trade. One reason that the UK Government wish to constrain the autonomy of the devolved Administrations in this area is that countries with which the UK is trying to negotiate trade deals may wish to clarify that they have access to the whole UK market, or Great Britain market if the Northern Ireland protocol survives, as it must do.

A White Paper published by the Government in July 2020 claimed that the Bill would provide “frictionless trade”, “fair competition” and protection for businesses and consumers within the UK. To achieve these aims, two market access principles were identified, namely mutual recognition and non-discrimination, which would constrain the ability of all relevant actors within the UK, be they regulators, local authorities or devolved Administrations, to impose new regulations on goods and services. These limit the ability of devolved Governments to regulate economic activity far more than did their EU predecessors. So much for taking back control. Obviously, that does not apply to devolved legislatures, which will lose control under the Bill—to Whitehall.

The UK internal market was initially seen as one strand of work, begun in October 2017 by the four Governments within the UK, to establish a common approach in key policy areas of returned EU rule, referred to as common frameworks, about which I spoke in the last Session. However, it is generally agreed that, by removing the internal market from these discussions and pushing ahead without the agreement of the devolved Authorities, the common framework approach is being completely undermined by the UK Government.

In response to the White Paper, the Welsh Government insisted that any new system must have independent oversight and dispute resolution, and that common rules must be agreed by all four Governments. When the Bill was published, Jeremy Miles, the Welsh Government Counsel General, called it an “attack on democracy”, and the Scottish Constitution Minister pointed out that the concept of mutual recognition could mean that Scotland, for example, would be forced to accept lower food standards—an area that is currently devolved—against its express wishes.

The mutual recognition provisions would, therefore, effectively prevent one part of the UK unilaterally imposing and enforcing requirements, for example for the presentation or characteristics of goods, which are covered by this principle, which also applies to services. There are exceptions under the Northern Ireland protocol. “Manner of sale” requirements, on the other hand, for example governing to whom products may be sold or their price, would not be covered by mutual recognition but by the non-discrimination provisions of the Bill. The exclusion of price from the mutual recognition principle was driven, in part, by arguments in the other place about what the Bill might mean for Scotland’s minimum alcohol pricing regime—subsequently adopted in Wales, more or less—in response to the public health challenge from excessive alcohol consumption.

Schedule 2 contains lists of services that are excluded from the principles of mutual recognition and non-discrimination, such as healthcare, transport and water supply, as well as some privately provided services. Amendments 74 and 75 require the Secretary of State to consult and/or seek the consent of the devolved Administrations before making changes to Schedule 2.

If there is wariness about enabling any one of the devolved nations to exercise a veto—for example, the Scottish nationalists simply refusing to consent to something which would benefit the rest of the UK —leading to deadlock, why, as I have suggested several times in recent debates in your Lordships’ House, do the Government not adopt the Welsh Government’s proposal for a Council of Ministers-type model with a form of qualified majority voting, in place of the current Joint Ministerial Committee, which has been dysfunctional and, frankly, worse than useless? I specifically ask the Minister to respond to this suggestion of the Welsh Government to have a Council of Ministers-type model with qualified majority voting, which could overcome many of the issues involved. This model would require the UK Government, since it represents England with its disproportionately large population and share of GDP, to secure the agreement of at least one devolved Administration before overriding any devolved Administration that wanted to exercise a veto.

The Bill prohibits both direct and indirect discrimination. The latter is permitted if it can reasonably be considered a “legitimate aim”, as defined in the Bill. However, with the Bill as it stands, the Secretary of State can redefine that term by regulations, subject only to an affirmative resolution procedure. Amendment 99 rightly seeks to ensure that there is consultation and consent from the devolved Administrations before doing so. I cannot for the life of me understand why the Government or the Minister, for that matter, would object to that.

New functions will be bestowed on the Competition and Markets Authority—the CMA—to monitor and report on the impact of specific regulations that are considered to potentially have a detrimental effect on the internal market. The Bill also proposes to establish an office for the internal market within the CMA to oversee the application of these principles and the functioning of the internal market. Expert analysis has shown that, whereas EU law had a symmetrical effect upon the UK Parliament and devolved legislatures, the Bill will have an inherently asymmetrical effect as it will become a protected enactment, which the devolved legislatures will be powerless to repeal or modify.

The Bill will also narrow the territorial scope of devolved legislation. Regulations relating to goods, passed by the Senedd, for example, will apply only to goods produced in Wales or imported directly into Wales from outside the UK. They will not apply to goods imported from the rest of the UK. This, as acknowledged by the business department’s impact assessment of the Bill, would reduce the ability of local legislatures to produce targeted social and environmental objectives, so that the intended societal—[Inaudible.]

[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

We seem to have lost connection with the noble Lord, Lord Hain, so I call the noble and learned Lord, Lord Mackay of Clashfern.

[Lord Mackay of Clashfern (Con) [V]]

My Lords, I have not tabled many amendments to the Bill—although there are many things on which I might seek reconsideration—because it is important that I confine myself to the principal matters. In this group, my amendment requires that the powers in the Bill are to be used only for the promotion of the internal market. Any idea that the Bill can be used for any other purpose should be clearly outlawed.

It is important to note that while the powers of the European Union in relation to our internal market will stop on 31 December, the retained EU law on our internal market will, of course, remain in place unless and until it is altered. Therefore, the question before the Committee now is about the rules that should apply after 31 December, and the powers that exist to change these in that time. I think it is absolutely clear that the responsibility for the internal market in legislative form must ultimately be with the UK Parliament, but of course the UK Parliament includes representatives from all four countries. Therefore, it is a suitable responsibility to carry. However, the other point is that the existing devolved Administrations and legislatures have responsibility for the laws in their particular areas. Accordingly, it is very important to ensure that, so far as possible, the rules of the internal market should accommodate that and be in agreement throughout the whole United Kingdom—in the devolved Administrations and legislatures also.

Therefore, I agree very much with a great deal of what has been said in support of the amendments in this group. I have an amendment later that suggests that every power that the Secretary of State has should be subject to the rule that they consult the JMC(EN), which I think is the committee responsible for the modification and regeneration of the common frameworks. That system seems to have worked very well, as far as I can gather from what has been said. I suggest that every power that the Secretary of State has to make regulations under the Bill should be subject to being put before that committee, which includes Ministers from the devolved Administrations, before they go forward. If, and only if, there is discontent or disagreement, the matter should then be referred to two debates, one in each House of Parliament, to resolve the matter using the responsibility that they have to solve the matters of the common market.

This is absolutely important. It is extremely important that the union we have is preserved by proper relationships between all the Administrations. I see no reason at all why that should not happen. I know that at least one of the Administrations has a desire to forsake the union, but in the meantime, while they are in the union, it is important that we have the best relationships possible with them, so that there is no feeling of resentment. An internal market is a very important part of the union, and a part that would be damaged if there were any degree of separation, both for the remaining units as well as for the unit that was thinking of leaving. This series of amendments in various forms is very important in the preservation of the union, and I support the principles laid down. I do not concentrate particularly on my own amendment, although I think it is quite important.

[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

My Lords, the noble Lord, Lord Hain, lost his connection, so we shall try him again now. It seems we are still having problems with the noble Lord, so I now call the noble Lord, Lord Naseby.

[Lord Naseby (Con) [V]]

I thank my noble and learned friend Lord Mackay. He certainly has a very practical sense of the law, which not all lawyers have. He is right: it is an internal market; the relationships between England, Scotland, Wales and Northern Ireland are usually very close and we all have a common cause, perhaps not in rugby, but in most things. Nevertheless, I repeat that the words used in the Bill are pretty strong. It does not say that, in making regulations, the Secretary of State “may” or “should”, as we see occasionally in law; it uses the word “must”, which is a strong word. He “must consult”; there is no option. That is quite right—absolutely right, but we need to remember what “consult” means.

It is not a soft verb. Its component parts, in my view, involve seeking out information or advice, depending on the subject matter. It means doing one’s best to find out what the views are, to have an interchange and to take into consideration all aspects of the particular action proposed. It is not a dictatorship or anything like that, and I would not believe that any Secretary of State, of any Government, would view it that way. I personally think it is as strong as it needs to be. The addition of “obtain the consent of” in place of “consult” is a threat; there are no two ways about it. When I was in local government and the leader of a local authority, if I had had some legislation in front of me that said, “You have to obtain our consent”, I would dig my heels in. Do not bother about the other 31 local authorities in London—just dig your heels in and that will foul it all up.

That is not what this is all about, so I am not in favour of Amendment 15. I think, though, that the noble Lord, Lord Hain, and my noble and learned friend Lord Mackay have taken the argument a bit further. The noble Lord, Lord Hain, was talking about a qualified majority, when one part of the nation dug its heels in for some reason, and maybe we should look at that. My noble and learned friend Lord Mackay put forward how Parliament might be brought in at a higher level in something that was particularly difficult. There is merit in looking at both aspects, but I just think the amendment before us, Amendment 15, is over the top.

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[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

My Lords, I am told that we have the noble Lord, Lord Hain, again.

[Lord Hain (Lab) [V]]

Thank you, my Lords. I suddenly expired by unilateral mute for reasons that neither the broadcasting hub nor I could understand. I was about to complete what I said so, with the leave of the Committee, I will briefly do so.

The Bill will also narrow the territorial scope of devolved legislation. Regulations relating to goods passed by the Senedd, for example, will apply only to goods produced in Wales or imported directly into Wales from outside the UK. They will not apply to goods imported from the rest of the UK. This, as acknowledged by BEIS’s impact assessment of the Bill, would reduce the ability of local legislatures to pursue targeted social and environmental objectives so that the intended societal benefits “would be forgone”.

It is therefore clear that the market access principles of mutual recognition and non-discrimination set out in the Bill would present a significant threat to the purposes of devolution, which have been democratically established now for nearly two decades. Surely it is not too much to ask that, at the very least, the devolved Administrations should be consulted and their consent sought on the relevant measures in this Bill, as set out in these amendments?

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[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

The noble Lord, Lord Liddle, has scratched, so I now call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, this is a short and vaguely surreal debate. I caught my mind wandering to the “League of Gentlemen” with the slogan “Local goods for local people”—but not even they attempted to define “hypothetical” local goods. Indeed, neither have the Government, because there is no explanation in the non-explanatory Explanatory Memorandum which sits at the back. We are indebted again to the eagle-eyed lawyers of Scotland for finding this issue. The question is simple: what is a “hypothetical good”, why are you using this word and who on earth decides what is a good and what is a hypothetical good?

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[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

My Lords, we now resume Committee stage and come to the group beginning with Amendment 33. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in debate.

Clause 8: The non-discrimination principle: indirect discrimination

Amendment 33

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