Northern Ireland Protocol Bill

Jeffrey M Donaldson Excerpts

Committee stage
Tuesday 19th July 2022 Commons Chamber

[Stephen Farry]

The hon. Gentleman tempts me to refer to the time when his father famously said that the people of Northern Ireland may well be British,

“but our cows are Irish”,

which recognised the integration of animal health and agriculture on the island of Ireland. It was certainly a wise comment from the hon. Gentleman’s father.

Final products go right across these islands, into the European Union and further afield. The Bill is a threat to the sector in that it would allow products to enter Northern Ireland that are not produced to EU standards. The biggest issue relates to grain, around 400,000 tonnes of which are imported in Northern Ireland annually, but seeds and veterinary medicines may also cause complications. Even if the imported grain, seeds and veterinary medicines are in practice produced to the same standards as the European Union, that still misses the point in terms of the legal regime.

According to the Dairy Council, if any of those inputs were used in the production of milk, it would mean that the raw milk could not be supplied to customers in the EU, as Department of Agriculture, Environment and Rural Affairs vets would not be able to sign the necessary certificates to demonstrate that the milk had been produced in accordance with EU regulations and standards. Such an outcome would pose an existential threat to the Northern Ireland dairy industry.

The notion of trying to segregate inputs such as grain or milk produced to different standards or under different legal regimes is simply not realistic. Segregation would involve separate production, storage and cleaning. Tankers may collect milk from five to 10 farms into one tanker. The sector is already very efficient and works to very tight margins of 3% to 4%. It cannot absorb the additional costs of managing such segregation, and to do so would anyway make no sense. Indeed, it would involve substantially more paperwork and red tape, something I understood Brexit was designed to cut back on.

[Sir Jeffrey M. Donaldson (Lagan Valley) (DUP)]

I have listened intently to the hon. Member and I am left confused by what he has to say. As I understand it, the dual regulatory system is a voluntary one, so what is to stop the co-operatives, which dairy farmers are part of, voluntarily agreeing to follow EU regulations under this system and abide by EU rules? The farmers are sending the milk in tankers to be processed in Monaghan, so it is processed within EU territory. What happens between the milk’s leaving the farm and its arriving at the processing centre in Monaghan that makes that milk incompatible with EU standards?

[Stephen Farry]

I think perhaps the right hon. Member was not listening fully. The point relates to the inputs in terms of grain, seeds and veterinary medicines. That is where the particular issue is. My point is that, if people decide not to do that, the scale of the segregation that would be involved in trying to accommodate that choice would lead to costs that the sector simply cannot afford.

[Sir Jeffrey M. Donaldson]

Will the hon. Gentleman give way?

[Stephen Farry]

I have already given way to many DUP Members.

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[Sir Jeffrey M. Donaldson]

I can answer his point.

[Stephen Farry]

No doubt the right hon. Gentleman will have a chance to speak shortly.

The outcomes here will pose an existential threat to the Northern Ireland dairy sector. We are talking about potentially 800 million litres of milk that need to be accommodated somehow. The cows, of course, still need to be milked, and that begs the question as to where the surplus milk will go; that could pose considerable environmental challenges. It is simply not sustainable for farmers to retain animals that no longer have an economic purpose, so we could face a brutal cull of healthy cows. It would cost between £200 million and £250 million to create alternative processing capacity in Northern Ireland, and could take three years. Even if it made any sense to do so, by then the markets for Northern Ireland products would be long gone.

It is worth stressing that the island of Ireland has always been treated as a single unit for animal health. That makes huge sense, but dual regulation undermines it; there has not been dual regulation in the recent past. The same dynamic that applies to the dairy sector also applies to other aspects of agrifood, such as Northern Ireland’s very successful meat exporting industry. Any dual regulation in relation to feedstuffs and medicines undermines the ability to access the European Union in accordance with EU regulations.

Again, it is not realistic to segregate certain fields or farms for domestic Northern Ireland or Great Britain markets from those for EU markets, because—this may address the point by the right hon. Member for Lagan Valley (Sir Jeffrey M. Donaldson)—we will not have a situation where one farm says, “We’re only going to do Northern Ireland and Great Britain forever.”, and one says, “We are going to do the European Union.”

[Sir Jeffrey M. Donaldson]

Why not?

[Stephen Farry]

Because in a free market situation, businesses want to maximise their sales. No business wants to shut off one half of a market when it does not need to.

Overall, the Northern Ireland Food and Drink Association estimates that agrifood provides £4.9 billion in terms of value added to the Northern Ireland economy and supports more than 100,000 jobs. Agrifood may be a small aspect of the economy across the United Kingdom, but it is massive in Northern Ireland, and it is worth noting that, if this Bill destroys the business model for many, there will be few alternatives for employment in many rural areas.

The same dynamic applies to manufacturing. Very few manufacturers seek to service a domestic market only. Any components in goods that are manufactured or processed in Northern Ireland that do not comply with the relevant parts of EU law will not be certified for export into the EU either for further processing or for final sale. Dual regulation may make things easier for suppliers in Great Britain supplying Northern Ireland. However, the needs of Great Britain’s suppliers would be better addressed via improved information and guidance, and of course the delivery of sustainable solutions around the red and green channel and a sanitary and phytosanitary agreement—or, even better, a full UK-EU veterinary agreement.

There are strong reservations, through to outright opposition, to this proposal for dual regulation within the Northern Ireland business community, and I urge hon. Members to listen to them. The amendment therefore provides significant safeguards against dual regulation in broad terms, but also the potential to facilitate dual regulation for any set of products or sectors where it makes sense. Consultation with the Northern Ireland business community is vital, as it has the expertise and on-the-ground knowledge. Agreement with the EU is necessary, as without a proper legal regime it would not work and indeed would be self-defeating. So is the agreement of the Northern Ireland Assembly, since this is notionally for the good of Northern Ireland and the Assembly represents a much more balanced perspective of the political views of the people of Northern Ireland.

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[Sir Jeffrey M. Donaldson]

I fear the shadow Secretary of State is approaching this on the premise that the dual regulatory system will be compulsory. As I understand the Government’s proposal, it is for each business—and sector, indeed, if it so wishes—to decide whether it wants to opt in or opt out of this system. Businesses and sectors could decide to opt into the UK system only or the EU system only, or both. The idea that every business and sector will have to adopt both sets of regulations is simply not true.

[Peter Kyle]

I am grateful for the intervention. I make two simple points: first, I used the word “could” encounter, not “would” or “be compelled” to encounter. Secondly, let us take a business that might be operating in both markets. It would be forced to undertake the bureaucracy required by both markets. He says that is optional. Of course it is, but it is not optimal if a business that is operating perfectly contently and successfully—perhaps even growing, and creating more wealth, opportunity and jobs in Northern Ireland—wants to withdraw from one of the markets just to avoid the paperwork. It would not be forced; I understand that. It would be voluntary, but let us not kid ourselves that withdrawing from one of the markets simply to avoid bureaucracy or red tape would not have any impact on jobs, prosperity and wealth in Northern Ireland.

[Sir Jeffrey M. Donaldson]

Northern Ireland does not operate in a vacuum. A business in my constituency is no different from a business in the hon. Gentleman’s constituency. If a business in his constituency wants to sell goods in the EU single market, is the hon. Gentleman suggesting that that business can apply British standards, even if they are different from EU standards, and sell those goods in the EU without complying with EU standards? Of course not. Businesses in Northern Ireland have to make commercial decisions. If they want to sell goods to the EU, they must comply with EU standards. If they want to sell goods in the UK, they must comply with British standards. That is the way the commercial world works. That is the way it is regulated. Let us not pretend that we are creating a new regime here for Northern Ireland businesses, and that if we want to sell goods both in the UK and the EU, we need only one set of standards. That is not the case.

[Peter Kyle]

I am not quite sure where to start with that intervention. The right hon. Gentleman suggests we take the instance of my community in Hove and Portslade, on the sunny Sussex coastline. If businesses there are exporting to the EU, then of course they have to do all the additional red tape that has been imposed by the particular Brexit deal negotiated by this Government, but they do not have to do so if they are selling locally. This is the problem we have at the moment: we are suggesting a dual regime for the domestic Northern Ireland market, so it is not the same. Those who trade within Sussex—there is such fantastic produce grown, compiled, sold and retailed there—would not expect to have two regulatory regimes forced on them in Sussex. I do not think we should conflate exporters with those who produce for the domestic market. That is the problem we face in Northern Ireland; producers there are certainly being forced, in that situation, to make a choice. I am not suggesting that anybody is being forced to trade under both regimes. They can unilaterally decide to withdraw from one of the markets and perhaps downscale their business. But let us move on.

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[Richard Thomson (Gordon) (SNP)]

I rise to speak to, or at least draw attention to, amendments 19 and 22 in my name, and to speak to the other amendments that have been discussed.

On amendments 19 and 22, I do not intend to rehearse in any depth the arguments I put forward on day one, except to say that even if the Bill was not at risk of being in breach of international law, in our view it still gives Ministers far too much power to proceed without adequate reference back to this place and opportunities for scrutiny by Members. I make that point again for the consideration of the Treasury Bench; no doubt they will instantly dispose of it, but nobody can accuse me of not having made it again.

On amendments 44 and 45, it seems to me entirely reasonable that Ministers should be required to consult appropriately on the impact of dual routes, and to make sure there is an agreement with the EU and the option to choose between dual routes so that the dual routes procedure can operate as intended. It also seems to me to be perfectly reasonable to refer back to the directly elected representatives of the people of Northern Ireland in the Assembly on how they might wish such a mechanism to go ahead or to work, so we are supportive of amendments 44 and 45.

On amendment 28, ensuring that an economic impact assessment is carried out before proceeding with a dual regulatory regime seems to me to be the very essence of common sense. If only we had carried out a thorough economic assessment before stepping into this morass in the first place, it might have given people some pause for thought.

Finally—I said I would be brief—new clause 15 would require the House to be informed timeously of the details of discussions in the UK-EU Joint Committee when they involved regulation of goods in connection with the protocol, and to be given details of the regard that has been offered to the strand 1 and strand 2 arrangements. That seems a perfectly sensible way to ensure that consent is in place and that the views of all relevant stakeholders have been properly taken into consideration before such a momentous step is taken.

We entirely support those provisions and, if they are selected for separate decision, we intend to walk through the Lobby in support of them.

[Sir Jeffrey M. Donaldson]

I welcome the opportunity to contribute to this debate on the various amendments. I say to my honourable friends and colleagues from the Alliance party and the Social Democratic and Labour party that, in all their contributions to debates on the Bill, I have yet to hear once any acknowledgment of the impact of the protocol on the Unionist community in Northern Ireland and its sense of identity, including its sense of identity within the United Kingdom. There has been no recognition from either party of the importance of these issues for the people I represent and how that has contributed significantly to the breakdown of power sharing in Northern Ireland and the breakdown of the North South Ministerial Council. If we are going to find a solution, I have to say, with respect to my colleagues, that simply focusing in on what I accept are important points while ignoring the elephant in the room will not take us anywhere close to finding a solution that restores political stability in Northern Ireland.

[Claire Hanna]

I think Members across the Chamber would concur, and Hansard will certainly show, that I and others are acutely aware of the discombobulating and disturbing impact on many of a Unionist background. We have put on record many times our concerns about the symbolic effect of borders, which is why we worked so hard and for so many years to ensure that there is a borderless solution. We regret that not all parties joined us in that fight. Will the right hon. Gentleman acknowledge that many of us are concerned that his party, in legitimate pursuit of the rights of those with a strong Unionist identity, utterly ignores the majority of people who support the protocol in some form and is disregarding the majority of people in Northern Ireland—a comfortable majority—who wish the Northern Ireland Assembly to be up and running and who wish MLAs, MPs and others to find a negotiated, not a unilateral, solution to this impasse?

[Sir Jeffrey M. Donaldson]

I welcome the intervention from the hon. Member, for whom who I have a high regard. It is important that she placed on record a recognition of the concerns of Unionists, but she mentioned the word “majority” at least twice, and I find that interesting. She will no doubt scold me for quoting John Hume, as she did my hon. Friend the Member for Upper Bann (Carla Lockhart), who is with us this afternoon. I have said on the record that even though I would have had many differences with John Hume, I came to respect and understand his very clear view that in a divided society such as Northern Ireland, consensus, not majority rule, is the way forward. As a Unionist, I accepted that any political institutions that were to operate in Northern Ireland and that could command broad support had to operate on the basis of that consensus. The consensus has broken down because of the protocol’s impact on the Unionist community.

[Claire Hanna]

Does the right hon. Member acknowledge that it feels duplicitous to many people for him and his colleagues to say repeatedly that the protocol requires cross-community consent but that Brexit does not—that the protocol means that this Bill is fine because it has a Unionist party’s consent, even though all the other parties, representing a number of other traditions, do not support it? Does he acknowledge that there is a bit of give and take? Many Unionists would like this argument to end, but does he understand that you cannot in the same breath make the argument for consensus while completely discounting every single elected representative of a nationalist or other identity?

[Sir Jeffrey M. Donaldson]

I have no desire whatever to replace Unionist discontentment with nationalist discontentment in Northern Ireland. I recognise that a solution to these issues must be capable of commanding broad support and of dealing with the concerns that arise, not just for Unionists. If, for a moment, we can set aside the process—I think that is what incurs the wrath of some about how the Government are going about this—and look the Government’s proposed solution, I believe we will see that it is capable of addressing the concerns of the European Union and its need to protect the single market and its integrity. What it does for Unionists, however, is to respect the integrity of the UK internal market.

When I hear the hon. Member for North Down (Stephen Farry) explaining his opposition to the Bill—I use this only as an example; I am not saying that it is the totality of his opposition—by saying that because one third of milk production in Northern Ireland crosses the border to be processed, we cannot find a solution that respects the integrity of the UK internal market, I am simply at a loss to understand the logic of that argument, because it completely ignores the right of this United Kingdom to regulate its own market. We do have that right, as a nation. We took that right upon ourselves when, in a referendum, the majority in this country voted to leave the European Union. I understand the point that the hon. Member for Belfast South makes. If we could turn the clock back, she would argue, no doubt, that in such a referendum there should be a need for cross-community consent in Northern Ireland, but the fact is that that did not exist—it was not argued for at the time—and the result of the referendum stands.

Therefore, we must make the best of this, but the best of it is not the protocol, because the protocol seriously inhibits the ability of the United Kingdom to regulate its internal market. The former Secretary of State, the right hon. Member for Chipping Barnet (Theresa Villiers), made the point that it goes beyond that: it actually undermines the Union itself. In respect of article 6 of the Acts of Union, which gives every citizen in this United Kingdom the right to trade freely within our own country, stating that there shall be no barriers to trade between the constituent parts of the United Kingdom, the protocol undermines the Union. It undermines Northern Ireland’s ability, as part of the United Kingdom, to trade freely with the rest of our own country.

[Claire Hanna]

The SDLP is acutely aware of the sensitivity of people’s identity, but does the right hon. Member agree that having customs checks

“doesn’t mean that you change the constitutional status of a part of the United Kingdom,”

and does he agree that he said that on 3 March 2020?

[Sir Jeffrey M. Donaldson]

Absolutely. The customs checks I was referring to were in the context of proposals that the Government had introduced in the United Kingdom Internal Market Bill—and that they proposed to introduce in the Finance Bill—which would have removed the need for customs checks on goods circulating within the United Kingdom. My point to the BBC at the time was that customs checks on goods moving into the EU do not represent constitutional change, but what does represent constitutional change, as confirmed by the High Court and the Court of Appeal, is placing those checks on goods staying within the United Kingdom.

My party and I have been consistent on this point. If the hon. Lady refers back to the speeches made when the protocol was debated in this House, she will see that the view of the Democratic Unionist party has been clear from the outset that the protocol, if unchanged, would threaten Northern Ireland’s place within the UK and impact our ability to trade with the rest of our country, and that we opposed the notion that we could have customs checks on goods moving within the UK internal market. That has consistently been our position, because that alters our constitutional status as part of the United Kingdom.

I believe that what the Government propose is a serious endeavour to correct that problem and address that difficulty, to ensure that we can regulate our own internal market and that where goods are moving within the United Kingdom and staying within the United Kingdom, they are not subject to customs checks, which, in our opinion, are unnecessary.

As the Minister rightly indicated, clause 7 introduces a system of dual regulation in Northern Ireland. I will not repeat what I said to the shadow Secretary of State, the hon. Member for Hove (Peter Kyle), but I listened very carefully to what he had to say. If a business in his constituency wants to export goods to the United States of America, it must comply with US standards. It is the same for businesses in any part of the United Kingdom wanting to export to the EU: they must comply with EU standards.

I will use the example of the dairy sector to set out what is different for Northern Ireland. Farmers in my constituency who are part of the Lakeland Dairies co-operative have their milk collected in tankers at their farms in County Down and County Antrim and driven to the processing plant across the border. Very often, that milk comes back to Northern Ireland and is sold on our supermarket shelves, so we need a bespoke solution for the dairy sector. Dual regulation does not prevent that from happening. In fact, it enables it, because although one third of milk crosses the border, two thirds of it remains in Northern Ireland for processing. It is as if we are ignoring the reality that the majority of farmers in Northern Ireland do not send their milk across the border to be processed; it stays in Northern Ireland, and much of it is sold in Great Britain. No provision has been made for that.

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[Colum Eastwood]

If the right hon. Member agrees that the North South Ministerial Council would be a good forum for discussing some of these issues, maybe he would allow it to meet.

[Sir Jeffrey M. Donaldson]

I am as anxious as anyone to get back to having those discussions, and once the confidence of the Unionist community has been restored—the Bill has the potential to help us to do that—we will be back in our place. I simply say to the hon. Member for Foyle (Colum Eastwood), as I said to the hon. Member for Belfast South (Claire Hanna), that we must recognise that this is not just about the practicalities of trade; for Unionists it goes much deeper than that, and we need to address this. We need to find a solution to this that rebuilds confidence and restores the need for consensus in our politics, and that applies to the North South Ministerial Council. What I cannot accept, and what my party would not agree to, is giving the North South Ministerial Council a veto over what the UK can do to regulate its internal market. I do not think that is right or appropriate. It would have an impact on the delicate constitutional balances that are part of the Belfast agreement.

[Colum Eastwood]

The right hon. Member makes an interesting point, and I think he is right when he says that it is not just the practicalities of trade that are damaging confidence within the Unionist population, but does he believe that this will be enough to keep those people who are out on the streets happy? There will still be checks, and that constitutional issue that he has will not go away as a result of this Bill.

[Sir Jeffrey M. Donaldson]

We are seeking to find a solution that works for everyone, and we are listening to what business is saying, just as the hon. Member for North Down and the SDLP are rightly doing. I accept that there will not be a solution that everyone in Northern Ireland will agree with.

I do not believe that accommodating checks on goods moving from the UK to the EU represents a constitutional change to our status as part of the United Kingdom, but I do believe that carrying out customs checks on goods travelling from GB to Northern Ireland and staying within the United Kingdom does have a constitutional impact on our position within the United Kingdom. I make a distinction in that respect. The question then is where and how you do those checks. We are prepared to look at what the Government are proposing, which is why I asked them to publish as soon as possible their proposals for the so-called green lane and red lane approach so we can see what that means in practice and how it might work, and to consult the Northern Ireland political parties and the business community on the practicalities of all this. But, in my opinion, removing the bureaucracy, the checks and the restrictions on the movement of goods within the UK internal market answers the question raised by the former Secretary of State, the right hon. Member for Chipping Barnet: this will resolve the issue around article 6 of the Act of Union, which says there should be no barriers to trade within the United Kingdom itself.

Although I understand the concerns that have been raised about the practical workings of this Bill, I believe it offers a potential solution that addresses the real and genuine concerns of not only Unionists in Northern Ireland but many in the business community. Yes, some in the business community say that the protocol works for them, but many say the opposite.

We are looking for an outcome that respects Northern Ireland’s place within the United Kingdom, that respects the core principles of the Belfast agreement, including the need for consensus, that removes the barriers to trade within the United Kingdom, that offers a practical solution to goods crossing into the European Union and protects the integrity of the EU’s single market, and that enables business to have a real say in how those solutions are designed.

We will not be supporting the amendments because we do not believe they are necessary to achieve the required objectives.

[Mary Kelly Foy (City of Durham) (Lab)]

I rise to speak in support of amendment 28.

It is frustrating and worrying that, yet again, we are debating legislation that will violate an international agreement under a Government who have an alarming disregard for the rule of law. For the second time in the space of a few weeks, the Government are attempting to force a Northern Ireland Bill through this House against the express wishes of many people in the north.

The contempt in which this Government hold the views of people in the north of Ireland has become increasingly clear. They are simply pawns in this Government’s political games, yet the decisions taken today and tomorrow will have a massive impact on the lives of ordinary people across the Irish sea. Given that the Government forced through the Northern Ireland Troubles (Legacy and Reconciliation) Bill just the other week, despite being opposed by every party in the Northern Ireland Assembly, it is a shameless act of hypocrisy that they are now using the lack of cross-community support for the protocol as an excuse for scrapping it, especially when the majority of MLAs have written to the Prime Minister opposing these plans, branding them “reckless”, and rejecting the Government’s

“claim to be protecting the Good Friday Agreement as your Government works to destabilise our region. To complain the protocol lacks cross-community consent, while ignoring the fact that Brexit itself—let alone hard Brexit—lacks even basic majority consent here, is a grotesque act of political distortion.”

Cross-community support has real meaning in Northern Ireland, and it is so poor that the Government are seeking to portray themselves as champions of bridging the divide when, just the other week, they were dismissing its importance out of hand. It is absolutely clear that the majority of legislators in the north believe that the measures in this Bill will come at a clear economic cost to Northern Ireland and that the protocol represents the only available protection for Northern Ireland from the worst impacts of that hard Brexit. It is therefore scandalous that this dying Government are dedicating their final days to riding roughshod over the wishes of the people of Northern Ireland in the name of policies that could have a detrimental impact on the local economy.

That is why I will be supporting amendment 28, as it would prevent the Government from making regulations relating to the dual regulatory regime until an economic impact assessment of the proposed changes has been carried out. The Prime Minister negotiated, signed off and campaigned on this protocol, which he promised to deliver—one of the many promises on which he has reneged. Now, in the death throes of his term in office, he is forcing through this Bill, damaging the credibility of GB. As he leaves office, his legacy remains a complete lack of respect for the rule of law, for international agreements and for the people of Northern Ireland. Sadly, the people of Northern Ireland will be poorer for it.

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[The Chairman of Ways and Means (Dame Eleanor Laing)]

Sir Geoffrey Robinson.

[Sir Jeffrey M. Donaldson]

Being named after another esteemed Member of this House is, I am sure, a fitting tribute, but thank you, Dame Eleanor, for the opportunity to say a few words in this debate.

[The Chairman]

I apologise to the right hon. Gentleman; I have just realised that I called him by the wrong name—it is 41° C outside.

[Sir Jeffrey M. Donaldson]

Robinson is quite a popular name in the Democratic Unionist party. I am honoured to join my hon. Friend the Member for Belfast East (Gavin Robinson), who has that assignation.

I listened very carefully to the comments that the hon. Member for North Down (Stephen Farry) made about VAT, and particularly the difficulties that arose from the Chancellor’s announcement of a VAT relief on certain energy products that are designed to make homes more energy-efficient. He made the point, and I am sure it is accurate, that according to Treasury figures, Northern Ireland would stand to benefit by an amount in the region of £1 million. However, that highlights the failure of the Alliance party to recognise that for us it is not a matter of the sum involved; it is the principle—the fact that Northern Ireland, which is part of the United Kingdom, as is recognised in the Belfast agreement, in the constitution of the Republic of Ireland and by this Government, cannot benefit from a scheme designed to benefit all our country because the rules of an external body prevent the Treasury from applying that benefit to all the United Kingdom.

[Sammy Wilson]

Does my right hon. Friend accept that this is an issue not just for us Unionists? It should be an issue for the whole House that the Chancellor of the Exchequer cannot apply his or her decisions to the whole United Kingdom, which this Government are supposed to have gained sovereignty over. That should be a concern for everybody who is elected to this House and believes that this House is the body that makes decisions for the United Kingdom.

[Sir Jeffrey M. Donaldson]

My right hon. Friend is right, of course. That goes to the heart of what Brexit is about. The mantra was “Taking back control.” That meant taking back control of our borders, our money and our laws. Her Majesty’s Government and the Chancellor of the Exchequer cannot apply a benefit designed for the whole United Kingdom to one part of it, Northern Ireland. That highlights a flaw in the final Brexit arrangements: in respect of Northern Ireland, we do not have control over our money, our laws or, sadly, our border. That is a fundamental point.

I respect the fact that the hon. Member for North Down speaks from a particular perspective, and I in no way mean to diminish its validity, but many of his constituents are solid Unionists. I have been in North Down since becoming leader of my party and have met many of those Unionists, who are affronted that their sense of identity and of belonging to the United Kingdom is undermined by the protocol, and that there is no proper recognition of that reality. That goes to the heart of why we have the current political problems and instability, and why our political institutions are not functioning properly.

[Sammy Wilson]

There is the argument that says, “Well, you could negotiate this. We should go back to the EU and negotiate to allow the VAT reduction to be applied to Northern Ireland.” Does my right hon. Friend accept that that is even more demeaning? The Government claim to have taken back control; the argument is that they should go cap in hand to a body that we left because we no longer wanted it to have control over decisions made in the United Kingdom, and ask, “Please can we apply tax changes that we made for England, Scotland and Wales to Northern Ireland?” That is even more demeaning than saying, “At least we’ve got back control for the rest of the UK.”

[Sir Jeffrey M. Donaldson]

My right hon. Friend makes a valid point, but the matter goes further than that. It is not just that our Government cannot apply their own policies and economic and financial initiatives to Northern Ireland in the same way that they can to the rest of the United Kingdom; it is that those restrictions imposed by the European Union are restrictions over which none of us on the DUP side has any control. They are regulations and rules on VAT brought forward by the European Union, on which we have no say whatsoever.

[Stephen Farry]

It may surprise the right hon. Gentleman that I have quite a lot of sympathy with what he is saying on VAT. Perhaps it is for this reason. A lot of the issues relating to regulation of goods relate to the devolved competencies of the Northern Ireland Assembly. Obviously, we are talking here about UK-wide macroeconomic tax policy. That is a different issue. I do not want to get into the whole background of Brexit and the protocol during this Committee stage, except to say that the reason for the differential relates to the fact that, in order to avoid a land border on the island of Ireland, certain decisions were taken, and one of those was that Northern Ireland should retain access to the single market for goods. The VAT rules are linked to that. While I acknowledge that there is some validity in the right hon. Gentleman’s argument, it is important to acknowledge the background, and the only way to address it is through negotiation.

[Sir Jeffrey M. Donaldson]

I understand the point that the hon. Gentleman makes, but negotiations have taken place and all these issues have been well aired with the European Union. When I met Maroš Šefčovič, I pointed out the real and practical impacts of the protocol not only on businesses in Northern Ireland but on consumers. More fundamentally, I pointed out the impact on our identity and sense of our place within the United Kingdom—the relationship of Northern Ireland with the rest of our home country.

I simply wanted to rise to make this point again this afternoon, Dame Eleanor, and to reaffirm a point that is fundamentally important. Let us not lose sight of the main objective of the Bill. While the Bill seeks to create a framework within which we can find practical solutions to the problems created by the protocol, more fundamentally the Bill is about addressing the concerns that have given rise to the political instability in Northern Ireland. It is about protecting the Good Friday or Belfast agreement, protecting the political institutions, protecting the delicate constitutional balance that is at the heart of that agreement, and resetting it in a way that achieves the consensus that is the absolute engine that drives power sharing in Northern Ireland.

I fear at times that some fellow Members of this Committee get so into the weeds of the detail that they lose sight of the bigger picture, which we believe is fundamental for the delivery of the Bill.

[The Financial Secretary to the Treasury (Lucy Frazer)]

I thank my right hon. and learned Friend the Minister for the Cabinet Office and Paymaster General for opening the debate this afternoon, and I thank hon. Members across the Committee who have contributed to it.

There has been a lot of talk this afternoon about negotiation. The Government have consistently said that it is our preference to resolve the issues through negotiation. Our door remains open, but the EU has so far not been willing to make changes to the protocol that deliver the solutions Northern Ireland needs. In that context, the Government are acting now to provide the solutions, to be implemented through this legislation, including for fiscal policy.

The reality is that businesses and consumers in Northern Ireland are not currently afforded the same UK tax breaks as those in the rest of the United Kingdom. That is preventing them from reaping the full benefits of this Government’s policies, and this simply cannot continue to be the case. The clauses we are discussing today will enable us to remedy these discrepancies, by paving the way for Northern Ireland to benefit from VAT, excise and subsidy control regimes consistent with those in place in Great Britain.

Let me begin by addressing clause 12. The hon. Member for Hove (Peter Kyle) said that the clause was complicated. It provides the basis for a single UK-wide subsidy control policy rather than the two separate regimes currently existing under the Northern Ireland protocol. The clause will provide legal certainty, and therefore confidence, about the extent to which businesses will be able to receive subsidies. It will provide clarity in domestic law that article 10 is disapplied, meaning that any subsidies that would previously have been notifiable to the EU under article 10 will no longer need to be notified. The clause will also amend section 48(3) of the Subsidy Control Act 2022 so that UK subsidy control requirements will apply to all UK subsidies, including those in Northern Ireland. Clause 12(3) provides powers for a Minister to make appropriate provision regarding any part of the Northern Ireland protocol to which the clause relates.

The protocol creates a two-tier system in the UK under which people and businesses in Northern Ireland are at risk of losing out in comparison with the rest of the UK. EU state aid rules have limited the level of support that may be granted in Northern Ireland without approval from the EU. With the covid-19 recovery loan scheme, for example, there were more limitations on who was eligible for the loans in Northern Ireland than in Great Britain. The Bill will remove that uncertainty for businesses and bring about parity between Northern Ireland and the rest of the UK.

Clause 17 provides Ministers with the ability to ensure that VAT, excise and other relevant tax policy is consistent across the whole UK, including Northern Ireland. That means that people in Northern Ireland will benefit from the same policies as people in Great Britain where it is beneficial for them to do so—as, of course, they should. I would like to explain why that is important. The EU has set rigid limits on VAT and excise rates and reliefs in Northern Ireland, meaning that even if UK policy changes would have no impact at all on the EU, they may not currently apply in Northern Ireland. That is why, as hon. Members across the Committee have mentioned, we still have not been able to introduce the new temporary zero rate for energy saving materials in Northern Ireland, as we have done in Great Britain.